On Eve Of TRIPS Council, Experts Promote Benefits Of IP For Small Enterprises

The importance of intellectual property protection for micro, small and medium-sized enterprises and the challenges they might encounter to ensure that protection was the focus of an event organised this week by a group of developed and middle-income countries at the World Trade Organization. According to the group, the event aimed at drawing connections between IP policies that are under discussion in the WTO IP committee.

On the eve of the Council for TRIPS (WTO Agreement on Trade-Related Aspects of Intellectual Property Rights) meeting taking place on 19-20 October, the “Friends of Intellectual Property and Innovation Group” organised an event convening representatives of universities, government, and the private sector from South Africa, Indonesia, Israel, and Colombia.

According to a source from the group, there is no definite list of countries in the group but active members at the TRIPS Council include the United States, Switzerland, Japan, Australia, Canada, the European Union, Taiwan, Hong Kong, Russia, Singapore, and New Zealand. This week Australia, Canada, the European Union, Japan, Switzerland, Taiwan, and the United States suggested an item on IP and innovation for the TRIPS Council (IPW, WTO/TRIPS, 11 October 2017).

Andrew Bailey, senior manager of the Innovation in the Research Contracts & Innovation Department at the University of Cape Town, South Africa, which is the university technology transfer office, said the university’s portfolio includes 278 patent applications, and 315 active granted patents.

Some 21 spinoff companies were launched since 2004, hosted by the university prior to their launch, he said, two of which are no longer active. The spinoff companies worked primarily in the areas of engineering and health sciences.

Bailey said the university wants to licence its inventions to spinoff companies, but it finds that venture capital, investors, and other funders in South Africa want to see IP assigned to the company as an actual asset. They usually conduct very thorough due diligence, they want to have a level of freedom to operate, and they expect the company IP strategy to be aligned with its marketing strategy, he said. Funders base part of the company valuation on its IP, he added.

IP at the university is primarily based on patents, and some copyright for software protection, however industrial designs registration maybe underutilised, he said, although they are reasonable and affordable for MSMEs, he added.

In South Africa, he remarked, the internationalisation of products occurs more slowly than anticipated, MSMEs focus very much on the home market and struggle to fully exploit protection in other countries, due to factors such as complex market entry requests, duties and tariffs.

Israel Company Perspective, Employee Royalties Threat

Shir Kodner, legal counsel for Q Technologies Group, an Israel-based company providing proprietary telecommunication solutions used by law enforcement agencies to combat terrorism and organised crime, said on IP matters, the company relies mostly on trade secrets.

Part of the company’s growth was based on mergers and acquisitions, she said, leading to the need for having a unified brand for the company, which proved to be a difficult process, although necessary for branding purposes.

MSMEs tend to go to softer and cheaper IP protection, such as branding and trademark registrations, rather than patents, she said. For Q Technologies Group, the rapidly changing software product precludes the use of patents, she said.

Challenges for small companies include the lack of awareness of IP-related benefits, and how to identify IP within their company, how to make the most of it and how to protect it, she said. It is however complicated and costly, she added.

According to Kodner, for the Q Technologies Group, costs and awareness are not a barrier, as she said there is a good awareness of IP in Israel, which has put in place a very strong ecosystem to foster innovation, with a number of innovation accelerators and technological incubators, with support for young companies and pro bono services from patent attorneys.

Challenges for Q Technologies Group include human resources-related issues, as companies are sometimes reluctant to hire students in advanced studies at the university. This is because if the students in question are not conducting research in the core technology of the company, it could “contaminate” the company’s products as the university may claim to have a part of the innovation later, she said.

Another issue for businesses are some 2010 decisions of the Committee for Compensation and Royalties about royalties given to employees on their service inventions, she said. Israeli patent law states that if an employee develops an invention during his/her time of employment, the invention, whether patentable or not, is the property of the company, she explained. However, a clause in the patent law says that in the absence of an agreement specifying the status of the royalties, the Committee for Compensation and Royalties can be consulted to decide on the matter, she said.

The committee and the Israeli Supreme Court looked at the question of the employee’s right to royalties, and whether it cannot be waived, she said. The company stills owns the inventions, she said, but the employee can receive royalties. That came as “a big earthquake” in the IP community, she said.

Companies working in the same field as the Q Technologies Group had to go back and review their contracts following those decisions, Kodner said, adding it is still an ongoing issue as there is a growing number of appeals to the Committee for Compensation and Royalties’ decisions.

Kodner also underlined the difficulties to recruit employees in the field of cutting-edge innovation technologies as potential candidates may not necessarily want to belong to a company, and may want to work as freelancers, which would also impede the company’s IP rights, she said.

Indonesian Guitars, Brand Essential

Toien Bernadhie, founder of Indonesian company Radix Guitars, said Indonesia is one of the biggest global guitar manufacturers and exporters. However, the Indonesian domestic guitar market was at the time of the creation of the company dominated by imported brands, he said.

Radix Guitars was created in 2003 with the aim to provide a genuine Indonesian guitar brand, he said, adding that the trademark was registered at the very start of the company. The company now employs 80 people at the factory, he said.

Bernadhie explained that securing a brand was very important, notably in the context of the promotion of the company. IP gives a solid base for brand image-building, he said.

Among challenges, he cited the issue of local copycats.

WIPO Helps Colombia Boost Patent Applications

Luis Antonio Silva Rubio, who oversees the Technological Information and Support to Industrial Property Management Center (CIGEPI), housed within the Superintendence of Industry and Commerce of Colombia, said there is an increased interest for IP protection in Colombia.

In particular, he said, there is an increasing use of the patent system, as Colombia has put in place strategies to encourage the use of industrial property in the country.

One of those strategies, includes support from the World Intellectual Property Organization Technology Information Support Centers (TISCs), of which Colombia was one of the pilot countries, he said.

The WIPO TISC program was created after a decision by member states mandated WIPO to carry out a pilot project to establish TISCs within the framework of its Development Agenda, according to WIPO. It provides “innovators in developing countries with access to locally based, high quality technology information and related services, helping them to exploit their innovative potential and to create, protect, and manage their intellectual property (IP) rights.”

With the help of the Inventor Assistance Program (IAP) and a national strategy for the protection of inventions, Silva Rubio said, patents filed by residents and trademark registrations increased. He said the IAP, which started in 2015 in Colombia and now includes 27 pro bono attorneys, is also active in Morocco and in the Philippines.

IAP is WIPO initiative “in cooperation with the World Economic Forum matching developing country inventors and small businesses with limited financial means with patent attorneys providing pro bono legal assistance to secure patent protection.”

According to the TISC Annual Report 2016 [pdf], 143 patent applications were filed by institutions hosting TISCs in Colombia in 2016 and a further 305 projects were identified as eligible for patent protection.

The Colombian national strategy for the protection of inventions provides technical and financial support for patent filings, and finances the writing of patent applications, Silva Rubio said.

One of the persistent issues in Colombia that needs addressing is that most of the companies or inventors do not know what do to once the patent process is completed, he said. One of the concerns is how to transfer what is being protected by companies.

Role of Governments, Policymakers

Asked about what the role of governments and policymakers should be, the panellists agreed that some actions would be helpful.

Bailey said assistance with the enforcement of IP rights could be considered by the South African government. He also underlined the challenge of seed funding for spinoff companies which limits their ability to spend on IP protection.

Kodner said investing in the IP system is crucial, adding that the Israel Inventor Authority is focusing on helping start-ups collaborate with other companies in the world and to enter the global market.

For Bernadhie, IP awareness and education is needed, as well as help with post-filing cases, with pro bono low-cost legal assistance.

Silva Rubio said that although more people are interested in the IP protection system than five years ago, there are still regions in the country where there is a lack of knowledge of the patent system. To address that situation, he said the Superintendence of Industry and Commerce of Colombia is circulating information so people have knowledge and access to trademark and patent protection.

A number of developing countries during meetings of the TRIPS Council have underlined that although IP might be an important factor, it is not the only one and governments should be careful to maintain a balance between IP rights and the public interest.

 

Image Credits: Catherine Saez