Have you ever tried to register for an email or social networking account? Chances are your first few choices of usernames had already been taken up by someone else. Naturally, you would end up with silly usernames like “HunnyBunny” or “VinnyPeach”, which my colleagues have recently informed me, were slightly suggestive in nature. If I had registered my real name before the other Vincent Tehs, I wouldn’t have had to suffer so many years of virtual sexual harassment. Things aren’t so different outside the virtual world either, our Singaporean neighbours, desperate for a place to sit after queuing up for centuries to procure their food in food courts, have resorted to “Chope-ing” (Singlish for “reserving”) tables by proxy with packets of tissue paper.
This first come, first served policy is also applicable in the corporate world. When a company is looking to go into a new territory or country, it would have to be sure that it has the Freedom to Operate. It has to be sure that its freedom to sell its goods/services is not curtailed by the prior Intellectual Property (IP) registration of a third party in the new territory. If the company is not careful, the sale of its products may be infringing upon the IP rights of others, with dire consequences.
A good example of the dangers of coming second in the IP registration race can be seen in the recent spate of lawsuits involving tech giant Apple Inc. It started with the custody battle in China with Chinese computer manufacturer Proview International Holdings for the trademark “IPAD” which Proview had registered in 2000, years before Apple had launched its “iPad” product. Apple lost the tussle and eventually conceded defeat by settling with Proview for USD 60 million. Apple was also handed the short end of the stick in South America with regard to its “iPhone” trademark. It lost the exclusive rights to use the trademark “iPhone” in Brazil as Brazilian phone manufacturer Gradiente Electronica had registered the trademark “iphone” in 2000, seven years before Apple released its smartphone. More recently, in March 2013, another David and Goliath showdown transpired where the Mexican Supreme Court held that local technology services firm Ifone had been the owner of the trademark “Ifone” since 2003, paving the way for Ifone to claim damages resulting from the use of its trademark by Apple. If Ifone’s claim is successful, Apple may be asked to pay damages amounting to at least 40% of its iPhone’s sales in Mexico. Apple’s plight in Latin America is an exceptional example of the age-old “you snooze, you lose” rule.
The dangers above are not limited to Trademarks alone; a company selling its product in a new country or simply selling a new product in a country where it already has presence may still run afoul of another person’s Patent Rights, Industrial Design Rights, or even Copyrights. The fact that the registration of most IP rights is mainly jurisdictional exacerbates the inconvenience of the first come first served situation. Corporations that seek to protect their Trademarks, Patents or Industrial Designs in a certain jurisdiction will have to register their rights in that particular jurisdiction in order to protect them. This inadvertently creates a sense of corporate colonialism where corporations are racing each other to plant their IP flags around the globe, because if you register your IP rights before your competitors do, you may be able to prevent them from successfully breaking into the market.
The worldwide legal battles of Samsung, Apple, HTC and Google show us how a corporation can rely on its registered patents and designs to keep its competitors out of a lucrative market. In 2011, Apple had convinced the court in Germany to impose a sales ban on Samsung Galaxy Tab 10.1 for allegedly infringing Apple’s patent. Luckily for Samsung, the decision was later overturned by a higher court. Also recently, Google brought a patent infringement action against Microsoft in the International Trade Commission (ITC). Google claimed that Microsoft’s Xbox 360 games console had infringed the patent of Motorola Mobility (Google’s subsidiary). Fortunately for Microsoft, Google’s allegations were dismissed by the ITC, thereby narrowly averting the possibility of an Xbox 360 sales ban in the US.
“Freedom makes a huge requirement of every human being. With freedom comes responsibility,” said former US First Lady Eleanor Roosevelt. Indeed she is right, freedom isn’t free. Throughout human history, every bit of freedom, e.g., the emancipation of African Slaves, women’s suffrage, habeas corpus, the 4th of July, the 31st of August, equal pay, men’s rights to hog the TV remote, is bought with the blood, toil, tears, sweat and burnt brassieres of those who came before us. Equally, Freedom to Operate requires expenditure of effort and money. To ensure that you are free to sell your products or services, you need to conduct searches in the relevant IP databases (Trademark, Patent, Industrial Design and/or Copyright) of the territories that you are entering into. If you find no prior filings or registrations of IP rights that may affect your Freedom to Operate in those territories, then the coast is clear and you should register your IP rights as soon as you can, before anyone else beats you to it!