Forgot your password?
Please enter your email & we will send your password to you:
My Account:
Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
15.1 Overview of intellectual property (IP) issues in international business
This book focuses primarily on export transactions in tangible goods as defined in commercial sales law. Today, however, trade in intangible goods, particularly intellectual property (“IP”), has become increasingly important. Consider the following figures:
Clearly, it has become increasingly important for international business professionals to have a basic understanding of IP and the ways to protect IP internationally.
Common IP issues faced by international business firms include:
In light of the above, all international business professionals should understand the basic elements of intellectual property and its international protection. Traders should appreciate the differences between trademark, patent, trade secret, design, and copyright protection, and should also be familiar with legal rights in Internet domain names.
Intellectual property law usually involves domestic laws and regulations operating within the framework of important international treaties administered by the World Intellectual Property Organisation (WIPO) and the World Trade Organization (WTO), based in Geneva. WIPO, which was established in 1967, is a specialized agency of the United Nations and administers the 24 principal treaties governing multilateral protection of different intellectual property rights, including patents, trademarks, designs and copyrights. The WTO administers the TRIPS agreement in Trade Related Intellectual Property Rights which lays out IP protection standards for WTO member countries. For international traders, WIPO administers systems to facilitate protection of intellectual property rights in multiple jurisdictions, e.g., the Patent Cooperation Treaty for patent protection and the Madrid system for international trademark protection. WIPO’s website is www.wipo.int.
15.2 Trademark protection1
A trademark or “mark” is any name, logo, sign, symbol or device by which a product’s manufacturer or source is known. Trademarks prevent consumer confusion by allowing consumers to easily locate and distinguish products from different suppliers. Trademarks are said to serve a vital public purpose in assuring consumers of the consistent levels of quality associated with particular products or providers.
As opposed to copyrights and patents, which are of limited duration, trademarks may be renewed indefinitely. This is one reason trademarks are so valuable to corporations. Over time, investments in product quality and marketing can yield substantial returns in the economic value or goodwill contained in the firm’s trademarks.
The 2011 Interbrand ranking of the world’s leading brands reveals the economic importance of global trademarks. Examples of highly valuable trademarks include:[Page213:]
Global branding strategies depend on a firm’s ability to maintain and police its trademarks internationally. International trademark protection thus represents a major strategic imperative for all firms reliant on brands and undertaking international operations. It can be expensive and time-consuming to obtain broad coverage in all countries, but it can be even more risky to neglect international registrations. At a minimum, firms should seek to protect their most important trademarks in all the countries in which they expect to do business.
15.2.1 International trademark protection should be cost–effective
Because the registration of a firm’s trademarks is required in each foreign market where the firm wishes to operate, and because registration normally requires the assistance of specialists and the payment of fees to each national trademark authority, it can be expensive to obtain global trademark protection. Supplemental fees, for example, must be paid in order to register a trademark in multiple trademark categories. While the costs of international trademark protection can be greatly reduced through usage of the Madrid system (discussed below), it is still important for a firm to develop a cost-effective strategy for protecting and maintaining intellectual property rights worldwide.
15.2.2 Domestic trademarks are not always eligible for foreign protection
The importance of thinking globally from a firm’s inception is exemplified by those firms that are stunned to discover that an important trademark cannot be used for export. It may happen, for example, that another firm has already registered the mark in an important foreign market. Proper due diligence on prospective trademarks requires firms to research all possible foreign trademark owners of similar names. Otherwise, a firm may find itself foreclosed from international expansion until it obtains an alternative trademark. This can be very inconvenient if the firm is already operating with the particular trademark. The firm may be forced to re-name and re-label its product for export.
One rule of thumb in this regard is to avoid obvious designations when coming up with brand names and trademarks. Thus, a U.K. manufacturer of children’s wear under the brand name “Unique Kids” found that this name was not unique enough when it learned that a Greek firm had obtained an EU trademark registration with the same name. Substantial relabelling costs ensued
.[Page214:]
15.2.3 Madrid System for the international registration of trademarks
The Madrid Protocol and the Madrid Agreement constitute the basis of the Madrid system for the international registration of trademarks. The Madrid system provides a centrally administered system (managed by WIPO) for obtaining international trademark registrations. Strictly speaking, WIPO does not grant an international trademark right; rather it facilitates multiple submissions to national trademark authorities. The Madrid Protocol, which has only been in operation since 2004, already has 78 contracting member countries and is rapidly superseding the older and less successful Madrid Agreement. The Protocol offers trademark owners and registrants a number of advantages over the Agreement. For example, it is possible to file for international protection even while the original application for trademark registration in the home country is still pending.
15.2.4 Paris Convention for the Protection of Industrial Property (1883)
Among the earliest and most important of international treaties governing intellectual property, the 1883 Paris Convention for the Protection of Industrial Property (Paris Convention) covers the protection of trademarks, trade names and patents. Among its principal contributions is the creation of a “priority right” under which the applicant for IP protection is allowed to use the date of first filing in a Contracting State as the effective date for filing in another Contracting State, provided that the subsidiary filing comes within six months of the first filing for trademarks and within 12 months for patents.
15.3 Patent protection
Patents are intellectual property rights in new scientific and technical inventions. A patent gives the inventor the right to prevent others from using, making, selling, or importing his invention (for a specified period of time, usually 20 years). In return for this government authorized temporary monopoly, the inventor must publicly disclose the details of his invention in a patent document. When a patent expires (for example, in the U.S. after 20 years), the patented subject matter enters the public domain and anyone may use it.
15.3.1 Patents under the Paris Convention
As with trademarks, the Paris Convention confers a priority right on anyone who obtains a patent in a Contracting State. The priority right allows the applicant to use the date of first filing as the effective date of filing for patent application, provided the subsidiary filing is made within 12 months.
15.3.2 Patent Cooperation Treaty or PCT
The Patent Cooperation Treaty (PCT) is an international treaty that provides a unified procedure for filing patent applications in each of the 144 Contracting States. A patent application under the PCT is called an international application or PCT application. A PCT application does not lead to an international patent; rather it provides a standard application which is then submitted to the national authorities of each jurisdiction in which a patent is desired.
The PCT procedure comprises two phases. In the first or “international” phase, the PCT application establishes a filing date pending the receipt of a patent in one of the Contracting States. When a patent has been granted in one of these States, the second or “national” (or [Page215:] “regional”) phase begins, as the patent owner must file necessary documents in each of the countries or regions in which patent protection is sought. The procedure for filing a PCT application can be found at www.wipo.int/pct/en/texts/articles/atoc.htm.
15.4 Copyright protection
Copyright is intellectual property in creative or cultural works - including literary, dramatic, musical, choreographic, pictorial, cinematic or architectural works. The scope of copyright protection may vary from country to country. For example, U.S. law protects software with copyright, but in other countries software may be protected by patent law.
To qualify for copyright protection, the work has to be an original creation and expressed in a certain fixed form. Copyright is automatically vested in the author once the work is created, though a few countries maintain registration systems which provide additional benefits. It can then be licensed or assigned. Copyright protection gives an author exclusive rights for a significant duration, generally lasting from the time of creation of the work until fifty or seventy years after the author’s death.
Exceptions to copyright law in most countries allow the public to make certain uses of works without either remunerating or obtaining the authorization of the author. An example of this could be the use of limited quotations for illustration or teaching.
In some countries, performers, producers and broadcasters of copyrighted works are protected by copyright just like authors, while in others, they are instead protected by “neighbouring” or “related” rights. Copyright has become increasingly important with respect to content delivered over the Internet, where IP faces difficult enforcement issues.
5.4.1 The Berne Convention for the Protection of Literary and Artistic Works
The main international treaty governing copyright is the Berne Convention for the Protection of Literary and Artistic Works (“Berne Convention”), which was first accepted in 1886 and has currently been adopted by 164 member states. Under the Convention, no formalities are required for obtaining copyright protection. As opposed to patent protection, which requires the filing and acceptance of an application, copyright protection is automatic and attaches as soon as a creative work has been fixed or expressed in tangible form (as by being written, recorded, photographed or filmed). Under the Berne Convention, copyright protection must extend for a minimum period depending on the type of work. For artistic and literary works the minimum duration of protection is the author’s life plus 50 years. Thus, the author’s heirs and assigns will continue to possess copyright protection for at least 50 years after the author’s death (in some countries, the protection may be significantly longer, but it cannot be less than 50 years). The website address for the Berne Convention text is www.wipo.int/treaties/en/ip/berne/trtdocs_wo001.html.
15.5 Trade secrets
A trade secret is confidential business information which gives a business a competitive edge over its rivals (for instance, trade secrets may consist of manufacturing processes, techniques and know-how, customer lists and profiles, ingredients, etc.). Unlike patent rights, trade secret rights allow firms to protect confidential information indefinitely. Since patent protection is obtained at the cost of revealing the details of an invention and accepting a limited time scope for exploiting it, some firms may prefer to keep an innovation confidential [Page216:]and unpatented, in which case it may be protected indefinitely as a trade secret. Moreover, in order to receive protection, trade secrets do not have to meet the stringent requirements of novelty and usefulness required for patents.
However, trade secret protection remains relatively weak in some countries, due partly to the lack of specific protective legislation and partly to the lack of awareness by the judiciary and other administrative bodies. Sanctions against procurement, use or disclosure of a trade secret, through application of the laws on unfair competition or practices are also provided by Article 39 of TRIPS.
15.6 Design protection
Design rights protect new and original visual aspects of a product or its packaging. To be eligible for protection, a design must display aesthetic features and must not be predated by a similar design. Designs are crucial for the marketing of products in many sectors, for instance textiles, fashion, mobile consumer devices, software, automobiles and home furnishings and decoration. There is a relative lack of international uniformity for this form of intellectual property protection, although an important measure of harmonization was achieved within the European Union, with a Community design right effective in all 27 EU Member States.
In most countries, design protection is subject to registration, although there is a trend to extend protection for a short term to unregistered designs, e.g., for 3 years in the EU. Registered designs can generally benefit from protection for up to 25 years.
15.7 IP and the Internet: domain names and dispute resolution
In an era of rapidly expanding e-commerce, social media and Internet marketing, it has become vital for firms to protect their access to commercially important domain names. In the early days of the Internet it was possible for so–called “cybersquatters” to register a commercially valuable domain name before the owner of a related trademark. More recently, a number of national and international laws and rules have developed to ensure that domain names are not registered in bad faith by parties seeking to exploit the trademark rights or the goodwill of established companies.
15.7.1 Uniform Domain-Name Dispute-Resolution Policy (“UDRP”)
The Uniform Domain-Name Dispute-Resolution Policy (“UDRP”) is a process established by the Internet Corporation for Assigned Names and Numbers (“ICANN”) for resolving disputes related to generic Top-Level Domain names [note however that it does not apply to country level domain names].
A complainant in a UDRP proceeding must establish three elements to succeed:
[Page217:]
Among the factors that may be considered to constitute bad faith under the UDRP concern whether the registrant registered the domain name primarily for the purpose of selling it to the complainant who is the owner of the trademark. If a party loses a UDRP proceeding, in many jurisdictions it may still bring a lawsuit against the domain name registrant under local law. Details on the UDRP can be found at the website www.icann.org/en/udrp/udrp.htm.
15.8 Counterfeiting
Trademark counterfeiting is the act of manufacturing or distributing a product bearing a mark identical to, or substantially indistinguishable from, a registered trademark. Counterfeits directly deprive brand owners of revenue due to the substitution of counterfeits for genuine articles. More broadly, however, counterfeiting may decrease overall brand revenues due to overexposure and harm to a brand’s high quality or exclusive image. Companies with successful products may well find their products counterfeited in export markets.
15.8.1 Anti-Counterfeiting Trade Agreement (ACTA)
A new multilateral treaty completed in December 2010, the Anti-Counterfeiting Trade Act (ACTA), would be the first international agreement designed specifically to combat counterfeiting in a harmonized and coordinated way. ACTA was developed to fight today’s highly sophisticated global counterfeiting networks and has been strongly supported by business organizations such as ICC, though its BASCAP initiative. ACTA will go into effect when it has been signed by a minimum number of countries. In June 2011, the European Commission formally adopted ACTA and referred it to the European Council and European Parliament for approval.
ACTA’s provisions call for:
15.9 ICC and intellectual property
ICC is very active, in particular through its Commission on Intellectual Property, in helping create a supportive environment for companies using IP internationally.
15.9.1 BASCAP: ICC’s anti–counterfeiting initiative
Business Action to Stop Counterfeiting and Piracy - BASCAP - was launched by the International Chamber of Commerce to: mobilize businesses across industries and national borders in the fight against counterfeiting and piracy, pool resources and expertise, amplify the voice and views of business to governments, public and media - increasing both awareness and understanding of counterfeiting and piracy activities and the associated economic and social harm, compel government action and the allocation of resources towards strengthened intellectual property rights enforcement and create a culture change to ensure intellectual property is respected and protected. The BASCAP website is www.bascap.com.
[Page218:]
15.9.2 Global IP Updates: The ICC Intellectual Property Roadmap for Business and Policy-makers
This ICC publication provides businesses and policy makers with a regularly updated briefing on the most important developments in global intellectual property protection. A particular focus of the Roadmap in recent years has been the spread of digital technologies and the Internet and the impact of this business evolution on IP rights. The Roadmap is revised biannually (with the 11th edition released in 2012) and is available in five languages (English, Chinese, Spanish, Arabic and Portuguese). The Roadmap is available at www.iccbooks.com.
1 For a more complete introduction to IP, and an in-depth review of current policy and business concerns, see the ICC Intellectual Property Roadmap for Business and Policy-makers, available at www.iccbooks.com