By John Chong
Intellectual Property Consultant and Director
Mindvault Sdn Bhd
This is the third in a four-part series published on 14 July 2003 in the [email protected] pullout of The Edge, Malaysia’s leading Business & Investment Weekly.
The road to managing a company’s intellectual property (IP) as a strategic asset begins with identifying, analysing and understanding those assets which can be classified and utilised as intellectual property, which was the subject of last week’s article. The next step is to protect them and this usually begins with the process of registration.
In Malaysia and most other countries there are statutory mechanisms to register intellectual property. The purpose of registration is to formalize the company’s legal rights over the intellectual property. Just as a homebuyer lays claim to his house by registering his name on the land title, a company can lay claim to its IP by registering them. Without a registration, a company’s claim over a piece of intellectual property may be disputed, as Microsoft found out in 1995.
In December 2002, OneStat.com reported that Internet Explorer held 95% of the global browser market share. For a browser that is now found in millions of personal computers and notebooks around the world, it is surprising to know that the name Internet Explorer did not originally belong to Microsoft – it was the property of a small internet company called SyNet, who had applied to register the name Internet Explorer as a trade mark earlier. In 1995 SyNet sued Microsoft over the latter’s use of Internet Explorer for its browser but the case was settled in 1998 when Microsoft paid US$5 million to end the suit and take over the name. SyNet’s trade mark registration for Internet Explorer was a key factor in its favour.
Trade marks are just one main form of IP that may be registered, the other main ones being patents and industrial designs. The rules and procedures for the registration of trade marks, patents and industrial designs are different and too involved to be contained in this article, but several general issues should be borne in mind:
Registration is typically country specific. For example, if you perform a registration in Malaysia then your rights only cover Malaysia. To protect your rights in another country you must register there also. While there are some treaties (such as the PCT and Madrid Protocol) which enable multinational registrations, Malaysia is not part of them yet
Registration costs money and overseas ones more so. The company ought to have a budget set aside for registration and more importantly, an action plan to ensure that the right intellectual property are selected for registration, that the registrations are managed properly and within the budget.
Registration Action Plan
Many Malaysian companies approach intellectual property registration in a haphazard manner, which may result in: IP not being registered in the right places, the wrong IP being registered, the right IP not being registered, etc. In order to maximize the results of a registration exercise, the company should work on a registration action plan that should include among other things:
A listing of all IP owned by the company (an IP audit will reveal this). This list should classify the IP into categories of importance; those which are most important (the so-called Strategic IP) should be registered first and registered in all the countries where the company will exploit the IP.
Rationale for registration – why do you want to register that particular IP? Registration is typically used to protect a company’s IP assets and revenue stream by making that IP exclusive to the company. However, some companies may use IP in a more aggressive manner, e.g. to block a competitor’s technology development, or to gain business leverage to negotiate with bigger companies.
A cost benefit analysis – is the cost of registration and maintenance of that registration justified by the commercial returns from that IP? Revenue forecasts for the IP should be compared against the registration costs.
An obsolescence analysis – seeing that the registration process can take years, the lifecyle of the IP ought to at least outlast the time it takes to obtain the certificate of registration. For example: in the textile industry, it is not feasible to register every textile design when the customer trends change in the short term, and by the time the registration is completed the design may be out of fashion. That is, unless you have a classic design which survives for many years.
Roll out strategy – the decision on where to register should be linked to the company’s export and expansion plans. Registration should be effected first in those countries where the company is going to export to shortly and in the major economies.
Protection Without Registration
While registration plays an important role in protecting your intellectual property, there are some situations where protection can exist or should exist without registration. A classic example is in the food & beverage industry, where recipes are jealously guarded and may be handed down a family for generations. The Coca
Cola formula, which has remained a trade secret for over a century, is one of the best known cases.
The decision on whether to keep something a trade secret usually depends on how well the secret can be kept. If the product can be easily ‘black-boxed’ and difficult to reverse-engineer, you may be better off keeping it a secret rather than apply for a patent over it (assuming it is patentable) and disclosing the product to the world.
The second major example of IP protection without registration is copyright. Copyright is one form of IP that exists without registration, yet it is an important and valuable right especially in the software and entertainment industries. Because there is no registry for copyright works, the method of claiming copyright ownership in Malaysia is usually by way of a statutory declaration.
Protecting your IP can be a complex issue, yet it is a vital early step in the entire chain of managing your IP. The next instalment will progress onto the issue of commercializing and making money from intellectual property.