INTELLECTUAL PROPERTY 2009

Baldwins Intellectual Property is a leading New Zealand patent attorney firm specialising in intellectual property and its management. We work with New Zealand and global businesses to achieve and maintain commercial advantage in the marketplace by protecting, developing, commercialising and enforcing intellectual property assets. trade@baldwins.com        Traditional thinking has been that intellectual property creates a defence against competitors.  However, developing an intellectual property portfolio can also serve as a competitive strategy to win market share. The uniqueness of the product, service or process on offer is at the heart of trading success and should be an integral part of the business strategy discussion. Specific to Importers and Exporters Legislation: NZ vs. other countries Intellectual property regimes are defined at national and in some instances regional levels (such as the E.U.). Differences in legislation can occur in fundamental issues such as the criteria for establishing the validity of intellectual property assets, or for example in procedures for obtaining and enforcing IP rights. A case in point would be copyright, which is not a registered right in New Zealand but may be required to be registered in some other countries. Such differences in legislation can substantially impact how IP is exploited, and in turn affect business outcomes. Whether for export or import, a clear understanding of which markets are part of the trade equation is therefore imperative. This will determine the elements, tactics and strategy of the IP portfolio. International IP systems Patent Cooperation Treaty (PCT) The PCT system is a system for filing patent applications in several countries. It allows an applicant to delay incurring the significant costs associated with an extensive filing program. Ordinarily these costs are incurred 12 months after the first patent application has been filed (usually a provisional patent application). However, by taking the PCT route filing costs are delayed until 30 months after the provisional application filing date. NB Interim costs relating to the application may continue to be incurred during this period. The primary benefit of the PCT system is that the additional 18 months may allow an applicant to generate cash flow from the invention to support the ongoing costs of obtaining granted patents in a number of countries. It also allows the commercial strengths and weaknesses of the invention to be better understood, meaning that more informed decisions can be made about whether or not to continue seeking patent protection in certain countries. The PCT system automatically provides an international novelty search and written opinion as part of the process, thereby enhancing the ability to make informed decisions. Madrid Protocol The Madrid Protocol is an international system through which one trade mark application can be filed in all or selected countries that are party to the treaty. New Zealand is still to ratify this treaty. The decision on this is expected to be made by parliament in 2009, and if it is to pass, would potentially mean entry in 2010. While the impacts of accession are uncertain an increase in the volume of trade mark applications coming into New Zealand is a possibility, which would lead to increased competition for New Zealand trade mark owners. New Zealand trade mark applicants would benefit from the system by being able to submit one application for different countries thereby reducing overall application filing costs. To benefit from this system, the home application must be robust and built on a strong mark. Madrid is an alternative, not necessarily a solution, and requires careful consideration in choosing whether or not to adopt it. Foreign market focus: China In April 2008 New Zealand signed the first Free Trade Agreement with China. The agreement incorporates an international intellectual property rights agreement (known as TRIPS), which provides that WTO members maintain basic minimum IP rights regimes. The FTA makes specific reference to China and New Zealand’s commitment to establishing and maintaining transparent IP regimes. The FTA also stipulates the parties’ agreement to cooperate in eliminating trade in counterfeit goods. The entrepreneurial nature of the Chinese market gives rise to serious concerns with  imitation, copies or rip-offs of goods. For this reason, even if China is not a major target market or manufacturing base, as a low-cost producing country it is important to consider obtaining IP rights there. TIP! This paradigm applies to other major countries offering low-cost manufacturing and production facilities. The Chinese IP regime follows different rules to New Zealand for obtaining and enforcing IP rights. For brand protection, the concept of acquiring rights in China is on a “first to file” basis. This is contrary to many Western IP regimes which operate on a “first to use” principle. Without a registered brand avenues for brand protection and enforcement in China could prove extremely difficult. The following is recommended for entering the Chinese market: • Observe, prospect, examine, protect, before even discussing the possibility of a deal with Chinese businesses. The slightest revelation of product, company, or brand information - even from seemingly insignificant sources such as a business card - can dissolve opportunities • Register brands with the PRC Trade Mark office before releasing any information about the product or marketing it in China • Select, use and register a Chinese language version of the brand. Not doing so leaves an opening for the market to create a Chinese “nickname” for the brand, or for someone else to register it in a Chinese language • Register brands in neighbouring countries such as Hong Kong and Macau in the case of eventual expansion, and to prevent others registering marks which consumers may confuse with the one already in the Chinese market. TIP! With the FTA the influx of Chinese-produced goods to New Zealand could rise, creating more competition in the New Zealand market. Key Stages of the IP Process Protection There are a number of ways of obtaining intellectual property rights.  Some rights are obtained by registration, while others are created by statute or arise at common law.  The scope of rights can vary, and each intellectual property asset can be supported by more than one type of intellectual property right. A well-founded intellectual property portfolio is built on identifying and obtaining rights. Though this is the initial stage of managing intellectual property, maintaining protection is an ongoing process. Elements of this stage include: • Ascertaining the validity of an IP asset and whether it can be registered • Identifying the markets in which to obtain rights, and the variable laws among these • Carrying out searches in these markets to determine existing rights and potential conflicts • Managing the application process and seeing this through to grant of the IP right • Watching the marketplace for the development of IP activity and other IP rights. Enforcement To develop and maintain an intellectual property portfolio after obtaining protection, owners of intellectual property rights need to ensure that: • Others do not infringe their rights • Their business activities are not adversely affected by the rights of others. Specific measures exist for safeguarding intellectual property rights, as well as processes to ensure rights are enforced and respected. Various methods for these include: • Watching services • Oppositions • Border protection (see TIP!) • Court proceedings • Alternative dispute resolution - negotiation, mediation, arbitration • Revocations and removals. TIP! Customs notices are an effective tactic for preventing counterfeit goods from entering New Zealand borders. Strategy The real value of intellectual property is exploited when existing and potential future rights contribute to the goals of a business. It is therefore important to regularly review how intellectual property assets fit in to the bigger picture, to re-assess their value to the business, to adjust tactics according to new directions and strategies, and to mitigate risks arising from changes in the business context. The process of strategising and developing intellectual property portfolios is equally driven by the continually changing environments that businesses operate in, as what works today could work differently (or not) in times to come. Intellectual property strategies take into account the commercial goals of a business, its competitive environment, and the technology (if any) behind the intellectual property.  Reasons for developing sound IP strategies are particularly strong when a business is: • Trying to attract funding • Expanding into new markets • Getting ready for sale, merger or acquisition. Methods used in developing IP strategies include the intellectual property audit, due diligence, and portfolio development.  Commercialisation Once intellectual property is protected and developed it is ready to be commercialised and in turn create revenue. As intellectual property is not a physical asset it is easy to lose sight of what happens to it and therefore the commercialisation process needs to be carefully managed. Written agreements for different situations should be entered into wherever possible and the following should always be documented in writing: • Transfers of intellectual property rights from one party to another • The limits on licences granted to other parties to use intellectual property rights • Coexistence arrangements relating to intellectual property • The settlement of disputes involving intellectual property. A broad range of agreements related to the commercialisation of intellectual property rights include: • Memoranda of understanding • Letters of intent • Licences • Assignments • Non-disclosure agreements • Research and development agreements • Technology transfer agreements • Product development agreements • Franchise agreements • Sponsorship and promotional agreements  • Distribution and merchandising agreements • Manufacturing agreements • Commissioning agreements • Joint venture agreements • Software agreements and licences • Hardware agreements • Out-sourcing agreements • Website development hosting and indexing agreements • E-commerce and internet-related agreements • Shareholders agreements.

Practically Speaking Obtaining IP rights If I can’t get IP rights in NZ can I get them elsewhere? This depends on the type of IP as well as the country in question, and therefore needs to be assessed on a case-by-case basis. If IP cannot be protected or enforced in New Zealand, this does not automatically mean it is the case in other countries. Can I get a worldwide patent / trademark / design registration? There is no such thing as an IP right which is granted for the whole world as a single region. There are, however, systems through which an application can be filed in several countries in conjunction, though the application will be examined separately by the authority in each country and therefore the right will be granted for each country individually. Examples are the PCT system for patents and the Madrid Protocol for trade marks. What to watch out for Disclosing ideas An important factor in determining the validity of certain types of IP is whether parties or individuals not involved in developing the innovation know about its existence, or have received and/or used information about it. This is of particular relevance to patents and designs. In other words, for IP rights which have yet to be obtained precautionary measures should be taken before publishing material related to the invention or before exploring related ideas with third parties. Managing your own trade mark applications IP owners have the possibility of submitting trade mark applications directly with the Intellectual Property Office of New Zealand, independently of a trade mark agent or attorney. Users of this system should pay attention to the following: • To ensure that the scope of protection is sufficiently broad in terms of classes of goods and services. In addition to the ‘core’ classes in which the mark is used, owners should consider extending the filing programme to include ancillary classes of goods and services • To remember to renew the rights before they expire. This is the responsibility of the owner or the agent and it is not the duty of the Intellectual Property Office to remind trade mark owners when they need to do this • To watch the market for developments which may adversely affect the rights of existing owners • To not infringe the existing rights of others potentially resulting in costly repercussions. That in the event of selling the business, prospective buyers may place great importance on the above having been handled with strict professional diligence. TIP! In the interest of safeguarding the value of IP it is best to seek advice early, rather than later to rectify a situation. How much will it cost? The range of services for different stages of the IP process is extensive. Some fees are set by the system (the examining office) where other variable costs depend on the involvement of professional services. The main branches of services include searching, applications, examination, acceptance, registration and renewal of rights, as well as commercial and dispute resolution / litigation work. Each of these are groups of services, the demands of which vary according to the type of IP, the market in question and the complexity of the case. Although established firms define a schedule of fees, due to the combination of these variable factors there is no set of standard costs which can be applied to all cases. That said, professionals are required to provide clients with an estimate of costs prior to commencing work, and furthermore to advise clients of significant changes in these costs as they may occur while work is in progress. As an example of cost variances, filing a patent application in New Zealand can range anywhere from $2,500 to $10,000, if not more. Or, a trade mark agent’s fees for filing an application for one mark in one class might be $600 but not include fees for filing in supplementary classes, nor for the cost of searches and opinions on availability – both of which can determine whether or not to actually proceed with the application in the first instance. TIP! There is no flat rate for “any and all IP charges or patent attorney services”. Engaging in the IP process can be a costly undertaking and is why establishing the viability of your IP asset and the potential returns it can bear, is vital. Hence the importance of including IP in the business strategy discussion. If I don’t have the expertise for managing IP in-house, who can help? Why patent attorneys? New Zealand patent attorneys are registered professionals who have passed rigorous examinations to demonstrate their ability to argue technical and scientific knowledge and innovations. Patent attorneys are registered to advise on all types of intellectual property, not just patents. However, their individual area of expertise is formed by advanced academic qualifications, along with extensive practical experience through which they have developed a depth of industry knowledge and legal experience. What will patent attorneys do for you? Patent attorneys advise businesses and individuals on appropriate courses of action for navigating all stages of the IP process including protection, enforcement, strategy and commercialisation. TIP! Established patent attorney firms work with a network of international IP experts specialised in their own markets and country legislation, which enabes the provision of prompt, current and reliable advice to local clients. What next? Once it is all in place – the rights are obtained, they are enforced, and the assets are bearing a return, then what? Keep innovating! The IP system was developed on the premise that fostering intellectual property is for the benefit of society and its progress. As a country, New Zealand needs this and relies on businesses and organisations to cultivate innovation. Intellectual Property Types This section describes the main types of intellectual property rights as defined in New Zealand. This is a brief overview, and greater details on the terms and duration of these rights can be found in a range of existing resources. Please also remember these rights can be defined differently in other countries. PATENTS A patent protects an invention. This is defined as a product of human ingenuity that has useful or commercial application. An invention must be new and not be obvious. Examples of inventions that can be patented include: a method of preserving food, a building component, a system for interactive wagering, a water trough, a fastening device, an extract from a plant and a concrete mixture. TRADE MARKS A trade mark is a sign which distinguishes the goods or services of a business from those of other traders. As well as acting as a “badge of origin” trade marks also fulfil important guarantee, advertising and promotional functions. A trade mark may comprise a word, logo, slogan, numerals or any other sign. Sometimes even a shape, sound or smell can act as a trade mark. Trade marks are valuable business assets and are the foundations on which strong brands are built. COPYRIGHT Copyright protects original literary, artistic, musical and dramatic works. Literary works include books, brochures, labels, software (including both source and object code), multimedia and computer databases. Artistic works include films, photographs, sketches, plans, drawings, packaging and three-dimensional models. DESIGNS Registered designs protect novel features of shape, configuration, pattern or ornamentation which appeal to the eye and are not dictated solely by the function of the article. Registered designs are available for three dimensional articles such as consumer products, and for two dimensional articles, such as wallpaper, textiles and packaging.  An application for a design must be made before the design is used or shown to others.   DOMAIN NAMES Domain names are the means by which people can locate information about organisations and products on the Internet.  As a valuable business asset they should be protected. There are two main types of domain name: generic Top Level Domains (gTLDs), such as .com and .biz, which reflect an international presence; and country code Top Level Domains (ccTLDs), such as .nz and .uk, which reflect a presence in, or association with, a particular country. PLANT VARIETY RIGHTS A plant variety right protects a novel plant variety. The holder of a registered PVR has the exclusive right to sell seed or reproductive material of the new variety or to license others.  The plant variety must have at least one characteristic that distinguishes it from other publicly known varieties.  Examples are novel fruit, a distinctive flower, unique leaf shape or improved disease resistance. CONFIDENTIAL INFORMATION AND TRADE SECRETS Confidential information and trade secrets are information and materials which are deliberately kept out of the public domain. They cannot be registered but the law protects against unauthorised disclosure (breach of confidence) in certain circumstances, usually where parties have agreed in advance not to disclose the information (non-disclosure agreement or NDA).  Once the information lawfully enters the public domain then it ceases to be confidential information or a trade secret. GEOGRAPHICAL INDICATIONS (GIs) A geographical indication is a name used to identify goods that have a specific geographical origin. The geographical indication acts as certification that the goods possess certain qualities or characteristics.  An example of a foreign geographical indication is Champagne. (NB: As NZ legislation is not yet in force GIs are currently not recognised).