Building barriers against competition

P KandiahMonday, March 20, 2017
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Shaving razor is protected by more than 30 patents
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Did you know that the shaving razor you hold to your face in the morning is protected by more than 30 patents, giving the manufacturer of that brand over 80% of the global market share?

Competitors who want to manufacture or sell a similar functioning shaving set or even the shaving blades cannot do so, until they have obtained patent licences from the manufacturer, the holder of the patent rights.

How can manufacturers in other industries obtain such an envious position in the market? Whenever a novel product is developed or significant improvements or modifications to an existing product or process of manufacture are developed, the company should seriously consider securing proprietary rights to the product, or to the improvements by way of obtaining patent rights or registered industrial design rights to prevent others from copying the new features into the new product or copying the process of manufacture. If the company is not sure whether the product, or the improvements or modifications would be eligible for any property rights, always seek the advice of a patent consultant.

Directors of technology or production, or CEOs of manufacturing companies should know about the importance or relevance of patent databases.

Patent databases are an extremely important reservoir technical information on products, process of manufacturing product, and solutions to technical problems in all areas of technology and industry. Patent databases of the industrially advanced countries are available in the Internet free of charge. What is needed by a company is a well-considered search strategy to uncover the right documents that provide a solution to the problem encountered. The technology disclosed in the patent can be freely adopted or copied in Malaysia provided there is no corresponding patent subsisting in Malaysia.

Database mining for technology is a common strategy adopted by companies which constantly look out for improved products, or by companies which want to know what their competitors are up to. Patents are filed long before a product covered by a patent is released into the market.

Technology trend analysis done on the patent databases will reveal the changes that are taking place in a particular technology sector. Careful analyses of the results will enable a company to be prepared for the change in the marketplace and not be taken by surprises when a new innovative product is introduced into the market by a competitor.

A review of recently granted patents or recently published patent applications in the US patent trademark office website will at least reveal the latest changes in products that are highly likely to be put into the US market in the near future. Local manufacturers of products in the same category could introduce similar innovations into their own products. Let us see how a recently granted US patent in the furniture industry can be utilised to improve the sales of Malaysian furniture manufacturers.

For example, granted US patent in the furniture industry can be utilised to improve the sales of Malaysian furniture. US patent 8,366,200B2 granted on Feb 5, 2013, to Casual Living Worldwide Inc — a US company in the furniture industry related to a furniture assembly for compact and efficient packaging. As living apartments get smaller in size, there is a need for a solution on how to store furniture in a compact manner. The US company had solved the problem by designing and dimensioning the components of the furniture assembly that can be arranged in a compact manner like a jigsaw puzzle.

A Malaysian furniture manufacturer may also realise that there could be a market of similar furniture assembly sets in Malaysia and in other countries where living rooms are getting smaller and that could be a possible demand for such furniture sets. The manufacturer could be persuaded to investigate the market as to whether there would be such a demand in Malaysia. Apart from the example of assemblable furniture set shown in the US patent, other designs of compact assembled furniture sets could be designed by local designers.

The Malaysian furniture manufacturer can then export the furniture assembly sets to the US after ensuring its furniture assembly does not infringe any US patent. However, the manufacturer would be free to sell this furniture assembly in Malaysia and in other countries where no patent corresponding to the US’ 200 patent been granted and still subsisting (the verification exercise can be undertaken by patent consultants in Malaysia).

Similar analysis and review can be undertaken in other product categories by manufacturers, or by trade associations for the benefit of their members.

CEOs of manufacturing companies should be aware of strategic use of patent databases in identifying technology trends, obtaining ideas to solution to technical problems on the production floor, obtaining ideas for product improvement, and identifying demands for new products in the market.

Obtaining several patents on a product and/or on the method of manufacturing a product will increase the entry barrier to competitors to make a new or similar product.

During the period of patent protection, when the patentee enjoys a monopolistic position in the market for the product, the entire premium profit on the product can be utilised to build the brand value of the product, such that after its patents expire, the product sale would still be maintained at a high level due to the popularity of the trademark of the product.

For example, the patent for paracetamol (a medicine to cure headaches) has expired long ago, but when you have a headache despite the presence of several brands of paracetamolin the market, which brand do you ask for?

Probably it is PANADOL®, which is the trademark of its original patentee of paracetamol. Trademark literally lasts forever — long after the patents and industrial design rights on the product have expired. So, CEOs should look at how to exploit the various types of intellectual property (IP) rights in a strategic manner so as to increase entry barriers to competitors and to increase their sale revenues.

P Kandiah is the founder and director of KASS International Sdn Bhd, an established IP firm with offices in Malaysia, Singapore and Indonesia. He has vast experience in obtaining patents, trademarks and industrial design rights on a global scale, and also specialises in identifying patentable inventions, designing around patented technology, and advising on the commercialisation of IP rights, franchising and licensing strategies. For more information, visit www.kass.com.my or drop an email to ipr@kass.com.my.

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