The importance of securing and protecting intellectual property (IP) rights often only becomes apparent for Malaysian exporters when it is too late, i.e. when faced with an infringer or when an infringement suit has been filed against them. Such problems usually arise because of the lack of awareness of the value and importance of IP rights and the role they play in modern day commerce. When planning their export strategy, many exporters either omit the step of protecting their IP rights abroad or list it as the last step in their strategy.
This article intends to raise awareness among Malaysian exporters on the methods and importance of securing their IP rights abroad, how to ensure exporters' products do not infringe the IP rights of third parties and how exporters can even gain additional revenue streams by exporting their IP without the accompanying product.
DO NOT UNDERESTIMATE THE IP RIGHTS IN YOUR PRODUCT
IP subsists in almost every aspect of a product. There is IP in the packaging of the product, in the know-how and technology behind the design and manufacture of the product and in the labels and booklets accompanying the product. If these IP rights subsisting in the product and the trade name are not protected, unnecessary costs and risks could threaten the company's survival or the sales of the product in the overseas market.
TIMELY ACTION REQUIRED
If the product is successful abroad, it is likely that another party would manufacture a similar or identical one and try to make a profit. Or if the exporter advertises extensively abroad and their trade name becomes well known among the locals, another party may attach the exact or similar name onto their products, thus taking an unfair ride on the reputation of the trade name. Without IP protection, it would be time-consuming and more costly to stop these offending acts, if at all possible. In some cases, it may be too late. For instance, when an invention is exhibited or sold abroad prior to any application for patent rights in that country, the early disclosure results in loss of novelty, one of the criteria for patentability of an invention. This would render the invention non-patentable and the exporter would have lost 20 years of potential monopoly on that invention. Exporters should adopt the golden rule in IP - apply for IP rights before the product is introduced into the market and NOT when the product is successful and infringers have appeared.
To avoid the possibility of infringing the rights of other parties abroad, exporters can conduct a search on the database of registered trademarks, patents and industrial designs in the country they intend to export their products to. A search for trademarks, industrial designs and patents will reveal whether a similar brand name, industrial design or invention exists. As IP rights are strictly territorial, a search should be done in the national IP office or the regional IP office, if the country has one. The search report from the IP office assists in determining the availability and registrability of a trademark and industrial design and the patentability of a product.
If there is a similar trademark, the exporter can change his mark and then distribute his products to the overseas market. For patents, if there is a similar granted patent or industrial design registered, the exporter should consider exporting his product to other countries where a similar patent or industrial design did not exist. Alternatively where possible it should innovate upon its product further to enable it to be patentable or design registrable. Exporters should seek the professional advice of patent agents in this respect, as the issues concerning the patentability of innovated products are quite complex.
ISSUES TO CONSIDER WHEN CREATING A TRADEMARK
In the case of trademarks, care should be taken in choosing a name that is suitable in relation to the country the products are being exported to. What may be a meaningless word in Malaysia may be an offensive word abroad. Or the word may be unpronounceable to the people of that country.
Also worth considering is whether you should register your trademark in its translated version, i.e. in the local language as a preemptive measure against the infringement of your trademark. A good example would be one global giant in the beverage industry registering "ke kou ke le", the Chinese version of their famous trademark in China, while Nestlé has a Chinese version of the "KIT KAT" mark.
Starbucks could have avoided unnecessary legal expenditure had they registered the Chinese version of their world famous trademark. Their mark was infringed in China by a local coffee chain, which was using the mark "XINGBAKE". The word "XING" means "star" in Chinese and the word "BAKE" sounds like "Buck". Fortunately for Starbucks, the Chinese courts ruled in their favour at the end of the two year legal battle.
Exporters need to carry out appropriate research before creating a mark for the overseas market. A mark which is not descriptive of the products it applies to in one country may be descriptive in another country. Whether a mark is descriptive depends on how the term is understood by the traders in the same course of business or consumers of the specified products. A recent case in Spain is an apt example of this. There, the mark 'MATRATZEN' was allowed registration for mattresses and related products despite the fact that the word 'Matratzen' means mattresses in German and was not allowed registration in Germany.
PROTECTION OF COPYRIGHTS
There is an almost global protection for copyright work. In most countries, including Malaysia, registration is typically not required and copyright subsists in the work in its expressed form. Ultimately, copyright protection depends on national law. Before publishing a work abroad, one should investigate the scope of protection available, as well as the specific legal requirements for copyright protection in countries in which protection is desired.
IP RIGHTS IN LICENSING, FRANCHISING & JOINT VENTURES
Securing IP rights abroad enables the owner to generate more income from the IP. This is done through the execution of licensing, franchising and joint venture agreements, which gives rise to the owner authorizing a third party to either use their registered trademark/service marks or allow them to manufacture and distribute their products for a royalty fee. As a result, companies earn additional profit while retaining ownership over their inventions, innovative designs, creative works or trademarks. Owning IP rights also gives greater leverage and bargaining power to companies in negotiating deals with other companies or individuals.
OWNERSHIP OF THE IP RIGHTS
Another important aspect of securing IP rights overseas is the issue of ownership of IP rights in a country, which is often overlooked. The importer, distributor, joint venture partner or franchisee often registers the IP rights under their own name as though they own the IP rights. Care should be taken in all agreements with foreign parties to ensure all IP rights subsisting in the product and any improvements/innovation in the product belongs to the Malaysian owner. Exporters need to ensure that their IP rights are not 'hijacked' by their foreign distributor, franchisee or joint venture partner. The Author is personally aware of a case whereby one of the Malaysian distributors of an Indonesian manufacturing company had applied to register the manufacturer's mark in Malaysia despite the fact that ownership in the mark belonged to the Indonesian manufacturer.
ENFORCEMENT OF IP RIGHTS
Mere attainment of IP rights in a foreign company alone is not sufficient. Third parties may often adopt the IP rights without the consent of the owner. Therefore Malaysian exporters need to put in place appropriate measures or extract obligations from their distributors to ensure that there is close surveillance on any infringement or misappropriation of IP rights in the market place. Bear in mind, mere registration of trademarks, industrial designs or patents is not an end in itself. The foreign government is not obliged on its own to monitor any infringing acts; it provides the legal framework under which offending parties can be sued or prosecuted. It is ultimately the responsibility of the IP rights owner to keep surveillance in the market and take the necessary action in a firmly manner.
Prompt action taken when the offending acts are first committed leads to favourable results, often with little costs. Delayed action can be detrimental to the owner of the IP rights as the offender may then find it worthwhile to challenge the validity of the IP rights.
ESSENTIAL STEP IN EXPORT PLAN
The recognition of IP rights subsisting in a product and planned efforts to secure valid IP rights in foreign countries are necessary to obtain enforceable rights. The selection of countries and identification of IP rights to secure must be an integral part of a company's production, marketing and distribution strategies. It should not be an afterthought or last ditch marketing effort. Unfortunately, the laws of all countries do not give the advantage of testing the market before applying for IP rights, so instead, the application of IP rights has to be done at the beginning of the export strategy or even earlier.
Note: The trademarks identified in the article belong to their respective owners. The Author does not claim any proprietary right whatsoever; they are used merely for educational purposes.
| Kandiah P, Managing Director of KASS International, has been practicing in the area of Intellectual Property Law since 1987. He has been identified as one of the most highly-acclaimed legal experts in the Intellectual Property field in the Asia-Pacific region by the Asialaw Leading Lawyers survey (2007-2009). |  |
