Intellectual property can be a crucial business tool, but not everyone thinks hard enough about protecting their big ideas. In 2001, plumber Brad McCarthy got stuck on a remote beach in Cape York in north Queensland and spent about six hours getting his car out with a hand winch. He knew there should be an improved way. In reaction, he invented Maxtrax, a light-weight vehicle-recovery device for bogged off-roaders.
After designing the Product Idea, he attended a Queensland Government business seminar, where advisers stressed getting patent protection before his idea was publicised. “One of the primary things we did was talk with a patent attorney to find out how we could protect the concept,” says McCarthy, who launched Maxtrax in 2005. It is now available in about 30 countries worldwide. McCarthy has patents in key markets like Australia, Europe as well as the US, and also the business even offers a trademark on the distinctive original “safety orange” hue it uses of its moulded product. Unlike McCarthy, however, many inventors and businesses with a great idea cruel their likelihood of success from day one.
Their big mistake? Ignoring patents or some other intellectual property protection before they spruik their idea to investors, the public or even friends. It may be a costly error. Bradley Postma, principal at patent and trademark attorney firm Cullens, says small and medium enterprises (SMEs), particularly, often neglect safeguarding their IP or think it will be too costly. “The majority of protectable IP goes unprotected,” he says.
Europe could be a particular trap for exporters because, unlike a few other major markets, it lacks a grace period allowing for public disclosure of an invention without affecting the validity of the subsequent patent application. That opens the way for an idea or product to get copied. “In Australia and the usa you can do something about this, provided you’re in a one-year window – in Europe you can’t, it’s far too late,” Postma says. “In that case, businesses have shot themselves in the foot; they’ve forfeited their rights and anybody can copy [their idea].” Postma observes that business people often think their idea is simply too very easy to warrant a patent. “However, if it’s successful and straightforward, it will likely be copied and you should get advice.”
Unitary patents on way – Margot Fröhlinger is principal director of How To Patent An Idea Or Product, European and international legal affairs in the Munich-based European Patent Office (EPO), which oversees about 160,000 patent applications annually. She recently completed a road trip warning Australian businesses that poor patent and IP safeguards could derail their European market opportunities. Companies need to innovate – and protect their inventions. “You have to have the protection of your own IP and, particularly, patent protection to get an excellent return on the investment,” she says.
Many international businesses have baulked at exporting to Europe because of complex patent processes across multiple jurisdictions that will result in potentially high costs and marginal protection. However, the EPO is promoting a brand new unitary patent system that promises as a game changer. This will make it easy to get protection in as much as 26 participating European Union member states with all the submission of the single request to the EPO.
A November 2017 EPO study, Patents, Trade and FDI inside the European Union, suggests better harmonisation of Europe’s patent system has the potential to increase trade and foreign direct investment in high-tech sectors, delivering annual gains of €14.6 billion ($A22.8 billion) in trade and €1.8 billion (A$2.81 billion) in foreign direct investment.
Fröhlinger believes Australian businesses across all sectors have opportunities to expand in to the European market, which boasts more than 500 million people, high gross domestic product and strong consumer demand. “It’s essential for Australian businesses to know that there is a big change ahead in Europe. I’m not talking only about patents,” Fröhlinger says. “It’s extremely important to get an integrated IP portfolio considering patents and trademarks and (covering) design. When they don’t have (IP) people in-house they should make an effort to get strategic business advice.”
The price of intangible assets – This call to action for Australian businesses may come as the international Innovation Index 2017 reports on countries’ IP receipts as a percentage of total trade. Basically, the measure indicates the way a country has been doing on the IP front. While Australia scores well with regards to inputs into research and development, the US (5.1 percent), Japan (4.7 percent) and Finland (2.9 %) easily outperform Australia (.3 %) on IP royalties.
The content? For the most part, Australian companies are certainly not great at converting research into value and treat IP almost as an administrative function. The exceptions are health tech leaders, such as medical device dppdwz Cochlear and sleep-disorder business ResMed, which understand the value of intangible assets such as logo and data use, and make their businesses around it.
In a knowledge-based economy, IP is becoming Prototype Model and governing it is no longer just a matter of organising trademarks and patents. Intangible assets are rapidly increasingly important than tangible assets and require appropriate consideration.
Overview of Australia’s top listed companies, released by Glasshouse Advisory in September 2017, endorses this type of sentiment. It reveals that 38 % of the companies’ value (about A$550 billion) will not be included on their balance sheets; this suggests that investors are operating without insights into a significant proportion in the corporate asset base.