Before embarking on an export operation, enterprises go through a series of crucial steps which range from identifying an appropriate export market and estimating demand, to finding channels of distribution, estimating costs and obtaining funds. Here we seek to outline the main reasons why you should also take intellectual property (IP) issues into account while planning your export strategy, and look into ways in which IP rights could enhance the competitiveness of your small or medium-sized enterprise (SME) in export markets.

As IP rights are ‘territorial’, i.e., are only available to you in the country or region in which they had been applied for and granted, to enjoy exclusive IP rights in foreign markets, you would have to seek and obtain protection abroad (except when it is available automatically without the need to comply with formalities, e.g., through an international treaty mechanism such as the Berne Convention for the Protection of Literary and Artistic Works.

The main reasons for protecting IP in export markets are outlined below:
IP rights, especially patents, may open up new export opportunities.
IP rights, especially trademarks and industrial designs, may help you to develop an advantageous market position in export markets.
IP rights enhance the opportunity of winning loyal clientele for your products and services in export markets

Trademarks & Industrial Designs

The reasons for protecting trademarks and industrial designs in the domestic market fully apply to foreign markets too. Trademark registration, in particular, enables you to maximise product differentiation, advertising and marketing, thus enhancing recognition of your product or service in international markets and establishing a direct link with the foreign consumers. Depending on the nature of your service, a franchising agreement with firms abroad, could be a useful alternative way to earn revenue from your trademark abroad as well.

Companies that export unbranded products will face disadvantages such as:
Lower revenues as consumers demand lower prices for unbranded goods.
Lack of customer loyalty largely due to their inability to recognise the product and distinguish it from the products of competitors.
Difficulties in marketing and advertising products or services abroad in the absence of a suitable symbol or easy identifier that links your products or services with your SME, as marketing an unbranded product is inherently much more difficult.

With regard to industrial designs, protection in export markets will help not only to strengthen your overall marketing strategy but may also be important for customising products for specific target markets, creating new niche markets for your company’s products, and strengthening your company’s image and reputation by linking it to a specific design.

Timing

As a general recommendation, your SME should make sure to obtain adequate protection in all relevant export markets as early as possible.
With regard to patents for inventions, most countries allow a 12-month priority period from the date of filing of the first application for applying for patents in other countries. Once this period has elapsed you may no longer be able to obtain patent protection in other countries. This may signify an important loss of earnings from your export operations. With regard to trademarks and industrial designs, most countries provide a 6-months priority period from the date of filing of the first application for applying for trademarks and industrial designs in other countries.

With regard to copyright, if you are a national or resident of a country party to the Berne Convention for the Protection of Literary and Artistic Works or member of the World Trade Organisation (WTO) bound by the provisions of the TRIPS Agreement, or if you have published your work for the first time or at least simultaneously in one of the above countries, your copyright will be automatically protected in all other countries that are party to the Berne Convention or are members of the WTO.

National Applications

One option is to seek protection in individual countries separately by applying directly to national Industrial/Intellectual Property Offices. Each application may have to be translated into a prescribed language, which is usually the national language. You will be required to pay the national application fees and, particularly in the case of patents, you may need to entrust an IP agent or attorney who will assist you in making sure the application meets national requirements. If you are still in the phase of assessing the commercial viability of an invention or are still exploring potential export markets or licensing partners, the national process would appear to be particularly expensive and cumbersome, especially where protection is being sought in a large number of countries. In such cases, the facilities offered by the WIPO-administered systems of international protection for inventions, marks and industrial designs offer a simpler and generally less expensive alternative.

Regional Applications

Some countries have established regional agreements for obtaining IP protection for an entire region with a single application.
The regional IP offices include:
European Patent Office (for European patents): http://www.european-patent-office.org
Office for Harmonisation in the Internal Market (for European Community trademarks and, in the future, industrial designs): http://oami.eu.int/
African Regional Industrial Property Office (ARIPO, the regional IP office for English-speaking Africa for patents, trademarks and industrial designs): http://aripo.wipo.net/
African Intellectual Property Office (OAPI, the regional IP office for French-speaking Africa for patents, trademarks, industrial designs and, in the future, geographical indications and layout-designs of integrated circuits): http://oapi.wipo.net/
Eurasian Patent Office (for patent protection in countries of the Community of Independent States): http://www.eapo.org/
Benelux Trademark Office & Benelux Designs Office (for trademark and industrial design protection in Belgium, the Netherlands and Luxembourg): http://www.bmb-bbm.org/ and http://www.bbtm-bbdm.org/
Patent Office of the Cooperation Council for the Arab States of the Gulf (for patents): http://www.gulf-patent-office.org.sa/

WIPO-administered systems of international protection significantly simplify the process for simultaneously seeking IP protection in a large number of countries. Rather than filing national applications in many languages, the systems of international protection enable you to file a single application, in one language, and to pay one application fee. These international filing systems not only facilitate the process but also, in the case of marks and industrial designs, considerably reduce your costs for obtaining international protection (in the case of patents, the PCT helps your SME in gaining time to assess the commercial value of your invention before national fees are to be paid in the national phase). WIPO-administered systems of international protection include three different mechanisms of protection for specific industrial property rights.

International protection of inventions is provided under the PCT system, the worldwide system for simplified multiple filing of patent applications. By filing one international patent application under the PCT, you actually apply for protection of an invention in each of a large number of member countries (now more than one hundred) throughout the world. (http://www.wipo.int/pct/en/index.html)

International protection of trademarks is provided under the “Madrid system.” The Madrid system simplifies greatly the procedures for registering a trademark in multiple countries that are party to the Madrid system. An international registration under the Madrid system produces the same effects as an application for registration of the mark filed in each of the countries designated by the applicant and, unless rejected by the office of a designated country within a certain period, has the same effect in that country as a registration in the Trademark Registry of that country. (http://www.wipo.int/madrid/en/index.html)
International protection of industrial designs is provided by the Hague Agreement. This system gives the owner of an industrial design the possibility to have his design protected in several countries by simply filing one application with the International Bureau of WIPO, in one language, with one set of fees in one currency. (http://www.wipo.int/hague/en/index.html)

IP Exhaustion

While developing your export strategy, you should verify, preferably by consulting a qualified professional, whether a buyer could legally resell in another market IP-protected goods bought from, or with the consent of, your SME without having to seek your consent. This issue will only arise if you have already protected or would be protecting your IP rights in the domestic as well as in export market(s). Similarly, if your SME has bought goods that are protected by a patent, trademark, industrial design and/or copyright, then you should ascertain whether you would need the formal agreement of the IP owner(s) to sell those goods abroad, that is, in another market(s) (i.e. whether the IP rights are considered to be “exhausted").
You may be surprised that the answers to these questions are rather complex and may not only be different from one country to another but may also depend on the kind of IP rights involved.

Definition

“Exhaustion” refers to one of the limits of intellectual property rights. Once a product protected by an IP right has been marketed either by your SME or by others with your consent, the IP rights of commercial exploitation over this given product can no longer be exercised by your SME, as they are “exhausted”. Sometimes this limitation is also called the “first sale doctrine”, as the rights of commercial exploitation for a given product end with the product’s first sale. Unless otherwise specified by law, subsequent acts of resale, rental, lending or other forms of commercial use by third parties can no longer be controlled or opposed by your SME. There is a fairly broad consensus that this applies at least within the context of the domestic market.

Parallel Importation

There is less consensus as to what extent the sale of an IP protected product abroad can exhaust the IP rights over this product in the context of domestic law. The issue becomes relevant in cases of so-called “parallel importation”. Parallel importation refers to the import of goods outside the distribution channels contractually negotiated by the manufacturer. Because the manufacturer/IP owner has no contractual connection with a parallel importer, the imported goods are sometimes referred to as “grey market goods”, which in fact is somewhat misleading, as the goods as such are original, only the distribution channels are not controlled by the manufacturer/IP owner. Based upon the right of importation that an IP right confers upon the IP owner, the latter may try to oppose such importation in order to separate markets. If, however, marketing of the product abroad by the IP owner or with his consent leads to the exhaustion of the domestic IP right, also the right of importation is exhausted and can thus no longer be invoked against such parallel importation.

The above principles have different implications depending on whether the country of importation, for reasons of law or policy, applies the concept of national, regional or international exhaustion. The concept of national exhaustion does not allow the IP owner to control the commercial exploitation of goods put on the domestic market by the IP owner or with his consent. However, the IP owner (or his authorised licensee) could still oppose the importation of original goods marketed abroad based on the right of importation.
In the case of regional exhaustion, the first sale of the IP protected product by the IP owner or with his consent exhausts any IP rights over these given products not only domestically, but within the whole region, and parallel imports within the region can no longer be opposed based on the IP right. Where a country applies the concept of international exhaustion, the IP rights are exhausted once the product has been sold by the IP owner or with his consent in any part of the world.