Branding and IP Protection In Export Transactions
As an exporter there are many different legal issues which can arise as you sell your goods or services abroad, from trade finance issues to local warranty and customer protection laws in your export markets. One of the key concerns for any exporter should involve ensuring that your brands, and other intellectual property (“IP”) assets of your company (patents, etc.), are protected as the geographic footprint of your business expands into new foreign markets. Laws vary from country to country, so as a company stretches its wings into new markets or territories, an understanding of local IP laws and protections is key. This article is intended to identify some of the areas in which exporters can avoid or minimize downstream problems with infringement or dilution of their brands or other IP rights.
One of the most important IP rights for any exporter to protect as you expand business outside of Canada are the trademarks used to identify your products and services. You invest large amounts of time and resources into building brand awareness and equity and it is important to extend the protection of your brands in your foreign markets . Thought of another way, what would you do if, upon arrival in a foreign market, you discover that you cannot use your product name because someone else is using the brand in that jurisdiction without your knowledge or consent? Trademarks or brands which you might use and protect include your business name, product names, logos, slogans and the like.
Just as important is to determine what other categories of proprietary information or intangible rights you have which you may wish to protect. These might include:
- Patents, copyrights, trademarks or other registered or unregistered intellectual property rights;
- Confidential information including customer lists, business strategy and documentation;
- Business contacts and relationships; or
- The IP of third parties which you have licensed or use, and for which you might have an extended obligation to protect.
Many of these rights can be protected by registration under the laws of the countries in which you are selling, and in cases where registration is not available other methods including contractual provisions and the like can be employed in an overall strategy.
It’s YOUR name:
From the trademark perspective, as well as with respect to other IP rights, there are certain steps necessary to maintain ownership and exclusive control. For example, any in-market use needs to be properly licensed and controlled. This can become particularly problematic if at some point your local distributor relationship needs to be terminated or re-aligned and the local partner has created by virtue of uncontrolled local use a conflicting or even superior position to the ownership of your trademarks by becoming associated with the brands in the minds of local consumers. These are all things which can be addressed in your overarching IP strategy and appropriate written agreements.
Another advisable step to take on market entry is to register your trademark or other IP rights in countries of commercial importance to you. A local trademark registration will often provide a good first line of protection for the defence and enforcement of trademark righs. Particularly in light of the fact that registration can take months or even years to complete, it is advisable to pursue the process early and budget accordingly as a part of your market entry planning process. Indeed, this advice is equally applicable across patents, copyrights and other IP rights in addition to trademarks as well.
Is there someone already using a similar trademark in the business, so that your market entry would infringe their rights and place you or your distributor or customers at risk? Are there competitive patents or other IP positions in the local market than could affect your ability to do export business there – in certain countries a competitor with an alleged infringed IP position may even be able to have your goods stopped at the border by customs authorities. How you proceed with your market entry is a business decision, but searches for these types of IP information can give you a better ability to fully weight any risk factors related to your IP position on market entry – not only from the perspective of someone else potentially infringing your rights but also from the perspective of avoiding infringing the rights of others.
Local market entry in foreign countries may also entail localized branding (i.e. through use of non-Latin characters, translation, etc.). Before doing so, consider conducting local trademark availability searches. Understanding how your proposed brand might be accepted either legally or in terms of local business custom should also be considered since there are many branding horror stories where a company innocently adopts a brand and later finds that it offends the principles, culture or custom of a local population, resulting in a re-brand, apologies, and loss of goodwill. Trademark search and clearance activities are something that IP legal counsel can assist you with, and they can typically be completed time- and cost-effectively within the scope of your plans.
Are you using a local partner or distributor, shipping directly to end customers, or some other hybrid approach? Each type of relationship will require a slightly different contractual approach to protect your IP rights, and protect your channel and your customers. Opinion of local legal counsel, sought at the right time(s) will be key to tackling any concerns. For example, when establishing a “distributor” channel in a market it is important to seek the advice of independent local counsel, and not simply accept the advice of your proposed local partner since you will want to ensure that the advice you receive is unequivocally targeted to your protection since if the local relationship becomes tenuous or needs to be terminated you will not want to be in a position where the validity or ownership of your IP rights can be impacted by your (former) in-market partner. The amount of work which is done on some of these points may be dictated by the nature and size of your IP portfolio and your present or planned market presence, but it is always a sound business decision to consider these issues as part of your overall marketing and export plans.
The right IP strategy will fit your business plan rather than dictate it – some of the key business considerations in defining a proper export IP protection strategy include:
- The countries of interest and the timeline for your market entry plans;
- The nature of the products or services that you sell, or plan to sell in the future;
- The type of distribution channel that you have or intend to establish; and
- An inventory of the IP rights associated with your products or services for sale.
Seeking to register and protect your brands and other IP rights as you expand your business to other countries can protect you over the long term as you add the legal ‘weapons to your arsenal’ to deal with infringements or other problems that might arise. An investment in careful diligence and IP protection strategies while setting up an exporting framework proves the old adage that an ounce of prevention prior to market entry can save you a ton of headache later on.