Competitive Edge – IP as a strategic business tool in manufacturing
Intellectual property (IP) should be seen as a strategic business asset that protects a company’s competitive advantage by safeguarding its inventions, designs, and brands.
Patents protect new and inventive functions while designs protect visual features of a new product. Designs can oftentimes protect new shapes and configurations where a patent may not be suitable.
Good products can have catchy brand names as part of a good marketing strategy and it is well known that trademarks protect such brand names.
Why IP is important in Manufacturing
- Protects your product margin: Robust IP registration prevents competitors from producing copies of successful products.
- Streams of Revenue: Registering IP creates the opportunity for technology licensing to other manufacturers in exchange for royalties.
- Adds to value of the business: An IP portfolio can significantly increase a company’s value during mergers, acquisitions, or fundraising.
- Global Competitive Edge: Enables manufacturers to protect their innovations in international markets.
Considerations for putting together an internal IP plan for your business
IP Due Diligence
While you are working on a new R&D project, it is important to firstly, identify the IP. Often, the IP is connected to the value proposition of the new product and it is helpful to hone in on what exact features are providing the benefits.
Keeping logs of product development and prototyping are part and parcel of R8D and manufacturing and it should not be difficult to run over the work with an eye for IP protection. Are you developing a new device, process or system? Patent protection may be relevant. Are there any specific parts which may not have a new function but need protection? Then, design registration may be relevant.
Once you have an IP portfolio, work with your paten attorney to understand the status of your IP portfolio and ensure it is aligned with the commercial direction.
If you have competitors in the space or need to guide product development, it is important to conduct Freedom-to-operate searches to work out if your product will infringe an existing patent. If it does, you can work with your patent attorney to determine variations which will circumvent that patent.
Keeping IP protection relevant
It is important to conduct IP audits to actively decide which new IP needs to be protected and also to identify what IP is no longer in line with the commercial focus.
This can look like working out which trade marks are worth renewing and filing new applications to updated logos or word marks which are actually in use.
With patents it can look like ensuring that the description covers new and commercial embodiments and if not, to file supplementary provisional applications or new applications where possible. Maybe a design application can be used to augment the protection.
With designs it can look like ensuring that the final product that will make it onto shelves is captured.
Another aspect of this is to know your IP rights. Identify potential infringers and work with your patent/trade mark attorney to take action accordingly.
IP Ownership in manufacturing
Do identify inventors and designers early. An inventor of an invention is someone who has made an inventive contribution to the working of the invention. A designer is anyone who has created the new and distinctive visual appearance of a product.
Robust IP clauses in employment agreements and manufacturing or designing agreements can attribute new IP to the instructing company.
Have confirmatory assignments in place to establish a clear line of succession of IP to the owner which may be an IP holdings or other company.
It is important for inventors to assign the IP to the company owning the patent before any complete patent application is file to prevent invalidation of the application due to an ownership dispute.
Your patent attorney can guide you here.
Navigating IP in China as a manufacturer
Many people express uncertainty about IP protection in China but this is a major manufacturing hub for new designs originating in Australia. Consider filing patent and designs in China in addition to other markets. This can be effective in stopping counterfeiters from making the product in China and distributing the product to countries in which you do not have IP protection, including China. Remedies are available through the courts and Australians have successfully enforced their IP rights in China in recent times.
IP filings can also augment a larger supply chain “divide and conquer” strategy where you might divide the manufacturing process strategically among multiple vendors in different countries.
As mentioned above, a well-thought out and protected IP portfolio can increase your company’s valuation in the event of an exit, such as a sale or an M&A transaction. It is well worth having an IP plan in place internally.
