The importance of IP rights in supporting trade success
Companies large, medium and small from the Cambridge area have been incredibly effective in creating and serving international markets for their goods and services, writes Stephen Hodsdon of Patent and Trade Mark Attorneys J A Kemp.
However, operating in new international markets inevitably attracts higher levels of competition and therefore requires companies to establish strong barriers to entry in order to protect the significant investment required to break into those markets. For many companies, IP rights form a valuable, and often key, part of those barriers.
For innovative companies, patent protection is one of the strongest barriers to direct competition. By providing a monopoly over not only the specific
product or process, but also those which rely on the same invention, in many cases patents can effectively exclude competition for several years, providing space to grow market share and customer loyalty.
Even if competitors manage to ‘work around’ the patent, the resulting products are often less effective, or delayed in entering the market.
International patent protection is, however, a complex business. Whilst there is substantive harmonisation of the basic requirements for obtaining a patent, the application process is national (or at best regional) and the inevitable publication of the underlying ideas mean that once the opportunity to obtain protection in a country has been allowed to pass, it can rarely be regained.
Furthermore, even those with deep pockets can rarely afford the costs of obtaining patents on a worldwide basis. As a result, most applicants adopt a ‘Swiss cheese’ approach to the selection of countries, being willing to leave holes in order to focus on the parts that matter most.
Selecting the countries in which to obtain protection is a complex balancing act best conducted with your trusted advisers.
It should not be forgotten that patents are not the only way to protect ideas and knowledge. The use and protection of confidential information (also referred to as ‘trade secrets’ or ‘knowhow’) can often be as important as obtaining patents.
Whilst reliance on confidential information is often associated with fields such as food and drink where it is possible to keep information secret (recently hitting the headlines with the jailing of an ex-Coca-Cola chemist for trade secret theft), it also has a valuable role to play in other industries.
For example, despite all the fuss made over the waiver/non-waiver of patent rights in COVID vaccine technology, it is unlikely that simply waiving patents would have much impact on the worldwide production of vaccines.
Whilst a waiver might allow third parties to legally produce vaccines, it is highly unlikely that any new companies would have been able to produce them without substantial previous experience and detailed explanation of the detailed manufacturing processes.
The importance of branding when entering a market should also not be overlooked. Establishing a foothold in a new market is likely to require effort and expenditure on marketing, whether through mass-audience channels, direct to consumers or word-of-mouth.
However, such expenditure is likely to be wasted, or at least much less effective, if competing products are able to enter the market with very similar names and/or looks.
Registering trade marks in advance of entry into a particular market will help to deter or prevent such ‘copycat’ approaches. With most countries operating a ‘first to file’ approach to trade mark registration, if a brand is gaining particular recognition in current markets it is recommended to secure wider geographic protection well in advance of expansion to prevent less-scrupulous operators from filing a speculative registration of their own.
Trade mark registrations are generally simpler to obtain than patent applications and can be filed in individual countries as a business expands the geographical scope of its operations.
Alternatively, an ‘International Registration’ can be used which effectively acts as an application in a selection of countries, whilst providing the option to add further countries as expansion continues.