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Do you use the TM symbol on your packaging? And if not, why not?

/ Bill McFarlane / Articles

A client recently asked me a question regarding the use of the TM symbol on products, and while it might sound like there’s a simple answer, it isn’t as simple as you might think. Here’s what they asked:

“Just wondering whether it’s beneficial for me to have TM on my packaging? I’ve noticed a lot of big brands don’t have TM but are in actual fact trademarked.”

All traders have a right to use the ™ symbol alongside the brand they apply to register or use in connection with the product they offer to the public from the first day that product hits the market (assuming that they are not aware that use of the brand will impinge on the rights of others). I use the term product in this answer however the same rules apply to services but the way the brand is used for services is a topic for another article.

The ™ symbol is not well understood by the general public, with most people thinking it denotes that the brand is a registered brand. That’s not correct, but, it can be an unintended advantage if most people think that’s the case. Note that the ® symbol can only be used on a product when that brand is officially registered and only used on products covered by the registration and offered into the same country in which it is registered. While most brand users know the difference between the ™ symbol and the ® symbol, the public and some competitors don’t always have the same understanding. However, the use of the ™ symbol none-the-less puts everyone on notice that there is a brand that is considered by its user/owner to be the brand for the respective product. That is generally a good thing and can be very important when claiming common law rights (those rights which accrue when the brand is not registered), since it is clear to the reviewing body that the user/owner knew that they were using the ™ symbol intentionally to signify there was a brand being used on the product distinct from any descriptive aspect of their marketing of that product (proper use of brands is a topic for a future article).

The more well-known the brand, the less the owner needs to tell everyone it is a brand (as long as the owner continues to use it as a brand). It could be that those owners want to avoid the possibility that either of the symbols will spoil the aesthetic of the package or the carefully crafted advertising script, and thus the owners are willing to forego any advantage the symbol may provide. That’s an easier choice for a well-known brand and remains a hard choice for the lesser-known brand owner. For example, L’Oréal is a house brand and there are at least 39 sub-brands including Guy Laroche, Redken, Yves Saint Laurent, Heratars, Diesel, Maybelline, and many more. The ™ symbol may not be used with those brands on products bearing the house brand or the sub-brands.

My recommendation would be to use the ™ symbol on the product, its packaging and any promotional material.  It is also useful to use it on invoices for the sale of the product. A fall-back is to mention that the brand is a trade mark of the owner somewhere on the packaging or use directions, and to at least use the ™ symbol on the promotional web page and on all advertising for the sale of the product. If you start using the ™ symbol, there’s no doubt your brand will be better off.

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Should my SME’s New Product Development Plan Include IP?

/ Tom Melville / Articles

Have you heard the common misconception that IP rights are the domain of big companies and that intellectual property (IP) is too expensive for Australian SMEs? We have some good news for you – it’s definitely not true that you need a big budget to have an effective global IP plan – especially if you are prepared to learn a little.

Recent studies* have shown that SMEs holding a single IP right, whether a patent, trade mark or a design, have 67 per cent greater revenue per employee than their competitors without any IP rights.

Your SME’s New Product Development Plan should always include an IP plan. While working with a good patent and trade mark attorney, and with the right approach, IP protection is affordable and should always be considered.. When forming on an IP plan, some basic DIY can help reduce IP costs and provide a solid foundation to work with. It might also help to work with supporters who have travelled the commercialisation road before, who can de-risk your IP journey.

Let’s work on the scenario of you and your team developing a new product. While there are plenty of challenges, you have confidence that it will be a market success. You have a long and expensive commercialisation road ahead. Should you spend some of your limited budget on IP? And, if so, when and how much?

Each situation will be different, but questions to ask include:

  • If successful, will products arising from the project have a long commercial life?
  • Are profits likely to be high enough to attract competitors and, if so, are competitors likely to produce a marketable copy?
  • What would the impact to our company be if third-party IP rights prevented the sale of the new product?

If you answered yes to at least some of the above questions, then you should explore IP protection and conduct patent searching.

Large companies, be they consumer-product companies, medical device companies, research institutions or food and wines business, typically have a well-developed IP plan to navigate questions of freedom to operate, when to pursue patent rights and how to licence IP SMEs however, sometimes only deal with IP issues infrequently and may have a more difficult time navigating the patent system.

Fortunately, laws to protect IP (patents, trade marks, design and copyright) are all designed such that, early in the product life, costs are relatively modest. Later, typically years later, and ideally when your product is generating significant revenue, costs build. Costs are, however, always within the owner’s control.

Agreements between countries are such that a single patent, trade mark or design filing can be made in Australia and provide the basis of future overseas filing. This keeps initial costs low, while still preserving the option of US, Chinese and European filings (and in hundreds of other countries). Applicants have 12 months in which to file patents overseas based on an initial Australian patent filing, and this time frame can be extended to 30 months through an international (PCT) application. For trade marks and designs, six months is provided.

After an initial Australian filing, a medical devices start-up, for instance, might focus on a small target group of countries where there are well-established health systems with good reimbursement processes (e.g. one of more of Australia, the UK or China). A resources start-up or SME might focus on countries where there are well-established and relatively low-risk paths to market (e.g. one of more of Canada, South Africa and Australia). Each company should carefully consider what countries are relevant to their business plan and whether the costs, risks, and benefits support IP filings in those countries.

As an SME, you may be concerned about the significant costs of enforcement. Fortunately, enforcement action is rarely required and typically occurs many years down the track when revenue is being generated. In many ways, obtaining IP rights can be thought of as a form of insurance, buying the option to enforce at a later time. Further, a strong and layered IP position acts as a deterrent to competitors and can attract investors.

There are many simple steps you can take at little or no cost that will provide a strong foundation for the pursuit of valuable IP rights:

At Madderns, we have more than 20 patent and trade mark attorneys with a broad range of expertise and experience who have helped many companies navigate their way through IP issues. Our team is your team. Which of our team has the technical skills and experience that most closely aligns with your needs? See their profiles:

https://madderns.com.au/team/

Give us a call or send us an email and we’ll help you on your journey.

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The Tangible Benefits of Intangible IP Rights

/ Chris Wilkinson / Articles

The Australian economy is dominated by SMEs, which account for 99 per cent of all companies, and thus have the potential to play a key role in re-building post-COVID-19.

As we look for ways to build the post-COVID-19 economy, a recent comprehensive study by the European Patent Office (EPO) has provided some insights on the positive role that innovation and Intellectual Property (IP) rights plays in increasing profitability and creating jobs.

The EPO study of more than 127,000 companies found that those companies that held at least one IP right, whether it be a patent, trade mark or design, generated 20 per cent higher revenues per employee than their counterparts without any IP rights. They also paid their employees 19 per cent more, and had more than 2.5 times the number of employees.

For those companies that held patents rights, their performance was substantially better, generating 36 per cent more revenue per employee, paying their employees at least 50 per cent more, and having more than five times the number of employees.

The econometric analysis allowed the results to be stratified based on company size, and this analysis indicated that SMEs were by far and away the main beneficiaries of IP rights. In terms of numbers, around 9 per cent of SMEs held at least one IPR, and less than 1 per cent owned a patent. In contrast, around 55 per cent of large companies held at least one IPR with 18 per cent owning a patent. Despite the low numbers of SMEs holding at least one IPR, they gained much more from this than larger companies, with the average revenue per employee gain of 67 per cent compared to 18 per cent for large companies.

The overarching conclusion of their analysis was that ownership of IPRs, specifically patents, trade marks and designs, was strongly associated with improved economic performance at the individual firm level and that this association was especially strong with SMEs.

Perhaps most telling was that for SMEs that owned patents, trademarks and designs, their revenue per employee was double that of their competitors without any IP rights.

Clearly holding intangible IP rights has very tangible benefits for the rights holders, especially SMEs.

The EPO study is certainly a very comprehensive and compelling study, where they combined IPR portfolio data with economic data pulled from the ORBIS financial database to study more than 127,000 companies (~85 per cent of which were SMEs) in 28 EU states, from 2007 to 2019 (thus spanning the GFC). The study used two complementary analysis methods and calculated descriptive statistics, as well as using a powerful econometric analysis model to study country level and firm size level effects.

Writing as an ex-statistics lecturer, it was particularly warming to read the EPO methodology, including the discussion around the choice of the outcome measures and use of panel regression to control for factors that could have affected economic performance, to “isolate” the relationship between IPR ownership and firm performance.

These results also compare favourably with earlier studies. In 2016, Farre-Mensa of the Harvard Business School was lead author on a NBER study which investigated whether patents helped start-ups grow and succeed. The study analysed all patent applications filed in the US between 2001 and 2014 and found that the start-ups that obtained patents recorded 51 per cent sales growth, a 36 per cent increase in jobs, and double the likelihood of an eventual listing on a stock exchange. Earlier research by Mann and Sager in 2006 came to a similar conclusion, and rather interestingly found these benefits could be reaped through the granting of just one patent.

These results robustly show that SMEs and start-ups that focus on innovation and obtaining IP rights reap the rewards of improved revenue and growth.

The Australian economy currently ranks a lowly 87th in the Harvard Atlas of Economic Complexity. This is particularly appalling given Australia is ranked as having the 8th richest economy.

Australia could thus do well to actively encourage innovation and the uptake of IP rights to strengthen and build the post COVID-19 economy. Not only is this likely to generate greater revenue and jobs, these innovative companies would create a more diverse and robust economy.

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Tips for selecting a unique trade mark

/ Louise Emmett / Articles

Before a trade mark is adopted, searches should be conducted to check whether anyone else has registered or is already using a similar mark.  It is also important to consider whether the proposed mark is sufficiently “distinctive” or unique to be registrable.  This will depend on whether other businesses are likely to need to use the proposed mark in respect of their own goods and services.

The following examples are generally not considered to be distinctive:

  • Descriptive words that have a direct reference to the relevant goods/services. This also applies to minor misspellings or variations of descriptive words.
  • Geographical names that have an obvious or potential connection with the relevant goods/services.
  • Surnames, depending on the commonness of the surname and whether the goods/services are very specialised or commonplace.
  • Single letter marks, unless the mark is stylised in a unique manner.
  • Combinations of numbers that have a meaning or relevance in the marketplace.
  • Logos that are simply an ordinary depiction of the goods or consist of a very simple design.

If the Trade Marks Office raises a “distinctiveness” objection, it may still ultimately be possible to obtain a registration by filing evidence of use of the mark to show acquired distinctiveness.  However, preparing this type of evidence can be time-consuming and costly with no guaranteed outcome.  It is consequently preferable to consider the question of distinctiveness prior to adopting and commencing use of a new mark.

Examples of distinctive marks include:

  • Invented words with no meaning.
  • A mark that is emotive or allusive but not directly descriptive of the relevant goods/services.
  • An unusual combination of words or a clever play on words.
  • Two letter marks and three letter marks, unless the letters have a descriptive meaning or are commonly used acronyms or abbreviations in the relevant industry.
  • Combinations of letters and numerals, unless the combinations are commonly used to indicate characteristics of the goods such as size or quantity. .
  • Stylised logos.

As the question of distinctiveness can be subjective, an option that may be worth consideration is to file an application for the proposed mark through the fast-track “headstart” system.  “Headstart” applications are assessed within 5-10 days (sometimes even sooner) and so we can find out very quickly whether a distinctiveness objection is likely to be raised.  “Headstart” results will also provide an indication of whether there are conflicting similar marks that may pose an obstacle to an application.  Once “headstart” results are issued there is a further 5 day period to decide whether to proceed with formally filing the application.

Take-home message:

Distinctive marks are easier to register and enforce.  It is consequently beneficial to invest some time selecting a mark that is unique and, ultimately, likely to be more memorable in the marketplace.

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Patent Term Extension Program to Be Introduced in China

/ Gloria Chen / Articles

Patent term extensions (PTEs) are available in many countries and can be used to extend patent life to compensate patent holders for the time lost waiting for regulatory approval of a new drug.

Currently, PTEs are not available in China. However, it’s positive to note that PTE provisions have recently been passed into legislation in China through the fourth amendment of the Patent Law, which will take effect on June 1, 2021.

A number of issues around the proposed PTE program remain pending or unresolved but will be addressed by the amended Rules for the Implementation of the Patent Law (‘the Rules’). The amended Rules will be further explored once they are released.

Statutory Provisions

Article 42 of the fourth amended Patent Law covers extensions, and is translated as follows:

42. ……. In order to compensate for reductions in patent term arising from regulatory review and approval of a new drug in China, the Patent Administration Department of the State Council, at the request of the patentee, may extend the term of an invention patent related to the new drug which has received regulatory approval. The term extension is no more than five years, and the total remaining term from the regulatory approval should not exceed 14 years.

Eligibility

The draft Rules suggest the extension is available for a drug product, a method for preparing the drug or a medical use of the drug. It also indicates that the new drug covers three types of drugs: chemical drugs, biological products and Chinese medicine.

Notably, the draft Rules clarify that the new drug-related invention patent refers to a patent related to the active ingredient of the new drug that receives regulatory approval for the first time by the Drug Supervision and Administration Department of the State Council.

However, we think there is a need for further clarification on the scope of the active ingredient, particularly on whether the term active ingredient refers to the active moiety and its salt, ester or crystal forms on a broad construction, or whether it is limited to the active moiety itself on a narrow construction.

Timing for Filing a Request for PTE

According to Article 42 set out above, the patentee cannot file a request for PTE before a new drug containing the active ingredient receives regulatory approval in China.

The draft Rules prescribe that the patentee must file a request for PTE with the Patent Administration Department of the State Council within three months from the date the new drug receives regulatory approval.

Furthermore, a request for PTE will need to be filed at least six months prior to the patent expiration date. With the amended Patent Law in China coming into force on June 1, it seems likely that certain pharmaceutical patents will miss the time limit for filing a request for PTE if the patent expires before December 1, 2021. No retrospective remedy is available.

Needless to say, it is essential for the patentees to monitor these time limits if considering a request for PTE.

Request for PTE Requirements

According to the draft Rules, applicants should satisfy the following requirements when filing a request for PTE:

  • In the case that there is more than one patent related to a new drug, a request for PTE may be filed for only one eligible patent;
  • In the case that a patent covers multiple drug products, the patent term may be extended on the basis of only one drug product;
  • A patent term extension has never been applied to the patent; and
  • The remaining term of the patent must not be less than six months.

We don’t believe these requirements prevent the patentee from filing another request for PTE based on a different patent (for example, a patent that claims different subject matter such as a preparation method and a medical use), in case a request for PTE based on one eligible patent (for example, a patent that claims a drug product) fails, but this needs confirmation.

It is also unclear if the regulatory review and approval period for a crystal form of the active ingredient can serve as a basis for a PTE, wherein an earlier product containing an amorphous form of the active ingredient previously received regulatory approval.

The second requirement arises when more than one drug product becomes subject to regulatory review and approval. Clarification is required on whether the one drug product that serves as a basis for a PTE request is meant to be the first one that receives regulatory approval.

Calculation of the Extension Term

According to the draft Rules, the extension term is equal to the period between the filing date of the patent and the date on which a new drug receives regulatory approval, reduced by five years.

Limited Protection Scope During the Extension Term

Compared to full protection afforded during the standard patent term, a more limited protection will be available during the extension term. Protection will be limited to only the new drug that receives regulatory approval and its approved indications (see Rule 85 item 6 of the draft Rules).

Closing comments

In response to the newly-introduced patent term extension program, a patent linkage system will be concurrently established in China. Given the huge potential market in China, it is critical for innovator and generic pharmaceutical companies to be prepared for these changes.

Madderns will endeavour to produce further explanatory articles in this series following this introduction, to ensure we can help provide a full picture of the changes which lie ahead.

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