31 October, 2022
Intellectual property (IP) rights are an important asset for any business. The World Intellectual Property Organization (WIPO) defines IP as "creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce". By ensuring that IP rights are properly protected and enforced, businesses place themselves in a strong position to commercially exploit those IP rights both domestically and internationally through carrying out international trade.
As part of International Trade Week, this article will navigate the main IP considerations for businesses when trading internationally, as well as discussing some of the potential consequences where there is a failure to carry out effective IP due diligence or ensure that the greatest degree of protection is afforded.
At the start of any new venture (or product launch), the IP rights that may be associated with that venture must first be identified. If properly identified from the offset, some products may benefit from a wide degree of IP protection. In order to fully consider this, each form of IP right needs to be considered in some further detail:
IP rights can either subsist automatically or be protected via registration. Trademarks, designs and patents are widely seen to be the registrable forms of IP right, whereas copyright can subsist automatically on creation. However, the goodwill and reputation that attaches to signs can be protected in some jurisdictions on an unregistered basis under what's know as "passing off", whereas designs can be protected following their creation or disclosure. Importantly, this is only a general rule of thumb, and each jurisdiction will ultimately have its only laws and procedures that govern registering and recording IP rights.
It is possible for several IP rights to subsist in any one product or service. From the above, it can be seen that trademarks protect the brand, signs protect the representation of the products sold under the brand, patents protect any inventive step associated with the manufacture of the product, whereas copyright protects original literary and artistic works associated with that product, such as marketing materials, but also product specifications and drawings.
Quasi forms of IP right include trade secrets and confidential information. It is common for businesses to discuss potential product lines with investors and third parties during the ideation process. It is important during the identification stage to ensure that any such discussions are contractually governed by confidentiality agreements which protect against the unauthorised use or disclosure of confidential information (which can include potentially patentable processes).
As part of the identification process, businesses ought to carry out due diligence in order to ensure that their activities will not infringe the IP rights of third parties. This entails searches of applicable registries (such as the UK Intellectual Property Office and applicable international counterparts, such as the European Union Intellectual Property Office and WIPO) for existing rights that may cause concern, as well as more broader searches via trading platforms such as Amazon and eBay.
Once IP has been identified, it should then be protected to the fullest extent possible. Where a UK business wishes to extend its sales of existing products internationally, a preliminary assessment should take place as to whether the corresponding rights have first been obtained in the UK. If not, then not only does this pose a risk should a third-party start carrying out what competing activities, but it could also present an initial barrier to obtaining protection internationally.
Whilst each jurisdiction will have its own laws and procedures in relation to the protection and registration of IP rights, there are several treaties containing universal principles in relation to the treatment of IP rights on an international basis. One such treaty is the Paris Convention for the Protection of Industrial Property 1883 (Paris Convention), which can be broken down into three categories:
Taking a practical example, if a UK trademark application was filed on 01 December 2022, the applicant for that trademark would have 6 months (i.e., until 01 May 2023) to apply for registration of that trademark in another contracting state. This effectively means that any applications submitted in that territory for the same mark during the intervening period will be superseded by the priority claim. The main consideration for brand owners, therefore, is that they should be forward-thinking with their IP registration strategy and benefit from priority rights under the Paris Convention where possible.
One strategy when seeking the registration of IP rights internationally would be to submit individual applications in each territory. The main disadvantage of this approach is the significant legal cost and administration expense that is associated with appointing local representatives to submit direct applications across territories.
Owing to increased harmonisation of IP practice over recent decades, centralised filing systems becoming more streamlined and cost-effective, and businesses now have a viable alternative option of obtaining protection in multiple jurisdictions under one centralised application. Under the Madrid System, applicants can obtain registration of their trademarks in over 100 territories via submission one international application via the WIPO. In order to do so, they must have a base registration or application (this is a further reason to protect the brand domestically prior to expanding internationally), as that provides the foundation for the international trademark. The Hague System and the Patent Cooperation Treaty provide a route to obtaining international protection of industrial designs and patents respectively.
Centralised applications via the WIPO generally comes with the initial advantage of reduced costs and administrative expense, however if substantive issues are raised by international registries, then local representation will often be required in any event. Furthermore, with reference to the Madrid System, the international trademark is dependent on the base application or registration for a period of 5 years from the date of the international application. If the base trademark is removed from the register, protection under the international trademark will also cease (although there are ways around this).
On a smaller scale, it is possible to obtain trademarks and designs throughout the European Union via applications to the EU Intellectual Property Office. European patent can also be obtained via central applications to the European Patent Office (note that European patents are not European Union rights, and they cover European territories that are not part of the European Union, such as the United Kingdom and Norway.
As with UK IP rights, due diligence should first be carried out in all international jurisdictions in order to ensure that the activities will not infringe the IP rights of third parties.
Once IP has been identified and protected it can then be exploited, either via assignment or licensing agreements. One effective way of exploiting IP rights that subsist in relation to goods is under distribution and agency relationships. Distributors and agents often have local knowledge and existing contacts, and under a properly drafted distribution or agency agreement, they are effectively granted a licence to use IP rights, subject to certain restrictions (such as relating to exclusivity or non-exclusivity or the territory in which the licence is granted). If the IP has not been properly protected in the territory in which ancillary rights are to be granted, there is the risk of third-party IP infringement claims in due course.
IP rights are monopoly rights, which means that brand owners ought to do all they can to prevent third-party misuse. An effective IP enforcement strategy typically includes brand monitoring and watching activities, online takedown measures (via platforms such as Amazon and eBay), understanding importation controls and anti-counterfeiting procedures, in addition to operating robust dispute resolution procedures.
If IP rights become diluted so does the value that attaches to them. Non-activity or a failure to enforce IP rights can lead to the IP right becoming prone to revocation and/or validity proceedings. Businesses often have the misconceived view that registration alone is sufficient, but the true value that attaches to IP rights comes from having in place effective exploitation and enforcement strategies.
For more information contact Daniel Fletcher in our Intellectual Property department via email or phone on 0333 207 1145. Alternatively send any question through to Forbes Solicitors via our online Contact Form.
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