Understanding Intellectual Property Basics: 7 Factors

Author: Douglas Cohen
Pirates have long been a threat to international trade. Today’s pirates are more likely to steal your company’s intellectual property (IP) by making an illegal copy/selling it for a discount under a counterfeit name/logo. IP=patents (inventions), trademarks (words and symbols that identify products/origin), and copyrights (works of art/authorship).
1. What is IP?
Technology such as Apple iPhone, chemical patents such as pharm, trademarks such as Mercedes’ diamond, sound of a Harley-Davidson, or Nike swoosh and copyrights include books, music, movies, poetry, paintings.
2. Importance of IP
Exports or international sales are key to growing business. In 2013, international theft of US IP was $300 billion. By 2015, this is expected to be $1.77 trillion. Piracy costs more than loss of sales revenue, loss of US jobs and undermines incentive to innovate and competitive advantage. If a brand loses value because it is viewed as less exclusive/confused with shoddy imitations, then it is a long-term threat to profitability.
3. External Factors for Risk of Loss
The external factors that have increased the risk of lossadvances in technology, free trade, and rising value of “global brands”, factors like Internet, MP3s, Smart Phones, writable compact disks make high quality digital duplication, which are fast, cheap, and anonymous.
4.Counterfeit Capital countries
China is the international counterfeit capital. According to the Economist magazine, at least $16 billion worth of goods each year inside China are illegal copies. Other counterfeit capital countries are Argentina, Vietnam, Thailand, Taiwan, Indonesia, Philippines, Ukraine, Russia, Costa Rica, Uruguay, India, Pakistan and Lebanon.
5. International Intellectual Property Theft
International Intellectual Property Theft includes, product dissected and re-engineered and sold without permission or payment of royalties. Samsung’s copying of Apple’s iPhone patented technology. In China, 50% of Abercrombie & Fitch and Calvin Klein’s products are counterfeit. American Superconductor Corp.’s wind energy software was stolen by a customer in China and lost 90% of its stock value. In Venezuela and Guatemala, Reebok shoes were prohibited from using their own name on their own products because local pirates registered the “Reebok” name before Reebok.
6. Risk of Loss in Entering Foreign Markets
Unlike the US, some foreign nations do not have laws protecting intellectual property. Some nations have weak laws or lax enforcement. Developing nations feel the counterfeit market is essential to their local economy. A few developing countries question the validity of private ownership of intangible assets. The pharm, entertainment, chemical, electronics, software, defense systems, autos, and aerospace sectors are especially vulnerable.
7. Stealing Intellectual Property
Sales agents, distributors, and resellers have the greatest opportunity to steal. Once they have the product (or even a sample), they copy your product and sell it in markets eager for global brands. They may export your product to another country under their name. They may “register” it in a foreign country before the rightful owner. They may try to sell the ownership rights to the true owner for a large ransom.

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