Friday, December 31, 2010

IP Protection a Money Spinner Today

The 21st century business is built on intellectual property (IP), just as the 19th century firm had property as its main asset, a leading global IP lawyer says.

Taking the Apple iPhone as an example, David Llewelyn, the deputy chairman and external director of the IP Academy, Singapore, pointed out that the cost of making the phone in China amounts to only 5% of the price consumers pay for it.

“The 95% that Apple keeps is for its technology, design, trademarks and the Apple logo. That’s what everybody wants to reproduce,” he said.

“It’s almost negligent to not look at the IP issue in a long-term way,”said Llewelyn, whose book on the subject, Invisible Gold in Asia: Creating Wealth Through Intellectual Property, was launched earlier this year.

“It’s a matter of educating people that this is the business of the future. This is the long-term sustainable advantage that businesses have,” said Llewelyn, who was here recently to promote the third Global Forum on Intellectual Property, to be held in Singapore from Jan 6-7.

Nevertheless, getting people to claim their intellectual property rights is relatively easy, he said. “Transforming it from liability to asset is the hard part. That comes from advertising, promoting, licensing and doing joint ventures,” said Llewelyn. “There’s definitely a change of mindset from short-term to longer-term investment going on all around Asia, in building up their invisible gold reserves.”
Llewelyn says transforming intellectual property rights from liability to asset is the hard part.

Llewelyn says transforming intellectual property rights from liability to asset is the hard part.

Chinese president Hu Jintao signalled this trend in 2003 when he said that world competition was going to revolve around IP rights. Five years later, China introduced a national IP strategy.

“The government told Chinese businesses they must start creating their own IP, such as patents, designs and trademarks, rather than copying foreigners or having to pay for foreigners’ patented technology,” Llewelyn said.

The same is happening in India, and all around the region.

“Just reducing prices all the time and copying some brand leader is a short-term strategy. And the manufacturing might move from Malaysia to China, Vietnam or Indonesia, as has been happening in the last 10 years,” he said.

Having a unique identity is important for IP rights protection because IP is difficult to protect otherwise, he said. Citing the example of Legend, which was a Chinese computer brand, Llewelyn pointed out that it was a difficult name to protect. “So they changed it to Lenovo, and when they bought over IBM’s ThinkPad, they used the new brand name, and it is now a global brand,” he said.

According to Llewelyn, entrepreneurs need to think ahead to the time when they would be successful, and protect their IP long before they become well known.
“You’ve got to think ahead to where you’re going to be selling your products and do your homework about what the IP position in those countries is as well,” he said.

“If Malaysian companies are going to do business in China, they often find that their trademarks are registered there by someone else, and then they get sued and have to pay money for it,” said Llewelyn.

“This is a game that is being played now by businesses all around the world,” he said. “You need to have an IP strategy which fits with your business strategy and that fits your budget.”

According to Llewelyn, the costs of protecting IP range from nothing to millions. For example, the Chinese electronics firm ZTE Corp, has an annual IP budget of US$16 million (RM49.4 million) and it has 30,000 patents.

“In many of the areas in which they do business, unless you have a lot of patents, you might as well not be in the game, because you will be threatened with patent infringement action when you go into the US or European markets,” he said. “So, you then say, well, I’ve got my patents here, let’s do a deal.”

IP can be licensed to others for huge profits, said Llewelyn. “In 1982, Austrian entrepreneur Dietrich Mateschitz on a visit to Thailand saw an energy drink that was being drunk out of a bottle by long distance lorry drivers. He did a deal with the producer Chaleo Yoovidhya, where each took 49% share in the company and Yoovidhya’s son had 2%. Yoovidhya is now the wealthiest man in Thailand through realising Mateschitz’s marketing genius,” he said.

The global forum, which is a biennial event, will be held at the Raffles City Convention Centre. It is expected to attract about 500 lawyers, professionals, entrepreneurs and business development managers in IP-related fields. It will feature some 80 international speakers on various aspects of the IP business, such as best practices in Singapore, Thailand, Indonesia, the US and Europe. “By listening to how others use and abuse their IP rights, businesses can learn how to play the game,” said Llewelyn. - The Edge

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