Intellectual property can be a crucial business tool, but not everyone thinks hard enough about protecting their big ideas. In 2001, plumber Brad McCarthy got stuck on a remote beach in Cape York in north Queensland and spent about six hours getting his car out with a hand winch. He knew there has to be a better way. In reaction, he invented Maxtrax, a light-weight vehicle-recovery device for bogged off-roaders.
After designing the Invent Help, he attended a Queensland Government business seminar, where advisers stressed getting patent protection before his idea was publicised. “One of the first things we did was speak to a patent attorney to find out how you could protect the concept,” says McCarthy, who launched Maxtrax in 2005. It is actually now purchased in about 30 countries worldwide. McCarthy has patents in key markets including Australia, Europe and the US, and the business even offers a trademark on the distinctive original “safety orange” hue it uses for its moulded product. Unlike McCarthy, however, many inventors and businesses with recommended cruel their likelihood of success from day one.
Their big mistake? Ignoring patents or some other intellectual property protection before they spruik their idea to investors, the general public as well as friends. It can be a costly error. Bradley Postma, principal at patent and trademark attorney firm Cullens, says small and medium enterprises (SMEs), particularly, often neglect safeguarding their IP or think it will probably be too costly. “The vast majority of protectable IP goes unprotected,” he says.
Europe can be a particular trap for exporters because, unlike a few other major markets, it lacks a grace period permitting public disclosure of an invention without affecting the validity of the subsequent patent application. That opens the way to have an idea or product to become copied. “In Australia and the usa you can do something about it, provided you’re in a one-year window – in Europe you can’t, it’s too late,” Postma says. “In that case, businesses have shot themselves inside the foot; they’ve forfeited their rights and everyone can copy [their idea].” Postma observes that business owners often think their idea is just too very easy to warrant a patent. “However, if it’s successful and simple, it will be copied and you should get advice.”
Unitary patents on way – Margot Fröhlinger is principal director of Review For Inventhelp, European and international legal affairs on the Munich-based European Patent Office (EPO), which oversees about 160,000 patent applications per year. She recently completed a road trip warning Australian companies that poor patent and IP safeguards could derail their European market opportunities. Companies must innovate – and protect their inventions. “You need the protection of your IP and, specifically, patent protection to get a good return on your investment,” she says.
Many international businesses have baulked at exporting to Europe due to complex patent processes across multiple jurisdictions that may result in potentially high costs and marginal protection. However, the EPO is promoting a brand new unitary patent system that promises to be a game changer. This makes it easy to get protection in as much as 26 participating European Union member states with all the submission of a single request for the EPO.
A November 2017 EPO study, Patents, Trade and FDI within the European Union, suggests better harmonisation of Europe’s patent system has the possibility to increase trade and foreign direct investment in high-tech sectors, delivering annual gains of €14.6 billion ($A22.8 billion) in trade and €1.8 billion (A$2.81 billion) in foreign direct investment.
Fröhlinger believes Australian businesses across all sectors have opportunities to expand in to the European market, which boasts more than 500 million people, high gross domestic product and strong consumer demand. “It’s extremely important for Australian businesses to understand that there is a big change ahead in Europe. I’m not talking just about patents,” Fröhlinger says. “It’s very important with an integrated IP portfolio considering patents and trademarks and (covering) design. If they don’t have (IP) people in-house they ought to try to get strategic business advice.”
The price of intangible assets – This call to action for Australian businesses comes as the worldwide Innovation Index 2017 reports on countries’ IP receipts as a amount of total trade. In essence, the measure indicates the way a country is performing on the IP front. While Australia scores well with regards to inputs into research and development, the united states (5.1 %), Japan (4.7 %) and Finland (2.9 %) easily outperform Australia (.3 percent) on IP royalties.
The message? As a general rule, Australian companies are certainly not great at converting research into value and treat IP nearly as an administrative function. The exceptions are health tech leaders, such as medical device dppdwz Cochlear and sleep-disorder business ResMed, which understand the value of intangible assets such as brand name and data use, and make their businesses around it.
In a knowledge-based economy, IP is becoming Product Idea and governing it is not only a matter of organising trademarks and patents. Intangible assets are rapidly increasingly important than tangible assets and require appropriate consideration.
Overview of Australia’s top listed companies, released by Glasshouse Advisory in September 2017, endorses this type of sentiment. It reveals that 38 % of the companies’ value (regarding a$550 billion) is not included on their own balance sheets; this suggests that investors are operating without insights into a significant proportion of the corporate asset base.