Time: a competitiveness factor on patented innovation

Vicente Zafrilla Diaz-Marta
Intellectual Property expert at the Latin America IPR SME Helpdesk

Why should some Latin American IPOs improve their patent granting procedure?

According to OECD´s Oslo Manual innovation is defined as “the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations”.

Therefore a country´s ability to innovate does not exclusively rely on how much research is developed in a country but on how much of this research reaches the market, directly or indirectly.

Despite a certain degree of debate concerning patents as boosters of innovation, it is true that there is a relevant percentage of innovation that reaches the market by means of patents.

Delays in registration are traditionally perceived as barriers for the entrance of foreign innovators and companies. However, this is only a partial view, since such deficiencies also entail a negative impact on their national innovation and entrepreneurship environment.

Effect on the Industrial Application analysis: the priority period

Since Paris Convention patent applicants in any of the member countries of the convention, enjoy a 12-month priority period to file their patent in any other member countries, while keeping its first application date as the priority date.

In terms of market entrance, 12 months is a very short period of time to assess whether the market accepts a product or not, especially if it is an innovative one. Therefore, only those companies that are very sure of the success of the product and/or have the means to predict such a success will invest their resources in seeking patent protection.

In such a scenario, only few SMEs and inventors would decide to invest their time and money to protect their inventions abroad and/or, once decided, would limit the number of international filings.

Fortunately, the Patent Cooperation Treaty extends the priority period. Once the PCT filing fee has been paid (around €1200) applicants can decide in which countries they want to protect their patent within approximately 30 months (depending on the country). Under this timeframe, even SMEs can assess if they want to enter certain countries.

Therefore, Latin American countries that are not members of the PCT (Argentina, Bolivia, Paraguay, Uruguay and Venezuela) are not only discouraging foreign IP applicants to protect their inventions, but also limiting the access of their own nationals’ patents to international protection.

This barrier has a stronger deterrent effect for foreign SMEs and inventors rather than big companies, which file their applications regardless of there being a PCT or not.

Effect on Application: Search and Examination Report

All those IP offices that are able to provide the Search and Examination Report within a short period of time are giving their applicants a competitive advantage.

If the IP office is able to issue the Preliminary Search Report and/or the Examination Report in a short timeframe, the IP applicants will be able to save money by:

  • Withdrawing the application and/or not filing the PCT if the patent is not new or inventive or;
  • Limiting or erasing claims that lack novelty or inventiveness to prevent facing delays related to other IPOs’ objections.

Thus, Latin American IPR Offices that cannot issue the PSR and/or the ER in twelve months from the priority/filing date are forcing their nationals to face the International Phase of the PCT or the filing in third countries without information concerning the strength of their patents or at least an overview of the expectations of succeeding in the granting of the patent; this is a scenario that may lead to losing all the amounts invested in the application, translations and any other administrative costs.

In recent years some Latin American IP Offices seemed to notice this negative impact and have started to take measures to improve their performance at internal level; by improving their internal practices, and thanks to international cooperation both at interregional level (e.g. the PPH agreements signed with EPO, Spanish IP Office and USPTO) and at intraregional level, with tools like the Prosur PPH or CADOPAT. 

Effect on Exploitation and Enforcement: Granting

Delays in granting the patent also have direct consequences in the use and defence of the patent. Despite the “standard” 20-year term of a patent, a patent’s lifecycle in certain sectors, such as smartphones, tends to be shorter. In some cases, a patent granted five or six years from the filing date have no or very reduced economic interest.

In addition, and generally speaking, pending patent right holders benefit from very little or any rights concerning enforcement until the patent is granted. Such a circumstance prevents them from bringing actions against infringers, which does not only harm their interests, but also their licensees’, including local companies.

Furthermore, long granting periods also harm competitors. A pending patent operates as a “warning” advice for competitors, who are very likely to avoid incurring in acts that may be prohibited by the patent owner once the patent is granted. Hence, a patent office that incurs in delays in rejecting a null patent creates uncertainty to its nationals about whether or not they are able to use the invention.

For instance, in the case were the same patent is rejected by National IP Offices, if country A rejected it in year 2 from filing date and country B rejected it in year 5, country A competitors would enjoy three additional years when they can freely use and exploit the invention in the country, whereas country B competitors will be subject to uncertainty until the patent is rejected.

To conclude, time is a key factor for the patent system. Although inefficiencies in patent registration procedures may harm foreign companies and innovators’ interests, the harm caused to its own national innovation system is even worse. Moreover, very long and formal procedures lead to a negative perception over the patent system in general, and discourage national innovators from protecting their inventions both nationally and abroad, which directly affects the country´s ability to compete in a knowledge-based economy.

Get your patent grant quicker with the Pacific Alliance and PROSUR PPH

Rebeca Nieto
IP Expert at Latin America IPR SME Helpdesk

Over the past few years, Intellectual Property Offices around the world have been busy preparing and negotiating Patent Prosecution Highways (PPH) agreements.

Better known by its abbreviation, the PPH is a system of bilateral and multilateral agreements particularly aimed at reducing the costs and time of patent examinations among applicants and participating patent offices. For doing so, the system enables an applicant with allowable/ granted claims in a patent application of an Office of Earlier Examination (OEE) to obtain an accelerated process examination of sufficiently corresponding claims in applications filed (but not yet examined) in other offices -Office of Later Examination (OLE)-.

It must, however, be noted that under PPH the OLE agrees to expedite the examination process by using the data and information provided by the OEE; but following the territoriality principle of patents, it reserves the right to grant or deny the patent.

In Latin America, two regional key networks have been created, namely, Pacific Alliance and PROSUR.

On July 1st, 2016 the PPH Pilot Program of the Pacific Alliance, made up of Chile, Mexico, Colombia and Peru, came into force. Some months later, on September 15th, the PPH Pilot Program of PROSUR, formed by Argentina, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru and Uruguay, came into force. Nonetheless, Brazil adherence to the PPH was on December 19th, 2016, while the final entry into force of Ecuador still  awaits the internal approval of its Government.

These Pilot Programs are expected to last 3 years, and renewable for an additional one. As we will see below, their implementation is carried out according to the guides prepared by the participating Industrial Property Offices, which establish the requirements, conditions and procedures to participate in the PPH Pilot Program.

For the purpose of giving certain flexibilities to the applicants, both networks decided to follow the “Mottainai” and the “PCT- PPH” modalities.

According to the PPH MOTTAINAI modality, an applicant can request to expedite its patent examination process at OLE using the results of the OEE, regardless of the office in which the first deposit occurs, provided that the OEE and OLE have signed a PPH MOTTAINAI agreement. By eliminating the directional requirement of the original PPH model, this alternative relaxes the requirements related to the order in which the applications were filed and the priority which they claimed.

Regarding the PCT- PPH, the OLE could utilize the positive results obtained in the PCT international phase to request accelerated processing in the national phase. In particular, in this modality OLE´s patent examiners can use the following work products:

  • the written opinion of the International Searching Authority (ISA),
  • the written opinion of the International Preliminary Examining Authority (IPEA), or
  • the international preliminary examination report issued within the framework of the PCT, subject to certain conditions.

In this region, WIPO has designated INPI (Brazil) and INAPI (Chile) as ISA/IPEA offices. According to this, the country members of the Pacific Alliance and PROSUR may benefit from the international PCT work elaborated by those offices.

To get a closer look at the system, let’s now see how the Pacific Alliance PPH system has worked for the Mexican inventor Sergio Fernando Grijalva, who was the first applicant within the PPH of the Pacific Alliance in filing and obtaining a patent granted.

His application was filed on March 3rd, 2016 in the National Institute of Industrial Property (INAPI). Once the PPH was requested, it was necessary to check if the application met the requirements set in the INAPI- IMPI’s guide to participate, which are:

  • The Chilean and the Mexican application must be equivalent, which means that they must have the same initial date, either the same priority date or the same filing date.
  • The corresponding application must have been examined substantively and have one or more claims considered by IMPI as patentable/ allowable.
  • All claims submitted for INAPI’S examination -as originally filed or as modified- must sufficiently correspond to one or more of the claims found patentable/ allowable by IMPI.
  • The application filed before INAPI shall has been published in the Official Gazette.
  • The substantive examination of the application of INAPI has not yet begun. In other words, the PPH must be requested before the examiner is appointed.

In the present case, the Mexican applicant was required to modify his application before INAPI as to make its claims sufficiently corresponding to the ones granted by IMPI. Thanks to this correction, the research and examination results done by IMPI could be used during INAPI´s patent prosecution.

As result of the prosecution of this patent by the PPH, the substantive examination process was executed in less than 3 months, which contributed to grant the patent in less than 12 months, rather than the 36 months that non-contentious patent application may take.

As we have seen, the existing PPH networks in Latin America can contribute effectively to speed up the substantive examination process of the participating offices, by avoiding the repetition of unnecessary administrative actions, while at the same time reduce related institutional and applicants’ costs. Moreover, and not previously mentioned, using these services do not, as a general rule, require additional fees.

For all of the reasons above mentioned, companies and inventors are encouraged to benefit from the existing PPH schemes. As for this purpose, if you are seeking patent protection internationally, you are highly recommended to verify the PPH agreements of those countries you are planning to expand your patent protection, as well as check out the modalities they adopted (i.e. “Mottainai” and “PCT- PPH”), as they can provide you an additional chance to successfully accomplish your patent registration in Latin America.

Intellectual Property for SMEs: 6 common errors

Having their own business is a yearning for many employees tired of a working life that does not fill anything else than their bank account. They endure frustrations and abuses for a not always decent salary, and feed their dream with the massive DIY-tools that the Internet provides.

More than a few are eventually convinced by the siren calls of tempting opportunities offered by the digital world to exploit an idea in a profitable way with no (or less) tangible means and leap into the void without a second thought.

In order to prevent your savings, hair and other valuable resources to be wiped out by a temporary insanity, we are listing some of the most common Intellectual Property (IP) – related mistakes Start-Ups make too often and that you must avoid if you want to succeed.

1. Poor knowledge of the sector

Working at Disneyland is not the same as visiting it. Likewise, being a (more or less specialized) consumer does not give you a complete picture of the sector. It’s key to know the internal mechanisms.

Given that experience is the best teacher, during the initial stages you’d overcome this deficiency with a deeper prior analysis and better planning.

However, many start-ups embrace adventure without being aware of the frequency or speed of technological developments in the sector, where to find new opportunities for growth or licensed-technology, or what patents are relevant to their products.

In other words, they do not know what Intellectual Property Rights (IPR) are needed to operate and its availability.

In regard to the first, sectorial guides (i.e. Machinery and IP in Mercosur and Chile) may help you to identify the relevant IPR to your case and understand why and when should them be protected (i.e. a graphic designer would need to know more about copyrights and trademarks, and pay less or no attention to patents).

In regard to the second, “Out of sight, out of mind” is not a good IP policy, since not knowing the law does not allow you not to obey it. Other’s IPR infringement may take place though you did not want to. You’d better check the trademarks, patents or copyrights owned by your competitors to avoid it.

Thanks to that, you’d not only escape a costly legal proceeding, but you’d have a deeper knowledge on how innovative you are and be able to adapt your commercial strategy.

Performing a prior search is hence indispensable. Unfortunately, you cannot always access comprehensive, reliable, free-of-charge databases that can be easily handled by the average user.

The solution calls for expert advice.

2. Fail to identify IPR and deficient valuation

The idea that inspires a different business’ birth tends to be unique to the father’s eyes.

Nonetheless, just a few know exactly what part can be protected (i.e. technical feature, aesthetical aspect, name, information itself, etc.) and how is it given material form. No, the answer is not always “patent”.

You can also find utility models, designs, trademarks, trade secrets or copyrights, among others. Generally speaking, commercialization of a new product involves many IPR simultaneously. For example, the technology used by Goretex (registered trademark) was patented and the shoes appearing on the catalogues and brochures (protected by copyright) have been previously registered as designs.

Though, if you think that IP is only for technology-based or big companies, you are wrong. Any company has some potential (or current) IPR.

In fact, all companies daily work with intangibles that could be protected as IPR –and, thus, be exploited-, but have no clue about it.

Your company or product name can be registered as a trademark and reach an incredible value. If you don’t believe me, you’d better check Forbes’ rank of the 10 most valuable trademarks.

If you are not aware of what you have in your hands, you can hardly assess its value properly and protect it accordingly. This error can cost you dear if we bear in mind that for most Start-Ups, IPR often represent the most important asset of the company.

3. Bad timing

Sadly, IP protection is way too common done as an after-thought or be left for a later stage.

Thus, many entrepreneurs figure out that the innovative product on which the business project is based cannot be patented anymore, either because:

  • Since they began to develop it until they finally were ready to launch it, it has been too long and in the meantime other company applied for similar patents (first-to-file wins, remember?); or
  • They disclosed it (via online or at a trade fair) and it is not new anymore. Many Latin-American countries do provide a grace period for patents, but you need to know which and its requirements.

Those of them who’d rather release the product and protect it depending on its success can be committing IP offenses unknowingly. At best, the product was really innovative and they could face any of the mentioned scenarios.

The same situation may be seen as respect to the trademark. Before naming your company or product, be sure that it is available in your countries of interest (think internationally!). Otherwise, you’d have to choose a new name or be forced to negotiate with the right holder (i.e. the “iphone” trademark dispute between Gradiente and Apple that took place in Brazil was a good example).

Usually, the first to apply for its registration gets the exclusive right (first-to-file principle). But some Latin-American countries have a different regulation. Hence, it is recommended to be assisted by specialized professionals from the beginning and have a case-by-case approach.

On the other hand, there are some opportunities that apparently cannot be missed. However, a trade fair or a meeting with a promising client can be a double-edge sword. You’d better calm down and perform a good search and design -supported by an IP expert preferably- involving all the relevant parts (e.g. designers and marketing team).

4. Ownership: absence of clarity and awareness

Creative processes tend to be convulsed and it’s hard to distinguish who created what and in which proportion (particularly, when ideas arise from brain storming or daily work).

Moreover, when you deal with external providers or a team, many of them do not know who is the real owner of the work. The assignment rules are usually contained in the IP regulation and the employment or project contract. This is why you must pay attention to its content and try to clarify rights and obligations of each part and adapt them to your needs before your start working.

In this regard, many disputes arise when the employee thinks that everything he/she creates belongs to him/her (while it tends to be the other way around).

For this purpose, a well-drafted contract is crucial. Be as much specific as possible and try to think on the most -and less, but harmful- likely scenarios and include a clause for that.

Start-Ups rarely avoid application of knowledge gained from the company they previously worked for or achieved the final result without using its means (although it was during their leisure time).

This is of central importance when you are looking for funding or partnership (ascertaining the correct IPR assignment is one of the key points of any due diligence conducted by investors to give the green light) or when license agreements are signed.

At internal level, it is equally important that the rest of the company members know the scope of the IPR they work with (i.e. what countries are covered, can it be modified for an online campaign, is there a limit to the number of licenses, what happens with any improvement on it). For-profit use of open source technology or under for personal use only license; inclusion of copyright-protected works without permission in catalogues or social networks; or utilization of patented technology without realizing it, are some of the most common errors and can be prevented with an active IP awareness policy by trainings like those provided by the Latin America IPR SME Helpdesk.

5. Lack of (or improvised) protection strategy

The absence of a clear short/medium term IP strategy is a serious handicap to the business project’s success –or event survival-. It’s impossible to identify the needed tools to achieve the objectives if they are not well defined.

Moreover, many entrepreneurs underestimate the importance of own and other’s IPR or overrate the power of a registered IPR (patents to not enforce themselves automatically: you have to negotiate with infringers or start legal actions). Additionally, some businessmen forget that IPR also entail certain obligations (i.e. trademarks’ obligation use was set to avoid defensive registrations in many Latin-American countries).

As a result, they find themselves:

  • with weak IPR to save money in legal assistance
  • with IPR that they don’t use; or
  • forced to request lawyer’s support to solve a non-registration related problem

Notwithstanding, the vast majority of the mentioned mistakes so far can be prevented with correct planning.

Or, to put in other way, you have to invest in IP and avoid relying upon improvisation.

Do not forget that the IP strategy must be aligned with the business strategy (and not vice versa). Short, medium and long term must be taken into account, too; and plans must be regularly updated and suited to change.

6. Who needs a lawyer?

You can find many infinite templates, examples and tutorials on how to elaborate your own agreements across the Internet. As a matter of fact, it is really tempting to take four of them and adapt them to your case –at high risk of copy-paste abuse-.

The so termed Frankenstein effect is one of the most frequent errors, given the high cost of legal assistance and low awareness of the importance of a well-drafted contract (in particular when no problem arose).

It must be however noted that IP is a very complex matter, that varies a lot from country to country, and that an in-house lawyer (if the company has one) -that already deals with tax or sales legal issues- can hardly ensure a high level of efficiency.

Although most of the entrepreneurs are used to do it all by themselves, they must know their limits, be wise and delegate to experts (when needed).

Do not forget that if you trust a lawyer from the beginning, you can save a lot of money (fixing the mess created can be two or three times more expensive).

Indeed, the Latin America IPR SME Helpdesk was created in response to all those EU SMEs that want (and must) to know more about IP and how to use it as a profitable business tool, in particular when they operate in Latin America –or are intending to do it-.

Moreover, some of the mentioned trainings (and much more) are explained in depth in the training sessions they organize (i.e. Start-Ups in Latin America: Most Common IP errors).

Nonetheless, when the problem you have is beyond your knowledge –gained thanks to the E-learning documents and trainings offered by the Helpdesk-, you could always use the Helpline. All any of its services, it is free-of-charge and totally confidential.

Furthermore, it is available in 5 different languages (English, Spanish, French, German and Portuguese) and the experts provide first-line assistance within 3 working days.

For further information, you can check their website www.latinamerica-ipr-helpdesk.eu.

Origin Mark: A tool which aggregates value to unique Chilean products

Maximiliano Santa Cruz Scantlebury
National Director of the National Institute of Industrial Property – INAPI

In early September of 2015, the President of Chile Michelle Bachelet officially presented the new image of Origin Mark, the result of a collaborative work between the National Institute of Industrial Property (INAPI) and Fundación Imagen de Chile. Three months later, the Origin Mark acknowledged the Tomato from Limache. The new face on this successful program is not a simple whim. It responds to a strongly belief to position the program, recognizing our traditions and customs, as well as entrepreneurs, farmers and artisans.

In the first place, the Origin Mark pursues consumers on a clear manner to easily notice the products recognized for being unique, having a certain quality and enjoying a high local ties. Every day customer assigns a greater value to product origin and the making method they are consuming. Thanks to the linkage provides by the Origin Mark is easier to foreground in the market those products that enhance local work.

During the last couple of years it is not a coincides that Chilean food restaurants and large supermarket chains have decided to offer local product with added value; in the past those were very difficult to find, such as Chiloe Potatoes or Azapa Olives. There is a global tendency to set the eyes in similar local products. There are many blue cheeses; however to the experts there is only one Gorgonzola (Italy), just one Roquefort (France) and one Stilton (England). Nowadays, in Chile everyone acknowledge the Lemon from Pica (a small village in the north of Chile) as unique and customers are willing to pay a premium for it instead of the generic lemon.

On the other hand, the producer, thanks to our program, takes a favorable position in the market, especially when the offer is the result of an associated process. For example: the Salt from Cáhuil, Boyeruca and Lo Valdivia, which before to receive their Origin Denomination (O.D.) was selling in bulk at the cost price; today they are in the supermarkets, gourmet stores and recently made their first exportation to Spain.

Mainly when a product has the Origin Denomination or Geographical Indication (G.I.) -both under the Origin Mark program-, legal protection from unfair competition prevails. Also enables rightful owners to prevent third parties to misrepresent their products as coming from the geographical area covered by such types of industrial property. In other words, avoids the “pig in a poke”.

Definitively, the country provides a strong signal by this program, implicitly expressing their commitment to preserve their traditions. Thus, leads to a strong impetus to entrepreneurship and productive development, especially among local communities.

Therefore, the efforts have not only focused in guiding the new applicants during the process, but also strategies has been designed to offer better visibility to protect products, through G.I., O.D., Collective Trademark or Certificated Trademark. This aims to support our producers to take place in trade fair and show their products at the highest level, to later be used by chefs and experts around the globe.

Today at the entry of small Chilean villages of La Ligua and Pomaire, there are sideboards notifying drivers entering a zone with Origin Marks products. The same will happen in every place associated to the Origin Mark. Hence it has begun to lay the foundations of new tourist routes, from the recognition by INAPI and our program. Origin Mark definitively leaves its footprint.