The Myth of the 'International Trademark': A Malaysian Business Owner's Guide to the Madrid Protocol

As a trademark agent with 18 years of experience, one of the most exciting conversations I have with clients is about taking their brand global. Their business is thriving in Malaysia, and they have their sights set on markets like Singapore, China, the US, or Europe. Inevitably, the question arises: "How do I get an 'international trademark'?"

It's a question filled with ambition, but it's based on a fundamental misunderstanding. And today, I want to clarify it for every Malaysian business owner looking to expand.

The single most important thing to understand is this: There is no such thing as a single, worldwide trademark that protects you everywhere.

Trademark rights are, and always have been, territorial.

Think of it this way: your Malaysian company registration allows you to do business in Malaysia. It doesn't grant you the right to operate in Indonesia. Similarly, your trademark registration with the Intellectual Property Corporation of Malaysia (MyIPO) gives you exclusive rights to use that brand within the borders of Malaysia. It offers no protection in Thailand, Australia, or any other country.

To be protected in another country, you must register your trademark in that specific country, according to its national laws.

"So," my clients ask, "does that mean I have to hire lawyers in a dozen different countries and file a dozen different applications in different languages and currencies? That sounds like a nightmare."

Historically, yes. But today, there is a much more efficient solution: The Madrid Protocol.

What is the Madrid Protocol? A Centralised International Trademark Filing System, Not a Global Trademark

The Madrid Protocol is not a magic wand that grants you a global trademark. Instead, it is a highly efficient international filing procedure.

Administered by the World Intellectual Property Organization (WIPO) in Geneva, the Madrid Protocol is an international treaty that allows a trademark owner to seek protection in over 130 member countries by filing a single application through their home trademark office.

125 Years of Madrid System reached in 2016 (WIPO)

It's best to think of it as a central post office for trademarks. Instead of mailing separate application packages to every country yourself, you submit one package (your international application) to your local post office (MyIPO). You provide a list of addresses (the countries you want to be protected in), and the central post office (WIPO) ensures your application is dispatched to each of those national trademark offices.

To further deepen my understanding and expertise in this critical area, I undertook and successfully completed the WIPO course on the Madrid System for the International Registration of Marks, from May 4, 2021, to June 20, 2021. This certification reinforces my commitment to providing the most current and effective guidance on international trademark strategies.

Obtained Certificate in Madrid System in 2021

How it Works for a Malaysian Business

The process follows a clear path:

1. The Foundation: A Basic Mark in Malaysia. Before you can go international, you must have either filed an application or secured a registration for the same trademark with MyIPO. This is your "basic mark."

2. The International Application. You file a single international application through MyIPO, in one language (English), and pay one set of fees in one currency (Swiss Francs). In this application, you designate the specific Madrid Protocol member countries where you want to seek protection.

3. WIPO Formal Examination. MyIPO sends your application to WIPO. WIPO checks it to ensure it complies with all formal requirements and then records it in the International Register and publishes it. They then forward your application to the national IP offices of all the countries you designated.

4. The Crucial Step: National Examination. This is where the territorial nature of trademark law comes back into play. Each designated country's IP office will examine your application according to its own domestic laws and procedures.

   • The United States Patent and Trademark Office (USPTO) will treat it as if it were a US application.

   • The China National Intellectual Property Administration (CNIPA) will examine it under Chinese law.

   • The European Union Intellectual Property Office (EUIPO) will examine it under EU law.

Each country has the full authority to grant or refuse protection. Approval in Malaysia does not guarantee approval elsewhere.

The Advantages are Clear, But So Are the Risks

Why use the Madrid Protocol?

• Efficiency: One application, one language, one currency. It dramatically simplifies the initial filing process.

• Cost-Effective: It is generally more affordable upfront than engaging separate lawyers in numerous countries simultaneously.

• Centralised Management: Future management is easier. Renewals, or changes in ownership or address, can be recorded through a single, simple procedure with WIPO.

However, my 18 years of experience have taught me to advise clients on the potential pitfalls:

• The "Central Attack" Risk: For the first five years, your entire international registration is dependent on your basic Malaysian application/registration. If your Malaysian mark is cancelled or limited for any reason during this period, your entire international registration will also be cancelled or limited.

• It's Not a Substitute for Local Counsel: If a designated country (say, Japan) issues a refusal, you will still need to hire a local Japanese trademark attorney to handle the response. The Madrid Protocol gets your foot in the door; it doesn't fight the battles for you.

• Not All Countries Are Members: While the list is extensive, some important commercial territories are not members. You will need to file directly in those places.

My Advice to You

The Madrid Protocol is a powerful and indispensable tool for international brand expansion. But it is a procedure, not a product.

Your international trademark strategy should not be about simply filing an application. It should be a considered business decision based on your goals for growth, your target markets, and your budget. Sometimes, filing directly in one or two key countries is a better first step. Other times, a broad Madrid application covering 20 countries is the right move.

Navigating this requires a strategic approach. Before you take the leap, let's have a conversation about where your brand is headed. Together, we can build a protection strategy that is robust, cost-effective, and right for your business.

The Importance of Microorganism Deposits in Malaysia

Patents can cover isolated bacteria, fungi, algae protozoa, plasmids and prions. One area that often requires special attention is the deposit of microorganisms, especially when it comes to patent applications involving biotechnological inventions. In Malaysia, the process of depositing microorganisms is essential for several reasons, and there are specific institutions where these deposits can be made. 

Why Deposit Microorganisms?

1. Patent Requirements: When filing a patent application for an invention involving microorganisms, it is often necessary to deposit the microorganism in a recognized depository. This is because microorganisms cannot be adequately described in a written patent application. The deposit ensures that the microorganism is available for examination and reproduction, which is a requirement under the Budapest Treaty.

2. Preservation and Accessibility: Depositing microorganisms in a recognized depository ensures their long-term preservation and accessibility. This is crucial for scientific research and industrial applications, as it allows other researchers and companies to access the microorganism for further study and development.

3. Compliance with International Standards: The Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure mandates that all member states recognize a deposit made in any one of the international depositary authorities (IDAs). This means that a single deposit is sufficient for patent procedures in multiple countries, streamlining the process and reducing costs.

What is the Budapest Treaty?

The Budapest Treaty, established in 1977, is an international agreement that simplifies the process of patenting biotechnological inventions involving microorganisms. Under this treaty, a single deposit of a microorganism with any recognized IDA is sufficient for patent purposes in all member countries. This eliminates the need for multiple deposits in different countries, making the patent process more efficient and cost-effective. The treaty also ensures that deposited microorganisms are preserved and made available for examination and reproduction, which is essential for the patenting process.

Where to Deposit Microorganisms

In Malaysia, the Universiti Putra Malaysia Microbial Culture Collection (UPM-MCC) (open exernal link) has been officially acknowledged as the first National Depository Authority (NDA) for microorganisms. UPM-MCC provides essential research support services and offers bacteria storage services under the Patent Deposit category, meeting a key requirement for filing patents related to microorganisms.

Additionally, microorganisms can be deposited in any IDA (open external link) recognized under the Budapest Treaty. This includes various institutions worldwide that meet the standards set by the treaty, ensuring that the deposited microorganisms are preserved and accessible for patent examination and other purposes.

When selecting a depository for microorganisms, several factors come into play:

1. Type of Microorganisms Accepted: Different depository accept various kinds of microorganisms. It's essential to verify whether the storage conditions of the depository can accomodate the specific type of microorganism you need to deposit.

2. Foreign Patent Applications: If you are planning to file a foreign patent application, you must choose an IDA. Currently, UPM is not recognised as an IDA.

3. Cost Considerations: The fees associated with depositing microorganisms can vary between depositories. Additionally, the logistics of transporting the microorganism can influence the overall costs. 

WIPO Standard ST.26 for Sequence Listing

Patent applications that include nucleotide and/or amino acid sequence listings must include the sequence listing in WIPO Standard ST.26 file format. WIPO Sequence is a global software tool that enables patent applicants to prepare amino acid and nucleotide sequence listings compliant with WIPO standard ST. 26 as part of a national or international patent application. This tool helps ensure that sequence listings are standardised. 

Conclusion

Depositing microorganisms is a crucial step in the patent application process for biotechnological inventions. It ensures compliance with international standards, preserves the microorganisms for future research, and makes them accessible for examination and reproduction. In Malaysia, UPM-MCC serves as a national depository, while IDA provide additional options for researchers and inventors seeking international protection. Patent applications that include sequence listings must be prepared according to WIPO Standard ST.26.

Building value and growth for small businesses

By Julian Crump, President of the International Federation of Intellectual Property Attorneys (FICPI)

There's a myth that protecting intellectual property (IP) is the preserve of larger firms and is unsuited to smaller and medium-sized enterprises (SMEs).

While large companies invest in IP for good reasons – to protect their products and services, discourage competition and create new revenue streams for themselves – IP undoubtedly benefits smaller businesses too.

SMEs that apply for patents, trademarks or designs are more likely to grow quickly and succeed than those that do not.

In fact, the evidence is that SMEs that apply for patents, trademarks or designs are more likely to grow quickly and succeed than those that do not.

A 2019 EPO/EUIPO study  demonstrated that SMEs that have at least one IP right are 21 percent more likely to experience a growth period. Meanwhile, a 2021 update to the study found that fewer than 9 percent of SMEs owned at least one of the three main IP rights (a patent, trademark and design). By contrast, the figure is close to 60 percent for larger firms. This reveals a shocking disparity in the use of such a valuable business tool.

The value SMEs gain from protecting their IP assets comes in many forms

As well as serving as the current president of FICPI, I am a Chartered UK and European Patent Attorney, and a partner in the firm of Abel + Imray in London, Bath and Cardiff, UK and Spain. To look for examples of SMEs that use IP protection as a key element of their business success, my partners and I reviewed our list of clients.  We did not have to look far.

Several years ago, aircraft seating designers Acumen Design Associates moved from a consultancy model (with revenue based on project fees), to also creating their own designs, which are then patented. Today, a major part of Acumen’s revenue comes from issuing licenses for the use of their protected designs. (Photo: Courtesy of Acumen Design Associates)

The results are instructive and hugely encouraging for other SMEs:

• Growing license sales and royalty revenue - Several years ago, market-leading aircraft seating designers Acumen Design Associates, led by founder Ian Dryburgh, moved from a consultancy model, with revenue based on project fees, to also creating their own designs, which are then patented. Today, a major part of Acumen’s revenue comes from issuing licenses for the use of their protected designs - including a large deal in 2016 with United Airlines for business class seating.
  
  
• Winning venture capital (VC) funding - XYZ Reality Ltd., has won numerous accolades for a highly accurate, “engineering grade” augmented reality (AR) solution which ensures building construction matches exactly the architects’ drawings. Their solution avoids problems with traditional site setting-out methods and penalties for errors. The patent application was complicated, involving multiple disciplines from advanced engineering to AR and physics. A positive opinion on the application from the European Patent Office (EPO) helped XYZ Reality secure venture capital (VC) funding.

Over and above the underlying product or service it protects, IP is a valuable asset in its own right. Indeed, it can become a company's most valuable asset.

• Making SMEs more valuable for acquisition - Siltbuster Limited is recognized as the UK’s top provider of on-site water treatments and is a winner of the Queen’s Award for Enterprise. A big factor in its success has been the patenting of breakthroughs by the company’s founder, Dr Richard Coulton, who began with a vision of treating concrete wastewater at construction sites in a more environmentally friendly way. In 2018, the technology caught the eye of Workdry International, which ended up purchasing Siltbuster – and its IP.
  
  
• From university research to university spin-out - A research project at University College London investigating how to transfect cells using siRNA morphed into a small company, NanoGenics Limited. A few years – and several research cycles – later, NanoGenics developed LipTide^® to target selected genes and better combat cancer. The company sold the associated IP rights for GBP 4.5 million (approx. USD 6.2 million), helping their cutting-edge medical development advance to commercialization.
  
  
• Using trade secrets to stay under competitor radar - Today, Rheon Labs Ltd., which makes protective body wear for high-impact sports, is a strategic and sophisticated user of IP. Initially, they relied on trade secrets to protect selected aspects of their IP, staying under their competitors’ radars (rather than filing patent applications, which are automatically published after 18 months). However, once others started encroaching on their field, Rheon Labs pivoted to patenting. This put their technology into the public domain, but in return they gained 20 years of exclusivity and their competitors must now devise their own new and inventive products if they wish to secure their own patents.

Rheon Labs Ltd., who make protective body wear for high-impact sports, is a strategic and sophisticated user of IP. (Photo: Courtesy of Rheon Labs Ltd.)

• Trademarks to underpin commercial partnerships - The Rheon Labs^® trademark was registered early, when pre-filing searches indicated there were few third-party rights that might prevent its use. As the company grew and moved into the realm of collaborations and commercial partnerships, water-tight non-disclosure agreements (NDAs) and design registrations were added to its IP estate. Rheon Labs^® now has strong brand recognition, and the company benefits from valuable goodwill in its name. Registration serves to lock in that value, provides a visible sign of ownership, and facilitates co-branding with partners like Xenith LLC, a top American football helmet manufacturer, whose products now carry the Rheon Labs^® trademark, and are recognized for reducing concussive impacts and associated brain injuries, alongside their own. Without registration and water-tight licensing arrangements, allowing a third party to apply your trademark to their goods would put you at risk of losing it. Registration typically protects a company’s marks for 10 years, but with the advantage that they can be renewed in perpetuity – as long as they don’t become generic terms.
  
  
• Creating valuable IP assets to demonstrate market potential - Ceres Power is a company with patented "deep technology" that has a wide range of clean energy applications and has become a hugely valuable asset. However, had commercialization specialists, IP Group Plc, not stepped in at a critical moment, the company would likely have declared bankruptcy following the failure of initial field trials. IP Group works with early-stage companies that own IP originating from university research to get them to a point where they can demonstrate the real-world viability of their technology to attract co-investment from large corporates and ultimately acquisition. IP Group's Dr. Rob Trezona told me, "IP is a table stake. If our portfolio companies haven't secured their IP rights, they won't be able to raise finance. And typically, investors are looking for a number of patents rather than one or two." Key to IP Group’s successful turnaround of Ceres was the realization that its world-class IP position would allow it to generate more value as a technology provider that jointly develops and licenses technology than as a vertically integrated manufacturing business. The company has partnered successfully with Bosch, Doosan and Weichai Power to develop products for data centers, distributed generation and heavy road vehicles, and is able to generate value for itself through license fees and royalties.

NanoGenics Limited, an innovative, research-based gene therapy company, sold IP rights for its LipTide® therapy for GBP 4.5 million (approx. USD 6.2 million), helping their cutting-edge medical development advance to commercialization. (Photo: Courtesy of NanoGenics Ltd.)

These examples illustrate how, over and above the underlying product or service it protects, IP is a valuable asset in its own right. Indeed, it can become a company's most valuable asset. Without doubt, there will be countless other examples among the clients of other IP firms worldwide.

IP rights create a protective wrapper around an intangible asset – locking in value and making it tradeable, through licensing, pooling, securitization or acquisition. Without IPRs, investments made by companies in developing new products and processes, or even in simply devising new product ideas, are at risk. It's a bit like creating a beautiful garden without putting up a fence to keep the rabbits out!

Without the help of a specialist IP attorney, an SME is unlikely to be able to identify the important points of novelty or broad utility of their inventions, which are vital for a successful IP strategy, or may simply be defeated by the registration process.

Indeed, for SMEs, tackling IP protection can seem impossible. Seeking to obtain patent, trademark and design rights is complex. There are relatively few "self-filers", and of those few, the majority abandon their applications or are unsuccessful in gaining granted rights.

As a patent attorney, I obviously have a self-interest in pointing out the depth and sophistication of the services offered by independent IP professionals to SMEs.

IP rights create a protective wrapper around an intangible asset – locking in value and making it tradeable through licensing, pooling, securitization or acquisition.

However, given the stakes, the clear evidence that SMEs holding IP rights prosper relative to others that do not, and the all-too-frequent failure of SMEs to complete the application process on their own, the conclusion is clear.

SMEs should look to protect their IP assets to support and accelerate their growth by locking in the value of their IP and building intangible assets which can be used to underpin a wide variety of different business models, with innovation at their core.

Independent IP attorneys bring wide experience from advising a broad range of different clients. They can look beyond the immediate applications of an invention to focus on its points of novelty, giving the patents a longer useful life as the businesses they protect flex and adapt to new markets and are made more attractive to investors.

The investment an SME makes in partnering with an independent IP professional has a significant return, not only in terms of a successful application, but also for its future as the owner of IP rights.

XYZ Reality Ltd., has developed a highly accurate, “engineering grade” augmented reality (AR) solution which ensures building construction matches exactly the architects’ drawings. A positive opinion on the application from the European Patent Office (EPO) helped the company secure venture capital funding. (Photo: Courtesy of XYZ Reality Ltd.)

WIPO Magazine

Online Courses on Intellectual Property

There are several online courses on intellectual property. Some are free.

(Image from WIPO)

World Intellectual Property Organization (WIPO) is a leader in distance learning. General courses on intellectual property are offered throughout the year for free. Beginners can join IP Panaroma to have an overview of intellectual property. Intermediate course on specific intellectual property topics involves minimal fee. Some of the courses on demand include:

• IP Panorama (for beginners)
• General Course on Intellectual Property
• Introduction to the Patent Cooperation Treaty
• Patent Information Search
• Basics of Patent Drafting
• Intellectual Property Management

European Patent Office (EPO) provides specific training on patent matters. Courses relevant to European patents are offered.

• EPO Patent Information Tools
• Introduction to the European Patent System 
• Patentability in Information and Communications Technology
• Patentablility in Healthcare, Biotechnology and Chemistry
• Patenting Artificial Intelligence
• Patenting Blockchain

European Union Intellectual Property Office (EUIPO) is a separate entity from EPO that manages European trademarks and design. Webinars, learning area and courses offered including:

• European Union Trade Mark (EUTM) in a Nutshell
• International Classification of Goods and Services
• Registered Community Design (RCD) in a Nutshell

United States Patent and Trademark Office (USPTO) produces eLearning modules for components of intellectual property:

• Introduction to Patent Protection
• Copyright: Encouraging and Protecting Creativity
• Overview of Trademarks

Japan Patent Office (JPO) provides e-Learning for specific patent topics.

• Requirements for Claims
• Novelty
• Inventive Step

Korea Intellectual Property Office (KIPO) also has an e-learning centre. WIPO IP Panorama was jointly developed with KIPO. Some topic of interest:

• Patent Map
• International Application through the PCT System and its Strategies
• International Trademark Application through Madrid System and its Strategies
• Interpreting and Drafting Patent Documents in US, Japan, Korea, EPO and Australia, respectively

 Coursera and edX provides courses from several universities.

• Intellectual Property Law, University of Pennsylvania
• Protecting Business Innovations, The Hong Kong University of Science and Technology
• Patenting in Biotechnology, Copenhagen Business School
• Intellectual Property Law, Tsinghua University (in Chinese)

The Impact of Trademarks Act 2019

Malaysia Trademarks Act 2019 is now in force since 27 Dec 2019 and Trade Marks Act 1976 is repealed. In Asia, the American spelling of trademarks is favoured over the British spelling of trade marks.  Several international trademark practices were adopted in the new Act. Here, we highlight several impact of Trademarks Act 2019.

1.       Scope of mark

The scope of qualifying mark is expanded to shape of goods, sound, scent, hologram, positioning, and sequence of motion. Shape of goods is also known as 3D mark. To qualify as a trademark, the shape must be distinctive in that it is not a result of the nature of the goods, eg. Toblerone chocolate. Example of distinctive sound marks include 20^th Century Fox fanfare.

Example of shape of goods - Toblerone chocolate (Image: Wikepedia)

2.       Qualifying mark

Trademark means any sign capable of distinguishing goods or services of one source from another source. The applicant must use or has intention to use the mark. Description of goods or services should accurately be described. Non-use of mark can be revoked.

3.       One step application process

The previous two step application process of filling and publication (after approval) is streamlined into a single step. The applicant has to pay the publication fee upon filling.

4.       Non-distinctive mark application to receive refusal (Absolute grounds of refusal)

A refusal is issued if the examiner finds that the mark describes kind, quality, quantity, intended purpose, value, geographical origin, characteristics of goods or services or time of production or rendering of services.

5.       Similar mark application to receive refusal (Relative grounds of refusal)

A refusal is issued if the examiner finds that the mark is similar with earlier trademark which comprises registered trademark, pending trademark or well-known trademark. Well-known trademark means any trademark that is well known in Malaysia.

6.       Registered trademarks as object of property

Registered owners can use the mark, authorize other person to use the mark, use the mark as a security interest and obtain relief for infringement.  

7.       One step international application process

After registering a trademark in Malaysia, the owner can file the trademark in multiple countries of Madrid Protocol in a single application. The owner can possibly save cost in filling the mark in multiple countries. The owner can also get double tax deduction for foreign trademark filling.

8.       Pending trademark applications

      Trademark applications filed before the implementation of Trademarks Act 2019 which are pending examination will be examined according to Trade Marks Act 1976.

More Trademarks and IP expected

Domestic Trade Affairs and Consumerism Minister Datuk Seri Saifuddin Nasution said this was because the new act, which replaced the Trade Marks Act 1976, provided recognition to non-traditional trademarks. - NSTP/RAMDZAN MASIAM

The government is foreseeing an increase in trademark and intellectual property applications over the next few months.

This is on the heel of the new Trademarks Act 2019 coming to force next month and its subsequent enforcement.

Domestic Trade Affairs and Consumerism Minister Datuk Seri Saifuddin Nasution said this was because the new act, which replaced the Trade Marks Act 1976, provided recognition to non-traditional trademarks.

He said with the new act, Malaysian entrepreneurs could now trademark intangible materials such as shape of goods, packaging, sound, scent, colour, holograms, positioning and sequence of motions that could be graphically presented to distinguish goods and services from others.

“The new act will help businesses protect their trademark through a fast, efficient and effective registration system. This new legislation also allows for multi-class applications and will streamline the administrative paperwork needed for brands to protect marks across different classes,” he said after the National Seminar on Branding and The Madrid System for the International Registration of Mark at the Royale Chulan Hotel, here, today.

The event was attended by Intellectual Property Corporation of Malaysia (MyIPO) chairman Dr Rozhan Othman and International Bureau of World Intellectual Property Organisation (WIPO) Asean regional director Denis Croze.

Elaborating, Saifuddin said between 2016 and 2018, there were 151,323 applications for intellectual property registration, and of that number, 118,237 were successfully registered.

He said during the same time period, a total of 123,856 applications for trademark registration were received of which 100,597 were successfully registered.

“In 2018 alone, there was a total of 52,998 applications for intellectual property registration and 43,656 for trademark registration. With the new act, we can expect to see the number growing,” he said.

It was reported that the Trademarks Act 2019 followed the recently-adopted Madrid System or Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol), adopted in Madrid on June 27, 1989. Malaysia is the 106th member of the Madrid System. Other Asean countries which have acceded to the protocol include Brunei, Cambodia, Indonesia, Laos, the Philippines, Singapore, Thailand and Vietnam.

The Madrid System enables them to protect their brands in 122 countries, including the United States, Australia, the United Kingdom and Brazil. Trademark owners will only need to fill a single application with MyIPO to register their local brands in countries participating in the protocol. The system is an international treaty administered by WIPO. The system allows trademark owners to seek protection in several countries simultaneously by filing one application with a single office, in one language and by paying one fee. Malaysian entrepreneurs will be able to register their brands starting Dec 27.

Saifuddin also urged Malaysian entrepreneurs to register their companies or brands under the act as soon as possible. He said businesses that does not protect their trademark by registering it risked having imitators from within the country taking over the name associated with their product.

“Malaysian companies need to be more cognizant of this development and start having a long-term brand strategy to protect and leverage on their trademark. This cannot happen if they do not file an application to protect their trademark with MyIPO,”he said.

It was reported that the new Trademarks Act 2019 also carries newer, more severe punishments for offenders. Those found committing fraudulent or trademark infringements can be fined up to RM1 million, jailed for a maximum of five years, or both. Previously, the punishment for trademark infringements included a fine of RM5,000 for the first offence, with subsequent fines possibly increasing to RM30,000 in addition to a three -year jail term, or both. - Balbin Kaur / NSTP

Five things to note about GII2019

The Global Innovation Index 2019, which rank countries according to innovation investment and output was released on 24 Jul 2019. We present five things to note about GII:

1. Malaysia maintained rank 35th in GII and 2nd among upper middle income countries

Malaysia leads in high tech exports (34.1% of total trade) and creative goods exports (9.8% of total trade). Malaysia needs to improve PISA score (412.7); and patent (1.2 /bn PPP$ GDP), trademark (20.9 /bn PPP$ GDP) and industrial design (0.6 /bn PPP$ GDP) application by origin. Top patent applicants are government institutions instead of private companies. Only 1.2 patent applications are filed over 1 billion PPP$ GDP.

2. China improved three spots to 14th in GII and still 1st among upper middle income countries

China has good marks in high tech exports (27.9% of total trade), creative goods exports (11.9% of total trade); and patent (53.7 /bn PPP$ GDP), trademark (238.7 /bn PPP$ GDP) and industrial design (26.3 /bn PPP$ GDP) application by origin. China private companies recognize high investment and output in intangible assets. Top patent applicants are Huawei, ZTE and BOE.

3. Vietnam improved three spots to 42 in GII and higher output than Malaysia

Vietnam has been outperforming peers for the 9th consecutive year. Vietnam (37th) has higher innovation output rank compared to Malaysia (39th) even though Malaysia has higher investment in innovation. Vietnam has improvements in human capital and research, market sophistication and knowledge, expenditure on education, high tech imports and trademark (85.3 /bn PPP$ GDP) applications of origin.

4. Switzerland, Sweden and USA lead the GII

Global government expenditures in R&D (GERD) grew by 5% while business R&D expenditures grey by 6.7%. The world is investing in R&D and producing innovation. Private companies lead patent applications.

5. Medical technology is the most frequent patenting field - present in 19 clusters

According to GII, the convergence of digital and biological technologies is disrupting healthcare and increasing the importance of data integration and management across the healthcare ecosystem. Innovation in the field of health now massively evolves around big data, the internet of things and artificial intelligence, entailing huge power shifts within and away from the health sector.

Our analysis:

Malaysia rank no. 1 in high tech exports. We need government and private companies to recognize the importance of innovation investment and output. Malaysia has low intangible asset output over GDP. The government needs to ask why private companies are not proportionally reinvesting income in producing intangible assets. We have high number of graduates in science (rank 8th in GII). What can the government do to give confidence to private companies to invest in innovation? Can government linked companies lead the way? Can government appoint the right person to lead the way? Can Malaysia stay competitive in innovation?

World Intellectual Property Day

(Image: WIPO) World IP Day is celebrated to recognize the role of intellectual property

This article covers the role of intellectual property in sports.

What are intellectual property (IP) rights?

Intellectual property rights are rights given to persons over the creations of their minds, according to World Trade Organization. People innovate and create better goods. Aspects of improvement can be protected with intellectual property. The source and identity of goods can also be protected with intellectual property. IP provides recognition and reward to people that creates better goods.

Why 26 April?

World Intellectual Property Organisation (WIPO) is an agency of the United Nations (UN) that promotes intellectual property. In 2000, WIPO designated April 26, the day which WIPO Convention came in force in 1970 as World IP Day. This marks an important day as members of UN have an international body to develop and harmonise intellectual property practice. WIPO provides a platform to raise intellectual property agenda for developing countries.

World IP Day is celebrated to highlight the role of intellectual property in encouraging innovation and creativity. Last year, the theme of ‘Women in Innovation and Creativity’ was celebrated.

What is the role of intellectual property in sports innovation?

Modern golf originates from medieval Scotland. In 1618, James Melvill, a golf ball maker get a 21-year monopoly to make golf balls. Melvill’s golf ball was made of cow or horsehide stuffed with feathers. However, the ball is useless when it got wet. It was also labour intensive to make the ball.

In 1843, Robert Paterson invented gutta percha ball that lower the cost of golf balls. It also lasted longer and less vulnerable to moisture. It increased the popularity of golf as a sport. Gutta percha is a form of latex from Malaysian forest. 

In 1899, Coburn Haskell obtained a patent for rubber wound ball. The ball was made of solid rubber wound core that was covered by gutta percha. 

The surface of golf ball is smooth until 1905, when William Taylor introduced the idea of dimple markings on golf balls in GB patent 190518668. The dimple pattern maximizes lift while minimizing drag. The dimple markings were adopted in all golf balls.

Illustration of GB patent 190518668 by William Taylor

In 1963, James Bartsch filled a patent for a one piece ball, replacing gutta percha and rubber. The golf ball has undergone various innovations. Patents provide acknowledgement and incentive to inventors. Notice that golf balls were used to be made of Malaysia gutta percha and rubber.

The function of a new product can be protected by a patent while the appearance of a new product can be protected by industrial design.

Balls in football used to look like basketball before Adidas introduced the Telstar ball in Euro 1968. The Telstar has 32-panel leather ball with white hexagons and black pentagons that bore resemblance to Telstar satellite. The striking black and white arrangement made the sports enjoyable over television. As a FIFA sponsor, Adidas introduces a new ball for each World Cup. Adidas introduced Tango ball, another classic ball in 1978.

  (Image: Adidas) Evolution of ball design for FIFA World Cup

How does sports innovation affect me?

The human foot is a complex biomechanical machine. Foot tendon and bone need to withstand daily human activity. Today, most shoes are bought based on the length of heel to toe. Charles Brannock has a better way to measure foot fit.

In 1927, Brannock filed a patent for foot measuring instrument, which was granted as US patent 1725334. Other than the length of heel to toe, the device measures arch length and the width of the foot. These two parameters can enhance comfort and fit of shoe. With proper fit, athlete can focus on their activity with greater confidence and performance. The Brannock measuring device is still being used in shoe retail store, worldwide. Do you know the arch length and width of your foot?

Illustration of US patent 1725334 by Charles Brannock. The device is positioned to measure length of heel to toes as 9, arch length of right foot as 9 and foot width A.
 

The Brannock device is used to measure foot fit when a person is standing. It is used to measure the right or left foot, one at a time, which is placed on two opposite ends. To measure right heel, the right heel is placed on the label right heel. The length of heel to toe is measured based on the position of the longest toe. Then, the arch length is measured based on the position of ball joint, which is the widest part of the foot. A lever is moved to the position of the ball joint and read. In the illustration, the device is positioned to measure length of heel to toe as 9 and arch length of the right foot as 9. The width lever of the device is moved to position 9. The width of the foot is observed as A.

Research is important to support innovation. Japan spends 3% of GDP in research and development, according to UNESCO. Korea and China, which seeks to imitate Japan’s success spends 4% and 2% of GDP in research and development, respectively. Huawei became a 5G leader by spending 12% to 15% of its annual revenue in research and development. Malaysia spends 1.3% compared to world average 1.7% of GDP in research and development. I hope that Malaysia government and companies increase expenditure in research and development.

How does intellectual property support sports activity?

FIFA organizes world cup every four years. FIFA World Cup is probably the most watched television program in the world. There are many brands involved in this sports activity. FIFA and FIFA World Cup are protected by trademark. Sponsors of sports such as Adidas, Puma and Nike brands are protected by trademark. Brands provide a link between the producer and consumer. Brands are protected by trademark. 

Sports club brand such as Arsenal, Liverpool and Real Madrid are also protected by trademark.

Trademarks can be licensed to create merchandise. Fans of sports usually buy a particular brand to indicate sense of relationship towards the brand. The fan would not hesitate to proudly show use of products with such brand.

Sports venue has limited seats. Popular sports event have valuable broadcast to reach many fans. The popularity of particular sports event is in direct proportion with the value of a broadcast. When an activity has high broadcast or reach, sponsors will come knocking on the door for product placement.

Rupert Murdoch recognises the value of sports broadcast. He promoted the English Premier League broadcast to the world which directly affects the fortunes of clubs in the league.

Local sports in Malaysia have followers. Sports association can make use of its intellectual property to gain fans, broadcast and sponsors. Sports managers should realise the potential of intellectual property.

I was a school quartermaster in Sekolah Aminuddin Baki, Kuala Lumpur. We organised annual sports event for sports club and raised substantial money for the sports activity. The trophy of event, Piala Tuan Haji Mokhtar, was named after the school principal. 

We know how to admire good quality brands. Have it occurred that we can develop our own brand? How much are we willing to invest in developing own brand?

Forty years ago, more than 80% value of S&P 500 companies lie in tangible assets. Buildings, land, cash and inventory are physical things known as tangible assets that investors have faith. Common folks would not have trouble to understand and invest in tangible asset for income or growth appreciation. Today, less than 20% value of S&P 500 companies lie in tangible assets. According to Ocean Tomo, a merchant bank, the role of tangible assets as investment choice is replaced by intangible assets, including intellectual property. Shall we increase investment in intellectual property?