It’s great news for you when your product or service is successful not only in your home country but also elsewhere in the world. Every year it becomes that bit easier to do business overseas, whether due to harmonization of trading norms or advances in financial, communications, and logistical technology. If your product is good, it can quickly become globally available.
Of course, that increased exposure can mean your business is therefore more vulnerable to misuse by others. Just as you protect your intellectual property at home, you need to think about how to do this overseas. Even if your IP is protected at home, you might not have the right to use it in another country, let alone to receive protection against infringement.
If you are exporting IP, you will probably want to ensure that any value and goodwill arising through use of the IP is owned by you, and not, for example, by a distributor that you employ to sell your products in a given country. And you also need to be sure your IP does not offend laws in that country. Here are a few pointers:
If you are hoping for investment or to improve status, registering your IP in another country can improve your market valuation or your profile. There are certain countries -China being a good example – where any business nexus would prompt those in the know to wonder if you have protected yourself against infringement.
Third party rights
The process of registering your IP overseas also helps flush out any existing third-party IP rights. You can then identify any pre-existing rights holders and either negotiate with them, accept the risk, or try to force them off your brand. In all scenarios, it is better to know what obstacles exist so that you can plan accordingly and so that you don’t inadvertently waste money and time on developing a brand that will immediately be challenged.
You may even need to rebrand before entering a particular market. In the worst-case scenario, you could be threatened not just with damages but even criminal sanctions if you breach a local IP holder’s rights. One measure of protection here is to require a commitment from your local agent that it has done its homework in the country for which it is responsible, and confirmed that you are free to develop your brand there. However, this will not let you avoid liability for tort or criminal law.
One important revenue stream for the owner of a strong brand or usable technology is in the form of royalties for licensing or sub-licensing that brand. If you have not registered the relevant IP in the target country, then that revenue is insecure.
It is still possible to licence the use of IP that is unregistered, but it can be difficult to challenge infringement and consequently more difficult to secure legal rights to related income.
In some cases, it is important to register IP in a certain country even if you have no intention of entering its market. This is because a third-party in that country might decide that, since you appear unaware of the market in question, it can use your brand for its own goods.
This creates risk for you as buyers of the branded goods or services in that country may mistakenly believe that you are liable and may even sue you for issues you know nothing about. Registering your IP in a jurisdiction where you do not do business can therefore be done as a defensive measure, although if you do nothing with it you could find it being challenged for non-use.
In conclusion, some level of IP due diligence is advisable before venturing into dealing with another country. This issue arises more swiftly than you might imagine, given the ease with which products or services can be delivered by e-commerce. An IP audit may even be advisable if you don’t yet trade internationally, because it may expose weaknesses in your protection that can be strengthened now before something does go wrong.