Cross Border Issues in Intellectual Property

Most forms of intellectual property are, by nature, territorial.  Obtaining the grant of a patent, trade mark or design in a particular country enables the rights owner to put up a fence around his borders.  Why then should IP owners be worried about what is happening over the fence?

Big ideas have to start somewhere and spotting the next successful product is not easy.  However, companies need to think about realistic territorial protection for their IP at the very earliest stage.

Most people know that patents, to protect technical aspects of new products, have to be filed before the invention has been disclosed.  This puts companies in the awkward position of having to decide whether to invest in patent applications before their products have been brought to market. Companies whose territorial aspirations are too limited initially, may lose the right to exclusive exploitation of their invention in valuable markets.

Fortunately the European patent and Patent Co-operation Treaty (PCT) systems provide useful routes for those wishing to keep their patenting options open territorially, whilst putting off some of the cost to a later date.

The same issue applies to registered designs for protecting the new appearance of a product.  However, all may not be lost if an unprotected design unexpectedly takes off.  In the UK and the European Union, grace periods mean that designs can still be validly protected up to one year after disclosure by the designer.  If your design becomes the new “must-have” accessory, there may still be time to protect it before the cheap copies start to arrive.

Brand managers need to think equally far ahead.  It is extremely common for companies who develop a marketable brand in one territory to find that they are unable to use the same trade mark in another country because someone else has conflicting rights.  This can be through deliberate brand-hijacking or independent development of a conflicting brand on a collision course. 

The risk of this happening to your business can be managed by checking the availability of a new brand across a realistic range of countries initially and registering your trade mark in those countries early on.  

In Europe, the Community trade mark (“CTM”) is a cost-effective tool for protecting trade marks across a wide territory.  One drawback is the possibility of opposition to registration from the owner of a prior right in another EU member state, which may be far away in terms of actual trade.  The Madrid Protocol, which allows applicants to designate up to 91 member states, is also useful for trade mark owners who like to think on a global scale.     

Companies who are too greedy territorially may run into problems with their trade mark registrations being challenged for non-use.  It is advisable to update and refresh brand protection periodically for this reason. 

Patent owners may encounter similar problems with patents for inventions which are not exploited becoming subject to compulsory licences.

Owners of all types of IP are well advised to try to anticipate where unwelcome imitations of their products or brands are likely to come from so that they can obtain protection in the manufacturer or internet retailer’s own country. 

It is equally important for companies to protect their brands in their own manufacturing locations.  In many manufacturing bases, including China and India, trade mark registrations can be infringed by applying a trade mark to goods to be exported. 

Registration of IP with Customs Authorities can be an easy way of stopping at least a proportion of counterfeits as they cross borders.  This is good where you are the rights holder, but not so welcome if a Chinese trade mark hijacker has enlisted the assistance of Chinese Customs to block the export of your latest creations for the coming season.    

In Europe, owners of EU-wide rights such as Community designs and trade marks can file an annual Application for Customs Action requesting Customs Authorities across Europe to look out for and detain suspected counterfeits.  National Customs Applications can be filed by the owners of national rights such as patents and copyright.  Certain undertakings to indemnify Customs have to be given.  When rights holders are notified by Customs in the EU of the interception of suspected counterfeits, they can request Customs to destroy the counterfeits without the need for court action. 

Even with the best forward thinking, some disputes are inevitable, and when that happens, it is increasingly likely that multiple territories will be involved.  This can create opportunities for forum shopping.  In infringement cases, cross-border injunctions within the EU are more likely to be given if action is brought in the country where the defendant is domiciled.  However action can also be brought in the territory where an infringement occurs.  Companies may prefer to bring proceedings in countries where the courts and the lawyers speak their language and where they are familiar with the way that the courts work.  The degree of specialism of the courts and experience of the judges may be important, as well as cost and speed.  Applicable law and procedures can also differ. 

A potential defendant who senses infringement proceedings may file pre-emptively for a declaration of non-infringement in a court which he regards more favourably, forcing other courts in Europe to stay their proceedings.

IP owners can try to stack the odds in their favour by paying careful attention in any agreements to clauses dealing with governing law and jurisdiction, and by thinking about their strategy as a dispute looms. 

Looking ahead, when the new Unitary Patent arrives in Europe, patent applicants will have more decisions to take about whether to continue to seek the grant of a European patent which splits into a basket of national patents after grant, or whether to put all of their eggs into one basket and opt for a Unitary Patent which will come under the jurisdiction of a single court able to injunct or revoke with effect in most of the European Union. 

Alison Hague, Partner
First published in Wealth & Finance Magazine, August 2014