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Measure Twice, Cut Once: Protecting Your Intellectual Property Requires Planning Ahead

Posted on March 30th, 2010 | Author: Christa Hildebrand

Globalization affects nearly every business.  Companies developing new products or methods have to carefully develop an intellectual property portfolio, including a patent filing strategy, to respond to and compete on an international scale in the global market. For sure, the patent filings start with filings in the companies’ home land, most likely where the inventions were made.   But considerations of foreign filings are a must for developing an international filing strategy that is truly in line with globalization.  Questions of where the newly developed product will be manufactured should be resolved as part of such strategy.  Is the newly developed product or method a candidate for successful distribution or sales abroad?  Where or in what part of the world would such sales be expected? In what countries are the competitors situated?  Often, the most obvious countries, i.e., the immediate neighboring countries, such as Canada and Mexico for U.S. companies, are not considered in a timely fashion.  The company may even wrongly assume that, due to NAFTA agreements, U.S. patent protection would extend into NAFTA states, not realizing that the protection stops at the countries borders.  Although the company may have a manufacturing agreement in place with a foreign manufacturer, which may give the company proprietary rights to any pre-manufacturing or manufacturing tools and molds, it is certainly advisable to include the country of manufacture into the foreign filing strategy.

At a minimum, the foregoing comments have to be evaluated and questions have to be answered before a meaningful and strong patent portfolio can be built up.  A well run company understands and is committed to building up such a portfolio.  The motivation is the fact that the IP portfolio most likely represents proportionally the highest value of the company’s assets.   

As the portfolio grows, dynamic decisions should be implemented to maintain an up-to-date meaningful portfolio.  Simply dropping obsolete patents from the portfolio saves on exponentially increasing maintenance fees.  Abandoning protection from countries where the product is no longer sold also saves in costs.  Thus, if the company no longer has use for a certain patented technology, and does not want to drop the patent, it could be a candidate for licensing the technology to others in exchange for a royalty payment.

If the decision concerning the foreign filing strategy only includes a few foreign countries, individual filings in such countries are advisable.  However, if the filing strategy is not quite settled, perhaps due to the financial burden of foreign filings, or if the decision calls for filings in multiple countries or even in groups of countries, the company may consider filing an international patent application.  Such procedure is governed by international treaties, which reserve the right to file in any member state within a certain time period.  These filings are governed by the Patent Cooperation Treaty (“PTC”) in the World Intellectual Property Organization (“WIPO”), an organization which is a specialized agency of the United Nations.  Such procedure is made convenient and can be done through the United States Patent and Trademark Office.  Not only does the procedure allow postponed filings in any of the member states, it also allows deferred payments of foreign filing fees substantially.  This economic factor is often very attractive, not only for start up companies, but also for established companies. 

Most IP portfolios also contain a trademark portfolio.  Each company does business under a known name and thus trademark considerations come into play. Most likely, there are logos, slogans and model/machine names that are part of such consideration.  Similarly to the patent system, there are also international vehicles for trademark filings available. 

But what appears more important is to test out first how the mark, logo or slogan would be received and consequently accepted by each of the foreign countries where the product is distributed and sold.  A name may be harmless here, but could be offensive elsewhere.  But once the company has settled on its marks, a search for the availability of the marks should be obtained. No marketing department should be given any orders going forward before such search results are evaluated. After positive search results, the marks should be filed to reserve at least the intentions to use such mark in the near future.  As the product which is identified with the trademark gets sold at least across a state line, the mark is used and the trademark application can be completed for registration.

Of course, if the designs of the companies’ products or apparatuses are critical, design protection is part of a global protection consideration and international filings should be reviewed.   

And lastly, globalization includes having an active website presence, which should be part of the IP Portfolio.  The company most likely already does business on the internet under its own registered domain name.  In case of disputes, the WIPO, mentioned above, also administers and decides disputes concerning bad faith domain name registrations or instances where existing trademarks were registered as a domain by others, through the Uniform Domain Name Dispute Resolution Policy.

In sum, well-run companies should consider a global presence at the very onset of their strategy development and should respond with an international IP portfolio.  It keeps, at least for some time, the options open to broaden out the portfolio into a meaningful international portfolio.   

Next IP Blog:  What to consider when patents or trademarks from abroad are to be filed in the US.