Dar-es-Salaam, Tanzania22-26TH SEPTEMBER, 2011

“ MANAGING INTELLECTUAL PROPERTY ASSESTS IN

INTERNATIONAL BUSINESS”

Mboya Rose

Contents

Managing IP Assets of SMEs

Doing business at international level (Products for export)Export Business Development plan and IP Assets

Ways of Commercializing IP Assets Abroad

Summary of Ways in which IP may Summary of Ways in which IP may assist SMEs in Export strategyassist SMEs in Export strategy

Objectives

How SMEs can Utilize IP Effectively Factors to consider when

protecting your IP Abroad Role of IP in Developing a business

strategy Commercial exploitation of IP

Assets

1-4 Micro Enterprises5-49 Small Enterprises50-99 Medium Enterprise> 100 Large Enterprises

1 Classification of Enterprises

1 Classification of Enterprises

1. Managing the IP Assets of SMEs

i) Importance of SMEs

Employment Creation Poverty Reduction and Wealth

Creation Value addition Entrepreneurial development Contributes to the GDP (20% in

Kenya)

Employment Creation Poverty Reduction and Wealth

Creation Value addition Entrepreneurial development Contributes to the GDP (20% in

Kenya)

ii) Characteristics of SMEs products

Low quality Less attractive in appearance Low efficiency and effective Lack of standardization of products Products that are not protected

and no Name

Low quality Less attractive in appearance Low efficiency and effective Lack of standardization of products Products that are not protected

and no Name

MSMEs very innovative (no vertical growth)

iii) Challenges Facing SMEs in business and market environment Business is done in the market place

Nowadays physical markets co exists with virtual markets (internet) based on online marketing, promotion and e commerce.

Too many products chasing too few brand very discerning consumers. In today’s economy the supply seems to exceed the demand thus consumer is truly the king

Challenges facing SMEs in business environment conti…

Rapidly changing tastes of consumers (consumers prefer natural to other products …..have gone herbal…)

Challenge is to provide newer, better, or more attractive products that catch the eye and retain the consumer

The real challenge therefore is to be more resourceful, creative and innovative than competitors in all aspects of business

Financial Markets Management Technological

Need for new product Need for new or alternative process Need for alternative raw material

Challenges facing SMEs in business environment conti…

v). Potential Market for MSMEsv). Potential Market for MSMEs

1. Traditional market (local, regional, international)

2. Government Procurement3. Sub-contracting

Difficulty in accessing the Market for MSMEs Products Lack of Competitiveness

vi) Basic ingredients of business success

A successful business is one that makes a bigger profit after understanding and meeting the needs of consumers better than its competitors this can be achieved through:

A quality product A distinctive brand Effective marketing

Where you are

Where you to

be

VisionMission

Enterprise IP Audit

2. Doing Business at International levelDeveloping Business Export Strategy

How to reach there

2. Doing business at international level (products for export)

i) Key issues to consider when developing business export strategy Type of existing IP Assets -Identify IP Assets

of the company (Carry out internal IP Audit) Effective method of IP Protection Abroad Type of IP Asset useful in the various cycle of

Business Development plan Strategies for Commercializing IP Assets

abroad Identifying export markets Estimating demand

ii) Company’s IP audit (Assets)

Taking stock of SME’s IP AssetTaking stock of SME’s IP Asset Company Company must either be must either be UsingUsing or or

CreatingCreating IPIP Technologically Based IP Assets:

Patents, Trade Secrets, Industrial Designs, Software, utility model, integrated circuits.

Institutionally Based IP Assets:Company’s brand, product brand,

trademarks, customers’ lists, distribution channels, quality marks, copyright

In general the value of intangible assets (IP)In general the value of intangible assets (IP)is underestimated by SMEsis underestimated by SMEs

In general the value of intangible assets (IP)In general the value of intangible assets (IP)is underestimated by SMEsis underestimated by SMEs

Identify existing IP AssetsIP audit (identify IP Assets)– the link with

business devt:1. Help to understand the enterprise position

in the market;2. An important tool for understanding the

existing assets of an enterprise;3. A key tool in identification of new

business opportunities;4. Serves to identify key business

partners/allies.

Company’s IP Audit cont..Company’s IP Audit cont..

iii) Protection of IP Assets

Determine if the IP Assets is already protected

If not determine the best strategy for your company in protecting the IP Asset

(patents, ID, Trademarks, copyrights, trade secrets etc)

Protect it

A)A) Advantages of IP Advantages of IP ProtectionProtection

Increase in negotiating Powers-IPrights could

be exchanged btn your enterprise

and another

Opportunityto sell or license

Invention or innovation

if you choose not to exploit

Positive Image for your enterprise-

high level of technological And innovative capacity

Strong market position-reduced

competition

Higher returns on Investments

if own exploited

EXCLUSIVE RIGHT FOR A GIVEN PERIOD

B)B) Implications of not Implications of not Filing for Filing for IP ProtectionIP Protection

NO PROTECTION FOR

YOUR INVENTION OR INNOVATION

Transfer oftechnology

difficult

Possibility to license

or sell hindered

Somebody else might protect itPrevent you

from exploiting it

Competitors will take advantage of your invention

If the product is successful

C) Factors to consider when protecting IP Abroad

. IP rights are territorial rights Protection of IP Rights is granted on a

territorial basis Most companies assume that IP

Protection in your country provides protection in other countries as well

Important differences in IP laws world-wide

Different countries have varying requirements with regards to IP Protection Differences in legal requirements e.g most

countries copyright is automatic, other countries provide for registration of the same mainly for evidential purposes

Differences in what cannot be protected e.g in Sudan alcoholic products not protected,

Differences in how a specific product may be protected: e.g. software, business methods as patents in US as opposed to Kenya where it is protected as copyrights

Important differences in IP procedures worldwide

Differences in how applications are examined (registration, or substantive examination)

Differences in options available to applicants, e.g. provisional patent applications, utility models.

Most countries require foreign applicants to hire a local (resident) agent/attorney

Requirement for working the invention, using the trademark after a given period of time (three years after grant/four years from filing date)

Options for filing applications for IP protection abroad

(National, regional or international routes) and companies may be in a position to choose their filing strategy based on issues such as: Membership to international treaties

(Tanzania not a member of Hague Agreement, thus may not be able to protect through the Hague system, Lisbon,)

Countries in which protection is sought (if members of the Treaty)

Convenience of reducing certain costs (Through International Treaties, regional as opposed to national eg ARIPO, PCT, )

Time taken to register/grant the right through different routes (National 18 months, PCT 36 months)

Decision on where to seek IP Protection may be based on

Availability and size of market Markets where benefits of protection can be

derived Main competitors Potential licensees based Potential infringers Effective enforcement system in case of

infringement

Timing of application

Priority date : case of patents and industrial designs, trademarks

Grace period Exhibitions Requirement for non disclosure of

invention or industrial designs First to file vs first to use (invent)

many (countries the law favours the first to file)

Type of protection granted by each IPR

Patent Industrial design Trademark Trade secrets copyrights

Duration of the protection

Patents Utility models Trade secrets Industrial design Trademarks copyrights

3) Export Business Development plan and IP assets

Production Expansion

Market Expansion

Capital Expansion

New Product Channels; Joint Ventures or

Partnerships

i) Production Expansion and relevance of IP

a) Expanding the production capacity New technologies – Patents/trade secrets; Quality control – patents/trademarksb) Product Development Patents Trademark Industrial Designs Trade secrets Copyrights

Adaptation of product / brand / design / packaging, will involve creative or inventive work that may be protected through the IP system

Production Expansion and relevance of IP cont…

c) Product Pricing Pricing of the product will partly

depend on the extent to which the patents, ID, and trademarks is recognized and valued by consumers, and the extent to which product will face competition from rival products

ii) Market Expansionand relevance of IP in the business Cycle

a) Carrying out Market Research Trademarks Patents Trade Secrets Industrial Designs

Market expansion cont.. b) Expanding the market Trademarks – whether there is a

competing trademark? Patents – whether the technology

used is protected in the market? Industrial Designs Copyright Issues

Market expansion cont..

c) Product Promotion Patents Trademark Industrial Designs Trade secrets Copyrights

d). New Product distribution Channels

Trademark – should it be a new or build on the existing?

Patents – technical needs – invent or license in?

Copyright – any potentials? Industrial Design – commissioned? If so

under what arrangement? Trade Secrets – is there a mechanism in

place already.

iii). Capital Expansion and Relevance of IP

Access to credit facilities – Securitization of IP assets; patents, trademarks, industrial designs, copyrights etc

Confidence of Financial Institutions – IP Portfolio;

Accessing grants in specific technologies – patents;

Business Reputation – branding; Revenue from Licensing – patents, copyright,

ID

iv). Joint Venture/Business Partnership/M&A

Value of your IP asset – boost your bargaining power.

The business brand; Valuable business information; Market channels; Technological edge – patents; Production manuals; Customer base.

4) Ways of Commercializing IP Assets Abroad

Clearly define issues pertaining to IP ownership with partners Example: if developing a new product

with another enterprise, establishing a joint venture, or modifying the design, package or trademark of a product, important to ensure that it is clear (preferably in a written contract) who will be the owner of any IP generated.

Ways of commercializing IP Assets Abroad

Adequate protection in foreign market as a pre-requisite to licensing/franchising in that market Companies seeking to license the

manufacturing of their product in a number of markets, should ensure that their IP is protected and is not in the public domain in those markets (i.e. protection has been obtained and has not expired)

1. Own exploitation IP in business

An inventor chooses to exploit its IP Assets if:

Necessary resources available You have business skills There is reasonable market for the product Expected royalty of the IP Assets is too low

Ways of commercializing IP Assets Abroad

Ways of commercializing IP Assets Abroad

2. Assignment /Sale of IP Assets

Occurs: Owner of the IP asset unable to exploit it by self

No financial resources No business skill No time

Desires to gain profit at min risk Test and develop untapped market

Ways of commercializing IP Assets Abroad

Ways of commercializing IP Assets Abroad

Technology Licensing Trademark franchising Copyright Licensing

Licensing of IP AssetsOwner of the IP asset allows another to

exploit and in return get royalties No financial resources No business skill No time

3. Licensing

Advantages of Licensing to the licensee and licensor

For Licensor Rely on better

manufacturing capacity, distribution outlets, local knowledge and management of the licensee;

IPR retained by licensor Access to new markets, Turning potential infringer

into partner; Provides some Degree of

Control over innovation, direction, and evolution of technology;

For the Licensee:1. Quick response to the

market needs using innovative technology;

2. No need of own research resources base – still have access to technical advances that are necessary in providing new or superior products;

3. Improve a company’s technological portfolio

DisadvantagesFor the Licensor1. A licensee can become a

licensor’s competitor – especially when they are operating in the same territory.

2. When technology is not clearly defined, a license agreement can be disadvantageous, for it may require continual service from the licensor;

3. The licensor may become critically dependent on the skills, abilities and resources of the licensee for generating profit.

For the Licensee:1. Risk of making financial

commitment when the technology is not “ready” to be commercially exploited;

2. A technology license may add a layer of expense to a product that is not supported by the market for that product;

3. The risk of becoming too technologically dependent – in the long-run it may become a barrier to their future expansion;

4.Joint VenturesWhere

Inventor invites investor to jointly exploit IP The IP is valued and converted into equity Investor bring money Inventor brings technology and know-how

Ways of commercializing IP Assets AbroadWays of commercializing IP Assets Abroad

5. Acquisition and Mergers

The Values of IPRs are important during Acquisition Merger

6. Fundraising – Monetization of IP Monetization of IP is an alternative route for raising money other than loans and equityIntellectual property rich companies can sell expected royalties or revenue streams based on their IPRs for cash

Ways of commercializing IP Assets Abroad

Ways of commercializing IP Assets Abroad

04/21/23 01:42 AM 45

Summary of Ways in which IP may Summary of Ways in which IP may assist SMEs in Export strategy:assist SMEs in Export strategy:

Product Development Product Development Product Design;Product Design; Service Delivery Service Delivery Marketing;Marketing; Raising Financial Resources Raising Financial Resources Exporting Exporting Expanding SMEs Expanding SMEs Business;Business; Developing a Business StrategyDeveloping a Business Strategy

04/21/23 01:42 AM 46

ConclusionsConclusions

1.1. Only companies that continue to provide Only companies that continue to provide better products and services at the better products and services at the lower price will be lower price will be competitivecompetitive, , profitableprofitable and and maintain an edgemaintain an edge in a in a market economy.market economy.

2.2. A better product may result from A better product may result from improved manufacturing process that improved manufacturing process that increases cost effectiveness by reducing increases cost effectiveness by reducing production time using fewer resources;production time using fewer resources;

3.3. A better product may be superior by A better product may be superior by virtue of its new features, higher quality, virtue of its new features, higher quality, lower cost or combination of all these;lower cost or combination of all these;

THANK YOU FOR YOUR

ATTENTION!

References WIPO, Marketing Crafts and Visual Arts:

The Role of Intellectual Property; A practical Guide

WIPO 2004. Intellectual Property Hand Book: Policy Law and Use

WIPO TRIPS Agreement Otieno Odek. Enforcement of

Intellectual Property Rights in Kenya MIP Class notes