01.03.08

How Can I Protect My Intellectual Property - Part 3 - Countries Where There Is Little or No IP Protection

Posted in Intellectual Property at 12:31 am by Administrator

Despite all the progress of the WTO in the past ten years in getting countries to protect patents, trademarks and copyrights, there are still many places where there are laws in place but no possibility of enforcement. Many manufacturers complain about piracy from China, yet many more companies successfully manufacture there. There are other examples from around the globe. So what are some tactics used by these savvy companies?

• Change designs so quickly that the pirated good reaches the market only after a new design has come out. Many luxury good designers follow this tactic. A high-end decorative ceramic maker told me he gave up on trying to copyright his designs. Since he started manufacturing in China, he sees his designs show up in Target and the like within a few months. Instead of spending money on lawyers, he simply changes the pattern several times per year.
• Break up the manufacture so that no one sub-contractor will understand the overall product. For electronics manufacturers, this extends to keeping the most sensitive parts of the design in house or within the United States. If you keep it within the US, a good non-disclosure agreement (NDA) can help protect the “secret sauce.” Another variant is what Coca-Cola does - the base syrup is manufactured in wholly-owned facilities. The syrup is diluted and sugared for the local market.
• Make the outsourced manufacturer your partner. One common tactic (particularly in China) is to have a JV with the company and give them rights to local production/distribution. This gives the local company the incentive to police the market. The idea is to make the outsourced manufacturer so tied into the success of the venture, that they won’t change. You must however have SEVERE penalties for shipments to third markets and you must be prepared to enforce the agreement. Don’t be a nice guy.
• Complain to your government about piracy. The US Trade Representative is always looking for examples of IP violations and US Embassies will support you in an attempt to bring pressure on the local government. However, their moral suasion is limited.
• Find the local pirate and offer to buy them out. Yes, I know this rewards bad behavior, but sometimes it is the only solution.

Tell us how you handled this issue!

Permalink