One of the biggest mistakes businesses exporting overseas make is rushing into the process without first protecting their brand.Unfortunately, we see clients making this mistake all too often. Even large businesses (like Penfolds) can make this mistake.
Before you export or expand overseas, you should protect your brand by securing your core intellectual property (IP). Here are five ways you can do this:
1. Protect your IP at your export destinations
Intellectual property protections are largely territorial in nature. This means that any protection you have in Australia won’t generally extend to export destinations. You can severely limit your avenues of protection unless you have specifically covered yourself in your destination markets.
Fortunately, there are ways to remedy the situation if you have already exported without first protecting your brand. However, this will take time and money, and there’s a risk your foreign agents and distributors could lose interest whilst you sort yourself out.
Another important thing to note is that IP protection may be limited to the language you registered it in. For example, if you are exporting to China, your English trade mark won’t cover the Chinese character mark equivalent. This was the mistake that Penfolds made when they entered the Chinese market.
Covering off different languages indicates market entry sophistication, a sound understanding of the function of a trade mark, and puts your business in good standing for engaging with partners and future investors.
2. Avoid disclosing anything to potential partners
Being successful enough in Australia to go for trade shows overseas and meet with potential partners is very exciting. However, you run the risk of intellectual property disclosure, especially during discussions with these potential partners.
If you don’t already have registered IP rights or a properly drafted and signed non-disclosure agreement (NDA), you should avoid disclosing anything. Even if you do have an NDA, there might be a lack of consideration in the choice of jurisdiction: Is it enforceable there? Do you need a translated copy? At the same time, you should be careful using foreign language translators for legal documents, as some provide suspect services.
Talking about the commercial outcomes is a good way to avoid inadvertent IP disclosure. Avoid how discussions, stick to why with potential partners. Do your due diligence, and speak at a high level. If you need to send messages over online platforms (like Chinese messaging app WeChat), match your behaviour online with your face-to-face discussions.
3. Structure yourself properly from the start
Check you have set up the appropriate business structure to suit your commercial goals, and that IP assets are owned by the rights entity (eg your holding company).
In Australia, unincorporated associations cannot register standard trade marks, but they can own collective trade marks. Many IP registers around the world publish details that enable anyone to see who owns the IP.
Because different businesses have different kinds of entity structures, it is important to get the intellectual property right before you file here and overseas. Deal with ownership changes, check the Personal Property Securities Register and assign rights early on, especially when large tax consequences can be triggered moving assets around later on. Investing in quality advice at the outset is generally a worthwhile cost in the long term.
Handpicked related article: Corporate Structuring: Are You Parking Your Bright Idea in the Right Spot?
4. Check your products or services are legal to sell in the destination market
There is, of course, no point protecting intellectual property in foreign markets if your products or services can’t be legally sold there.
For example, while you may be able to file trade marks for your e-cigarette products, the official regulations on selling these products (which might touch on plain packaging legislation, poisons and therapeutic requirements, and a patchwork of local laws) could mean that the red tape is too high to allow commercial success, let alone justify filing a trade mark.
Again, it comes down to thinking about your business, what consumers want from it, what you can legally give them (and at what costs), and then tailoring your IP protection to get that outcome.
It also pays to keep abreast of any major regulatory changes that impact on IP, which IP professionals can generally help with as they “survey the horizon” regularly.
5. Get advice from an expert
Once you’ve met potential business contacts overseas and have a partner willing to take on your product, you should consider going to a trusted IP expert as soon as possible.
Without the right IP advice, Australian business can often find themselves in the position where they own the trade marks in English, but their overseas partner is using a foreign language equivalent without permission or, worse still, owns a trade mark registrations for the foreign mark.
In addition, IP experts can help with having a properly drafted distribution/agent contract.
Finally, there’s no doubt IP experts can help avoid the “technicalities” traps. To take one example, a client who sold parts of their successful business to a competitor in Australia and New Zealand, unfortunately, failed to get advice first on the complex requirements of international trade mark treaties. As a result, the client couldn’t utilise the cost-effective mechanisms under the international treaties, and was forced to incur the added expense of filing trade marks directly in each relevant individual country.