Exporting smartly

The smart exporter needs to plan, but often the importer is dangling orders enticing the exporter before they’ve had time consider thoroughly their legal position. With the potential loss of a future contract and income the importer’s siren song can be very enticing especially in a competitive market. However, not having a well-considered plan could be tantamount to commercial suicide. Over the next series of articles the writer will be addressing the topic areas broadly touched on in this ‘planning issue’ that will assist in protecting or positioning your business and its income.

In essence an export plan is about maximising the business’s profit and minimising it’s risk or put another way, by minimising risk so profits will be greater. So what types of topics should a risk minimising plan include:

Intellectual Property, Supply Contract, Distribution/Agency Contract, Taxes, Protecting Profit Margins, Securing payment, Shipping terms, Shipping agreements, Compliance in Importer Country, Lose of Goods, Legal claims and jurisdictional terms.

For the first of these issues we will consider Intellectual Property.

The importance of protection through registration of your intellectual property has been made all that more important in today’s electronic world where physical borders have become a memory of the past. It has become increasingly easy to access information on the web from any part of the world and by the time the owner realises that their idea has been stolen significant profits may have been lost.

A professional shipwright of 18 years and now a lawyer, Marcel Vaarzon-Morel continues to be a committed player within the marine industry and is passionate about educating and supporting the industry. Marcel believes,

“The marine industry is extremely imaginative, by its very nature, creating ideas in every area of the industry from the concept and design through to processes of construction, service and sales.”

While, registering your idea may not stop the initial theft and the potential to incur legal costs in recovery, registration does increase your chances of reclaiming what is yours and having the offender pay the successful litigant’s legal costs.

Export Markets

The modern marine business in Australia that looks toward expanding its market share overseas needs to protect its intellectual investments. The importance of registration for your intellectual property is not limited to simply exporting products but may include; services and even whole businesses. By securing all the intellectual property before venturing overseas will give you the added security needed when dealing in an unfamiliar market place. Further, registration will provide the opportunity to develop a positive position in the marketplace, which will also provide new business opportunities, new clientele and a greater recognition of your product.

Confidentiality Agreements

Unfortunately not all people we deal with in business are to be trusted therefore, before you talk to anyone about your idea for the purposes of developing, marketing or any other purpose you should come to this person armed with a ‘Confidentiality Agreement’. This should last up to 12 months to enable you time needed to develop your idea further in preparation for registration.

These agreements may be drafted to meet the specific requirements of creator and while some initial pain may be incurred with respect to the cost of this agreement this is insignificant compared to the cost and difficulties that are incurred trying to prove ownership. Once the idea has been shared where no agreement it is practically imposable to impose a confidentiality agreement. Additionally, the cost proving you were the originator of the idea is costly and difficult.

Trade Mark

The Trade Mark is the corner stone of any business and therefore a highly valued asset. A business owner should be considering at the commencement of a business protection of its business logo or its product logo, known as a ‘Trade Mark’. The Trade Mark is significant as it distinguishes the goods and services from other businesses.

It is important that you consider registration of your Trade Mark early in the business or product development. While once registered you are protected from others registering the same Trade Mark, the process to determine ownership and registration may take up to 18 months or longer depending on the issues to be determined and if anyone lodges an opposition. However, once approved the registration will be backdated to the application date. All Trade Marks once registered in Australia can also be registered within other countries; as long as the owner of the Trade Mark specifies in their application the countries they require protection.

The benefits from registration are that you are entitled to the exclusive legal right to use the Trade Mark and to enter into agreements to license or sell the Trade Mark. If you do not register your Trade Mark you risk someone taking your idea and registering it before you leaving you with the arduous task of proving the original Trade Mark was yours in the first place. Or alternatively you may be left with an expensive common law action to prove your ownership.

Copyright

Copyright may or may not be the correct application to be used for registration in the marine business as it is mainly used to protect original expression of ideas in respect to art or literature.

The High Court in a recent appeal decision ruled against a yacht designer as he should have registered his yacht design under the Designs Act instead of the Copyright Act. The designer believed the “Plug” was a work of art and while it may be argued that many “Plugs” are certainly amazing creations, as far as the High Court was concerned, it was not. The result being that the designer was left with a very large and unnecessary legal bill.

There certainly will be copyright in programs and documents produced by the business however, the moral of the story, get good advice and correctly register your intellectual property.

Designs

The marine industry is well placed to utilise the benefits of registering under the Designs Act as shown by the previous mentioned High Court decision. If you register a design you will be protecting the overall appearance of the product, including shape, configuration and pattern and your sole ability to use the design, for a maximum 10 year period. To be successfully registered under the Designs Act your design needs to be unique and original in appearance and the design should not have been previously published in Australia or overseas. However, registration of designs in Australia will not automatically provide protection in overseas markets and a separate registration will be required in those other countries where protection is desired.

Patents

The marine industry has had to develop many new and innovative ways of working and in doing so has created new machines and processes known as Patents. If you are either already in business or thinking of shifting your business overseas you should register your Patents before you embark.

A patent is the rights of protection for any new machine, material or process which is functional. When you register a patent you do not own the tangible property but a legal right to use the invention for the time the patent is registered. Such protection is important before any public discussion of your invention so that the invention is not stolen beforehand.

It is important to register your idea early in the process of development to avoid someone else stealing your idea and you suffering the loss of money spent in development.

Patents may be either in standard or innovation form. A standard patent will grant protection for a period up to 20 years, while an innovation patent will only grant 8 years of protection. The innovation patent is faster to obtain, and may be applicable if the commercial success of the product is limited.

Application for the registration of patents internationally may be achieved through individual applications in those relevant countries or alternatively by means of an “international application” which will give protection in all countries that are selected in the application documents.

A recent decision in the Federal Court of Australia highlighted the importance of registering your patent in a timely manner. In this case the litigant was an overseas company suing an Australian company. It involved industry jargon and was highly technical, discussing hydro-dynamic design and principles. This highlights the need to use a lawyer familiar with this terminology. While the litigant was only successful with one of their claims, this success meant that their legal costs and losses were recovered.

Additional Protection

In the marine industry profit margins are tight and the last thing needed is your competitor using your idea leaving you with no legal recourse. As part of the protection of your intellectual property you may wish to consider reviewing existing employment contracts or having employees enter into confidentiality agreements.

On the world wide net searches will direct potential customers to your website and the last thing you want is a competitor being feed your potential customers. You should consider comprehensively registering domain names in respect of your business names and product names in order to protect from others profiting from your ideas and business.

Conclusion

In today’s electronic and global market, the importance of registering not only within Australia but also overseas, your intellectual property, has become even more relevant in order to protect the future profits of your business. It may be the case that a substantial part of your income is earned from licensing or selling your ideas. To assist you in creating a business plan for the protection of your intellectual property some basic guidelines have been set out as follows:-

Planning

  1. It is important that your business sets out a plan of action. Create a register of Intellectual Property, an audit program and store all relevant documents with respect to the development of the idea.
  2. Secure your assets i.e. protecting your assets by entering into agreements with those persons who will have contact and access to your intellectual property.
  3. It is important that the owner of the intellectual property is interested and involved and understands what is required for registration or renewal, seeking legal assistance.
  4. Register your intellectual property assets appropriately, consider your business needs.