Dynamic Export » IP/Legal

Protecting your intellectual property assets and China

Tony Grujovski — Thu, 24 Jan 2013 23:54:10 +0000

While the potential for company growth in China is very high – making bringing your operations there very attractive – such a move requires (among other things) a considered strategy to protect your intellectual property rights in that jurisdiction.

The improving spending power of China’s 1.4 billion population makes it a prime target for companies around the world who are looking at expansion. While the potential for company growth in China is very high – making bringing your operations there very attractive – such a move requires (among other things) a considered strategy to protect your intellectual property rights in that jurisdiction.

China has a reputation, whether rightly or wrongly for being a haven for counterfeit product. That’s not to say that the government isn’t taking steps to review its intellectual property enforcement laws. But when compared to many other countries, China’s IP laws are relatively new and have only had a much shorter period of time to develop. While good progress has been made in progressing China’s ability to deal with infringers, it may naturally take some time before China catches up in terms of having a robust IP protection regime. This does not mean that applying for IP protection in China is a toothless tiger. China currently has registration-based protective regimes for trade marks, patentable technologies and copyright (something that is missing from Australia’s IP protection landscape). Intellectual property rights can also be protected through the thoughtful application of China’s trade secret and unfair competition laws. Indeed, China does provide significant benefits for those who seek to use its various registration systems to protect their IP assets in China.

Unlike Australia, China’s trade mark registration system works on what we call the “first to file” rule system. Australia (like many other countries) is based on a “first to use” system – this means superior brand rights are afforded to businesses that can show they commercially used the brand first in the marketplace for their particular good or service offering. Just because another business might file a trade mark application first, does not mean the “first user” cannot obtain its own registration or be prevented from continuing to use its brand.

China’s “first to file” system is essentially a first in best dressed approach. First filed trade marks generally have superior recognition under Chinese trade mark, notwithstanding that another business may have used the trade mark first. Such a system requires quick action, lest a rival company registers your brand name first as their own before you do. Even though you may have been operating in China for some time beforehand, you may have to be prepared for a lengthy legal battle to retain your rights to use that brand in that country.

Some handy things to remember about trade mark registration in China (and other IP rights registration) is set out below:

Unless you have a residential address or business address in China, filings must be conducted through registered and qualified agents or attorneys (Actuate IP has a network of such associates in China which it co-ordinates with to file applications for its clients)
Filings will need to be translated into Chinese – these translation costs should be taken into account when considering registered protection in China
If you are looking to register a trade mark in China, remember to also have searches conducted on the translation and transliteration of your trade mark. Sometimes the direct translation may be protected, but the phoenetic transliteration may unintentionally miss out on protection
Also, be aware when choosing a trade mark to file in China, that there are several dialects of Chinese which are spoken in that country (most commonly, Mandarin and Cantonese). The sounds of words in one dialect can differ significantly from another and may lead to unintended consequences for your brand
Always seek to register your IP rights before entering the market in China to maximise your potential for avoiding legal issues
While copyright registration is not compulsory, foreign investors are still encouraged to register with China’s National Copyright Administration in order to establish evidence of ownership. This also grants the owner of the copyright the ascendancy should legal actions be necessary.

IP Protection in China is still a progressing concept but one which China is rapidly developing in line with other countries with more established intellectual property legal frameworks. Nevertheless, China remains one of the most sought-after markets in the world, and if a company is to be globally competitive, it makes good business sense to carefully inspect Chinese intellectual property laws when preparing to enter and operate within that market.

Australian made logo recognised in China

Rhiannon Sawyer — Fri, 07 Sep 2012 04:52:26 +0000

Businesses exporting to China have a reason to celebrate this week with the Australian Made, Australian Grown (AMAG) logo being formally trademarked in China.

The logo, which can be listed on seven classes of goods including pharmaceuticals, food, furniture and beverages, has been legally protected under Chinese law and officially establishes products as being genuinely Australian.

Australian Made chief executive Ian Harrison said, “Historically, China has been a challenging environment for the protection of intellectual property.

“The AMAG logo’s formal registration in China as a country-of-origin symbol for Australia now provides an essential legal framework which exporters can rely upon in the event that the logo (or product carrying it) is copied or used without proper authority.”

The Australian Government supported the registration of the logo in China, with Trade and Competitiveness Minister Craig Emerson stating that this registration confirms Australia’s status as an exporter of quality goods.

“The Government welcomes China’s legal recognition of the Australian Made, Australian Grown symbol and the benefits our exporters will enjoy from additional confidence in the Australian brand.”

The formal registration of the AMAG logo in China follows its registration in the USA. Registration is also pending in Republic of Korea.

SMEs and inventorship disputes

Spruson and Ferguson — Thu, 30 Aug 2012 00:19:09 +0000

In this article we consider the importance for SMEs to identify the inventors of a patent application correctly and steps that can be taken to prevent inventorship disputes.

Resolving inventorship disputes and the ownership of patent rights is very difficult. A US judge once famously commented that “(t)he exact parameters of what constitutes joint inventorship are quite difficult to define. It is one of the muddiest concepts in the muddy metaphysics of patent law…”. As the Australian Patents Act provides that a lack of entitlement is a ground for opposing the grant of a patent or for having a granted patent revoked, an SME considering filing a patent application is well advised to establish its entitlement to the grant of a patent from the outset and before any patent application is filed.

The Patent Act provides that a patent for an invention may only be granted to (i) the inventor, (ii) a person who, on the grant of a patent, would be entitled to have the patent assigned to it, (iii) a person that derives title from persons listed under (i) and (ii) above, or (iv) the legal representative of a deceased person mentioned under (i), (ii) or (iii). A patent applicant may derive entitlement to the grant of a patent from an inventor by virtue of (i) assignment or (ii) an employer/employee relationship between the patent applicant and inventor.

Assignment of Patent Rights

Patent rights are personal property and as such are capable of transfer by way of a written assignment. For example, where an invention is created by an independent contractor upon instructions from an entity, an assignment in favour of the entity will be required to transfer the rights in the invention from the independent contractor.

Employer/Employee Relationships and Ownership of Patent Rights

The Patents Act does not include any specific provisions directed to the entitlement of an employer’s rights in inventions devised by its employees. Rather, an employer’s rights are governed by Australian common law. The general rule is that an invention made by an employee in the course of the employee’s employment will belong to the employer.

When determining entitlement in employer/employee relationships it is necessary to consider all circumstances surrounding the relationship. That includes aspects of the employee’s contract of employment, the position of the employee with the employer and whether time and materials of the employer were used in developing the invention. Where an employee’s duties do not normally include inventing, problem solving or the like, that factor will weight against the employer having any entitlement to the invention.

Practical Steps to Avoid Entitlement Disputes

It is vital that SMEs ensure that their employment contracts with relevant employees and their contracts with independent contractors contain appropriate provisions governing ownership of inventions made during the course of such contracts.

Also, before filing a patent application an SME should ensure that inventorship of the invention is ascertained and that the SME is able to establish its title from all inventors.

André Meyer is an associate with Spruson & Ferguson Patent and Trade Mark Attorneys

Australia and Serbia align to fight financial crime

Carly McKenna — Wed, 01 Aug 2012 23:50:14 +0000

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has signed a memorandum of understanding with Serbia’s financial intelligence unit in an effort to prevent financial crime.

The memorandum, which specifies the terms of the financial intelligence exchange, is a vital step forward in ensuring international cooperation.

AUSTRAC’s exchange of financial intelligence with the Republic of Serbia will assist efforts to track illicit funds across countries and prevent money laundering.

“Australia is involved in millions of international funds transactions each year, so international partnerships are critical in the global fight against money laundering and in protecting the integrity of Australia’s financial system,” said AUSTRAC CEO John Schmidt.

AUSTRAC and Serbia are active members of the Egmont Group, the globally recognised international network of financial intelligence units established to promote cooperation between its members.

The MOUs protect the confidentiality of the information exchanged by the financial intelligence units and ensure that the information will only be used for the purpose for which it is communicated to the foreign country.

The memorandum is the 64^th exchange agreement that AUSTRAC has signed with its foreign counterparts, representing AUSTRAC’s continuing commitment to international cooperation.

Technology: Giving Aussie exporters a competitive edge

Adeline Teoh — Mon, 30 Jul 2012 06:36:43 +0000

Australia likes to think of itself as the food bowl of Asia—or even the world—but there’s so much more to our food industry than container loads of wheat. Technology is giving Australian businesses the edge when it comes to exporting.

We’re often told that we’re a clever nation, yet when we look at the biggest numbers on our international sales ledger, the bulk of what we export might imply that we’re nothing but a quarry and a farm to the rest of the world. Never fear; like the mining industry, the food industry has a counterpart equipment, technology and services subsector that thrives on innovation and is populated by smaller businesses rather than corporations and farm barons.

Exports of good breeding
While Australia’s counter seasonality and diversity of growing environments means our food sector can sell fresh fruit and vegetables to the rest of the world year-round, horticulture is also a relatively lucrative aspect of this type of agriculture, valued at more than $9 billion a year. Our global clients predominantly buy fruit and vegetable seeds and plants, although there is an increasing demand for horticultural intellectual property.

Due to historical water scarcity in Australia, we have a number of drought resistant food plant varieties that are now coming to the fore as the rest of the world begins to experience water shortages. Doug Waterhouse, chief of Plant Breeders Rights at IP Australia, believes developing countries will benefit from these resource efficient breeds as demand for food grows in areas where the yield from traditional varieties cannot keep up.

But it is not just yield that brings in international customers, taste will also be an attraction, says Waterhouse. He cites the Cripps Pink, otherwise known as the Pink Lady apple, as an example of an Australian horticulture export that has become popular worldwide. “Pink Lady is the most popular apple in the world. Every market you see overseas has Pink Lady in it.”

In 1973 Western Australia breeder John Cripps crossed a Lady Williams and a Golden Delicious apple to create the Cripps Pink, which he then registered under the Plant Breeders Rights register in dozens of countries around the world and trade marked for commercialisation as Pink Lady. Any growers who want to grow the variety need to buy a license, one way the food industry can make money from its technology without having to worry about freight and spoilage.

Living off the land

Of course the larger umbrella of agriculture forms a huge part of Australia’s export sales. Of the $48.7 billion that agriculture contributes the Australian economy, $32.5 billion is from export sales according to 2010/11 figures provided by the National Farmers’ Federation. Livestock, wheat and dairy products top the list of agricultural products Australia sells to the world. Behind these food commodities, however, Australian agricultural equipment, technology and services are at the forefront of global best practice.

The technology sector in this space ranges from specialised machinery and resource management to growing techniques and harvesting processes, even animal genetics. In the high growth market of Russia, for example, there is strong demand for livestock for the meat and dairy sectors, but Russia has shown that it wants to focus on building its own food security rather than relying on imports from other countries. As a result, Australia has an opportunity to supply pedigree dairy and beef cattle and provide everything from artificial insemination and embryo transplant technologies to genetic science to ensure that Australian breeds can be adapted to Russian environmental conditions.

Like Russia, many other emerging markets in Latin America, Africa and Asia are looking to increase food security. Australia’s leadership in resource management therefore stands us in good stead as efficiency in crop management comes to the fore. Consultancy is a key service export here, and specialised equipment, for example irrigation technology, a significant product.

One example of Australia’s efficiency is major rice exporter SunRice, which brings in about $800 million a year. Rice is one of the most water intensive crops in the world so the fact that a dry continent such as ours has the capacity to grow more than 1 million tons of rice per annum is testament to the techniques, processes and technology that sees us supply more than 60 markets worldwide.

Innovation patents and SMEs

Spruson and Ferguson — Thu, 26 Jul 2012 23:23:14 +0000

IP experts Spruson and Ferguson examine what are innovation patents and why SMEs should be aware of them.

Brief Overview of the Innovation Patent System

The Australian patents legislation provides for standard patents as well as a second tier patent called an “innovation patent”. Innovation patents were introduced as a means by which it is possible to obtain patent protection for inventions that might not display a sufficient degree of inventiveness to merit standard patent protection or for inventions with an anticipated short commercial lifetime.

While innovation patents provide the same exclusive rights as standard patents they have a shorter term, namely eight years as opposed to the 20 years of standard patents. An innovation patent is granted after only a formalities check (i.e., there is no substantive examination) and typically within a matter of weeks after filing. A granted innovation patent, however, can only be enforced once it has been certified after post-grant substantive examination. Substantive examination may be requested at any time during the life of an innovation patent and may be made by the patentee or any interested third party.

Unlike standard patents, substantive examination of an innovation patent typically commences within a few months of an examination request having been made. The deadline for overcoming any objections raised by a patent examiner is also far shorter than in the case of standard patents. As a result an innovation patent can provide a very rapid route to rights that can be enforced against alleged infringers.

Where a standard patent requires that an invention must involve an “inventive step”, an innovation patent must display an “innovative step”. To display an innovative step an invention must vary from the prior art (i.e., existing information in the public domain) in a way that makes a substantial contribution to the working of the claimed invention. Establishing an innovative step is normally a lower hurdle to cross than establishing the requisite inventive step for standard patents. In fact, recent case law has indicated that it does not matter whether features that distinguish the invention from the prior art are well-known or obvious to a person skilled in the art (that is a person familiar with the relevant field of technology). All that is required is for at least one distinguishing feature of the claimed invention to make a substantial contribution, being a contribution that is “real” or “of substance”, to the manner in which the claimed device or process works.

Why should an SME consider innovation patent protection?

Firstly, an SME can defer the costs associated with substantive patent examination by delaying examination until an invention has shown commercial success or the patentee has become aware of possible infringing activities by third parties. This is unlike a standard patent where the costs associated with substantive examination must be incurred before a standard patent will be granted.

As an innovative step is normally a lower standard than an inventive step, an SME can protect its improvements to existing inventions more easily against copying by competitors. Further, as an innovation patent can be granted and certified within a relative short period of time, it is possible to have patent rights which can be enforced against third parties within a relative short period of time after filing a patent application.

In short, obtaining an innovation patent is a quick and efficient manner for an SME to secure enforceable rights for inventions which may not qualify for standard patent protection.

André Meyer is an associate at Spruson & Ferguson Patent and Trade Mark Attorneys

Why seek patent protection?

Spruson and Ferguson — Mon, 25 Jun 2012 02:34:44 +0000

In this latest blog from IP experts Spruson and Ferguson, they ask is having a patent important to protect your product.

The winner of Dynamic Business’ recent book giveaway via Twitter asked the following question: “My brand is trademarked, my content is copyrighted, my product is unique in the market, do I need a patent?”

As a general comment, Intellectual Property Law is that branch of the law which protects the intangible property rights in a “product” of human intellect and creativity. In the absence of Intellectual Property (IP) rights protecting such a product, third parties are free to copy the product at will. Although this may at first blush appear to be unfair, to ensure competition in the marketplace it is vital that third parties be free to copy products that are not protected by IP rights so that consumers are able to purchase the product from the supplier offering the product at the best price.

Trade marks, copyright and patents are forms of IP rights that protect different types of intangible property. Those rights can be summarised as follows:

Trade Marks: A trade mark is a “sign” that is used to distinguish the goods or services of one person from those dealt with or provided from another person in the course of trade. Examples of trade marks are names, brands and slogans.

Copyright: Copyright protects unauthorised reproductions and public disseminations of an original work. Copyright protects the particular expression of an idea – not the idea itself. For example, copyright subsists in original artistic works such as technical drawings. An important limitation to note is that copyright can not be employed to prevent third parties from reverse engineering utilitarian products that are sold on a commercial scale. For example, a person may reproduce a ballpoint pen by reverse engineering a sample of the pen without infringing any copyright. However, it may be that the ballpoint pen is covered by some other IP right such as a patent (see below).

Patents: A patent is an exclusive right to exclude others for a limited period from commercially exploiting an invention within a specific jurisdiction. A patent may be granted for any invention (for example a device, a method or a process) that satisfies certain requirements.

Registered Design Rights: A registered design protects the overall appearance of a product resulting from one or more features of shape, configuration, pattern or ornamentation of the product.

Returning to the question posed above, the trade mark will protect the mark that is used to distinguish the product from other similar products in the market, while copyright will protect content such as advertising material and brochures. The product itself, although stated to be unique, is not protected by any IP rights. If a third party, for example, decides to copy the product it is permissible to reverse engineer the product. If the third party then proceeds to use its own trade mark and develop its own marketing material, it will not infringe any IP rights related to the product itself.

The short answer is “yes”, patent protection should no doubt be considered. Based on the facts stated in the question it appears that it may potentially no longer be possible to secure valid patent and/or registered design protection as the product appears already to be available in the market. We would, however, strongly suggest that professional advice be sought as soon as possible on the possibility of securing patent and/or registered design protection for the product or any possible improvement thereto.

André Meyer is an associate at Spruson & Ferguson Patent and Trade Mark Attorneys.

Successful inventors share their secrets – Part III

Spruson and Ferguson — Mon, 28 May 2012 04:53:14 +0000

In the fourth article in our series on the use of Intellectual Property (IP) by small and medium businesses (SMEs), we discuss some further thoughts shared with us by inventors who have gone through the process of conceiving an invention and developing the invention to a market-ready product.

Is there a market for the invention?

Perhaps an obvious consideration, but all too often inventors fail to consider whether there in fact is a market for a new invention. There may be a number of reasons for the oversight. Often, however, it simply is a case of being blinded by subjective considerations in evaluating the commercial prospects of an invention. The successful inventors whom we interviewed stressed that it is critical that one, at the very early stages of bringing an invention to market, ascertain the market prospects of the invention. For example, an invention which overcomes a long existing problem within a specific field of technology may have very good prospects of success. A novelty product, on the other hand, may be a nice thing to have, but will typically require substantial marketing expenditure to stimulate demand. In short, the importance of proper market research cannot be overemphasised.

Successful inventors also stressed that in bringing an invention to market one should not only consider the cost implications but also the time commitment. Deciding to bring an invention to market may be a life commitment.

How will the invention be commercialised?

SMEs have various options in exploiting an invention. For example, an SME may decide to manufacture and sell a patented product itself. However, often an SME may not be able to finance the capital outlay for tooling-up. In such cases it may be preferable to grant a license to a third party to exploit the invention. The third party may already have the manufacturing capabilities and existing distribution channels. By granting the third party a license to exploit a patented invention an SME may reap the rewards of bring the invention to market without substantial initial expense.

The model of commercialisation, for example self-manufacture, licensing etc., will depend upon a number of factors. It is crucial that an SME identify the most appropriate model in bringing the invention to market. If there is any uncertainty on the best model for commercialisation of a particular invention it is strongly advisable that independent advice be obtained.

Be alert

Bringing a new invention to market can be filled with unexpected events. It is, therefore, important that an inventor remain alert to threats and opportunities. Successful inventors informed us that they had contingencies in place to moderate the impact of unexpected changes in, for example, market conditions.

Improvements and ownership of improvements

In order to maintain its competitive edge an SME should continue to innovate. Appropriate measures must be put in place to monitor innovation and to ensure that new inventions be identified and adequately protected by, for example new patent and/or design applications.

All too often SMEs get embroiled in disputes regarding the ownership of IP. It is, therefore, critical that SMEs have appropriate agreements in place with employees, contractors and other parties to ensure that improvements developed with the IP of an SME vest in the SME.

Article by André Meyer, Associate at Spruson & Ferguson

Wallace and Gromit exhibit to teach Aussie kids about invention and intellectual property

Gillian Wolski — Sun, 20 May 2012 23:14:12 +0000

Wallace and Gromit, the world-famous characters created by British studio Aardman Animation, are set to star in an interactive exhibition to educate children on innovation and intellectual property (IP).

Visitors to Wallace & Gromit’s World of Invention will be able to explore the character’s ‘house’, view both real and imaginary innovations, learn about Australian inventors and discover how IP rights work. Both young and old will enjoy activities such as creating a smoothie recipe and logo, inventing household tools and belting out some tunes in the karaoke disco shower.

The principle sponsors, IP Australia, hope that the exhibit inspires a new generation of Australian inventors who understand IP rights and how to employ them in protecting their inventions.

Wallace & Gromit’s World of Invention will be open at Scienceworks in Melbourne from the 19th of May 2012 until the 11th of November 2012, then moves to the Powerhouse Museum in Sydney where it will be open from the 12 December 2012 until the 26 May 2013.

Tickets are $19 for adults, $7.50 for concession holders and $6 for children.

For information about the Melbourne exhibit, visit the ScienceWorks’ website.

Successful inventors share their secrets – Part II

Spruson and Ferguson — Thu, 26 Apr 2012 00:22:55 +0000

In the third article in our series on the use of Intellectual Property (IP) by small and medium businesses (SMEs), we discuss more lessons shared with us by inventors who have gone through the process of conceiving an invention and developing the invention to a market-ready product.

Is there any benefit in employing the services of a consultant?

We received mixed comments in connection with the use of consultants. While it is true that consultants can provide invaluable insights in how to access markets for a new invention, one should not be unduly influenced in appointing a consultant or to follow the advice provided by a consultant without considering both the long and short term goals with the invention. One inventor commented that he specifically declined to follow the advice of a consultant in order to pursue other opportunities which he viewed more in line with his long term goals, although the short term gains proposed by the consultant appeared very attractive.

Intermediaries for facilitating dealings in China

Inventors seeking to conduct business in China often employ intermediaries. Although intermediaries may in some instances provide very valuable assistance, inventors should conduct a thorough due diligence on any intermediary that is proposed to be engaged. For example, some intermediaries may only have connections in a single Chinese province so that opportunities in other Chinese provinces may be left unexplored. In this regard one inventor commented that using accounting firms was generally a safe path into China.

Dealings with Investors

Short term investors often use the volume of sales as an indicator of the potential success of an investment in a business. It is, therefore, important to achieve some sales as soon as possible.

In the early stages of developing an invention it is vital to have good cash flow as insufficient funding could easily derail commercialisation of the invention. For this reason one inventor commented that when an investor is brought on board the inventor should ensure that funds are not received in a drip-feed fashion. Although it may be tempting to accept the proposed investment by the first investor that comes knocking, an inventor should be wary and consider any offer to invest carefully and with due caution.

When setting up a company for exploiting a new invention, an inventor should also be wary of appointing those persons investing in an invention as directors of a company. Also be careful when shares are transferred to investors that the shareholding of the inventor is not diluted to such an extent that the inventor effectively loses control of the invention. Without due care an inventor may find that he/she is stuck with a board/shareholders that do not share his/her vision for the invention and direct the commercialisation of the invention in a direction contrary to the vision of the inventor.

IP Holding Companies

It is advisable to consider transferring all IP relating to an invention to an IP holding company. The IP holding company can then license the exploitation of the invention to an operating company. The benefit of having such a structure is that the IP is effectively “quarantined” from claims made against the operating company. Having the IP centralised in an IP holding company will also make it possible to separate the IP from other assets of the business with relative ease either to sell the IP separately or use the IP as security. An IP holding company can also streamline a spin-off of the IP.

In our next article we will consider some final tips from inventors who have succeeded in transforming their inventions into revenue generating assets.

Article by André Meyer, Associate at Spruson & Ferguson