Delhi Counsel to Counsel: Building, Managing and Defending Your Intellectual Property Portfolio (1)

A recent Counsel to Counsel debate, held in India, discussed how in-house lawyers could establish a strategy for protecting their company’s intellectual property assets. In the first of our two-part summary of proceedings, speakers discussed attitudes within their own companies towards IP protection. They then discussed what arguments they should use to justify the time and effort required to embark in a successful IP protection strategy. Part two of our report will discuss which IP rights participants thought it was most important for a company to protect, and also some common problems they encountered when trying to enforce those rights.

Attitudes to towards IP protection in India

Although India has a wide range of long-established, enforceable intellectual property (IP) rights, various speakers had very different experiences of how IP was treated within their companies.

Amir Singh Pasrich, managing partner of International Law Affiliates, said that in his opinion, the protection of IP in India was too often reactive: “Companies tend to happily carry on until there’s a crisis – it’s like not going to a doctor until they need a major operation. When a company decides to go to court to enforce their rights, they demand the best lawyer, and don’t worry much about how much the lawyer charges. This corporate mentality has to change – prevention is necessary.”

As far as Herbert Smith’s Nick Gardner was concerned, the importance of IP protection was something that companies often had to learn the hard way. He suggested that some India companies were shocked when they tried to expand outside their home territories, and discovered that every aspect of their product line has been protected in some way by their overseas competitors. “This scenario has the potential to destroy a company’s business,” he said.

Where companies suffer from a lack of internal stakeholder interest in IP protecting rights, this can make the life of the in-house counsel difficult. Employees may simply not alert the legal department that they are working on a project that may benefit from formal IP protection. Alternatively, even if the legal department is aware of specific matters that need protection, they may not be able to obtain the necessary documentation from key individuals to enable this to happen. In this scenario, it may help concentrate stakeholders’ minds if the in-house counsel can put a financial value on the implications of their non-cooperation.

Training of key personnel is often suggested as a way to remedy lax corporate attitudes towards the importance of IP. However this, in itself, is not without its consequences. Some speakers hinted that, after training, their internal clients tended to become over-enthusiastic about trying to protect their IP rights, even if the cost/benefit of such protection was questionable. To alleviate this problem, it was suggested that an IP training programme should probably go hand in hand with a formal policy on IP registration, which sets out in what circumstances protection will be sought. Such a policy may help prevent resentment and loss of faith in the system from those employees whose inventions the company believes are not worth protecting.

In relation to patents, once technical personnel have been trained about the contents of a typical application, counsel should expect more prolonged discussions about what an application should contain. Enhanced knowledge may help technical staff become more aware of the hows and wherefores of patent registration – but it will not necessarily result in less work for the corporate law department.

Of course, there will always be some key stakeholders it will be difficult to persuade of the importance of IP. While one speaker said that large multinationals were increasingly winning IP disputes in India, another speaker said that many mid-ranking government officials either remained ignorant about IP matters, or were actively hostile to the whole concept. “Some police offices and customs enforcement officers do have an attitude problem with IP issues,” they said. “You can teach them about the law – but what can you do if they’ve been in the job for 40 years, and have decided they hate IP? You can’t find answers on how to deal with these people in any textbooks.” Turning to the judiciary, they added: “It’s helpful if you can appear in front of a judge who really understands the terminology you are dealing with – like what the difference is between a website and a domain name, for example.”

Justifying investment in IP protection

Protection of IP rights may be a costly and time-consuming process. For those rights capable of registration, counsel will have to factor in the direct financial cost of the registration itself, time required to create and submit the registration document, plus subsequent challenges to the registration. This is before costs are incurred in relation to any subsequent enforcement action. For non-registrable rights, costs will be incurred if rivals decide to challenge the company’s right to use their IP, or if the company decides to commence its own enforcement proceedings against its rivals.

This, of course, all takes time and money. Several speakers therefore offered practical suggestions about how this expense could be justified to the counsel’s internal management team. One speaker pointed out that it was simply cheaper to make use of a statutory registration process – even if a registration fee was payable – than to rely on less-defined alternative protection options, which may have a higher evidentiary burden in order to be successful. In addition, formal registration sometimes offered some specific benefits, such as the right to have a dispute heard in a specialist court.

One private practice lawyer pointed out that the cost of proactive IP protection could be considered in relation to the cost of marketing the item or brand to be protected. Put simply, counsel could consider pushing IP registration costs into the start-up budget for a new project launch, rather than having to find money out of the legal department’s own operational budget. “It’s often said that trade mark litigation is quite expensive, but you have to consider its cost relative to the advertising budget that created the brand in the first place,” said one Herbert Smith representative. “Companies only have to defend their brands because they’re successful.”

For companies who are most interested in IP enforcement, one speaker had an interesting suggestion about which group of workers should receive specific IP training: the sales force. Although these people may not be an immediately obvious priority for an IP training programme, there was a logic to this speaker’s argument. They claimed that the sales forces are arguably the best group of people for gathering intelligence about the activities of rival suppliers – simply because they talk to their customers about developments in the wider market. If sales staff are informed about which IP rights the company wishes to protect, and which rights this protection entails, they will be better placed to understand which possible infringements should be referred to the legal department for further investigation. And, although not suggested at the meeting, it may even be worthwhile for the legal department to provide their team with financial incentives to report any possible IP infringements by rival companies. The cost of doing so would almost certainly be less than hiring a special investigator to proactively seek out infringements – while also increasing the company’s revenues.

Takeaways

■ Many companies take a reactive stance towards IP protection. Education can help change this culture – but it can also bring about over-enthusiasm for enforcing rights of marginal value. Any IP training programme should be accompanied by a clear policy setting out which IP rights will be vigorously protected.

■ IP enforcement can expensive. Where money is tight, try to incorporate its cost within other departmental budgets, such as product development or marketing.

Part two of our report will discuss which IP rights participants thought it was most important for a company to protect, and also some common problems they encountered when enforcing the protection of those rights.

Last updated - 23 April 09

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