Why are we so bad at protecting our intellectual property?

As a country, we’re proud of our inventors and our innovation. So why are we so hesitant to protect that value once we’ve created it? What are we doing wrong? How can we do better? And most importantly, how do prevent the whole Pavlova fiasco from happening again?

For a country that talks about its Number 8 Wire mentality ad nauseam, we certainly do have a strange relationship with the concept of intellectual property.

Whether it’s our self-effacing culture, our lack of sophistication in the global marketplace or just a dismal lack of ambition, our failure to act in our own interests when it comes to patents and IP is a disturbing lesson in missed opportunities.

So what’s New Zealand’s problem with IP?

“My sense is that in this country we lack a bit of sophistication and maturity,” says Shaun Hendy, director of Te Pūnaha Matatini, a New Zealand Centre of Research Excellence.

“When we’re looking to invent something, were overly secretive,” he says. “We know we ought to be protecting this, but we over-protect it with that secrecy, and without having a good intellectual property plan from the outset that would enable us to test and exchange those ideas. That, I think, comes from a lack of experience.”

Image: Shaun Hendy, director of Te Pūnaha Matatini

Hendy says that the New Zealand temperament – self-effacing, reserved and reluctant to self-promote – sees us working against our best interests when legally establishing the value of our own ideas.

“There’s definitely a lack of confidence there,” he says. “We seem to be afraid of actually finding out whether what we’ve got is a good idea or not. We don’t have that ‘fail fast’ approach. Instead we sit on [our ideas], polishing them, instead of actually testing them.”

“What we fail to realise here is that by sharing your idea you can actually strengthen it. We still have this myth that invention happens in the shed and you do it alone, and that’s just no longer the case. Knowledge is becoming more specialised and it’s at the point where you just can’t do that on your own. You won’t be getting those complimentary pieces of knowledge that will put your idea on the world stage.”

So is it simply a case that we are inventive, but bad at turning that inventiveness into profit?

Anton Gibson, partner at AJ Park doesn’t think it’s that simple.

“I don't think that statement is right,” he says.

“Kiwis continue to have great success turning a profit from innovation. But commercialising science and technology is hard, particularly in regulated industries with uncertain outcomes, in market segments where consumers are presented with a lot of choice, and in markets where our off-shore competitors are better resourced or closer to the market.”

“Many (most!) ideas fail, no matter their country of origin. Do Kiwis have a weakness? Possibly in our comfort and experience with failing things fast, and moving on to the next idea. But that's not unique to us.”

Image: Anton Gibson, partner at AJ Park

Ceri Wells, partner at James & Wells, sees the issue in far starker terms, saying the reason many Kiwi companies don’t aggressively pursue IP protection is simple: ignorance.

Most New Zealanders don’t even recognise the existence of [intellectual property value], and don’t even see it in their business,” he says.

“I talk to businesses all the time who aren’t even aware they’ve got something worth protecting.”

“They’re making money, so they figure ‘what more do I want?’ They don’t see the value in it, but it’s everywhere! Their customer list, their method of operation, their processes and the products they produce, brand names. They don’t protect it and can’t control it.”

Image: Ceri Wells, partner at James & Wells

The rest of the world is not so naïve, however. Foreign interests often look at Kiwi innovation with an acquisitive eye, and this, says Wells, is something that can be turned to either our advantage or disadvantage.

“We recently had an experience with a client and we were nagging them about their IP, because they have some good formulas, processes and a lot of know-how, but they only owned one trademark.”

“One day, a super-wealthy Chinese billionaire came over and wanted to buy their intellectual property.”

“So we started registering what we could and they ended up signing a huge deal, all based around Kiwi know-how. Now they’re going to do extremely well out of it, and here’s the thing: they haven’t sold their IP or their business, they’ve simply multiplied the value of that business by leveraging their IP. Everything has been added to the bottom line at no cost to them. They’re getting a huge slice of this international market without ever really stepping out of the Waikato.”

Of course, for every Hollywood ending, there’s a horror story to match. And that, says Wells, happens every day:

“With the current situation, people can just come here and take. A Iot of foreign companies come to New Zealand, and they come to the farming days with cameras, knowing that this stuff is not protected. They come from Norway, from the States, and they’re taking photos of that new attachment for a tractor, saying ‘I can put that right onto a John Deere’. It’s free R&D for them because New Zealand companies don’t protect their own R&D.”

“These [New Zealand] companies just don’t have they capital to invest – just in case it has value – so we miss out on all that potential.”

Gibson however, doesn’t see things the same way.

He says that business owners can get too focused on acquiring IP and not pay enough attention to the actual value of the idea itself.

“IP rights are just tools,” he says. “Sure, there are many scenarios where IP might make or break an opportunity, such as when you're seeking investment or up against a well-resourced competitor, but IP won't salvage a solution that no one wants, or that they won't pay for.”

“Time and money is lost when business are unnecessarily distracted by IP issues. Building robust IP assessment into your business practices, alongside any decision-making around setting commercial or innovation priorities will reduce that loss.”

So if value has been established, and there’s a market ready and waiting, what is the best way forward?

Hendy says the first step is a change of mind set.

“We need to become more sophisticated in the way we deal with IP,” he says. “It’s a chicken and the egg problem, but the more we do it the better we’ll get at it. We’ll build that critical mass of people who know how to deal with IP, and with that, we’ll go forward.”

Wells agrees that businesses need to be committed to their own IP concerns, but says that a lot of that burden also falls to the government.

It’s a chicken and the egg problem, but the more we do it the better we’ll get at it. We’ll build that critical mass of people who know how to deal with IP, and with that, we’ll go forward. - Shaun Hendy

He says that it’s time for the New Zealand government to “actually back innovation”, rather than “just paying lip-service to it”, by putting systems in place and creating incentives to encourage businesses to take a more aggressive approach to exploiting their IP power.

“We need some kind of circuit breaker here,” says Wells.

“We need to own and control what we develop. New Zealand needs to do what the UK has done. In the UK, if you’re making something for export, then the tax on those profits is only 10 percent, but you only get that tax advantage if that product’s got a patent on it. That’s how you encourage R&D and product development. That’s the missing cog in the innovation wheel here.”

“We’re doing nothing like that. By the time these [local] businesses find they’ve got a winner, it’s too late. I find it really odd that the government has a policy of encouraging R&D but not encouraging the ownership of it.”