Protecting Intellectual Property for SMEs in APEC

While coming from economies with differing levels of IPR awareness and enforcement, both Tran Huu Nam, an IPR attorney with Viet Nam's National Office of Intellectual Property, and Robert Wulff, a partner and patent attorney with Australian IP Services firm Griffith Hack, agree that globalization and the emergence of the information economy have broken down the barriers for potential IP infringement. After they spoke at the APEC Workshop on SME's and Micro-Enterprises in Ha Noi, the APEC Newsletter caught up with both of these leading IPR experts who expressed their opinions on the need for Small and Medium-Sized Enterprises to protect and capitalize on their intellectual property as valuable business assets. They began by demonstrating a divergence of opinion on the approaches to IPR required from big and small business.


APEC Newsletter (APEC E): Should small and medium sized enterprises take a different approach to protect intellectual property in developing economies?

Tran Huu Nam (THN): In principle there is no real difference in approach. But because of limited resources the protection system of a small or medium sized enterprise may not be so effective. One rule is that wherever possible intellectual property rights should be registered for maximum protection. This includes trademarks, designs and patents and in some cases copyrights. If this is done then if a problem arises in the future a clear presumption of ownership arises in favor of the business that has registered.

Robert Wulff (RW): The short answer is yes. SMEs should understand the shortcomings (if any) of the actual IPR in the given developing economy, and also the enforcement procedures associated with that economy. For example, an SME may choose to rely on local alliances and allegiances rather than worrying about IPR protection. Alternatively, they may still secure the IPR protection but only for "administrative" purposes, and again rely heavily on locally focused alliances and agreements to facilitate doing business in the economy. SMEs should work with their professional advisors, and advisors in the particular developing economy to work out the best means of protecting intellectual property in that economy and not to assume that simply registering the IPR will be effective.


APEC E: While IPR policies vary from economy to economy what common practices exist within the APEC process to protect small to medium enterprises?

THN: We are finding an increased level of support in developing APEC economies for small and medium sized enterprises, particularly through education strategies and provision by government and other agencies of information and databases. Increased facilities for education and training for owners of small and medium sized enterprises are also being developed. The National Office for Intellectual Property (NOIP) in Vietnam has created a website to provide information and access to Vietnamese databases of registered rights. It has also completed an IP Guide designed specifically for small and medium sized enterprises.

Financial support is available in most economies either through favorable treatment for small and medium sized enterprises in respect of fees for search and IP registrations and filing.

RW: I agree that there is some variation in IPR policies from economy to economy, although initiatives such as the TRIP's agreement (Trade Related Aspects of Intellectual Property) under the WTO framework are resulting in considerably more uniform IPR laws globally, including in APEC economies.

I am aware that many of the APEC member economies are substantially based upon or skewed towards SMEs, hence it makes good political and economic sense to have systems in place which encourage SMEs to better avail the IPR system in such economies, to enable them to more effectively compete on the global stage.


APEC E: What steps have APEC member economies taken to assist small & medium sized enterprises protect their intellectual property? What steps should businesses take to protect their rights?

THN: To protect intellectual property rights, we may identify some important areas. Of course, one of the main problems is a lack of awareness among small and medium sized enterprises concerning IPR and their actual and potential value to a business. First, clearly identify and audit the IP assets that the business possesses. A decision must then be made as to whether or not to protect the asset through registration (particularly in the case of a patent), or simply to protect the information as a trade secret. In the case of trade marks and industrial design, registration is usually mandatory. Many economies, including Vietnam, allow registration of a copyright on an optional basis. Although registration is not necessary under the Berne principles to protect a copyright, as a general rule we would recommend registration where it is available.

RW: This is a good question. I can certainly speak from the Australian position, and I'm aware that similar processes exist in other APEC member economies. Some specific measures have been introduced to reduce the cost of obtaining IP rights. For example, it is possible to cost-effectively secure innovation patent protection in Australia as well as registered design protection. Considerable help is also provided to businesses in securing their own trademark protection.

Strong IP rights can help secure investment through traditional sources such as banking, venture capital, private investment and government grants but also through partnering and alignments.


APEC E: From both the policy and business point of view what steps need to be taken to strengthen intellectual property rights and to reduce trade in counterfeit goods and online piracy?

THN: Governments must continue initiatives to upgrade current legislation to deal with online piracy. In most economies, including Vietnam, there is a lack of adequate regulation in the area of online piracy. It is an ongoing problem and abuse is widespread. Lack of any physical presence makes the problem difficult to police. One particular problem is that there is no mechanism to police the website and the administrator of the website bears no responsibility under current legislation.

RW: We were recently advised that 8% of the world's economy is now in counterfeit goods, pirated goods and in the black market. It is a huge issue for the global economy, and particularly for businesses that are born in economies where there is great respect for the rule of law and strong IPR protection. Such businesses find it hard to do business in economies where there are no such similar legal and regulatory systems. Obviously, IPR needs to have a focus at the highest governmental level. Businesses need to understand which economies have either weak IPR laws or weak enforcement procedures, and then consider carefully how they do business in those economies. It may be important for businesses to align themselves with strong domestic players in such economies.


APEC E: What challenges will businesses face and what opportunities could they miss if they do not protect their intellectual property?

THN: If intellectual property rights are not adequately protected and enforced, businesses will lose money in the long run. If a business does not register its brand in another economy the risk is that it may then be misappropriated and used by a third party in that jurisdiction. If this happens, it will then be far more difficult to protect that brand from misuse. It will be necessary to rely on misrepresentation and related grounds rather than prior registration. Both the cost and other difficulties associated with litigation will make enforcement difficult.

RW: The information economy, together with the outsourcing and manufacturing to low cost economies as increasingly standard practice, means that businesses can no longer effectively compete on price. Sophisticated SMEs use IPR rights to enable them to compete with both comparably sized and larger players, and also to enable them to secure alignments, alliances and deals with larger players on a global basis. My personal view is that businesses that do not have some mechanism for managing and controlling their intellectual property will, in today's economy and in almost all commercial fields of endeavor, ultimately fail.


APEC E: What approach should businesses take to protect the value of their intellectual property in the APEC region? Should this approach differ for small and medium sized businesses?

THN: Many APEC economies are signatories to the Madrid convention and the Patent Cooperation Treaty. Registration is thereby facilitated as the normal way to seek protection on an international basis. What seems to distinguish small and medium sized enterprises if that they generally lack the financial resources of larger concerns. This means that allocating scarce resources to protect intellectual property rights is often not seen as a priority. One way this can be overcome is through the promotion of collective organizations as well as other common initiatives such as cluster and sectoral developments.

RW: Essentially, every business should work out where the major markets are for their goods or services. They should seek to secure the appropriate level of IPR protection in each major market. Where a major market has difficult IPR enforcement procedures, they should carefully consider aligning themselves with domestic players that have some clout in that market. However, if APEC can better harmonize IP rights so that there is more uniformity in terms of both the actual rights themselves as well as their enforcement and operation, this may provide an incentive for businesses across the APEC region to make full use of APEC member economies.

Tran Huu Nam is an IPR attorney with Viet Nam's National Office of Intellectual Property. Robert Wulff is a partner and patent attorney with Australian IP Services firm Griffith Hack.