Mastering Global Markets

The Essential Guide to Strategic IP Planning

This is a summary of the lecture by Dr. Paolo Beconcini about entering foreign markets from the joint CEIPI European Patent👉 A legal right granting exclusive control over an invention for a limited time. Office Diplom Universitaire IP Business Administration

Paolo Beconcini’s lecture on entering foreign markets provides a comprehensive overview of the importance of intellectual property👉 Creations of the mind protected by legal rights. rights (IPR) when expanding business operations internationally. The lecture is divided into four main sections, covering when to plan an IPR strategy, how to plan it, how to execute it, and how to follow up on it.

Throughout the lecture, Beconcini emphasizes the critical importance of early and thorough IPR planning when entering foreign markets. He stresses that a proactive approach to IP protection can help businesses avoid costly mistakes, protect their valuable assets, and maximize their chances of success in new markets. By providing numerous examples and practical advice, particularly focusing on challenges in the Chinese market, Beconcini offers valuable insights for businesses of all sizes looking to expand internationally.

The lecture underscores that successful international expansion requires not just a solid business strategy, but also a comprehensive understanding of IP laws and practices in target markets. By following the outlined steps for planning, executing, and following up on an IPR strategy, businesses can better protect their innovations, brands, and competitive advantages as they navigate the complexities of global markets.

• Many countries require IPR registration before rights become valid and effective:
  In many jurisdictions, intellectual property rights only become enforceable after formal registration with the local IP office. This is particularly true for trademarks in countries like China, where unregistered marks receive no protection, unlike in the EU or US. Failing to register IP rights promptly can lead to serious consequences, such as trademark squatting or the inability to enforce rights against infringers.
• Not all types of IPR may be available in the foreign country, or they may have different scopes and functions:
  The availability and scope of intellectual property rights can vary significantly between countries, impacting a company’s IP strategy👉 Approach to manage, protect, and leverage IP assets.. For instance, unregistered design rights are recognized in the EU but not in China or the US, while trademark protection for smells is not available in China. These differences in IP systems can affect the choice of protection methods and require businesses to adapt their IP portfolios when entering new markets.

The timing of IPR strategy planning can vary depending on the size and resources of the company. Large multinationals often have streamlined processes for global IP protection, while smaller enterprises may face more challenges. However, Beconcini stresses that even for SMEs, an early start is crucial.

Some key triggers for IPR strategy planning include:

• Existing sales (even through parallel imports) in the foreign market: Existing sales in a foreign market, even through parallel imports, indicate potential demand and brand👉 A distinctive identity that differentiates a product, service, or entity. recognition. This situation necessitates immediate IP protection to safeguard the company’s interests and prevent potential infringement or trademark squatting.
• Approaching deals with local business partners: When approaching deals with local business partners, it’s crucial to have a robust IP strategy in place before negotiations begin. This proactive approach helps protect valuable assets and ensures a stronger negotiating position when entering into manufacturing, distribution, or joint venture👉 A business partnership where different  entities collaborate on a specific project or goal. agreements.
• Expansion into key countries with market potential or competitor presence: Expanding into key countries with significant market potential or established competitor presence requires careful IP planning, even if immediate entry isn’t planned. This strategic foresight helps secure IP rights in advance, reducing the risk👉 The probability of adverse outcomes due to uncertainty in future events. of IP theft and counterfeiting while gaining a competitive advantage in these important markets.
• Countries offering attractive IP or business incentives: Countries offering attractive IP or business incentives can present unexpected opportunities for market entry and expansion. Considering IP protection in these markets, even if not initially planned, can help businesses capitalize on these incentives and establish a strong IP position for future growth.

How to Plan an IPR Strategy

Planning an effective Intellectual Property Rights (IPR) strategy is crucial for businesses entering foreign markets. This process involves several key steps, including acquiring knowledge about the target market, identifying valuable assets, and carefully considering budgetary constraints.

• Regulatory systems: Comprehending the regulatory landscape of the target market is vital for navigating IP registration, enforcement, and transaction processes. Different countries may have unique requirements, such as China’s first-to-file system for trademarks and patents, or specific regulations regarding technology transfer👉 The transfer of intangible goods to make scientific findings economically usable. and IP transactions, which can significantly affect a company’s IP strategy and operations in the foreign market.

Beconcini uses China as an example to illustrate the importance of this knowledge. He points out common mistakes made by foreign businesses, such as assuming trademark protection in their home country extends to China, or failing to register Chinese translations of their brand names.

Asset Identification and IP Selection

The next crucial step is identifying valuable company assets for the foreign market entry and determining which assets require IPR protection. This process involves:

• Evaluating which brands, patented products, and trade secrets will be used in the new market: Businesses must carefully assess which of their intellectual assets will be most valuable and relevant in the target foreign market. This evaluation process involves considering factors such as market demand, competitive landscape, and the potential for revenue generation or strategic advantage in the new territory.
• Selecting the appropriate type of IP protection for each asset: Once valuable assets are identified, companies need to determine the most suitable form of IP protection for each, taking into account the specific legal framework and enforcement practices of the target country. This selection process requires a thorough understanding of the available IP rights in the foreign market and how they align with the company’s business strategy and goals.

The selection of IP rights should consider:

• The type of industry (e.g., fashion is trademark-intensive, while biotechnology relies heavily on patents): Different industries prioritize various types of intellectual property rights based on their core assets and market dynamics. For instance, the fashion industry heavily relies on trademarks to protect brand identity and consumer recognition, while biotechnology companies focus on patents to safeguard their innovative technologies and research outcomes.
• The business strategy (defensive vs. active use of IP rights): Companies can employ IP rights either defensively to create barriers for competitors or actively to generate direct economic benefits. A defensive strategy might involve filing patents to prevent competitors from inventing around core assets, while an active approach could include licensing👉 Permission to use a right or asset granted by its owner. IP to generate revenue or enforcing rights against infringers.

Budgeting

Budget constraints play a significant role in IPR planning. Beconcini discusses how these constraints can affect:

• The asset selection process: Budget constraints can significantly impact which assets a company chooses to protect when entering a foreign market. Businesses must carefully prioritize their most valuable and revenue-generating assets, as protecting all assets may not be financially feasible, especially for smaller enterprises.
• The choice of needed IPR: Financial limitations can influence the types of intellectual property rights a company pursues for its assets in a new market. Companies may need to strategically select which forms of protection (e.g., trademarks, patents, copyrights) offer the best value and protection relative to their cost.
• The model of exploitation and monetization of IPR assets: Budget considerations can affect how a company plans to utilize and profit from its intellectual property in a foreign market. Businesses may need to adjust their strategies for licensing, enforcement, or direct commercialization based on the available resources and potential return on investment for each approach.

He provides detailed examples of budgeting considerations for trademarks and patents, highlighting the need to consider not just initial filing costs, but also potential expenses related to rejections, oppositions, maintenance, monitoring, and enforcement.

• Performing availability searches for trademarks and design patents: Availability searches for trademarks and design patents are essential to identify potential conflicts with existing rights that could hinder registration or lead to future legal disputes. These searches allow businesses to evaluate the likelihood of successfully registering their trademarks or design patents and help them develop strategies to overcome potential obstacles, such as modifying their marks or designs or seeking agreements with prior rights holders.

Filing and Prosecution

The actual registration of IPR can be done either through international systems (e.g., WIPO marks, PCT patents) or through national filings in each country of interest. Beconcini discusses the strategic considerations for choosing between these options, including:

• First-to-File rules in certain countries: First-to-File rules significantly impact filing strategies in countries like China and the US, where the first person to file a trademark or patent application is granted the rights. This system necessitates prompt action in securing intellectual property rights, as waiting can result in competitors or squatters registering the rights first, potentially blocking the legitimate owner’s market entry.
• Geographical coverage of international filings: International filing systems like the Madrid Protocol for trademarks or PCT for patents offer broad geographical coverage, but may not include all desired territories. For instance, an international trademark filing designating China won’t automatically cover Hong Kong and Taiwan, requiring separate national filings for comprehensive protection in these markets.
• Cost implications: While international filings can be more cost-effective for securing rights in multiple countries simultaneously, they often involve substantial upfront fees. National filings, on the other hand, allow for more targeted spending but may result in higher cumulative costs when filing in numerous individual countries.
• Language and local rule differences: National filings often require navigation of local languages and specific rules, which can pose challenges for foreign applicants unfamiliar with the local system. For example, China’s trademark classification system differs significantly from the international Nice classification, making national filings preferable for protecting marks in specific local languages or markets with unique goods and services classifications.

He also highlights specific challenges, such as the requirement in some countries (e.g., US and China) to file patents first in the country where the invention👉 A novel method, process or product that is original and useful. was made.

Incorporating IP in Contracts and Partnerships

Beconcini stresses the importance of not only registering IPR but also incorporating it effectively into contracts with local partners, distributors, and manufacturers. He emphasizes that standard contracts from the home country may not be suitable, using the example of Non-Disclosure Agreements (NDAs) in China, where more comprehensive Non-Disclose, Not-use, and Not Circumvent (NNN) agreements are often necessary.

How to Follow Up on Your IP Strategy

Following up on your IP strategy is a crucial phase that begins after you’ve entered a foreign market and secured your intellectual property rights. This ongoing process involves several key activities, including maintenance of your IP portfolio, monitoring for potential infringements, and enforcing your rights when necessary.

Maintenance and Monitoring

Once IPR is secured and business relationships are established, ongoing maintenance and monitoring are crucial. This includes:

• Regularly paying maintenance fees for IPR renewals
• Monitoring the market for potentially conflicting IPR registrations by third parties
• Establishing systems to check foreign IPR databases
• Conducting audits of licensees, joint venture partners, and distributors

Investigations and Enforcement

Enforcement of IPR in foreign countries can be complex and challenging. Beconcini advises a strategic approach to enforcement, considering:

• Goal setting
• Selection of proper local IP and assessment of its strength
• Identification of potential co-plaintiffs
• Investigation and evidence acquisition
• Forum shopping (where possible)

He also discusses the importance of choosing the right law and court (or arbitration body) to regulate disputes in IPR agreements.

IPR Transactions

Beconcini highlights additional challenges that can arise during IPR transactions in foreign countries, including:

• Requirements for registration and approval of licenses or assignments with local IP offices
• Technology transfer regulations that may subject transactions to governmental approval
• Taxation and monetary transfer norms affecting royalty payments

He emphasizes the need for comprehensive knowledge of each country’s specific rules to navigate these challenges effectively.