Intellectual Property: Protect your great ideas when going global

Intellectual Property (IP) protection can help you establish your position when entering markets around the world. Research into trade mark activity tells us that businesses with a trade mark are more likely to become exporters, and, after filing a trade mark in an export market, they perform better, That’s why IP should be considered early to protect your business and your products.

Take Huskee for example. Huskee is a designer of reusable coffee cups and has created an innovative, reusable product that is changing the way take-away coffee and disposable cups work. Huskee’s intention is to enable sustainability within their industry, not just through the product they create but within the systems used to create it.

The product is made primarily from recycled husks of coffee beans, a by-product of processing that would otherwise be discarded by growers. This is a waste material which can only be manufactured in certain countries. ‘We’re manufactured in China, we’re designed in Australia but we are selling to over 70 countries now, so we have gone global very quickly’.

Huskee considered early on how to protect its brand and product design in overseas markets, with trade marks and design registrations.

IP is a valuable asset that can support you when doing business overseas. It’s important to remember that an Australian patent, trade mark, design or plant breeder’s right does not secure your rights outside of Australia. Like Huskee, you should consider IP protection in countries where you plan on doing business, including manufacturing and selling products online.

You can hear more from Adrian and Saxon from Huskee about their IP protection journey and how they have gone global with their products on the IP Australia website.

Where can I find out more?

Visit IP Australia’s website to learn more about taking your business global. You can also read more about the common challenges for exports and what considerations you should take when it comes to IP protection overseas.

If you need help specific to your business or situation, it is recommended you seek advice from an IP professional.

Intellectual property protection: Idea to international success

Before you think about exporting, it’s important you have a solid intellectual property (IP) foundation for your business.

Wheely Bug have been in operation since 1995. The Australian designers created the multi award winning ride on toy for children and toddlers at the cusp of walking. The bright and friendly designs are unique and promote gross motor skills.

Considering IP early was an important part of the businesses strategy, to protect its designs and products. The businesses instant success in a domestic market encouraged them to start exporting in 2000. The business expanded into a workshop with 5 employees in order to make 1000 ride on toys per month. By 2004 demand was so high that they expanded their manufacturing overseas to a US owned Chinese factory. Despite this global success, their headquarters remain in Cairns.

‘I think to have an I think to have early and well-protected strategy for your own designs is very important because that’s what you have. This is your product.’

It’s important to remember that an Australian patent, trade mark, design or plant breeder’s right does not secure your rights outside of Australia. You should consider IP protection in countries where you plan on doing business, including manufacturing and selling products online. It’s also important to ensure you are not infringing the IP rights of others in your countries of choice.

Discover more about Wheely Bug and its IP and exporting journey on the IP Australia website.

Where can I find out more about IP and exporting?

Visit IP Australia’s website to learn more about taking your business global. You can also read more about the common challenges for exports and what considerations you should take when it comes to IP protection overseas.

If you need help specific to your business or situation, it is recommended you seek advice from an IP professional.

Commercial agreements with commercial partners

When you trade beyond the borders of your country, you will encounter issues that are unique to the global trading landscape. Taking a proactive approach, particularly considering the types of commercial agreements that will need to be put in place with your international partners, can put you one step ahead. Each business and each commercial transaction is unique. This section introduces the different types of commercial agreements that may suit your business needs.

What is an agreement?

An agreement or a contract is essentially an understanding or arrangement between two or more parties (either individuals or entities) that sets out the respective rights and obligations of each party within the transaction.

Agreements form the backbone of business arrangements and transactions. The key to getting an agreement right is to ensure that the agreed position is clearly documented and suits your business needs (e.g. does it allow your business to do what your business wishes to do) and to control or minimise your risks (e.g. which party will cover claims and losses when things go wrong).

Setting out or negotiating these details at the outset are crucial as they can make or break a deal. It is also important that the terms are set out clearly and in an unambiguous way so that each party clearly understands their rights and obligations as well as the expectations of the other party.

There usually isn’t a one size fits all agreement, and it is generally recommended that each agreement be specifically drafted and tailored to your particular circumstances and transactions.

Types of Commercial Agreements

There are several types of commercial agreements, and each serves a different purpose.

Confidentiality Agreements

If you are planning to discuss confidential information with potential business partners, investors, manufacturers or customers, it would be prudent to enter into a confidentiality agreement (or non-disclosure agreement) with them prior to the disclosure. A confidentiality agreement may be unilateral (where the confidentiality obligation is on one party) or mutual (where both parties are required to keep the disclosed information confidential). Confidential agreements can be particularly important in circumstances where trade secrets, new technologies and commercially sensitive information (such as client lists) are disclosed.

In preparing confidentiality agreements, it is important to clearly define the confidential information that is to be disclosed and how it may be used by the other party.

Manufacturing Agreements

Manufacturing of products are often outsourced to a third party given that businesses often do not have the capacity or funds to manufacture in-house. In these circumstances, having a manufacturing agreement in place which clearly defines the rights and obligations of the manufacturer is crucial. Manufacturing agreements can often be complex but should cover all aspects of the transaction from product specifications and material procurement to payment and delivery. It should also include terms in relation to consequences of product defects or failure. It is also essential to include terms which govern and restrict the use of a particular design or IP.

Supply and Distribution Agreements

Supply and distribution agreements commonly arise in circumstances where a supplier or manufacturer engages a distributor to sell their products at a wholesale or retail level. This often involves the distributor purchasing products from the supplier or manufacturer and reselling these products. Such agreements can be exclusive (where a distributor is granted the right to be the only seller of the products) or non-exclusive (where there are multiple distributors of the same products), and be restricted to a particular geographical area or customer channel. For exclusive supply and distribution agreements, it is particularly important to include key performance indicators and the consequences of not reaching those targets, such as termination, or conversion of the granted rights to non-exclusive.

Intellectual Property Assignment and Licence

If you have purchased or sold a business with IP assets, or engaged someone to create a product or certain material for you, an IP assignment may be needed. An IP assignment is used to transfer ownership of IP rights (such as trade marks, copyright, designs and patents) from one party to another.

If, however you have permitted someone to use or exploit your IP but not transferred the ownership of your rights, a licence agreement may be appropriate so that you remain in control of your IP. For example, provisions of trade mark licences will often be included in manufacturing or distribution agreements to allow the manufacturer or distributor to use the trade marks to manufacture or promote products. However, ownership of the trade marks will remain with the original owner.

Consultancy Agreement

Businesses often engage consultants with specialist knowledge or skills to assist with a particular project or business need. This arrangement can be formalised through a consultancy agreement which covers, amongst other things, the scope of services, deliverables and IP property created by the consultant. If this aspect is not covered, under the laws of some countries (such as Australia) ownership of such IP will stay with the consultant.

Importance of a Written Agreement

While agreements can be verbal or written, it is best practice to have a written agreement in place for certainty. A written agreement will clearly outline what has been agreed to and the obligations of each party. A written agreement would also give you something concrete to rely on should a contractual dispute arise.

Enforceability and Local Requirements

If your business arrangements extend beyond Australia, it is important that your dealings and agreements also comply with the local laws and regulations of the foreign jurisdiction. It is recommended that local advice is sought given that local laws and regulations between each country are often quite different to Australia. Legal issues regarding import/export controls, IP and tax law are especially important.

Conclusion

Having appropriate commercial agreements, especially with international business partners, will help you run your export business smoothly and with more certainty. Putting an agreement in place prompts you to consider the specific details of your commercial arrangements and assist with risk management.

This article is written by Sylvie Tso, Principal at Spruson & Ferguson.

Intellectual property rights for online platforms

Online platforms are an important venue for selling products, particularly when the buyer and seller are based in different countries. While approved distributors may use online platforms, they are often a venue for parallel importers, those in the second-hand market and, of course, for those who sell counterfeits of infringing products. For this reason, it is important to be aware of the online platforms that are being used to sell products of interest.

An online platform can provide a means of obtaining evidence of IP infringement (or confirming that such evidence exists), including by means of making trap purchases, which may also serve to identify the seller once an invoice is generated or any additional documents are supplied. If infringement can be established, the infringer may then be pursued by conventional legal means in the country where the infringement has occurred.

In addition to any available enforcement mechanisms under conventional legal processes, online platforms usually have their mechanisms for resolving disputes that can often be faster and more efficient. Many of these dispute mechanisms have come about because they provide platforms with protection from liability for IP infringement in the United States in the wake of the US Digital Millennium Copyright Act (DMCA). While the DMCA is a United States law, and the same protections do not apply in other countries, including Australia, these mechanisms can provide a useful, quick and inexpensive means for IP rights holders to address infringing acts. Where an infringer relies on an online platform to sell counterfeit products into a particular country, especially where the infringer seeks to remain anonymous, a series of reports of infringements to the platform may be enough to put a stop to the activity even where the infringer tries changing identities.

By way of example, if an online seller using the Amazon Australia platform offers a product for sale that infringes an Australian patent, it is possible to have the offending listing taken down overnight with a simple online report, citing the patent number, the claims alleged to be infringed and why such claims are infringed by the listed product. However, each platform will have different requirements and may require additional proof, and some countries with pro-parallel importation policies (and corresponding laws) may challenge such reports if they consider that the selling activity is legal in their country, even if it would not be legal elsewhere.

Some online platforms do not investigate whether claims of infringement are correct before taking down a listing based on a report of IP rights infringement. Sellers who wish to keep their identities secret may be less motivated than those whose identities are public to challenge the removal of their listings. Nonetheless, it is important to be in a position to justify any claim of infringement in the event that the seller challenges the removal of the listing.

Online platforms are usually regarded as mere conduits for the conduct on their platform, which, depending on the IP right and the country involved, may be sufficient to shield them from liability. However, if the platform acts as more than a mere intermediary, this may change. In an Australian case (the Redbubble case), Redbubble was held liable for trade mark infringement and would also have been liable for copyright infringement (but for the failure of the applicant to demonstrate its ownership of the copyright at issue) because it exercised control over the creation and sale of the products on its website. In a given case therefore, it may be possible to take action against the online platform.

Conclusion

There are many things to be mindful of when using online platforms to sell your products and it is important to note not all legal protections apply in every country. Seeking professional advice at an early stage insures that you are aware of any potential complications that may arise. Please contact our IP experts at Spruson & Ferguson should you require any assistance.

This article is written by Lucy Hartland, Senior Associate at Spruson & Ferguson.

Intellectual property barriers and enforcement overseas

Exporting products or services is a goal of many business owners. However, those that do export rarely ever speak of an incident-free journey to market. Some major incidents are the result of issues with intellectual property (IP), including with branding/trade marks, domain names, copyrighted images and written works, patented products and processes, and registered product designs. Therefore, it is important to conduct searches in the intended export market, and ensure your IP is protected and enforced.

IP Barriers to Marketplace Entry

Before using a trade mark, innovative technology or product design in a foreign country, it is recommended that searches be conducted to ascertain whether the trade mark, innovative technology or product design is, in fact, available for use (and registration) in that country. Searches of national IP databases should be conducted. With respect to trade marks, searches of trade marks used in the marketplace for which registration has not been sought should also be carried out.

It is possible that use of the trade mark, innovative technology or product design may infringe earlier patent or design rights belonging to a third party. Unauthorised use of a trade mark (including one that is deceptively/confusingly similar to a registered trade mark), patented invention or registered design may amount to infringement and render the user liable for costs.

Searching is a specialised task, and it is recommended that searches be carried out by competent searchers, and the results analysed by qualified patent or trade mark attorneys.

IP Enforcement

A solid first step to IP enforcement is to mark your goods/ processes/services with your registered IP rights – e.g. Patent Pending, Patent No, TM, ®, Registered Design. In this way, it will be harder for a third-party to claim that they were unknowingly infringing.

A second step is to monitor the marketplace for infringement and to act against infringers. If not, then it may be more difficult (if not impossible), and expensive to stop the infringement. Normally, letters of demand are sent to infringers, to ‘cease and desist’.

Failure to enforce your trade mark rights may result in other traders obtaining registration of the same or similar trade mark which may lead to your trade mark being unenforceable and/or there being a limitation on the recovery of costs for infringement.

Conclusion

IP laws vary from country to country and are constantly changing. There are many traps for the unwary, and valuable IP rights may be lost inadvertently. It is advisable to seek professional advice from a patent and trade mark attorney at an early stage. Please contact our IP experts at Spruson & Ferguson should you require any assistance.

This article is written by Gint Silins, Principal at Spruson & Ferguson.