Using Using Patents, Patents, Trade Trade Secrets, Secrets, Industrial Industrial Designs, Designs, Trademarks Trademarks and and Geographical Geographical Indications Indications for for the the Business Business Success Success of of SMEs SMEs Guriqbal Singh Jaiya Director, SMEs Division World Intellectual Property Organization (WIPO)
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Using Patents, Trade Secrets, Industrial Designs, Trademarks and … · 2007-05-30 · Using Patents, Trade Secrets, Industrial Designs, Trademarks and Geographical Indications for
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• IP rightscanenhancethevalueof yourSME in theeyesof investorsandfinancing institutions– IP rightsareoneof the5 maincriteriausedby European
venturecapitalistsin theirdecisionsto fund SMEs
• In theeventof a sale,merger or acquisition, IPassetscanprovideanextremelyvaluablebargainingtool
• IP assetsareseparatelyidentifiablebusinessassetsandhavea separatevalue– E.g.Coca-Colabrandvalue:estimatedat US$69 billion
Examples
• Biobrás: A Brazilianbiotechcompanyobtainedapatenton humanrecombinantinsulin.While saleshaveremainedconstant(companyexploringcommercialization),thevalueof shareshasgoneupsix-fold overthepast5 years.
– Industrialdesigns& trademarksareidentifiers?customersdistinguish, at a glance,betweenyourproductsor servicesandthoseof your competitors.Theyestablisha link betweenyourproductsorservicesandyourSME
• Debtfinanceis generally‘secured’by a chargeoverthebusiness’assets.In principle,theseassetscanbeanyclaimsthathavereasonablypredictablecashflows, or evenfuturereceivablesthatareexclusive.
• Securitization of IP assets- a newtrend:collateralizingcommercialloansandbankfinancingby grantinga securityinterestin IP is a growingpractice,esp.in music,Internetandhigh technologysectors.– E.g.,securitizationfor futureroyaltypaymentsfrom licensing
a patent,trademarkor tradesecret,or from musicalcompositionsor recordingrightsof a musician(D. Bowie).
4.2 Venture Capital
• For theventurecapitalist,returndependsuponfutureprofits.
• IP ownershipis importantto convinceinvestorsof themarketopportunitiesopento theenterprisefor thecommercializationof theproductsorservicesin question:
ConvinceVenture Capitalist (1)
– Strongtrademarksarea guaranteefor a loyalclientele
– For manycompanies,tradesecrets(suchasdetailsofproduction,secretinventions,andtechnical,financialandmarketingknow-how)alonemaybethesourceoftheir competitiveadvantage
Therefore…
�Ensurethatyour IP portfolio protectsthoseaspectsof thebusinesswhich determinetheventure’ssuccess
�ReflectproprietaryIP in yourbusiness’books,balancesheet,businessplan
�Any indicationthatconfirmsduediligenceon yourpartin themanagementof IP assetsis likely to playanimportantrole in convincinginvestorsof yourcompany'spotential
• A licensingagreementis a partnershipbetweenanIP rightsowner(licensor)andanotherwho is authorizedto usesuchrights(licensee)in exchangefor anagreedpayment(feeorroyalty)
Advantagesof Licensing Technology
• you canensurea steadystreamof additionalincomefrom your invention(royalties)
• no needto invest yourselfin thecommercializationof theinvention
• your SME canexpandits businessto thefrontiersof your partners'business
• cross-licensing
Cross-licensing:Cross-licensing:exampleexample
• Dell (computercompany)hasnumberof patentsin theUS on its uniquebusinessmodels
• In 1999,Dell usedits patentportfolio ascollateralin aUS$billion cross-licensingdealwith IBM with lowercostcomputercomponents
• This freedDell from havingto payIBM severalmillions of dollarsin royalties
Attention !
� Internationalcontext? IP right you wish tolicensemustbeprotectedin thecountries
– For inventionsor manufacturingprocessesthatdo notmeetthepatentabilitycriteriaandthereforecanonly beprotectedastradesecrets(thoughtheymayqualify forprotectionasa utility model)
2. Whenthetradesecretis not consideredto beof suchgreatvalueto bedeemedworth a patent(thoughutilitymodelmaybegoodalternative)
3. Whenit is likely thattheinformationcanbekept secretfor a considerableperiodof time.
• If thesecretinformationconsistsof a valuablepatentableinvention,tradesecretprotectionwould only beconvenientif thesecretcanbekeptconfidentialfor over20 years(periodof protectionof a patent)andif othersarenot likelyto comeup with thesameinventionin a legitimateway.
4. Whenthesecretrelatesto a manufacturingprocess ratherthanto a product,asproductswould bemore likely to bereverseengineered.
5. Whenyou haveappliedfor a patentandarewaiting for thepatentto begranted.
• However,bear in mind:– Tradesecretprotectionis generallyweak
– Referto reputation andcertainqualities in theproductthroughcollectivemarks,certificationmarks,geographicalindications
IndustrialIndustrial DesignsDesigns
• Industrialdesignsarecompositionsof linesorcolorsor anythree-dimensionalformswhich givea specialappearanceto a product
• Theyprotecttheornamental or aestheticaspectof a product(not functional)
• Exclusiverights: Right to preventothersfromapplying(making,sellingor importing)theprotecteddesignto commercialproductsfor aperiodof 10 to 25 years(Estonia:25y)
Pos: easyto protect(likely to beconsidereddistinct)
Neg: difficult to remember? greatereffortsin advertising
2. Arbitrary marks: wordsthathavea realmeaningin a givenlanguage.This meaning,however,hasno relationto theproductitself or to anyof its qualities(e.g.Apple)
Pos: level andeaseof protectionis generallyhighNeg: no directassociationbetweenthemarkandtheproduct
? greatermarketingpowerto createsuchanassociationin themind of theconsumer
3. Suggestivemarks: markswhich hint at oneor someoftheattributesof theproduct(e.g.Benecol,Bonaqua)
Pos: actasa form of advertisingandmaycreatea directassociationin themind of theconsumersbetweenthetrademark,certaindesiredqualitiesandtheproduct
Neg: Risk too descriptiveor not sufficientlydistinctive to meetthelegalcriteriafortrademarkprotection
How to Protect a Trademark?
• Registration is requiredin mostcountries(exceptwell-knowntrademarks).
• Trademark search: To besurethatit is notregisteredby anothercompanyin thecountryfor thesameproducts(goodsor services).
• It is importantto registerearly, andin anycasebefore launching a newproducton themarket
How to Protect a Trademark?
• Territorial : only protectedin thecountryin whichregistrationhasbeenobtained
• Term : 10 years– renewableindefinitely !
• Somecountries:obligation to use(3 or 5ynon-use? invalid)