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 the remote beach in Cape York in north Queensland and spent about 6 hours getting his car out with a hand winch. He knew there must be a better way. In response, he invented Maxtrax, a lightweight vehicle-recovery device for bogged off-roaders.
After designing the super-tough nylon product, 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 talk to a patent attorney to find out how you could protect the thought,” says McCarthy, who launched Maxtrax in 2005. It is now sold in about 30 countries worldwide. McCarthy has Inventhelp New Store Products in key markets including Australia, Europe and also the US, and the business also has a trademark on the distinctive original “safety orange” hue it uses for its moulded product. Unlike McCarthy, however, many inventors and businesses with a great idea cruel their chances of success from day one.
Their big mistake? Ignoring patents or any other intellectual property protection before they spruik their idea to investors, the public or even friends. It can become a costly error. Bradley Postma, principal at patent and trademark attorney firm Cullens, says small, and medium enterprises (SMEs), specifically, often neglect safeguarding their IP or think it will probably be too costly. “The majority of protectable IP goes unprotected,” he says.
Europe can become a particular trap for exporters because, unlike a few other major markets, it does not have a grace period allowing for public disclosure of the invention without affecting the validity of a subsequent patent application. That opens the way in which for the idea or product to get copied. “In Australia and america you can take action about this, provided you’re inside a one-year window – in Europe you can’t, it’s too late,” Postma says. “In that case, businesses have shot themselves within the foot; they’ve forfeited their rights and anyone can copy [their idea].” Postma observes that business people often think their idea is just too simple to warrant a patent. “However, if it’s successful and simple, it will probably be copied and you need to get advice.”
Unitary patents on way – Margot Fröhlinger is principal director of unitary patent, European and international legal affairs in the Munich-based European Patent Office (EPO), which oversees about 160,000 patent applications a year. She recently completed a road trip warning Australian companies that poor patent and IP safeguards could derail their European market opportunities. Companies need to innovate – and protect their inventions. “You require the protection of your own IP and, in particular, patent protection in order to get a good return on your own investment,” she says.
Many international businesses have baulked at exporting to Europe due to complex patent processes across multiple jurisdictions that can end in potentially high costs and marginal protection. However, the EPO is promoting a new unitary patent system that promises to become a game changer. This will make it possible to get protection in approximately 26 participating European Union member states with the submission of any single request for the EPO.
A November 2017 EPO study, Inventhelp Commercials, Trade and FDI in the European Union, suggests better harmonisation of Europe’s patent system has the potential 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 chances to expand in to the European market, which boasts a lot more than 500 million people, high gross domestic product and robust consumer demand. “It’s very important for Australian businesses to know that there is a big change ahead in Europe. I’m not talking only about patents,” Fröhlinger says. “It’s essential to get an integrated IP portfolio considering patents and trademarks and (covering) design. If they don’t have (IP) people in-house they ought to attempt to get strategic business advice.”
The value of intangible assets – This call to action for Australian businesses may come as the international Innovation Index 2017 reports on countries’ IP receipts being a percentage of total trade. Basically, the measure indicates just how a country is performing on the IP front. While Australia scores well with regards to inputs into research and development, the US (5.1 percent), Japan (4.7 per cent) and Finland (2.9 %) easily outperform Australia (.3 per cent) on IP royalties.
The content? As being a general rule, Australian companies usually are not proficient at converting research into value and treat IP almost as an administrative function. The exceptions are health tech leaders, such as medical device company Cochlear and sleep-disorder business ResMed, which understand the value of intangible assets like logo and data use, and build their businesses around it.
In a knowledge-based economy, IP has developed into a crucial business tool and governing it has stopped being just dependent on organising trademarks and Inventhelp Patent Referral Services. Intangible assets are rapidly increasingly important than tangible assets and require appropriate consideration.
A review of Australia’s top listed companies, released by Glasshouse Advisory in September 2017, endorses this type of sentiment. It reveals that 38 percent of the companies’ value (about A$550 billion) is not included on the jjnywy sheets; this indicates that investors are operating without insights into a significant proportion from the corporate asset base.