Protecting your IP Abroad
A plain English review of managing IP risk overseas
In 2001, Jim O’Neill, a well-reputed British economist, coined the term BRIC by suggesting that the four countries – Brazil, Russia, India and China – have the potential to be economic giants by 2050. More recently, US businesses have added Indonesia to the “BRIC” convention as a location with (potentially) abundant opportunity for US companies expanding abroad.
Over the last two decades, however, US companies have learned the hard way that those same countries share another key attribute – they are among the worst on the planet in terms of intellectual property protection. With a growing number of US business going global every year, especially to BRICI countries, it is imperative to think about safeguarding your intellectual property.
In the U.S., the procedure for protecting intellectual property is unambiguous: register your trademark or copyright or file a patent or provisional patent application with the US Patent and Trademark Office. Many, unfortunately, assume that IP protection in the US extends globally – if you take one thing from this article, remember that it does not!
The extent of your exposure really depends on the law of the countries in which you’re doing business, and that, in and of itself, gets very complicated. For that reason, smart companies know that the best way to protect your IP during international expansion is to have legal counsel develop a global IP policy, working with local agents to execute that strategy in various markets. IP laws are very technical, regionally distinct, and compliance can be a nightmare for a layperson: outsourcing is almost always the best way to go given what’s at stake.
Just make sure you’re outsourcing wisely. Ask for referrals from people who know what they’re doing. Research agents’ credibility and read reviews. Make sure you sign a contract that is not only explicit about what will be done, but that is enforceable in both the home country and the target country.
Here are 4 key steps to getting off on the right foot when it come to protecting IP overseas:
Step 1 – Understand the Risks in Your Target Markets
The initial question: where do I want to expand and how much exposure to IP infringement do I have in those markets? The internet is swimming with information on which countries are most and least protective of IP, so do your research to evaluate the risks to your business, and weigh that against the potential upside of expansion.
For example, the International Property Rights Index publishes an annual global scorecard for IP protection. No BRICI countries ranked “better” than #59 (out of 125) in its 2018 rankings: Brazil #55, Russia #84, India #59, China #52 and Indonesia #64. Who claims the top spots, you might wonder? (In order of rank): Finland, New Zealand, Switzerland, Norway, Singapore, Sweden, Australia, The Netherlands, Luxembourg, Canada, Japan, Denmark, the UK and…at 14th, the United States.
Step 2 – Streamline (if possible)
Rather than painstakingly following law country by country, you may be able to protect your IP through one of the treaty frameworks like the following:
PCT – The International Patent System - The Patent Cooperation Treaty (PCT) assists applicants in seeking patent protection internationally for their inventions and facilitates public access to a wealth of technical information relating to those inventions. By filing one international patent application under the PCT, applicants can simultaneously seek protection for an invention in 152 countries (as of February 2019), including all BRIC countries except for Russia.
Madrid – The International Trademark System -- The Madrid System is a convenient and cost-effective solution for registering and managing trademarks worldwide. File a single application and pay one set of fees to apply for protection in (as of February 2019) up to 191 countries, including all BRIC countries except for Brazil. Through the Madrid System, you can modify, renew or expand your global trademark portfolio through one centralized system.
Hague – The International Design System - The Hague System for the International Registration of Industrial Designs provides a practical business solution for registering up to 100 designs through filing one single international application. Geographic application is limited, however, and excludes most BRIC countries.
Berne Convention for the Protection of Literary and Artistic Works – The Berne Convention covers copyrights and extends some copyright protection to 176 “contracting parties,” including all BRIC countries.
Step 3 – Utilize Country Resources
Patents and trademarks are territorial and must be filed in each country where protection is sought. For more information on how to apply for individual patents or trademarks in a foreign country, contact the intellectual property office in that country directly. A list of contact information for most intellectual property offices worldwide can be found on the Intellectual Property Organization Portal.
Each country has its local norms and rules as well, and those rules may have serious implications for your business. In China, for example, trademarks are granted on a “first to file” basis, meaning the first to file a trademark application automatically owns the mark, regardless of who developed or first used the mark. This can result in “trademark squatting,” whereby due to the “first to file” trademark system, someone can apply opportunistically for a trademark with the intent to sell the mark back to its original creator.
The best way to prevent trademark squatting is to register your trademark – in English and Chinese or its local versions – before anyone else does. If there’s a remote chance you might do business in China someday, for example, act sooner rather than later.
Even if you hire an expert to navigate the process, you should make use of publicly available resources to educate yourself on the basics so you can feel comfortable your interests are being protected.
The StopFakes.gov site includes IPR toolkits that provide detailed information about protecting and enforcing intellectual property rights in specific markets, along with contact information for local intellectual property rights offices abroad and U.S government officials available to assist you. As of February 2019, US embassies in the following locations posted IP toolkits designed to help US companies seeking IP protection overseas:
- European Union
Similarly, the UK Intellectual Property Office (IPO) has produced a range of country-specific guides to help you protect and manage your IP abroad. These guides describe the issues you may face with IP infringement, how to deal with them and where to find sources of further help.
As of February 2019, available country guides are:
- South Africa
Also consider whether there is regional protection available, which could ease the burden of filing for IP protection in multiple jurisdictions.
Step 3 – Do Your Homework and be Vigilant
Central to protecting your IP overseas is requiring that local manufacturers or potential business partners sign a non-disclosure agreement specifically designed for the local market.
These contracts may be written in the local language, but make sure the contract can be enforced by local laws. In addition, it’s critical that you develop detailed IP language for licensing and subcontracting contracts in local markets.
As a matter of practice, conduct thorough due diligence of potential foreign partners, including background checks, to make sure you’re avoiding players likely to exploit your IP. The U.S. Commercial Service – which provides a broad menu of services to US companies expanding overseas – can be very helpful on this front.
In addition to vetting potential partners and protecting yourself contractually, consider augmenting your security procedures by:
- Limiting IP access to carefully selected parties;
- Physically locking areas where IP is stored;
- Prohibiting unauthorized copies of IP, such as on USB devices, shared network drives;
- Encrypting IP transmitted digitally and electronically;
- Ensuring sensitive information is kept on password-protected areas of your system;
- Installing anti-virus software and keeping it up to date;
- Installing firewalls to prevent unauthorized users from hacking into your system;
- Backing up your work and ensuring back-ups are stored securely, preferably off site
- Protecting your system against power surges and failures
Step 4 – Monitor the Market for Infringements
Once your IP rights have been secured in key markets, monitor the market for infringements. For example, most Chinese e-commerce sites have takedown procedures that allow IP rights owners to apply and have IP infringing product listings removed. If you are particularly concerned with infringing products, register your IP with China Customs. Most IP seizures made by China Customs are trademark infringing goods being exported from China.
Along those same lines, register your IP with US Customs and Border Protection (CBP) via an online Intellectual Property Rights e-Recordation (IPRR) application. As an intellectual property right owner, you can partner with CBP to help protect your registered and recorded rights. CBP can detain and seize imported goods which violate intellectual property rights in the United States. To learn more, read How to Work with CBP to Protect Your Intellectual Property
Particularly in high-risk situations, consider acquiring IP insurance which protects against significant legal costs of IP violation. Policies vary and can be quite costly, but an IP insurance policy may cover both the enforcement and defense of claims. Remedies may include damages, such as loss of profits or reputation and settlements to any IP right domestically or internationally.
The bottom line is this --- your IP is your most valuable asset. Protect it accordingly.
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