By John Chong
Intellectual Property Consultant and Director
Mindvault Sdn Bhd

This article was published in April 2001 in The Star, Malaysia’s leading daily newspaper.

The K-Economy has received much attention in the Third Outline Perspective Plan (OPP3) and in recent press and events. There is substantial political will behind a move towards the K-Economy. To make it a reality though will require more than political motivation; it will demand considerable development and investment in all aspects of the national infrastructure.

While the shortcomings of the current physical infrastructure are often highlighted, what is often not mentioned is the dearth of significant intellectual property (IP) in this country. The wealth of the K-Economy lies in IP and its creation, protection, management and exploitation must be a priority for countries and businesses that wish to advance into and reap the benefits of a K-Economy.

The largest economies in the world have a lot of their wealth and influence tied up in IP. Think of the most valuable brands in the world (like Coca-Cola, ranked no.1 by Interbrand and worth US$72.5 billion), whose pull affects consumer spending decisions around the world. Think of where the latest technologies come from, technologies that impact the way we live and work. Think of who conducts cutting edge research and development, the people and companies who will continue to chart the course of commerce in future. And you will think of the first world nations. They are first for a variety of reasons, one of the most important being leadership in the field of IP.

What is IP? In basic terms IP represents creations of the intellect, be they products or services, inventions or discoveries, tangible or intangible. IP can take an incredible array of forms – brands, software, consumer goods, content, art, music, film, etc. – and can be found in virtually any industry – food, entertainment, fashion, biotechnology, information technology, manufacturing, pharmaceuticals, media, etc.

IP has been and is under-developed in Malaysia. There are too many ‘me too’ products and not enough distinctiveness and innovation. In some cases, good ideas have not been commercialized successfully. Rather than command a premium for quality and uniqueness, many companies compete on price with fairly generic products. With places like China looming large on the economic front and other Indochina countries in the shadows, competing on price alone can be disadvantageous. Hence companies must harness the power of IP, a process which involves 4 steps: Create, Protect, Manage and Exploit.

Creation of IP is the most fundamental step. It should be part of the corporate vision and be supported by the commitment of corporate time, manpower and resources towards the creative function. The strength of the human resource is critical, each division should be staffed with the right talent – researchers for product development, designers for product aesthetics, marketers for product branding and the like. Each of these divisions generates their own IP and contributes towards the overall IP portfolio of the company.

A reasonable budget should be provided for the development of IP. Many times research, development, and marketing efforts are hampered when not enough funds are allocated. More importantly, management must give the creative team the latitude and flexibility to work and also be prepared to review their efforts with an open mind – too many times a good idea is defeated by a conservative management. The term ‘think outside the box’ should be as important to the management as it is to the creative team.

Lastly, it must be remembered that innovating and creating is an ongoing concern. The best companies sustain their research and development year after year; constantly pushing the envelope and staying ahead of the competition.

Valuable IP must be protected against infringement otherwise its worth will be diluted. Protection for IP rights is governed by legislation in Malaysia and the four main rights – trade marks, copyright, patents and industrial designs – are recognized in this country.

In order to qualify for protection, the IP has to be capable of being ‘pigeon-holed’ under one of the four main rights mentioned above. It should be noted that there are peculiar exceptions under each piece of legislation and not everything can be protected. For example: colours per se cannot be registered as a trade mark, copyright will not cover ideas, and a patent cannot be granted for rules or methods for doing business. There are many more exceptions and professional advice should be obtained when in doubt.

To obtain the protection itself the IP rights must be registered except for copyright, which accrues automatically. Registration is a process that takes time (usually measured in years) so it is prudent to make the application as soon as possible.

It is worth mentioning that IP protection is a matter of sovereign national legislation. Hence, registration in one country only protects you in that country. There is no such thing yet as an international registration that gives you worldwide coverage. However, there are certain protocols and treaties that aim to provide a common filing system that helps cut down the paperwork for registration in multiple member countries.

Management & Exploitation
Like any other corporate asset, IP needs to be managed. Management involves keeping a diary system for rights like patents, trade marks and industrials designs because they need to be periodically renewed. It also involves keeping track of how the rights are used and presented and monitoring the marketplace for competition or infringers. Scrupulous records should be kept for the IP, including any licenses, agreements, or legal documents that are relevant. Even press clippings, advertisements, articles or write ups about the your products and services should be filed as they can serve as supporting documents when there are disputes or litigation; this is especially true of cases involving trade marks and branding.

Beyond management is aspect of exploiting your IP, putting it to work to generate income for the company. Think of the business and revenue model – will the product be manufactured in house or licensed out to others, perhaps domestic production can be supplemented by contract manufacturing abroad. Different considerations apply to different goods and services and each of the various IP can be leveraged and applied differently. Managing and exploiting IP in the right manner ensures maximum returns.

The above is a very brief overview of the role of IP as an important component in the K-Economy. Pursuing an IP strategy that addresses the four areas above is a prerequisite for companies intending to make their way into the K-Economy.