Protecting your intellectual property abroad

The growth of IP protection systems has played a major role in the transformation of the world’s markets during the last few decades. Since IP ownership has become increasingly important to Canada’s economic growth and that of most other developed economies, creating and protecting IP has become indispensable for succeeding in today’s global marketplace. Integrating IP protection into your company’s business operations is simply a recognition of this reality. Doing so is even more important given how steadily Canadian IP sales are increasing. According to a Statistics Canada report released in 2019,

• Businesses in Canada having R&D activities sold a record $4.2 billion of IP property and services in 2017, up 7.7% from 2016.
• In 2017, the majority of sales of IP by Canadian companies were made to foreign markets. IP exports increased 2.8% from 2016, demonstrating an increasing outside demand for Canadian IP goods and services.
• For the fourth consecutive year, original software accounted for the largest share of IP sales made by Canadian businesses.

Moreover, according to the IP Canada Report 2020, Canadian filings for IP protection abroad have been rising. This emphasizes the importance Canadian businesses place on protecting their innovations and brands in international markets. In more detail:

• Between 2009 and 2018, international applications for IP protection by Canadians grew by 17%. 
• Canadian companies filed 24,062 trademark applications abroad in 2018, a 21% increase from 2017 and a 139% increase from 2009. 
• They also filed 1,626 industrial design applications internationally, up 13% from 2017 and 5% since 2008. 

Your international business model may take various forms, such as direct exporting, e-commerce, the use of distributors or agents, or joint ventures. No matter which strategy you use, establishing clear ownership of your IP rights at the appropriate time in your target market(s) is an indispensable first step. Not only does this protect your company, it can help you form new business relationships in the markets where you want to grow.

IP rights and international opportunities

It can often be difficult to determine whether an overseas market may be a good fit for your company’s products or services. But IP rights, both yours and those of others, can play an important part in your market research. For example:

• Companies frequently search patent databases to determine who else is working on similar technology. If you register your IP rights in a new market, potential business partners, local investors and possible licensees will be able to identify you more easily. 
• The IP rights registered by other companies in a market may provide useful information about your potential competitors within it.
• Identifying the IP rights that have already been registered in a market can help you decide whether it’s a suitable export target. Depending on what IP you find, this can help you identify your own niche in the market, avoid infringing on another company’s rights or avoid investing in a market already staked out by the competition.

Applying for IP protection abroad

IP rights are territorial. Consequently, when you apply for IP protection abroad, you need to know about the IP regulations, laws and procedures of the country where you want your IP protected. Even when you apply via an international application system, the IP office of that country will examine your application in light of local regulations and procedures.

For these reasons, registering IP protection abroad can be complicated, and it’s very wise to enlist the help of professionals such as local IP agents. In some cases, your Canadian IP agent may co-operate with a local agent to deal with the local IP office. While this kind of expertise can be costly, it can be much cheaper than filing an invalid application and finding out too late that your IP is unprotected. 

For more detail, refer to the Canadian Intellectual Property Office’s (CIPO) five-step guide on how to Protect IP outside Canada. It includes an overview of IP and its importance, plus how-tos that cover:

• Minimizing the risk of self-disclosure
• Learning about IP in target countries
• Applying for IP rights abroad
• Enforcing your rights

The decades-long growth of global trade has gone hand in hand with a huge increase in the number of companies moving to protect their IP rights. As supply chains have become increasingly international and overseas manufacturing has grown, issues around trade and IP protection have become closely intertwined.

The growth of global trade in the 1970s and 1980s also revealed gaps in the way IP rights were protected and enforced in different countries. In response, the World Trade Organization (WTO) established the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 1995 to reduce these gaps and establish minimum standards and common international rules governing IP protection for the WTO’s 164 member states.

The TRIPS Agreement covers five areas:

• How general provisions and basic principles of the multilateral trading system apply to international IP
• What the minimum standards of protection are for IP rights that members should provide
• Which procedures members should provide to enforce those rights in their own territories
• How to settle disputes
• Special transitional arrangements for the implementation of TRIPS provisions

The WTO’s website outlines the ways the TRIPS Agreement incorporated, modified, and expanded upon existing international conventions for protecting IP rights. If your business is involved in a trade dispute, you can use the WTO’s dispute settlement system.

It’s worth noting that the TRIPS Agreement doesn’t eliminate the need to protect your IP rights in all the countries where you do business. You must still attend to this yourself.

Detecting infringements on your IP requires regular diligence and monitoring. This includes paying attention to the innovations, new product releases and brand announcements relevant to your industry. You should also schedule periodic reviews and searches of patent and trademark databases to check for interlopers on your property. Setting up various kinds of online alerts is also advisable. If your IP (such as your trademark) is critical to the success of your business, you might want to hire a firm that specializes in monitoring IP rights.

Infringement on your IP rights, both in Canada and abroad, can range from activities such as unwitting use of your registered trademark to outright theft of your patented technology. How you respond will depend on factors such as:

• How serious the infringement is, in terms of the impact on your revenues or brand reputation
• Where the infringement took place
• How many countries are involved
• Whether your company has a contractual or business relationship with the infringing party, or may want to in future

What to do

If you discover an infringement, first consult with an IP professional to see what options you have, and whether you’re likely to get positive, cost-effective results by pursing a remedy. Possibilities include the following: 

• If you simply want the infringer to stop, sending a cease-and-desist letter to the offender may be all you need to do. If they ignore you, you’ll have to get a court injunction to get them to comply. Unfortunately, obtaining an injunction in an international market can be time-consuming.
• If you want compensation for financial losses, you can sue for damages. To do this, you need to demonstrate that you incurred losses such as lost sales or royalties. Damages are a common remedy in patent and copyright infringement cases because there’s usually a direct relationship between the infringement and lost revenues. For trademark infringement, you can sue for damages, but determining the amount can be more complicated than for patent or copyright offenses.

Alternatives to litigation

Suing for damages can be costly and time-consuming. While the litigation is going on, the infringing party may be free to continue its behaviour until the court reaches a decision. 

If you have an existing contractual relationship with the infringer, such as a licensee, it can be preferable to use arbitration or mediation instead. This means that any contract you enter into should state how disputes are to be settled. If you have no relationship with the infringer, arbitration or mediation may still be possible, so it’s worth suggesting. If that isn’t possible, you’ll have to litigate. But before you turn to the courts, be sure that the results will be worth the resources you put into doing so.

The World Intellectual Property Organization (WIPO) has a number of resources about IP for small- and medium-sized companies looking to expand internationally. The following is based on WIPO’s list of the most common mistakes that companies make when managing their IP.

Do

• Find out if a competitor in your target market has already registered a trademark that is the same as yours
  A competitor in your target market may have registered a trademark there that’s essentially the same as yours. To find out, you should do a trademark search before entering the market. If you don’t do the search, and violate the competitor’s rights by unwittingly using their mark, you may have to pay costly damages. At the very least, an infringement can upset your entire sales and marketing strategy for the market.
  
  
• Use regional and international protection systems
  Using an international application system can save time and money when you apply for IP rights in multiple countries. An IP professional can provide guidance and an idea of the potential cost savings.
  
  

Learn more about how to apply through an international application system with these resources:

• Trademarks: International Trademarks under the Madrid Protocol
  
  
• Patents: Patent Co-operation Treaty Kit
  
  
• Industrial designs: International industrial design registration using the Hague System
  
  
• Copyright: Copyright is automatically established when a work is created. Canada and more than 170 other countries have signed the Berne Convention, which deals with the protection of works and the rights of their authors. There’s no international copyright registration system or requirement for formal registration, but a voluntary registration of works can make it easier to prove your ownership if a dispute arises. Therefore, most countries have a system in place to allow for the formal copyright registration.
  
  
• Use confidentiality or non-disclosure agreements
  Setting up your international operations may include working with agents, distributors or other business partners. If you need to disclose information to them about IP such as unpatented technology or unregistered designs, make sure they sign confidentiality or non-disclosure agreements first. Your application may be jeopardized if you make any public disclosure beforehand.
  
  
• Clearly define IP ownership when outsourcing
  If you outsource the design or manufacture of your products to another company, be sure to register your IP in any market where the other company will be selling those products. Failing to do so can lead to disputes over IP ownership as well as infringements on your IP.

Don’t

• Assume your IP is protected abroad 
  Registering your patents, trademarks or industrial designs in Canada protects them only in Canada. To protect them in other countries, you must register them there as well. Copyright is automatically established when a work is created. Canada and more than 170 other countries have signed the Berne Convention, which deals with the protection of works and the rights of their authors.
  
  
• Assume that IP rules are the same everywhere 
  IP rules are slowly being harmonized around the world, but significant differences persist. Be sure to check into this when protecting your IP abroad.
  
  
• Delay your applications for protection abroad 
  For some IP rights, registering them domestically puts a time limit on registering them in other countries as well. For patents, the period is usually one year. For trademarks and industrial designs, it’s only six months. If you don’t register your rights in time, you may have no recourse if someone infringes on them in that market.
  
  
• Infringe on the IP rights of third parties
  Be sure not to encroach on the rights of third parties whose IP is part of your product or service. For example, if you have licensed someone else’s technology as part of your product, the licensing agreement may allow you to sell the product only in specific countries. If you sell it elsewhere, you violate the IP clauses of the licence agreement and may face penalties. The other party could also cancel the licence, leading to all kinds of business disruptions.
  
  
• Licence patents or designs without protecting them
  Rather than export your products directly to a new market, you may decide to license your patents or designs to a company there, on payment of a one-time fee or royalty. Such agreements often include information or technology transfer, as well as an authorization to manufacture in that market. When you’re negotiating these agreements, be sure that they establish clear IP ownership and that the IP is protected in the new market.
  
  
• Use a trademark that’s inappropriate for the market
  Trademarks that work well in Canada may mean something else entirely in another language. There are many examples, such as HSBC Bank’s slogan of “Assume nothing” translating as “Do nothing” in some countries. Needless to say, getting it wrong may mean disaster for your venture into the new market.