Many exporters don’t realize the importance of intellectual property rights until they’re faced with a “cease and desist” letter—or, worse, a lawsuit in a foreign court.
Litigation can be extremely costly and time-consuming. That’s why it’s prudent to protect your patents, trademarks and other intellectual property before you sign that licensing agreement or start selling a proprietary product in a new market.
Here are four steps every exporter should take in order to avoid the most common intellectual property pitfalls:
1. Plan your expansion early
Patents and trademarks are jurisdictional, which means they apply only in the country where they were filed. That means you will have to register your intellectual property separately in every country in which you want protection—and you have to do it early.
Jeff Tracey, a Toronto-based intellectual property lawyer with Rowand LLP, recommends first doing some searches to make sure your product or service doesn’t infringe on any existing patents or trademarks in that country.
All of that searching and filing can get pricey. While the cost of applying for a patent varies widely depending on the jurisdiction, Tracey says, the first application can cost roughly $10,000 to $12,000. Each additional jurisdiction that you apply to can add another $1,000 to $9,000.
That’s why planning which jurisdictions you want to enter is important. “Everybody wants a worldwide patent, but not everybody can afford a worldwide patent,” says Tracey. “You have to pick and choose your jurisdictions.”
Filing an application under the Patent Cooperation Treaty lets you seek protection in multiple countries at once. But be mindful that if you want to extend your Canadian patent to other jurisdictions, you have only a year after filing it in Canada to do so, says Chicago-based intellectual property lawyer John Cullis. For a trademark, you have six months.
2. Set out who owns what
If you’re enlisting the help of a foreign company to distribute your trademarked product or licensing your patented technology abroad, a contract can protect you in case the relationship between you and your business partner sours. It’s vital that any contracts you sign clearly set out who owns the rights to the trademarks and patents in that jurisdiction, says Cullis.
In Cullis’s work at Neal Gerber & Eisenberg, he often deals with Canadian companies that have U.S. operations, and Cullis has represented a few that found themselves in litigation in U.S. courts because they hadn’t properly documented the nature of their relationship with their U.S. distributors. Says Cullis: “That raises the question: Who owns the rights here?”
3. Keep it out of the courts
If you don’t trust the court system in the jurisdiction into which you’re expanding, put a dispute-resolution clause in your contract, suggests Lisa Lifshitz, a lawyer with Torkin Manes. For example, the clause could specify that any conflicts will be dealt with through arbitration, a private remedy whereby both sides agree to have their dispute settled out of the courts by a neutral third party.
4. Get a reputable translator
When doing business in a non-English-speaking country, you may need to have your licensing or distribution contract translated into another language. In these cases, says Lifshitz, it’s essential that you use a reputable translator who has experience working with legal documents.
A poorly worded translation is likely to contain gaping loopholes that an ex-business partner could exploit. “Law is a precise art,” says Lifshitz. “The language is important.”
Join your fellow exporters and discuss the challenges of working in global markets in the PROFIT Export Exchange on LinkedIn.