Weekly outline

  • General

    How do you exploit and enforce your IP rights?

    The management of your IPRs may have two main objectives:

    • To avoid possible problems with them, such as losing them or weakening them;
    • To capitalize on them, by increasing your revenues and your commercial success.

    Let’s start with some practical suggestions to make sure that you do not lose or weaken your IPRs:

    • The famous principle of “use it or lose it” applies to IP, or at least to some rights (trademarks, in particular). Remember that, in accordance with your trademark law, you have five years from the registration date to start genuine use of your mark in your country, failing which anyone can initiate a cancellation action against your mark.
    • Secondly, pay particular attention if the general public in your country starts using your mark not only to indicate your own products (or services), that obviously carry your mark, but as a general term to indicate any product of the same category. Should this be the case, any judge could in principle declare the “vulgarization” or “genericide” of the mark in question, as it would have lost its capacity to distinguish the goods/services of one specific undertaking.
    • In this context, try to systematically use your mark as … a mark, and not as a noun, as an adjective or as a verb. Expressions like “please Xerox these pages” or “I googled her name …” may endanger the trademarks Xerox and Google and make them, as mentioned above, generic and as such, not protectable as marks.
    • In addition, if you foresee the risk of vulgarization for your precious mark (for example because you have invented a new product), it might be wise to invent a generic term to indicate such a product. You will then use it together with your trademark. This will clearly indicate that the mark is not the generic name, and as such, it maintains its distinctive character. By way of example, when the company Nestlé invented Nescafé, they immediately realized that the public may have started using this term to indicate any coffee that can be instantaneously prepared by pouring boiling water on coffee granules. For this reason, Nestlé coined the term “instant coffee” as the generic term for this (new) product. This technique can be considered “best practice” if you want to avoid the vulgarization of your mark.
    • Using the symbols ® or TM (or even “REGISTERED TRADEMARK”) may also help you educate your consumers to the fact that your mark is in fact protected (registered or applied for).
    • You should also try to use your mark consistently, without major variations as compared to the version that you originally filed.
    • Finally, remember that you are your best “watchdog” to protect your trademark. In other words, try to monitor the market and watch out for some possible infringers:
      • Make certain that no one attempts to protect a mark that is identical or similar to yours for identical or similar goods/services;
      • Monitor trademark databases for applications/registrations that are identical or similar to yours.
      • Ensure nobody uses your trademark in any of the markets where you have registered it. This include checking stores or malls where products carrying your mark may be illegally sold, monitoring the press and the websites of companies using your mark without authorization, etc.
      • In some countries, you might be able to file your mark with the local customs authority.

    Now that we have discussed some best practices that might help you avoid losing or weakening your IPRs, let’s turn our attention to what you can do to capitalize on them and increase your commercial success.

    Marketing

    It can be considered as a technique to sell products (or provide services) to consumers. It is however much more than just putting your products on a shelf and hoping that they are purchased. Marketing implies a careful consideration of the following elements:

    • type of packaging,
    • colors,
    • slogans,
    • advertisements (in various media),
    • which stores where the products bearing your mark may be found,
    • where the product is placed in the store aisles,
    • how the retail store will promote the product,
    • cost of the product,
    • after-sales services linked to the sale of your products.

    A good marketing strategy is necessary if you want to be successful and win over your competitors. These are some of the key principles of an effective marketing strategy:

    • Understand people and their needs: your products or services will have to be purchased by people. They should select them among dozens of other competing products. You have to make sure that whatever you produce responds to their needs, correspond to their expectations, to … their dreams. In this context, you should remember that there are two types of needs: physical or practical needs and emotional needs. Believe it or not, the latter are almost more powerful than the former. if you manage to tap on emotions and leverage on emotional needs, you will be able to build more profound and long-lasting relationships with your clients.

      And how can you understand your clients’ needs? In the past, you could mainly rely on direct contact with them (i.e., direct interviews, focus groups, etc.). Nowadays, particularly if you intend to export, this approach may not be enough. A good option might be to send surveys to current and potential clients. However, the best option that you have today is technology and social media. Thanks to this important development, nowadays, you can have almost “direct contact”, carry out surveys and many other options, by taking advantages of the incredible opportunities offered by the internet.
    • Find a niche: instead of becoming good-enough in something that many others do, try to be the number one (or one of the best) in a particular area. This also means identifying your possible competitive advantages. This means positioning yourself on the market, avoiding duplications.
    • Have a good product and a good packaging: the first part of this statement is obvious: if your product is ugly, of poor quality, dangerous, carries negative connotations, nobody will buy it. However, having a good product is not enough: the appearance counts! Having an attractive, eye-catching packaging may give an additional competitive advantage to your products. After all, do you prefer to buy potato chips in an ugly, old fashion package or in a package that makes you feel proud of walking around with it in your hands? The response is clear.
    • Have a differentiated offer: no matter how wonderful what you produce might be, it cannot please everybody. If you remain stuck to your one product that proved to be successful, first of all, you lose the chance to acquire all those customers that, for whatever reason, may not appreciate that product. On the other hand, you may soon start losing clientele and your competitive advantage, as people change tastes, are sensitive to fashion, trends, etc. The message is clear: you should constantly improve your product, inside and outside (its appearance, its packaging) to ensure that it remains relevant to people and … their first choice. You should also create and put on the market variations of your main product, to accommodate the needs and tastes of those customers that did not appreciate it, for whatever reason.
    • Build awareness: years ago, that might have been the point where your limited financial resources, could have hampered your efforts to make your SME more successful, and squashed your dreams. Nowadays, again, the new technologies offer unprecedented opportunities. You might upload a little video on Youtube and, all of the sudden, millions of people watch it. Your Twitter might be re-twitted thousands of times. You Facebook page may be “liked” by more people than you could ever imagine. You, as representative of an SME, are lucky to live in this era!

      And in this context, you should concentrate on your messaging: what idea do you want to promote about yourself and your products? What kind of emotional connection do you want to create with your potential consumers? In this context, a small but useful piece of advice is: remain faithful to your original message and improve it, develop it. In other words, try to avoid changing completely your main message, as it might be perceived as an inconsistent and schizophrenic approach by your clients: they may not know with what message they want to associate and identify themselves.
    Merchandising

    It is a type of marketing and more specifically, merchandising is a technique to use a known brand for a product to sell another product (like using trademark Mickey Mouse, normally used for cartoons and entertainment, to sell t-shirts, hats, key-rings, etc.). More broadly, producers may take advantage of the reputation of their mark normally associated with product A to start selling also product B.

    Franchising

    Franchising is also a type of marketing and more in particular a type of license. It is in fact based on IP licensing and it allows for business expansion and product distribution without reinventing the wheel.

    The precise definition of “Franchising” may change from country to country. However, most countries consider some variation of these elements to constitute a franchise:

    • License to use a Franchisor’s intellectual property (in particular: trademarks and know how);
    • Payment by Franchisee (often in the form of a lump sum and royalties);
    • Assistance to Franchisee (the Franchisor has obligations to provide the necessary know-how to the Franchisee, train him/her in terms of selling techniques, windows dressing, account keeping, etc.);
    • Significant control by Franchisor (particularly on the way in which the franchisee uses its trademark and sells the products bearing such mark).
    Licensing

    As indicated earlier, intellectual property, if properly exploited, can play a fundamental role in increasing your revenues and enhancing your commercial success. The process of trading and exploiting IP assets with a view to making profits or returns is commonly referred to as “commercialization” of IP. Generally, there are different modalities that allow you, as IP holder, to exploit your IPRs.

    You can use your IP assets to manufacture unique products (or deliver unique services) which are subsequently sold on the market. In this case, the IP owner directly exploits its rights. However, in the best case scenario, this is practical almost exclusively in the country where you are based and at the very maximum in neighboring countries.

    Let’s see then what are your options.

    You can “sell” your rights to third parties, particularly in other countries. This is the so-called “assignment” of IPRs and in this case you transfer all your rights to a third party that becomes the new owner. In other word, a bit like when you sell a house, you lose your rights forever.

    Alternatively, you have another and probably the best option: Licensing your IPRs. It is a bit like when you rent your beautiful house to somebody you trust: you maintain the property and the control, and you receive a rent every month. Licensing of IPRs works in the same manner.

    In this section we are going to deal exclusively with licensing as a means of commercially exploiting IPRs. This can mark a huge turning point for your SME, as it might enable you to move from your back-yard economy to the global markets, taking fully advantage of globalization.

    Licensing may considered as a tool that enables you to grant permission to third parties to utilize your IP asset/s for a specified duration, for a specific purpose, on a particular territory, and under agreed upon terms and conditions.

    It evident that licenses can be granted for different types of intellectual property assets ranging from, patents, trademarks, industrial designs, copyrights, etc.

    Let’s see now what are the main advantages for the licensor, i.e., you, as the owner of the IPRs.

    • You do not entirely give up your intellectual property rights, but only “lease” or “rent” them out;
    • You will be able to earn returns in terms of license fees and royalties (while doing almost nothing, except monitoring that everything proceeds smoothly);
    • You will be able to expand existing markets and access brand new markets;
    • You will able to capitalize on the local knowledge, network and expertise of your local licensees in the various countries, as well as on their distribution and manufacturing capacity;
    • Your licensees might introduce more easily the adaptations that are necessary to penetrate their local markets;
    • Your licensees may generate valuable knowledge from exploiting your IP and perhaps even improve them;
    • You will retain oversight over the evolution of the technology and the brand;
    • Numerous times, you may transform a potential (or actual) infringer into your partner/licensee.

    However, in order to be successful, the license must also bring tangible advantages for the licensees. Let’s see what are the potential benefits for them:

    • Acquiring technological know-how and valuable brands without having to go through the expensive and complex process of research and development (R&D). In this context, remember that even the bigger companies do not carry out all the R&D themselves, and prefer to acquire some of the relevant technologies from their parties;
    • Saving time, money and human resources to enter a new market with an enhanced product (i.e., a successful product);
    • Developing skills to create new products and services that can increase their competitiveness;
    • Acquiring knowledge of new cutting edge technology and techniques that can help in their business strategies.

    On the other hand, you better watch out to avoid some of the common negative consequences of poorly conceived and drafted licensing agreements. For example:

    • The licensor may not be able to gain as much as it would like from the license agreement.
    • It might have to compete with its own licensees if they were not prevented from exploiting the acquired IPRs in the Licensor’s territory.
    • The licensee might discover that its target market is not ready for that particular product or it is simply too expensive for the local consumers.

    However, these issues are easy to avoid if there is proper preparation and the licensing agreement is well-crafted and well negotiated.

    The licensing of intellectual property rights can be a rather complex exercise: make sure your contract is drafted by a good lawyer with knowledge of IP, contract law, corporate law, and supported by other more technical professional figures such as an accountant and an expert in the relevant field of technology.

    Licensing compared to other forms of transfer
    Licensing and Assignments

    A license does not imply a transfer of ownership. An assignment does.
    Licensing and Spin-offs

    A license does not imply the establishment of a new company while often this is the case with spin offs where subsidiary companies may be created with a view to capitalizing on IPRs.
    Licensing and Distribution Agreements

    A license provides the licensee with rights to use certain IPRs. A distribution agreement grants only the permission to sell a certain product within agreed terms.
    Licensing and Joint Ventures

    While in licensing a company authorizes another to use certain IPRs under agreed upon conditions, in a joint venture two separate companies decide to create a third company to jointly undertake a project or work towards a common goal. In this case there is sharing and contribution of intellectual property assets, technological research, marketing strategies, etc.

    Previous sections have guided you through the practicalities of how to develop, choose and protect an IP right. This section will take you one step further and share with you a number of practical suggestions that you can follow in case your precious IPRs are copied, violated, infringed, at home or abroad, whether in good or in bad faith.

    After all, it would be completely pointless for countries to spend significant amount of money to establish a national system to grant the IP rights, if they did not invest also in strengthening their capacity to enforce such rights in case of violations. Unfortunately, the development of the national enforcement system varies and often, the national office in charge of granting IP rights protection does not have responsibility for IPR enforcement. Efforts are being made on a daily basis to enhance the human capacity of the professionals and officials involved in the enforcement of IPRs. This is an ongoing process and improvements are expected. IP owners have the primary responsibility to protect their IP rights provided the necessary infrastructures are in place that would support the enforcement of these rights.

    For this reason, the first two tips are:

    • Be your own watchdog.
      You are the best person to monitor the market/s in which you sell your products or deliver your services. You should constantly keep abreast of:
      • What your competitors are doing in terms of possible new and competing products on the market, as you may need this information to adjust your commercial strategies; and
      • Any potential or actual infringement of your IPRs. This could take the form of garments unlawfully bearing your trademark, technological devices embodying your invention without your permission, musical CDs and DVDs of your music or your latest film being sold on the streets.
    • Try to find an amicable solution
      Litigation is expensive, it takes long time and creates enemies. In addition, try not to assume that systematically somebody that in your view infringes your rights, does it actually on purpose and in bad faith. Sometimes, it might be a question of ignorance (though ignorance of the law cannot be excused!), and a simple warning letter may be sufficient to put an end to the infringement. Other times, the counterpart genuinely believes that its products do not infringe your IPRs, either because they carry a sufficiently different trademark, or because their inventions do not squarely fall within the claims of your protected patent. In this case, a warning letter may not be sufficient, but before running to a lawyer to start a legal action, you may wish to try an out-of-court settlement, through negotiation.

    In short this is the way in which we would suggest that you proceed:

    Step 1:
    monitor the market for possible violations of your IPRs.
    … If you detect a possible infringement, then:
    Step 2:
    write a warning letter (also known as “cease and desist letter”) to the potential infringer, drawing its attention to its unlawful behavior that violates your IPRs (that you need to describe in detail). Show that you are willing to enter into a dialogue, but that you will be firm if the infringement is not terminated within a short deadline.
    … If this does not work, then:
    Step 3:
    try to negotiate an out-of-court settlement. In other words, try to understand why the counterpart does not intend to stop its behavior that in your view infringes your IP rights. Perhaps they have legitimate reasons to do so. Perhaps your two marks are not that similar after all in that particular country. Perhaps … in other words, you better fully understand their reasons and their “secret weapons” before embarking into a real litigation.
    … If you feel that you are not achieving the desired result, then:
    Step 4:
    you may want to revert to the services of a professional mediator, who might facilitate the achievement of a satisfactory agreement for both parties.
    … And if also this does not work, then:
    Step 5:
    find yourself a good IP lawyer and commence legal proceeding before the competent court in the country where your right is violated.

    Unfortunately, only step 1 can be carried out by yourself, at no cost. The other steps should be performed with the help of a professional with expertise in the subject matter, and of course he/she is not going to work for free.