International Trademarks Good. International Patents Bad.

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International Trademarks Good. International Patents Bad.

The title to this post is a gross oversimplification meant to prove a point or, more accurately, disprove a myth. I cannot tell you how many times I’ve had companies swoon over the idea of spending big money to secure a patent and pooh-pooh my suggestion to spend small money to secure a trademark. Often, these companies don’t really get it.

Let me explain.

Patents are virtually always expensive to get and virtually always expensive to protect.
Trademarks are virtually always inexpensive to get and usually inexpensive to protect.

Let me further explain, first with patents:

Securing a patent (other than a design patent) typically costs three to four times what it costs to secure a trademark. This is true in China, the United States, Europe, Canada, Mexico, and wherever. That said, patents are sometimes invaluable for protecting truly innovative technologies, pharmaceuticals, or other unique inventions where a competitive edge depends on exclusive rights.
If you believe someone is violating your patent and you send them a cease-and-desist letter to get them to stop, there is a good chance they will deny any violation. And after you explain to them why there is a violation, there is a good chance they will explain to you why you are wrong. If their orthopedic device is exactly like yours, but for some relatively unimportant button somewhere, they will claim that relatively unimportant button is actually important, and it means they are not violating your patent.
If you go to the e-commerce sites on which they are selling the orthopedic device that almost certainly violates your patent and you ask that e-commerce site to take down the infringing product, the odds are overwhelming that site will tell you that they are not patent lawyers, and you will need a court order or a judgment for them to take it down. This is generally true of all the leading e-commerce sites around the world.
The above means that if you want to stop your competitor from selling what you see as the infringing orthopedic device you must sue, and you likely will need to hire an expensive expert to prove the patent infringement. Few things in life cost more than patent litigation, and since my law firm does patent litigation, I know whereof I speak on this. The high cost is due to the complexity of patent law, the need for technical experts, extensive document discovery, and lengthy trials.

When Patents Are Vital

While trademarks often provide a more accessible and cost-effective form of intellectual property protection, patents remain indispensable for certain types of innovation. Patents grant inventors exclusive rights to their inventions for a limited period, providing a crucial competitive advantage. Here are situations where patents are vital:

Breakthrough Technologies: For inventions that represent significant technological advancements, patents offer the strongest form of protection. This is particularly true in industries like pharmaceuticals, biotechnology, and advanced engineering, where innovation can be easily replicated.
Unique Processes and Methods: If your business relies on proprietary manufacturing processes or methods that provide a distinct competitive edge, a patent can prevent competitors from replicating those processes.
Early-Stage Startups: For startups built on groundbreaking technology, patents can be essential for attracting investment and establishing a strong market position. Investors often prioritize companies with robust patent portfolios.
Protecting Core Innovations: When a product’s core functionality or unique selling proposition is based on a specific invention, a patent ensures that competitors cannot easily copy or imitate that functionality.
Deterring Infringement: Even if you don’t intend to actively enforce your patents, having a strong patent portfolio can deter potential infringers and create a barrier to entry for competitors.
Licensing Revenue: Patents can also generate revenue through licensing agreements, allowing other companies to use your patented technology in exchange for royalties.

In these scenarios, the cost and complexity of obtaining and enforcing patents may very well be justified by the significant competitive advantages they provide.

International Patent Protection Varies by Region

Generally, utility patents provide the most protection in the United States, followed by Europe and Australasia, then Latin America, and finally Asia. However, there are notable exceptions. For example, Singapore, due to its long history with pharmaceuticals, is well-known for its strong patent protections. This variation is an important factor to consider when deciding whether to pursue international patent filings. It’s crucial to evaluate the strength of patent enforcement in each target market to determine whether the cost and effort of obtaining a patent will provide adequate protection and return on investment.

The Value of Design Patents

While utility patents protect the functional aspects of an invention, design patents protect its ornamental appearance. Design patents are particularly valuable for businesses that prioritize aesthetics and brand identity. Here’s why:

Protecting Product Aesthetics: Design patents safeguard the unique visual design of your products, preventing competitors from creating knock-offs that mimic their appearance.
Enhancing Brand Identity: A distinctive product design can become a key element of your brand identity. Design patents help maintain that exclusivity and prevent competitors from capitalizing on your brand recognition.
Cost-Effective Protection: Compared to utility patents, design patents are generally less expensive and easier to obtain, making them a practical option for protecting product aesthetics.
Protecting Consumer Recognition: Design patents protect the look of your products, helping consumers to recognize your brand.
Protecting Product Packaging: Design patents can protect the visual aspects of packaging.
Protecting User Interface: Design patents can protect the visual elements of user interfaces.

We had for many years heard how design patents in most of Asia are worthless, but I have two recent real-life examples that prove otherwise.

The first involved a headphone company that had a China design patent on a particular portion of wired headphones. It learned that three Chinese companies were using its design, and we wrote cease-and-desist letters to all three factories, expecting no response. All three responded, so we told them they would need to pay $2 per headphone manufactured to use our client’s design—this was what they were charging American and EU companies.

All three of the Chinese companies said that this was too high, but we ended up getting all three to sign licensing agreements to pay from 70 to 90 cents for the license to the design. Was it $2 like in the rest of the world? No, but it was real money, and it shows that design patents are not as weak as so many tout them to be.

The second example involved a unique and easily identifiable design of a children’s toy. The design was registered in multiple Asian countries. When knock-off toys began appearing, the company was able to quickly get them removed from both physical stores and online marketplaces due to their registered design rights.

Design patents are especially relevant in industries like consumer electronics, fashion, and furniture, where product design plays a significant role in consumer purchasing decisions.

The POWER of Trademarks

Trademarks, unlike patents, operate on a “first-to-file” basis in most countries, particularly in Asia, Europe, and Latin America. This generally means that whoever registers a trademark first owns the rights to it, regardless of who used it first. This makes it absolutely vital to register your trademarks in these regions as soon as possible.

Nearly all countries in Asia, Europe, and Latin America are first to file countries. The importance of this cannot be overstated. If you are manufacturing products in Vietnam, for example, but have not registered your trademark there, a local company could register it and prevent you from selling your own products under your own brand. This means even if you’ve been using “your” mark for years, someone else can register it and prevent you from using it. Similarly, if you plan to sell your products in Asia, Europe or Latin America, you must register your trademarks in those regions to secure your rights.

E-commerce platforms around the world, particularly in first-to-file jurisdictions, generally take trademark infringement very seriously. Because trademark infringement is usually considerably easier to determine than patent infringement, especially in first-to-file countries, e-commerce companies are much more likely to remove infringing products.

By way of a very basic example. If you are making and selling a telephone that is branded “Apple iPhone” (and you are not Apple), everyone knows you are violating Apple’s trademark. But if you are selling an iPhone that uses a component that Apple has patented, there will be incredibly few people with the knowledge, expertise and testing facilities to be able to determine that you are violating the patent.

If you have a registered trademark, you can typically provide evidence of your registration to an e-commerce platform, and they will remove the infringing product. This is a powerful tool for protecting your brand and preventing counterfeiting.

Therefore, it is essential to trademark your brand name wherever you manufacture or sell your products. This proactive approach can save you significant time, money, and legal headaches in the future.

Conclusion

The choice between trademarks and patents is not really a matter of one being universally “good” and the other “bad.” Rather, it’s about understanding the specific needs of your business, the nature of your innovations, and the pros and cons of the IP that you can secure.

For many businesses, particularly those focused on branding and market presence, trademarks offer a cost-effective and readily enforceable form of protection. However, for those developing groundbreaking technologies or prioritizing product aesthetics, patents remain essential for securing a competitive edge.

It is vital to consider your business model, your budget, and the nature of your intellectual property before making any decisions. Before making any decisions, it is always best to consult with an intellectual property attorney. By strategically leveraging both trademarks and patents, businesses can create a robust intellectual property portfolio that safeguards their innovations and drives long-term success.