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Shelston IP has been named as a finalist in the Australian Law Awards for Intellectual Property Team of the Year.  

Now in its 20th year, the Australian Law Awards, run in partnership with Principal Partner UNSW Law, bestows the industry’s most prestigious accolades recognising excellence across the entire legal industry.

The awards showcase professional development and innovation, celebrating both the individuals and firms that are leading the way in the industry.

Award recipients represent a true cross section of the legal industry, recognising the contributions of the profession’s most senior ranks through to its rising stars.

“It is our pleasure to mark the 20th year anniversary of the Australian Law Awards,” said Lawyers Weekly editor Emma Ryan.

“This annual event represents the premier benchmark for those operating in the business of law, covering vast practice areas, level of experience and contribution to the profession.

“I would like to congratulate all of the finalists for this year’s event. We look forward to celebrating with you soon.”

This recognition reinforces the strength of our service and dedication to our clients.

Authored by Duncan Longstaff

Part IV of the Competition and Consumer Act 2010 (Cth) (the Act) prohibits certain anti-competitive conduct.

Following the repeal of s51(3) of the Act, which provided an exemption for some IP dealings, various prohibitions in Part IV will now apply to certain IP arrangements from 13 September 2019. Amongst other things, those prohibitions will apply to licences and assignments of patent, design, copyright and eligible circuit layout rights. The prohibitions will also apply to licences between registered trade mark owners and registered users that were previously exempted. Importantly, it will be an offence to continue to give effect to provisions of relevant IP licences, assignments and other arrangements that contravene Part IV even if those licences, assignments or other arrangements were entered into before 13 September 2019.

The ACCC recently released its final Guidelines on the repeal of s51(3), with the intention of providing further clarity on what conduct involving IP rights is likely or unlikely to contravene the prohibitions that now apply to IP arrangements, and on the ACCC’s approach to assessment and enforcement. The following is an overview of some of the key parts of the final ACCC Guidelines.

The final Guidelines can be accessed here.

So what is prohibited?

The following will now be prohibited in connection with arrangements/conduct involving relevant IP rights:

  1. making or giving effect to a contract, arrangement or understanding, or engaging in a concerted practice, for the purpose, or with the effect or likely effect, of substantially lessening competition;
  2. engaging in exclusive dealing for the purpose, or with the effect or likely effect, of substantially lessening competition – this would generally involve imposing conditions which restrict the other party’s freedom to choose how it engages with third parties (for example, by requiring the other party to obtain goods/services from or supply goods/services to a specified third party or refusing to supply goods/services to the other party unless they agree to deal with a specified third party); and
  3. cartel conduct – IP contracts/arrangements will generally constitute cartel conduct if they are between parties that are, or are likely to be, competitors and include a provision that has the: (a) purpose or likely effect of fixing the price of goods/services supplied or acquired by any of the parties (Price Fixing); (b) purpose of preventing, restricting or limiting the production, supply or availability of goods/services (Output Restriction); (c) purpose of allocating or dividing certain customers, suppliers or territories between any of the parties (Market Allocation); or (d) purpose of rigging a bid for tender (Bid Rigging).

Cartel conduct is prohibited even if the conduct does not have any effect on competition. However, the prohibition on making or giving effect to cartel provisions will not apply if the only parties to the arrangement are related companies or if the conduct is for the purposes of a joint venture relating to the production of goods or the supply or acquisition of goods/services, which is not carried on for the purposes of substantially lessening competition.

Following public consultation and submissions made by some industry bodies, including INTA and LESANZ, it appears that the ACCC is seeking to provide some comfort by suggesting that the repeal of s51(3) will not necessarily disrupt existing IP arrangements, hamper investment in innovation and IP commercialisation or necessarily put IP owners or licensees at broad risk of non-compliance. In particular, the ACCC has acknowledged the exclusive nature of IP rights; acknowledged that exclusivity is an important incentive for investment in and promotion of innovation and IP commercialisation; suggested that the exercise of exclusive IP rights will not have significant anti-competitive implications; and noted that the licensing/assignment of IP rights usually encourages competition by allowing IP to be accessed, exploited and commercialised to a greater extent than would otherwise be allowed if the IP is not made available via licence or assignment.

IP arrangements that substantially lessen competition

Engaging in concerted practices, giving effect to contracts/arrangements (including specific contractual terms) and engaging in exclusive dealing involving IP rights will only contravene the prohibitions on anti-competitive conduct if they have the purpose, effect or likely effect of substantially lessening competition.

The ACCC will usually apply a “with or without” test when assessing the effect or likely effect of certain conduct on competition – by comparing the likely state of competition “with” and “without” the relevant conduct. In the case of IP licences/assignments, the ACCC has indicated that the “without” scenario for the purposes of its assessment will be where there is no IP assignment/licence at all, rather than a scenario where there is an IP licence/assignment without the potentially prohibited provisions. If the position is accepted that IP licences/assignments generally encourage competition by making IP accessible in circumstances where it would not be accessible “without” the licence/assignment, then there is a good argument that IP licences/assignments generally should not substantially lessen competition.

The purpose, effect or likely effect of the relevant conduct is assessed at the time the conduct occurs. Given that the prohibitions applying to IP contracts/arrangements relate to both the “making” and “giving effect” to the IP contract/arrangement, the ACCC will assess the purpose, effect or likely effect of the relevant provisions of the contract both at the time the contract is made and at the time the relevant provisions are given effect. Significantly, the effect or likely effect of a contractual provision on competition within a particular market may vary over time if market conditions change. This could pose a challenge to IP owners and licensees, as it may become necessary to continue to monitor market conditions to ensure that existing compliant IP arrangements do not subsequently become prohibited anti-competitive arrangements because of changes in the relevant market.

Examples of some relatively common IP contract terms that may be at risk of contravening the prohibitions on anti-competitive conduct include those which: (a) impose restrictions beyond the statutory term of the relevant IP right; (b) automatically grant the licensor a licence to improvements made to the IP by the licensee; or (c) require a party not to challenge the validity of the other party’s IP rights. Again, these terms would only be prohibited if they have the purpose, effect or likely effect of substantially lessening competition. The ACCC has indicated that these types of terms will “only occasionally” have that purpose, effect or likely effect when applying the “with or without” test.

Cartel conduct

Cartel conduct can only occur if both of the following are satisfied:

  1. the parties to the conduct are, or are likely to be, competitors for the relevant goods/services; and
  2. the conduct, or contractual provision, has the purpose/effect of Price Fixing, Output Restriction, Market Allocation or Bid Rigging (as applicable).

Parties would generally be considered competitors for the purposes of the cartel provisions if one party’s goods/services being the subject of the cartel conduct are substitutable for similar goods/services of the other party. However, for the purposes of IP licences/assignments, the ACCC has pointed out that it is relevant to consider if both parties already had the capacity to supply substitutable goods/services before the IP licence/assignment – implying that the parties may not be considered competitors for the purposes of the prohibition on cartel conduct if they did not both have that capacity before the IP licence/assignment.

Generally, the ACCC will assess what the parties actually intended in determining whether the relevant conduct or contractual provision had the substantial purpose/effect of Price Fixing, Output Restriction, Market Allocation or Bid Rigging, but by reference to available evidence surrounding the nature and circumstances of the arrangements between the parties. It is therefore possible that the parties to an IP licence/assignment will not be liable for engaging in cartel conduct even if certain contractual provisions have the inadvertent effect of Price Fixing, Output Restriction, Market Allocation or Bid Rigging, provided it is clear that the parties did not agree or give effect to the relevant contractual provisions for the substantial purpose of Price Fixing, Output Restriction, Market Allocation or Bid Rigging (as applicable).

Penalties and next steps

A range of penalties may apply if conduct or contractual provisions relating to IP are found to contravene the prohibitions on anti-competitive conduct. Amongst other things, a party may be ordered to pay damages and/or be restrained from engaging in the relevant conduct or giving effect to the offending contractual provisions. Pecuniary penalties may also apply, with the potential for fines of up to $10 million per contravention for corporations and $500,000 per contravention for individuals. Significantly, certain cartel conduct may also constitute a criminal offence for which a sentence of up to 10 years imprisonment and/or a fine of up to $420,000 may be imposed.

Where specific IP licence/assignment terms are at risk of contravening the prohibitions on anti-competitive conduct, the most obvious way to mitigate risk would be to amend the IP licence/assignment to remove the relevant term and vary arrangements to ensure that the relevant term is not given any effect. Of course, this may not be ideal or simple to achieve in the context of certain IP arrangements and such terms should not necessarily be removed or varied without an appropriate assessment of whether they are likely to substantially lessen competition or comprise cartel conduct in the particular circumstances. As an alternative, parties to an IP licence, assignment or other arrangement can also seek the ACCC’s authorisation of the arrangement. The ACCC may authorise the IP licence, assignment or arrangement if it is likely to result in a net public benefit, which may be the case in the context of IP arrangements involving research, development, innovation and IP commercialisation with a public benefit. If the IP arrangements are authorised by the ACCC, neither the ACCC nor any other person may take legal action on the basis that the IP arrangements contravene the prohibitions on anti-competitive conduct.

The ACCC Guidelines do not cater for all scenarios. Whether or not specific conduct or contractual provisions relating to IP will contravene the prohibitions on anti-competitive conduct will depend on the specific context and circumstances of each case. At the very least, IP owners and licensees should familiarise themselves with the ACCC Guidelines and review their IP arrangements to identify and mitigate any apparent risks of non-compliance. While the ACCC Guidelines are not exhaustive or determinative, they at least provide some examples of the types of clauses in IP agreements that may be at risk of contravening the prohibitions on anti-competitive conduct; IP arrangements that are likely or unlikely to contravene the relevant prohibitions; and the ACCC’s approach to assessing each arrangement.

Authored by Michael Deacon

IAM Patent 1000: The World’s Leading Patent Professionals 2019 results have been announced.  Shelston IP have again been Highly Recommended for their patent prosecution.

Those who have been commended, are to be congratulated.

“Shelston IP is head and shoulders above the rest, for its holistic service and deep reserves of knowledge. The team is super proactive and always one step ahead of the opposition; they work around the clock, never missing a deadline and will go above and beyond to ensure the work is first-rate.” An example of the firm’s innovative tendencies is its recent launch of OneAsia, a business solution aimed at providing clients with seamless one-stop shop protection across the Association of Southeast Asian Nations. Paul Harrison leaves both clients and peers in awe. As one patron enthuses: “Paul fuses his technical knowledge in chemical engineering with his legal expertise and sound commercial thinking, to produce great work. He has strong patent searching and analysis skills and his overall strategic approach makes him a stand out. Paul is proactive and his ability to understand complex processes and distil it into simple and easily digestible language is extremely valuable.” Patent attorney Greg Whitehead has a broad mechanical engineering practice; he possesses detailed and unique knowledge of robotic systems, automation equipment and industrial drying and heating machine patents. Commercial law department spearhead Chris Bevitt comes “highly recommended for his finesse in transactional matters. He has the ability to take intricate commercial arrangements involving the past, present and future rights and obligations of parties and draft meticulous, concise and effective clauses to reflect them perfectly. Chris’ turnaround is fast and his communication extremely effective – he proposes alternative solutions to achieve the best possible outcome. He is courteous and always available to answer questions too.”

Authored by Paul Harrison, Greg Whitehead and Chris Bevitt

April 26 is World IP Day for 2019, with the theme of “Reach for Gold – IP & Sports”. Shelston Intellectual Property and Shelston Lawyers, congratulate Australian Rugby League Commission Limited (ARLC) and its related entities including New South Wales Rugby League Limited and Queensland Rugby Football League Limited for their sustained and successful efforts in relation to the application of IP in the sporting arena.

ARLC

ARLC is the peak body responsible for the governance, growth and development of the sport of rugby league throughout Australia. ARLC and its related State entities operate and control all the major professional rugby league competitions in Australia including the renowned National Rugby League (NRL) competition and the annual State of Origin series.

Rugby league in Australia

Rugby league can trace its history back to as early as 8 August 1907, when New South Wales Rugby League (NSWRL) was founded. The first season of the Sydney rugby league premiership took place in 1908, and was contested by nine teams.

NSWRL ran the major rugby league competition of New South Wales, and subsequently Australia, from 1907 to 1994. In 1995, control of the Australian rugby league competition passed from NSWRL to ARLC. ARLC has controlled professional rugby league competitions in Australia since that time (together with News Limited during the period 1998 to 2012).

The NRL competition is a competition between professional rugby league clubs in Australia and New Zealand. It has been sponsored by Telstra Corporation Limited (Telstra) since 2001, and is called the NRL Telstra Premiership. It is contested by sixteen teams, fifteen of which are from clubs based in Australia, and one of which is from a club based in New Zealand.

The NRL competition is regarded as the world’s elite rugby league club competition. The NRL Grand Final is one of Australia’s most popular sporting events, and one of the largest attended club championship events in the world.

The State of Origin series is contested between rugby league teams representing Queensland and New South Wales and is comprised of elite players from the NRL competition. Accordingly, the State of Origin series is widely regarded as the pinnacle of the sport of rugby league worldwide as it comprises the best players from the most competitive and highest quality rugby league club competition in the world. The series is also widely considered to be one of Australia’s greatest sporting rivalries and premier sporting events, attracting extensive game attendance and high rating television viewing.

ARLC’s trade mark portfolio

ARLC and its predecessors have established a substantial portfolio of trade marks, some of which date back decades. The trade mark portfolio comprises the names, logos and official mascots of all participating league clubs along with the names and brands of ARLC and its associated entities including the names of the various competitions. Shelston Lawyers has had the privilege of assisting ARLC and related entities with their trade mark registration, prosecution, enforcement and defence work for more than 10 years.

ARLC’s trade mark portfolio serves various purposes. First, it protects the valuable intellectual property of ARLC and related entities in club and competition names and brands, many of which have been established for decades or longer. ARLC uses its registered trade marks to prevent other sporting codes from adopting club or competition names which are too similar to those associated with ARLC. ARLC has also successively opposed many trade mark applications by third parties wishing to unfairly capitalise on ARLC’s strong reputation in its names and brands.

Secondly, ARLC’s trade mark portfolio enables ARLC to commercialise its brands and reputation through licensing arrangements with authorised producers and distributors of official ARLC and NRL merchandise and through media rights deals. ARLC generates substantial revenues from its licensing and merchandising programs and media rights deals. A related purpose is to prevent unauthorised third-party merchandisers from seeking to pass off their rugby league merchandise as official merchandise sanctioned by ARLC.

ARLC makes very active use of its trade marks including in media promoting the competitions, on club jerseys and other official match paraphernalia, on ground signage and on commercial merchandise. Likewise, the trade marks are frequently referenced by television, print, radio and internet media.

A key victory for ARLC through its trade mark program

As indicated above, one of the purposes of ARLC’s trade mark registration program is to successfully establish and defend its title to its names and brands.

In recent years, ARLC (and its associated entities) have opposed various third-party applications for, and defended their own applications for, trade marks related to the State of Origin series. ARLC has been successful in every matter to date. In a decision confirming ARLC’s successful defence of one of its applications for STATE OF ORIGIN, the hearing officer stated that “In the present matter, the Applicant [ARLC] has provided overwhelming and continual evidence of use of the Trade Mark from well before the Relevant Date. This evidence is of such an extent that it establishes in fact that the Trade Mark distinguishes the Applicant’s Goods from the goods of other traders. An endorsement to this effect will be added to the Register.”

To assist the hearing officer in reaching this conclusion, ARLC submitted hundreds of pages of evidence of its use of the trade mark over an extended period together with evidence of substantial match attendance figures and media coverage involving ARLC’s use of State of Origin-related branding. ARLC has subsequently used the findings from this hearing to successfully oppose other third-party applications and support its own further applications for State of Origin related trade marks. ARLC’s clear title to those trade marks is now beyond doubt as a result of its vigorous prosecution of its own applications and vigorous opposition of third party applications. Shelston Lawyers is proud to have acted for ARLC in all of these matters.

ARLC Reaching for Gold

While ARLC’s primary goal will always be the promotion and ongoing development of rugby league, it can be justifiably proud of its long history of successfully using its trade mark portfolio to protect its reputation, and monetise its brands through merchandising and media rights licensing.

Authored by Chris Bevitt and Michael Deacon

We handle the intellectual property (IP) portfolios for a diverse range of clients, many of whom are large multinationals. Their IP portfolios typically include all forms of registrable rights – patents, trademarks and designs. We also often find that certain clients have many IP service providers, each of which handle one or more of those registrable rights. Such a fractured vendor landscape can arise due to a variety of factors, such as historical reasons. For example, different IP Managers within the organisation have had different preferences for IP services providers and have spread the work around over time, or there may have even been an internal policy in this regard. Sometimes, a parent company may acquire smaller entities and will transfer any IP into the parent’s name, but will retain management of the IP with the existing service provider. This may be for perceived convenience, or simply due to a perceived cost for transfer of the portfolio. Whatever the reason, there are disadvantages to having the IP handled by plurality of service providers.

By reviewing the IP portfolios of the most successful organisations it is clear that industry best practice is to have the IP handled by a very limited number of service providers, and preferably consolidated to a single provider.

Industry best practice

There are many advantages of having your IP handled under one roof by a single dedicated IP team. For example, to enable the attorneys handling the IP to better understand:

  • the client’s commercial objectives,
  • the client’s existing technology, the technology currently under development, and what technology may be required in the future,
  • the client’s main competitors and their technologies, and
  • to gain a better understanding of the industry in general, including the common technical knowledge.

An understanding of the commercial objectives is important, as these objectives should frame the IP being developed now and into the future, and will assist the attorney to more comprehensively protect and enforce the IP. Consolidation of IP with a single service provider enables the attorneys to become more embedded in the organisation and fosters a more collaborative working relationship with the key people in the organisation (researchers, inventors, business development managers, etc). It can also be important to understand the client’s key competitor(s) and its technologies for freedom to operate issues and to assist the organisation in its decisions to attack its competitors’ IP.  All these factors lead to:

  • greater proactive and strategic management of the client’s IP (rather than a reactive approach to IP issues as they arise);
  • increased efficiencies in dealing with IP matters;
  • a service provider enabled to add real value to the organisation, and
  • cost benefits.

Furthermore, there are synergies which come about from this approach.  As attorneys/lawyers become more embedded in an organisation they are better able to brainstorm technical solutions with R&D personnel and to assist them to understand the commerciality of the solutions they develop to real-world problems. Additionally, the improved collaboration which is possible between attorneys and R&D staff can lead to more robust patent specifications being drafted, thereby improving the strength of the IP, reducing the ability of infringers to work around the IP, and increasing the prospects of surviving a validity attack. It also leads to the attorneys having a better understanding of the key prior art in the field, and the common ‘terms of art’.  The organisation can also benefit in other ways. For example, many in-house IP teams are relatively small and there can sometimes be a high turnover of attorneys. Utilising a single service provider supports portfolio knowledge and corporate memory.

Conclusions and summary

There are many advantages to an organisation having its IP handled by a single service provider, and is a ‘best practice’ approach to strategic IP portfolio management.

Shelston IP is well placed to assist with management and consolidation of your IP portfolio to achieve your commercial objectives.

The content of this article is general in nature and must not be relied on in lieu of advice from a qualified professional in respect of your particular circumstances.

Authored by Paul Harrison

In a recent article, we outlined the role of IP in the innovation process. In particular, we noted that the innovation process can be conveniently described as having 4 main stages, namely:

– conception of innovative ideas,

– the research and development (R&D) stage,

– commercialisation of products or services, and

– the marketing of those products or services.

The process may also include iterative aspects and is often cyclical in order to continually produce new product and service offerings to the market (the so-called “cycle of innovation”).

We noted that the involvement of an IP professional is critical at each stage of the innovation process, for example to provide advice on: legal (confidentiality) agreements, prior art searching and analysis (patentability, freedom to operate, competitor and landscape mapping), trade mark and design registrations, patent strategy (including advice on when a trade secret vs patent protection is appropriate), and enforcement matters.

  • We also noted that additional specialised advice is sometimes required in relation to, for example, Innovation Incentives, comprising advice on Government grants and rebates, and collaborative funding opportunities.

As the activities undertaken at each stage of innovation are different, it follows that the IP considerations are different at each stage, too. It is useful to summarise the stages of innovation and the main forms of IP that are relevant at each stage, and to identify what forms of specialised advice may additionally be appropriate at each stage. In this regard, we refer to the following table.

Closing comments

Outlined in this article is a summary of the main stages of the innovation process and what main IP tools are relevant throughout. We also outline what relevant advisory services are relevant corresponding to the stages of innovation. When an idea is an important commercial asset, it is wise to engage a qualified IP professional (patent or trade mark attorney) to assist in the generation of relevant intellectual property rights that suitably protect that commercial asset. At Shelston IP, we have a number of highly experienced attorneys who can assist in navigating these complexities. Contact us to understand what IP tools are most appropriate for your innovation.

The content of this article is general in nature and must not be relied on in lieu of advice from a qualified professional in respect of your particular circumstances.

Authored by Paul Harrison

In a previous article, we outlined the various stages of innovation – from conception of an innovative idea, through the research and development (R&D) stage, followed by commercialisation, and then marketing of innovative products or services. We have also outlined what IP considerations are most relevant at each stage. The purpose of this article is to outline an example (which is based on a real-world example) that may assist in illustrating the types of IP considerations that were made prior to, and during the course of, research intended to lead to the development of a commercial product.

Commercial and IP considerations during R&D

In this particular example, an academic had been contracted by a commercial partner to conduct R&D to prepare a fire-retardant coating composition for a new market opportunity that had been identified. Initially, a “landscape” prior art review was undertaken (see our article here for further information on prior art searching). In reviewing the relevant prior art, it became apparent that there were two options, namely to either:

  1. start with a known fire-retardant coating composition and modify it to improve fire-retardancy; or
  2. take a known “standard” coating composition and modify it to introduce fire-retardancy.

Because there was some time pressure and a limited budget, it was unlikely that both options could be pursued simultaneously and naturally, therefore, the question arose as to which option was preferable.

In this case, the commercial partner’s attorneys were brought into the project from an early stage and advised that it was important to consider the IP position before starting and during research. In particular, it was important to consider:

  • the potential for patentability;
  • the potential for infringement; and
  • how to maximise the commercial value of, or add value to, the IP produced by the research at each stage of the R&D.

It is useful to explore these factors for both options a.) and b.).

Option a.)

In the case of the first option (i.e., modifying an existing fire-retardant coating composition to improve its fire-retardancy), assuming that the research was successful, patent claims could be directed to the improved fire-retardant coating composition. This of course assumes that the improved composition is new (i.e. no-one had previously modified the existing fire-retardant coating composition in the same way) and the modifications are arguably inventive. If the inventiveness was questionable, for example if routine modifications were made that had an expected outcome, it may be that the only IP protection which was possible was the “use”-type claims (especially if it was a new application), which would be a relatively narrow scope of protection, although use-type claims may still be commercially valuable.

The main issue that may arise is that the existing fire-retardant coating composition could “belong” to a third-party. Issues of infringement and whether there was freedom to operate could compromise the commerciality of the project. This is an important factor to consider prior to commencing the research, as significant time and money can be wasted if no license were to be given to the existing coating composition, or if it were not possible to buy the existing coating composition from that third party, in which case more time and effort would be required to work around the third-party rights. As third-party IP rights may act as “roadblocks” to commercialisation of a product or service, and as significant resources are usually required to commercialise new products or services, it is important to understand the risks of infringement before going to market. In this case, it would be preferable to start with an existing fire-retardant coating composition that was more than 20 years old, if possible.

Option b.)

In the case of the second option (i.e., whereby a known “standard” coating composition is modified to introduce fire-retardancy), assuming that the research is successful it is likely that the new fire-retardant coating is patentable (i.e., meets the requirements of novelty and inventiveness), including the use of it for the commercial purposes that had been identified in the marketplace. Claims to the new coating composition would comprise broad protection. Also, infringement issues would be less likely, as presumably the starting “standard” coating would be at least 20 years old, and therefore any IP rights relating to the starting coating composition owned by a third party would have expired.

The downside with option b.), however, is that a greater research effort is likely to be required to develop the new coating composition, meaning a longer time to market. This is in contrast with option a.), whereby a relatively lower research effort is expected as the existing fire-retardant coating composition is already known, and therefore the innovation could be expected on the market relatively sooner. Of course, this assumes that it is technically easier to improve fire-retardancy than to introduce it, and this assumption is one of the main technical factors which would determine the option to pursue.

The R&D process

During the research, it was important to define the specific steps that would be undertaken, and to review every step that may infringe third party patent rights, and to design the project around these constraints or seek licenses from the technology owners. Further prior art searching was also conducted as the research matured. Agreements covering ownership of the resulting IP were established, and various innovations which were not discernable in the final product were protected via trade secret.

The competition

During the course of the research and subsequent commercialisation it was also important to consider what the competition may do, as a competitive alternative can reduce the value of the IP resulting from the research. Accordingly, it can be important to consider understanding other technologies that work, and those that don’t work. From a strategic perspective, it may be appropriate to consider publishing other methods that work (i.e., a so-called “defensive publication”) since there will be less chance a competitor will compete using published technologies if they cannot obtain a monopoly on the technology. It may also be useful to keep trade secrets around what does not work, so that others expend resources and time investigating the negative results, keeping them out of the market for longer.

The “best” option

Returning to the question of which option was best, clearly there are a number of factors to consider, including those that are:

  • technical – which course of scientific research to pursue, for example whether it is technically easier to improve fire-retardancy than to introduce it;
  • IP-related – the scope of patent protection which is likely to be available and the risks of infringing third party rights;
  • commercial – such as the likely speed of bringing the innovation to market, and
  • practical – such as managing the overall cost of the project.

Additional factors to consider included whether the product would be exported to, or manufactured in other countries, in which case those IP-related factors must also be considered for those other jurisdictions.

Closing comments

It should be clear from this example that it is preferable to think about IP before one starts a course of research, and that there is a balance of science, law, and commercial considerations during the innovation process. Whilst a specific example has been used in this article, it should be clear that this could be replaced with another technical solution, and what is more important is the methodology that was followed rather than the specifics of this particular example.

The content of this article is general in nature and must not be relied on in lieu of advice from a qualified professional in respect of your particular circumstances.

Authored by Charles Tansey, PhD

Innovation is generally understood as the process of bringing valuable new products (and services) to market, and has been highlighted as one of the key factors that determines the future success of an organisation. Intellectual property (IP), and the management of the IP throughout the new product development process is a critical factor in successfully commercialising products and services, for example by providing a monopoly to the IP owner, and barriers to entry for competition. The purpose of this article is to briefly outline what forms of IP protection may be required at each stage of the product development process, and how overall management of the IP may lead to overall improved revenues and profitability.

What is Innovation?

Innovation is generally understood as the process of commercialising new ideas.  Through innovation, a business will endeavor to deliver new value to its customers to generate improved revenues/profitability by:

  1. offering new commercially viable products/services, which generally result from “radical innovations”, and/or
  2. offering more efficient ways of doing things, which generally result from “improvement innovations”.

In the latter case, an improvement innovation tends to produce an improved product over its ancestor eg. improvements in, say, raw material use, or the application of new/better production processes that allow old/new products to be made faster, better, or more cheaply.

The cycle of innovation can be broken down into several stages. For the purposes of this article, it is convenient to consider 4 stages of innovation, comprising:

  • conception of innovative ideas,
  • the research and development (R&D) stage,
  • commercialisation of product or services, and
  • the marketing of those products or services.

As the activities undertaken at each stage are different, it follows that the IP considerations are different at each stage, too. The process may also include iterative aspects, and if often cyclical in order to continually produce new product and service offerings to the market.

As commercialisation of products and services is complex and requires input from a multitude of disciplines (e.g., technical experts in R&D, marketing, external consultants, suppliers, outsourced component manufacturers/service providers, etc), it is important to consider the use of different IP tools throughout the process, as highlighted below.

What IP considerations are relevant during conception of innovative ideas?

Prior art searching and analysis is a critically important part of this stage, especially searching and analysis of the patent literature, which contains a vast amount of information not available elsewhere.  By reviewing the prior literature, it is possible to ascertain whether an idea is new and potentially inventive, whether there may be a commercial market for the idea and, therefore, whether or not to proceed with investment into the idea. A wealth of other useful information is also available, including information on potential competitors and technology trends. We have recently authored an article on prior art searching and analysis, which can be found here.

During this initial stage, it is imperative that innovative ideas are kept as trade secrets. Apart from not wanting to alert competitors, this is because not all commercially viable ideas can be, or will be, patented. To qualify as a trade secret the information must meet several key requirements, including that the information must be documented, access to it controlled and limited, and the information must be of value and of course kept secret.  Examples of trade secrets include information such as: business plans, manufacturing processes, algorithms, software code, marketing information, and client data. Clearly, confidentiality agreements with those conceiving the innovative ideas (e.g., employees), or those who are being exposed to them (e.g., suppliers, collaborators, subcontractors, etc) are essential at the outset of this first stage of innovation.

There are disadvantages to trade secrets, however, including that there is no protection against independent creation and/or disclosure of a similar or identical innovation by a third party.   Public disclosure can lead to the loss of your right to obtain a patent and, in a worst case scenario, the third party may patent the idea before you.. Keeping trade secrets is an increasingly difficult task in today’s environment where employees change companies regularly. The decision on whether to protect an invention with a patent application or to retain it as a trade secret is an important one, and the choice can depend on a number of factors, which are best assessed by an IP professional.

What IP considerations are relevant during the R&D stage?

For the same reasons as mentioned above, keeping trade secrets continues to be relevant during this next stage of innovation, as is the continuing need to search and review prior literature. Relevant inventions should be protected by lodging patent applications during this stage, and multiple “layers” of patent protection should be considered too. A patent protects an “invention”, which is defined as the generation of a new idea or knowledge which aims to solve a specific technical problem, and most commonly relates to an article of manufacture (e.g., light bulb), a composition of matter (e.g., compounds), a system (e.g., mobile phone), or a process (e.g., process of making or using).

Once a patent is filed, however, the “clock starts ticking”, meaning that a sequence of strict deadlines must be met in order to keep the patent application “alive”. Accordingly, there is some strategy around when to file the patent application(s) – if too early, there may not be time to generate the required enabling experimental data to support broad patent claims, and if too late, the risk is that a competitor will beat you to filing an application directed to the invention or the invention is superseded.

The R&D stage is also where investigations can be undertaken on the risk of infringement of third party rights, i.e. freedom to operate searching and analysis (see our article here). Further strategic decisions can be taken at this time on whether it is possible to avoid third party patents which are at risk of infringement, or whether those rights could/should be licensed or bought, or attacked and potentially removed from the patent register.  Accordingly, this is the ideal time to make adjustments if necessary to avoid IP legal hurdles which might arise.

Depending on the innovation, another IP tool to consider is a design registration, which protects the appearance of a product such as its shape or pattern.

What IP considerations are relevant during the process of commercialising products or services?

The existence of IP surrounding the innovation, and clarity around the ownership of the IP can be critical to obtaining funding from third parties during the commercialisation process. Obtaining a valuation of the IP can be important in this respect, too. At this stage, there may be opportunities to seek and obtain commercialisation and export grants.

Furthermore, ownership of IP assets can assist in ensuring that the innovation is not “lost” during partnership with third parties who may be required to provide further technical development to make the innovation commercially viable. It may also become apparent during this stage of innovation that additional IP is required, in which case that IP should be identified and licensed, or potentially bought.

Further patent applications may be appropriate at this stage, especially to protect improvement innovations as discussed above.

What IP considerations are relevant during the process of marketing products or services?

Finally, during the marketing stage, other IP tools become relevant, especially trade marks and designs as they enable consumers to identify a product/service of a particular company and enable them to distinguish the product from other similar products/services.

IP rights require constant monitoring, which is the responsibility of the owner. It is best practice to monitor the market to identify any third party copying or imitation of the product, for example at trade fairs, or using the customs authorities to stop infringing goods from entering the market. Enforcement of IP rights may be important in protecting market share and revenues.

Finally, relevant material can be protected by copyright, such as software, product literature and images, website, drawings, plans, and manuals.

Summary

Innovative technologies stand a better chance of successfully reaching the marketplace if the 3 main tools of IP protection – patents, designs, and trade marks – are used strategically. As there will be some overlap of activities at each stage of the innovation cycle, the IP considerations will “evolve” over the process.  Initially, and throughout the innovation process, it is imperative to retain trade secrets, and once into the R&D stage patents and design applications can be used to protect functional and aesthetic features, respectively. Consumer recognition of the product and brand can be protected via trade marks, which is important during the life of the patent, and especially after the patent has expired in order to retain market share as competitors enter the market. A strategic, planned, and holistic approach to the use of a combination of IP tools in the innovation process can allow an organisation to obtain a higher return on investment through maintaining a premium market position.

Closing comments

The involvement of an IP professional is critical at each stage of the innovation process, for example to provide advice on:

  • legal (confidentiality) agreements,
  • prior art searching and analysis (patentability, freedom to operate, competitor and landscape mapping),
  • trade mark and design registrations,
  • patent strategy, and for when a trade secrets vs patent protection is appropriate, and
  • enforcement matters.

Outlined in this article is a description of the main stages of the innovation process and what main IP tools are relevant throughout.  When an idea is an important commercial asset, it is wise to engage a qualified IP professional (patent or trade mark attorney) to assist in the generation of relevant intellectual rights that suitably protect that commercial asset. It is preferable to choose an IP professional who has genuine technical expertise in the relevant technology, and an excellent understanding of the practicalities of bringing products and services to market through real-world experience with the product development process. At Shelston IP, we have a number of highly experienced attorneys who can assist in navigating these complexities. Contact us to understand what IP tools are most appropriate for your innovation.

The content of this article is general in nature and must not be relied on in lieu of advice from a qualified professional in respect of your particular circumstances.

Authored by Charles Tansey, PhD