A guide to Intellectual Property for exporters; a shortened version of AJ Park’s comprehensive IP feature chapter in the 2022 NZ Export & Trade Handbook.
Exporting presents a huge opportunity for growth, providing access to new and potentially more lucrative markets around the world.
If your product or service is based on intellectual property (IP) that has taken time and money to develop, it is important to protect it, both in New Zealand and abroad. If it is carefully protected, it can form a powerful barrier to competitors, but if it is stolen or disclosed without your permission, your entire business may be put at risk.
Even though a new business may protect its IP in New Zealand as a matter of course, this provides little protection beyond our shores. International protocols mean it may be possible to protect and enforce your IP rights with many of New Zealand’s trading partners, but unless you have protected your IP in that specific country, you could be left without recourse.
Even if you’re not intending to export straight away, having overseas IP protection for your invention, design and/or brand helps preserve your ability to do so in the future. This may also open licensing opportunities if you decide to export the IP rather than the product itself.
Remember that you should also make sure that you are able to release your product or service in the countries of interest to you. If you are unable to obtain protection, it is possible that someone else may have done so already. The key factor is to understand the IP landscape and risks that exist, not only at home, where you manufacture your goods, but also wherever you aspire to sell in the future.
Understanding the risks and developing an IP strategy for expansion will put you on the best path possible for business success.
What is IP?
IP is the legal right to protect ideas and inventions that are unique to a business. In effect, IP is the property of the mind or proprietary knowledge. These rights ensure you get the full economic benefit from developing your distinctive brands, ideas or products. Your IP can be a totally new concept or invention, an innovative design, a distinctive brand, or a combination of all three.
Whatever form your IP takes, it is one of your most important business assets – it is what differentiates you from your competitors, and even though it is an intangible asset, it has tangible value. Therefore, it makes sense to protect this valuable asset from being used by other individuals or businesses.
Benefits of IP to your business
Establishing IP protection for your brand or logo in relation to goods and services is important for a variety of reasons. It can:
• establish a right to, and ownership of, your original ideas so you can profit from them;
• prevent competitors from copying or closely imitating your products or services;
• protect the distinct identity, image, and reputation of your business; and
• build customer trust and loyalty by establishing an identifiable brand name or reputation.
IP is rising
Worldwide filings for patents, trade marks, and industrial designs are reaching record heights. Innovators around the world filed 3.3 million patent applications in 2020, up 1.6 percent from 2019. Trade mark applications also rose by 13.7 percent in 2020 to approximately 17.2 million, and worldwide industrial design applications reached 1.4 million. This growth was primarily driven by growth in China.
Know the rules
Moving into new markets means you will come into contact with different legal environments and processes, so the rules that apply in New Zealand can differ significantly to those in other countries.
IP rights are territorial in nature. With a few exceptions, such as copyright, any IP protection granted in New Zealand does not cross international boundaries and registered IP rights are only enforceable in the countries where protection has been granted.
It is also important to understand what parts of your business can and should be protected with registered rights, like patents, designs, and trade marks, and what the process for applying for those measures is in each country.
If you’re thinking of expanding offshore, or dealing with overseas manufacturers or suppliers, you need to:
• understand there’s no such thing as worldwide IP protection;
• be aware that potential competitors (and counterfeiters) watch the IP registers of different countries to find new opportunities, brands and ideas;
• consider where your business is going and what IP steps you might need to take to protect yourself in other markets; and
• be mindful that there are sometimes time limits on IP protections. For example, a patent application filed in New Zealand must be filed before the invention it covers is made public and patent filings in other countries must be within 12 months of the New Zealand filing date. This means you need to act relatively quickly to protect or capitalise on your IP.
Developing your IP strategy
If you have something worth protecting, then registered forms of protection are a vital lever for commercial success. It is essential to develop a considered IP strategy that maximises protection while minimising costs.
Protecting every element of your IP in every possible potential market may seem like the safest bet, but it is not the most practical. Aside from the cost of filing in multiple countries, your IP rights will also need to be asserted and maintained, which could result in significant legal, administrative, and translation costs. This is where you need to be very clear about where the value of your product lies. If it is inherent in the IP, then you need to take appropriate steps to protect it in the markets you care about most. Balance these costs against the potential cost to your business if your product was copied and sold by a competitor with no recourse available.
Your export strategy drives your IP strategy
Your IP strategy will be driven by your export strategy, so be clear as early as possible on your plan and the role of IP in your business.
You also need to understand which markets offer the best potential for your product. This may depend on factors such as population and national wealth or the best cultural fit.
Other questions that will drive your IP strategy include:
• What are the best distribution channels into that market?
• Will you market and sell directly, via distributors or licensees, and if so, what type of commercial agreements do you need to put in place?
• Where will your product be produced and how best can you get protection there?
Careful consideration of these issues will help shape your export and IP strategy, as the two are inextricably linked.
IP Protection – your options
IP is a general term that represents a range of methods that protect ownership rights over brands, products, ideas, innovations, and designs. These rights ensure IP owners get the full economic benefit of their original brands, ideas, or products, and stop others from commercialising the same or similar products. IP rights can either be registered or unregistered.
Protecting your own IP is your first priority but you will also need to ensure that by exporting to a new country, you aren’t infringing someone else’s IP. Your product or brand may be unique in your own market, but this does not mean it will also be unique in other markets. Establishing freedom to operate (FTO) before you invest in a new territory will assist in guarding your business from costly legal challenges from potential competitors in those markets.
Another key aspect of researching your market is understanding how your brand will translate on foreign shores, as the way a brand is interpreted in New Zealand will not necessarily be the same in other countries. Check that your product or brand name and associated imagery, including colours, translate well into other languages and cultures and won’t be considered offensive or unlucky. Some Kiwi companies have found it is easier to establish a new brand in Asian markets that translates better than their original brand.
If English is not the first language of your export market, register in both English and the native language of your foreign market.
Patent attorneys and IP specialists are the best option to provide comprehensive searches for you but doing your own research first can help to shape your export strategy.
Protecting your IP in China
It was only a decade ago that China was considered the place to have products manufactured on the cheap. As a result, counterfeits were rife and it was known as a country in which it was very difficult to enforce any IP rights you may have.
China’s IP protection and enforcement is improving. As more and more Chinese companies are innovating, they have realised that it is best to have IP law on their side. Although there are still a number of risks involved with exporting to China, most notably trade mark squatters, China has made significant progress thanks to changes to its laws and trading environment, which have created huge opportunities for Kiwi companies eyeing up the market.
Protecting your IP in the US
The US is one of the biggest markets in the world and when it comes to IP it operates in a unique way. The Americans have a good understanding of the investment involved in seeking IP protection and the monopoly it gives. They understand the importance of taking action, against third parties that use intellectual property that is similar to their own, and to protect and maintain the monopoly value of an asset.
Protecting your IP in Australia
When it comes to trading, Australia and New Zealand have a close and significant relationship. Fortunately, the IP systems of both countries are largely similar, although there are some unique differences to keep in mind.
CPTPP
It is up to each signatory of the Comprehensive and Progressive Trans-Pacific Partnership Agreement (“CPTPP”) – which came into force on 30 December 2018 – to ensure its laws comply with the agreement. For New Zealand, it was a relatively straightforward task. The Trans-Pacific Partnership Agreement (CPTPP) Amendment Act 2018 together with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership Amendment Act 2018 Commencement Order 2018 has already resulted in a number of changes to the Copyright Act 1994, Customs and Excise Act 1996, Patents Act 2013, and Trade Marks Act 2002.
New Zealand-UK FTA
On 20 October 2021, New Zealand and the UK reached agreement in principle on a new free trade agreement (“FTA”) which, once finalised, could result in changes to New Zealand’s intellectual property laws. The IP chapter of the FTA will include commitments from New Zealand to extend its copyright term by 20 years, adopt an artist resale right scheme, expand the scope of performers’ rights and make all reasonable efforts to join the Hague Agreement on Industrial Designs. Changes to New Zealand’s copyright term will be implemented within 15 years of the FTA coming into force.
The FTA is also expected to include provisions relating to the use of traditional knowledge and cultural expressions, including in the context of patent examination processes, and commitments to cooperate at an international level to promote multilateral outcomes in this area.
IP protection is all about balance
IP protection is often about striking the right balance between achieving maximum protection and managing IP costs. The solutions you choose to protect your IP in foreign markets will need to reflect your broader commercial business strategy, at home and abroad.
To get the balance right, work with an IP professional, such as a registered patent or trade mark attorney, or experienced IP lawyer, who will help develop and implement an IP strategy to take your ideas to the world.
Top ten checklist when taking your IP to the world:
- Is your product or brand eligible to be protected under IP law?
- Is your packaging part of your product’s value? Have you protected its design?
- What are your target markets?
- Are your target markets covered by international conventions?
- What is the value of your brand, design, or product features to your business?
- Have you considered registering trade marks for the local language version of your brand?
- Is your IP already registered by a third party in your target markets?
- Have you conducted adequate due diligence into your commercial partners?
- Is disclosure of your commercially sensitive information protected by non-disclosure agreements? and
- Have you consulted an IP professional with connections in the countries to which you want to export?
AJ Park is a leading provider of intellectual property services in Australia, New Zealand and the Pacific region. With offices in Auckland and Wellington, we have one of the largest, most experienced teams of IP experts in the area. Visit www.ajpark.com
To access the full version of this IP chapter go to www.exportandtrade.co.nz
