A great idea is worth defending—but how? Idealog talks to inventors, entrepreneurs and IP experts
Regrets, we’ve all had a few—and designer Peter Haythornthwaite is no exception. Sitting in his Hobsonville studio, he wistfully recalls how he could have set himself up for life while still in his early twenties.
It was the late 1960s and a young Haythornthwaite had just graduated from the University of Illinois, bought himself a brand new Ford pickup truck and headed out to California to embark on an illustrious career which would see him designing everything from garage door remotes to spoons for eating kiwifruit.
A keen diver, Haythornthwaite used to drive down to Mexico in his pickup and after a friend gave it its first scratch by dropping a chain in the back he hit upon the idea of a protective liner for the back of pickup trucks. Originally he was going to make it out of fibreglass, but dune buggy inventor Bruce Meyers convinced him to make it out of vacuum-formed polypropylene instead. An optimistic Haythornthwaite then drew up plans and approached a manufacturer. He was rebuffed. But instead of picking himself up off the floor and approaching the next suitor he failed to pursue his idea. Perhaps we can forgive him for this—it was, after all, California in 1968 and the freshly-graduated Haythornthwaite had more on his mind than just getting rich quick.
But several years later another company came out with a liner very similar to the one Haythornthwaite designed and went on to make a bundle. “I had a good idea but got distracted and did not pursue it,” he says. “Every designer could probably tell you a similar story.”
Fight for your right
The story is illustrative of one of the major lessons Haythornthwaite says he has learned during his career—that when it comes to legally protecting your products and designs, commitment is key. If you’re going to take out patents or registered designs to protect your intellectual property be prepared not only to pay to do so—in New Zealand and other jurisdictions—but, more importantly, be prepared to defend your rights. “Unless you have deep pockets and are willing to fight tooth and nail it’s very hard to put fences around your product,” says Haythornthwaite. “If you are not committed to it, it’s just throwing money away. What have you got? Certificates on the wall.”
For Haythornthwaite, continued innovation is often his best defence against people ripping off his ideas. But despite this there are many situations where it pays to be protected, he says. “If you have an absolutely ingenious piece of technology then patents are of great value.” Patents or registered designs are also de rigeur if you are hoping to sell your idea or product to a large company as they probably won’t talk to you if you’re not protected. And while ring-fencing a product is difficult and expensive, brands are very important—and easier—to protect, he says.
There is no one-size fits all prescription for how, or whether, you should protect your intellectual property. A lot will depend on the sector you are in, the life-cycle and uniqueness of your product, your intended marketplace and the will and resources you have at your disposal to protect your ideas.
Broadly speaking, intellectual property protection can be divided into two streams—formal and informal rights. Informal rights include reputation and goodwill in the marketplace, confidentiality agreements and reliance on copyright laws. Formal manifestations of IP rights include patents, registered designs and trade mark registrations. Another useful division to make when thinking about IP protection is between protecting ideas and products—generally more difficult—and protecting brands—usually more straightforward.
The first step for an entrepreneur who wants to talk to potential customers and investors about a new product is to get a confidentiality agreement. You should be wary of opening your mouth before you do this as even the simple act of telling someone can make the idea public property. Philip Thoreau, the chairman of IP law firm Baldwins, says many local inventors used to inadvertently lose the rights to their ideas by having them broadcast on the TV show Country Calendar.
On the flip side, larger companies are often wary of signing confidentiality agreements because by doing so they may nullify their own R&D if they are working on something similar. This tension is often solved by the filing of patent applications or the registering of designs, says Thoreau. “Once the application has been filed you don’t need to rely on confidentiality anymore,” he says.
So what’s patentable and what’s not? Generally speaking to be patentable something has to be new and inventive, as opposed to a registered design, which applies to aesthetic features such as shape and configuration. For example you could protect a new chair by taking out a registered design on it but you probably couldn’t patent it, unless there was a mechanism in the chair which was unique.
The biotech and pharmaceutical industries rely heavily on patents because it’s a long time to market, there’s a huge investment required and once the product is out there it’s very easy to replicate, says Baldwins patent attorney and partner Wes Jones. Software is an interesting case, he says. Software manufacturers used to actively avoid the patent process but that’s changing, particularly in the US, where there’s an ongoing debate about what can be patented.
Registered designs are used to protect mass-produced artistic works such as furniture or homeware, while copyright laws are relied on to protect one-off artistic works and industrial designs.
While patents and registered designs are important, often speed to market and continued innovation are better strategies for less unique products with shorter life-cycles, says Jones.
Why not to patent
Glidepath chairman and CEO Ken Stevens subscribes to the “just give them last year’s model, we’re working on a new one” theory. Glidepath sells around $70 million a year of baggage conveyor systems to airports and ports, many of which are in Asia, but the company doesn’t file patents because its intellectual property—clusters of codes which control machines and can be written by electricians—is too difficult to patent, says Stevens.
“In the past, we had a few machines that we patented but these are no longer in production,” he says. “And because technology is moving so fast we found we tended to lock ourselves into designs and got behind the eight-ball.
“The reason that US industry has fallen behind is because it’s stuck with old ideas protected by patent when it should have moved on and come up with a re-design.”
Glidepath relies on copyright laws for protection but would be very careful before taking legal action because of the expense and the uncertainty of whether it would win or not, he says. It’s also very careful when outsourcing production to its Asian subcontractors, giving them only a small part of the design.
But Glidepath is looking at patenting some new technology this year and next. “It depends on how unique it is,” says Stevens. “If you really have a breakthrough it’s worth patenting.”
In today’s business environment, thinking globally rather than locally is imperative when considering IP protection. By filing for protection in New Zealand you get a grace period—12 months for patents and six months for registered designs and trade marks—in which you are automatically protected overseas. “This gives you breathing space to decide whether you will go down the formal protection or speed to market route and enables you to go and talk to people about your product or idea,” says Thoreau.
Because of the additional expense of protection in each jurisdiction, entrepreneurs need to think strategically about where to protect themselves, he says.
The home front
New Zealand’s copyright laws are among the strictest in the world but Thoreau says this works to the detriment of New Zealand manufacturers. In most overseas jurisdictions copyright laws apply only to one-off artistic works (such as books or paintings) but the way the Copyright Act is interpreted in New Zealand means it can also be used for some mass-produced items. Not only does it give overseas competitors a level of protection in New Zealand that they do not have elsewhere, but it lulls New Zealand manufacturers into a false sense of security, he says. “New Zealand manufacturers may not be aware that while they are protected by copyright law in New Zealand they may not be overseas. Once the designs have been made public in New Zealand the horse has effectively bolted and they are largely unprotected overseas.”
Our elderly patent laws are now also out of whack with most of the rest of the world, with patents being easier to obtain in New Zealand, again effectively granting overseas companies (more than half of patents filed in New Zealand are from overseas) monopolies that they can’t get elsewhere. This situation is being remedied though, with an overhaul of our patent law which will introduce a higher threshold for gaining patents. A ‘universal novelty’ standard is also being introduced, which extends the concept of novelty from what was known in New Zealand to what is known throughout the world. Under New Zealand’s current system—which has become an anomaly in a globalised world—it’s possible to see an idea overseas and patent it in New Zealand. The changes are included in the Patents Bill, which is expected to be introduced to Parliament later this year.
While protecting ideas and inventions can be problematic and expensive, protecting your brand—or the designs and symbols that identify you in the marketplace—is more straightforward. You can get trade mark protection through use alone but by registering a trade mark you get a recognised right and national protection. Someone manufacturing wetsuits in Orewa and selling only to the local community might have brand protection in the Hibiscus Coast area but their brand could, quite legally, be used by a rival manufacturer in Mt Manganui. With a registered trade mark the Orewa manufacturer would be protected throughout the country. “If you have a trade mark registration you can license and expand with a greater degree of confidence,” says Thoreau. Without registered protection you would have to prove passing off or breach of the Fair Trading Act, a more difficult and expensive process than merely showing you own the registered trade mark, he says.
IP is a weapon
But many New Zealanders don’t think strategically enough when registering trade marks, says Thoreau. “There’s lots of naive activity before the patent office. IP is a weapon to stop your competition being able to interfere with your business so people need to approach it from a mindset of what they want to stop other people doing.”
You need to think about what are the key hooks and cues that people recognise as representing your products, he says. “In a supermarket I’d look at the yellow colour of a cap on a Vegemite jar and consider that a key element to protect.”
Both Thoreau and Haythornthwaite say New Zealanders tend to undervalue their IP and often are hamstrung by thinking locally rather than globally. “We get sedated by the smallness of our society and business environment,” says Haythornthwaite.
“A lot of NZ companies don’t see the IP that they own and as a result they donate it to their competitors,” says Thoreau. “For example, a text for learning English written in New Zealand could be very useful to someone starting up an English-language school in China.
“The costs of protecting your IP should be compared with the potential costs of not protecting it,” he says. “Any new venture creates risks. If that new venture is successful then the cost of protection is never an issue. It only becomes an issue if it’s not as successful as envisioned.”