Surfing retailer Tony Reid knows thing or two about the need to identify and protect intellectual property. Reid has been in business at The Longboard Shop on Auckland’s North Shore for 10 years. During that time he has registered two trademarks, brand name, an online domain name, has been required to seek iwi permission to register intellectual property, and has had his customer database stolen.
“I was sending custom orders to manufacturing supplier who then kept all the customer details. When I stopped stocking that supplier’s product, the supplier sent letters to my customers suggesting the customers work with them directly,” says Reid.
He reckons the intellectual property (IP) attached to his small business includes industry knowledge he stores in his head – which may later be saleable on consultancy basis or if used in video, guide manual or book – his longboard trademarks, ‘Moki’ and ‘Atlas Woods’, and the brand name and goodwill of The Longboard Shop
And he’d be right. According to IP lawyers interviewed for this article, IP takes several forms and may be of immediate or potential commercial value to business – or almost no value at all. What matters are that business knows what its IP is and what category it falls into to prevent missing future commercial opportunities or protect something already of value.
Reid says registering his trademarks was straightforward but he resented the requirement to seek iwi permission for use of the trademark ‘Moki’.
“There was an assumption that Moki was exclusively Mori word. It can also be combination of Morris and Kiko, the diminutive for Francis in Spanish,” says Reid.
However, he says registering his trademarks was important, particularly in retrospect: he has since received phone calls from longboard buyers advising him of sellers claiming to have Atlas Woods ‘replicas’ for sale.
“IP needs [legal] protection because of reduction in the power of common law,” says Reid.
IP infringements
Along with the need to identify and protect IP is the need to enforce legal rights if IP is infringed – process easier said than done.
Take counterfeits. Rupert Gamlen, senior investigator for the New Zealand Customs Service says Customs conducted 683 IP rights investigations in 2005 compared with 410 in 2003 – 50 percent increase over two years.
He says the reasons for that include increased lodgment of trademark and copyright notices (lodged with Customs by rights owners for fee) leading to more goods being detained; greater awareness by rights owners of the potential damage of counterfeit; public demand for branded goods, and an increase in the number of Customs inspections staff.
“The more you look at the more you find,” says Gamlen.
Reid says counterfeits in the surf industry include clothing labels like Billabong, Quicksilver and Rip Curl, and surf videos and DVDs.
“Some countries don’t care about intellectual property rights and most [buyers] either don’t realise what’s going on or couldn’t care less. People want cheap. It’s social comment with an economic outcome,” says Reid.
Gamlen says Customs presently has 1288 individual notices covering 729 different New Zealand signs and trademarks and 83 notices relating to copyright works.
The most commonly counterfeited goods in New Zealand are clothing, pharmaceuticals – apparently fake Viagra is doing roaring trade – memory sticks and computer mice. Counterfeiting has commercial implications, but can also be safety hazard, says Gamlen.
“In some countries there are counterfeit blood transfusion kits and fake car parts. When helicopter crashed in New Zealand few years ago it was found that the rotor on the back was counterfeit part,” says Gamlen.
Getting the team IP savvy
Before businesses go down the track of registering patents, designs, trademarks and logos, they first need internal processes in place to identify and trap potential IP before it leaves the organisation. This requires internal systems that reward internal reporting of innovation, says Reagan Ell, an IP solicitor for Chapman Tripp.
“Education can be at broad level so staff stop and think ‘maybe this is new trademark or design we could have copyright on’. The process that follows could be as simple as the staff member knowing who to go to, to talk about IP,” says Ell.
Earl Gray, an IP partner for Simpson Grierson, says it also pays to keep close eye on who owns the IP rights to work done by consultants and contractors. The verbal and written contracts between contractor and commissioning company are important, he says. Organisations that sell or license IP rights should also tread carefully.
Gray gives the example of business that invents new indicator assembly for car then provides an exclusive licence for its use to Korean car company without thinking about how the indicator could be used in other vehicles like boats.
“If the business remembers to limit the IP rights it grants, the Korean company might only be able to use the indicator in cars,” he says.
Discovery and decision
Once IP is identified internally, organisations can decide whether it is worth the cost and effort of protecting legally.
Silke Radde, policy analyst on the IP team of the Ministry of Economic Development, says rather than patent new product, it may be better and cheaper to rely on being first into the market.
She says IP like software sometimes has limited shelf-life before technological advances may make the original design redundant, and asks businesses to balance the benefits and risks of registering IP – for example, seeking patent protection for trade secret would result in the invention being disclosed to competitors.
Gray says while IP delivers considered building blocks towards better profitability, like any asset it is only of value if it’s valuable.
“My valuable IP is whatever makes me more profitable; like brand name or customer database,” says Gray.
Similarly, if an organisation has 40 different sub brands, it should work out whether it is cost effective and valuable to register them all. Gray says strategy for IP protection comes down to individual businesses and decisions. Some – The Warehouse and the ASB Bank are recent examples – will invest in the relaunch of brand or logo and then follow that up with renewed trademark and brand protection “just in case”.
Acts and oddness
Lawyers have the basics of IP law and practice “locked and loaded”, but for the average manager, understanding the scope of IP and developing sensible IP policies for staff to follow can be likened to trying to hold water in your hands. If you think this is little exaggerated, what do you know about the Plant Variety Rights Act 1987?
“This protects newly discovered or bred varieties of plants. If someone breeds new apple variety, the breeder may be able to get grant of plant variety rights,” says Charlotte Henley, solicitor for Kensington Swan.
So IP, normal and strange, is everywhere. But what happens if you protect IP and it changes slightly? What if someone uses it in another country? And what can you do to protect copyright in the digital age? For the lowdown on copyright issues see the box story “The copyright conundrum”.
In practical terms, people can be reminded of who owns copyright by copyright notice placed on the original work.
While such notice isn’t legally necessary to establish copyright, it does act as useful reminder for those who don’t want, or intend to, infringe copyright. Copyright owners can also use IT tools to help prevent the infringement of copyright work published online.
Businesses also need to watch original material doesn’t change over time and render IP unprotected, say the lawyers. However the amount that IP can morph and still be protected is debated. Radde says the Trademarks Act 2002 does not allow trademark registration to be changed or otherwise modified, while Henley says major changes require re-registering, but very slight changes to trademark
