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The following text will provide the reader with practical guidelines about all the available Intellectual property (IP) protection tools and how he/she could use it in order to have the best possible protection.

Effective Intellectual Property management enables companies to use their intellectual property assets to improve their competitiveness and strategic advantage. Acquiring IP protection is a crucial initial step, but effective IP management means more than just protecting an enterprise's inventions, trademarks, designs, or copyright. It also involves a company's ability to commercialize such inventions, market its brands, license its know-how, conclude joint ventures and other contractual agreements involving IP, and effectively monitor and enforce its intellectual property rights. Indeed, a company's portfolio of IP must be viewed as a collection of key assets that add significant value to the enterprise.

Many new products or services embody different types of intellectual property. Forward-looking enterprises face the challenge of extracting the latent value of their IP and using it effectively in their business strategy. Companies that dedicate time and resources to protecting their intellectual property assets can increase their competitiveness in a variety of ways. In addition, enterprises, which search systematically for conflicting IP rights of others prior to seeking IP protection, are able to avoid unnecessary litigation, thereby saving time and resources.

For manufacturers protection of new ideas and innovations by way of patents, copyrights and trademarks (collectively, "intellectual property," or "IP") is critical for survival. Smaller companies, in particular, must protect their new ideas and innovations to increase their financial worth and, hopefully, compete with larger manufacturers.

SMEs can also benefit from the wealth of technological and commercial information available in patent and trademark databases to learn about recent technological breakthroughs, identify future partners, and find out about the innovative activities of competitors. Managing IP effectively and using it to devise business strategies is an increasingly critical task for entrepreneurs worldwide. Intellectual property protection helps in:

7.1. Intellectual Property Protection tools

In the following paragraphs the main Intellectual Property tools are presented. The reader will be able to learn what each of these protection tools provide, how the are obtained, what is their period of protection and how they could be used to strengthen the innovation potential of an SME. As most of these tools are governed by national, European or in some times international laws, which are changing continuously, SMEs managers are advised to keep good contacts with the national I.P regulating offices in order to be informed about each change on time.

7.1.1. What are the main IP protection tools?

Patents are concerned with inventions - new and improved products and processes containing a new principle or idea that are capable of industrial application. A patent is a monopoly granted by a state to the first inventor of a new invention, in return for a full disclosure of the invention.

Trademarks are concerned with brand identity – they can be distinctive words, marks or other features the purpose of which is connect, in the mind of the customer, a link between the particular goods or service and the manufacturer/supplier. A trademark is a sign by which a business identifies its goods or services and distinguishes them from the products or services supplied by other businesses.

Copyright is concerned with new (original) literary, musical or artistic works. The creators of such works automatically acquire rights, which mean that they can control their further use. Copyright has become particularly important because of the wide range of works that are now seen to be covered by it. These include computer software; any drawing, map, chart or plan; photographs and films; architectural works; sculptures; sound recordings; tv and radio broadcasts etc. Rights are related not just to the originators of the works themselves but apply also to people performing the works.

Designs are concerned with the appearance of a product – features of e.g. shape, configuration, texture or materials not dictated by functional considerations. A design means the appearance of the whole or part of a product. It may consist therefore of three-dimensional features, such as the shape, texture or surface of an article, or of two-dimensional features, such as patterns, lines or colour. Traditionally it was seen as the quality that made an article appeal to the eye of a customer. However features having no particular eye appeal may be registrable.

7.1.2. Why each of the protection titles is important?

A patent owner has the right to decide who may - or may not - use the patented invention for the period in which the invention is protected. The patent owner may give permission to, or license, other parties to use the invention on mutually agreed terms. The owner may also sell the right to the invention to someone else, who will then become the new owner of the patent. Once a patent expires, the protection ends, and an invention enters the public domain, that is, the owner no longer holds exclusive rights to the invention, which becomes available to commercial exploitation by others.

Patents provide incentives to individuals by offering them recognition for their creativity and material reward for their marketable inventions. These incentives encourage innovation, which assures that the quality of human life is continuously enhanced.

In a larger sense, trademarks promote initiative and enterprise worldwide by rewarding the owners of trademarks with recognition and financial profit. Trademark protection also hinders the efforts of unfair competitors, such as counterfeiters, to use similar distinctive signs to market inferior or different products or services. The system enables people with skill and enterprise to produce and market goods and services in the fairest possible conditions, thereby facilitating international trade.

Copyright and its related rights are essential to human creativity, by giving creators incentives in the form of recognition and fair economic rewards. Under this system of rights, creators are assured that their works can be disseminated without fear of unauthorized copying or piracy. This in turn helps increase access to and enhances the enjoyment of culture, knowledge, and entertainment all over the world.

It informs the public that the work is protected by copyright (and thereby helps to scare aware potential infringers);
It prevents a party from claiming the status of "innocent infringer", which may allow a party to escape certain damages under the Copyright Act; and
it identifies the copyright owner and the year of first publication (so that third parties will know who to contact to request a license to the work).

Protecting industrial designs helps economic development, by encouraging creativity in the industrial and manufacturing sectors, as well as in traditional arts and crafts. They contribute to the expansion of commercial activities and the export of national products.

Industrial designs can be relatively simple and inexpensive to develop and protect. They are reasonably accessible to small and medium-sized enterprises as well as to individual artists and craftsmen, in both industrialized and developing countries.

7.1.3. Where each of the protection titles could be used?

Patented inventions have, in fact, pervaded every aspect of human life, from electric lighting (patents held by Edison and Swan) and plastic (patents held by Baekeland), to ballpoint pens (patents held by Biro) and microprocessors (patents held by Intel, for example).

All patent owners are obliged, in return for patent protection, to publicly disclose information on their invention in order to enrich the total body of technical knowledge in the world. Such an ever-increasing body of public knowledge promotes further creativity and innovation in others. In this way, patents provide not only protection for the owner but valuable information and inspiration for future generations of researchers and inventors.

For most small and medium-sized enterprises (SMEs), marketing products or services is a major challenge. A marketing strategy should establish a clear link between your products or services and your SME, as the producer or provider of such products or services. That is to say, customers should be able to distinguish, at a glance, between your products or services and those of your competitors and associate them with certain desired qualities.

Intellectual property, when efficiently used, is an important tool in creating an image for your business in the minds of your current and potential customers and in positioning your business in the market. IP rights, combined with other marketing tools (such as advertisements and other sales promotion activities) are crucial for:

Is your enterprise involved in the creation, recording, publication, dissemination, distribution or retailing of artistic, musical or literary works? Does your company have a website, a brochure, a corporate video, or does it advertise in newspapers or on TV? Is your SME using music, pictures, or software products owned by others in any of its publications, brochures, databases or websites? Does your company own the rights to any computer software? If you answered “yes” to any of the above, then you may wish to find out more about copyright issues.

Legitimately use or exploit the works or creations of others with the authorisation of the author or right holder on fair and reasonable terms;
Protect your own works or creations and make sure you make best use of your right and get fair economic rewards from any use made of your creations

Industrial designs are what make an article attractive and appealing; hence, they add to the commercial value of a product and increase its marketability. When an industrial design is protected, the owner - the person or entity that has registered the design - is assured an exclusive right against unauthorised copying or imitation of the design by third parties. This helps to ensure a fair return on investment. An effective system of protection also benefits consumers and the public at large, by promoting fair competition and honest trade practices, encouraging creativity, and promoting more aesthetically attractive products.

7.1.4. How to obtain a PATENT?

Patents are generally concerned with the functional and technical aspects of products and processes. To qualify for patent protection an invention must be novel and contain an inventive step.

Novelty implies that the details of how the invention works are secret. If such details have been publicly disseminated or the invention used in public where people could see how it works or if an identical product or process has already been invented then the application will fail.

Discoveries, scientific theories and mathematical methods,
Artistic creations,
Schemes, rules and methods for performing mental acts, playing games or doing business and programs for computers,
Presentations of information,
Methods for medical treatment of humans and animals (as opposed to medical products)
Inventions which are contrary to public order and morality
Plant or animal varieties or essentially biological processes for the production of plants or animals.

In the first instance one applies to ones national Patent Office. Some countries offer different forms of patents depending on level of inventiveness. Here you can find a list of all the European National Patent Offices.

Take care not to disclose your invention publicly prior to applying for a patent. To get a patent your invention must be new and premature disclosure of the invention may mean that you will be unable to obtain a patent registration as this may prevent you from obtaining registration. Discussing your invention with your immediate fellow researchers, business partners and professional advisers would normally be regarded as implicitly confidential and would not prejudice a subsequent patent application. In cases of doubt however a written confidentiality agreement should be drawn up and signed.

7.1.5. How to obtain a TRADEMARK?

Any sign capable of being represented graphically. Thus marks may be one or a combination of words (including slogans), letters, and numerals. They may consist of drawings, symbols, and three- dimensional signs such as the shape and packaging of goods, audible signs such as music or vocal sounds, fragrances, or colours.

A mark must be distinctive meaning that a customer seeing the mark can immediately link the goods or service to a particular manufacturer/supplier. Thus commonly used words are generally not acceptable except in a slogan.
A mark must not be deceptive. It must not be too similar to an existing mark.
A mark must not be descriptive. It cannot describe the product or service.
Certain things are excluded e.g. photographs/drawings of or names of people or places unless they can be shown to be particularly distinctive.
Trademarks legislation provides for various classes of goods and services. One may therefore seek registration only for a particular class and the requirements may therefore apply only in respect of other marks in that class.

NOVELTY: i.e. the absence from the market of goods and services distinguished by an identical or similar sign. Novelty is not, however, lacking when the earlier mark expired over two years previously (three in the case of a collective mark) or lapsed because it was not used for over five years;

Registrations can be cancelled if the holder is not using a mark. It is important therefore to indicate on goods or services that the mark is a registered one. The letters RTM are normally used in association with the mark to show this.

7.1.6. How to obtain COPYRIGHT?

Definitions of what is covered can be very broad. For example literary works include software, and artistic works include any drawing, map, chart or plan. The only absolute requirement is that the work is new, i.e. not copied from somewhere else and has required original intellectual effort by the author.

Basically the act of creating the work also creates the copyright, which then subsists in the physical expression of the work. There is no formal registration process in most countries. However if one goes to court to sue an alleged infringer one must be able to prove ownership. Works can therefore be dated, signed, witnessed and marked with the internationally recognised copyright symbol ©.

It is important also to recognise that copyright is not a monopoly. Two people could completely independently create identical items. Provided there is no copying, there is no infringement and both can hold copyright in their respective works.

Obtaining Protection – Copyright protection is automatic and there is no registration system - so there are no forms to fill in and no fees to pay. Once a work is created copyright subsists in it. It is important however that the originator be able to show subsequently when the work and the consequential copyright were created. One way of doing this is deposit a copy of the work with a bank or solicitor in such a way as the date and time of the deposit are recorded. Alternatively one may send a copy of the work to oneself by registered post (which gives a clear date stamp on the envelope), leaving the envelope unopened on its return thus establishing that the work existed at this

Claiming Protection – It is essential that it is clear that copyright is claimed in a work. One should mark the work clearly to show who the copyright owner is and the date from which the copyright is claimed. The internationally recognised symbol © is normally used.

Transfer of Ownership – Remember a transfer of ownership may cover all or only some of the rights to which a copyright owner is entitled. First or subsequent copyright owners can choose to license others to use their works whilst retaining ownership themselves.

Using Material already covered by Copyright – Your work may be a development of the works of others. You may need to obtain permission therefore to use copyright material. This is normally done by approaching the copyright owner. However, there are a number of organisations that act collectively for groups of copyright owners in respect of particular rights and which may offer licences to users for a tariff. A performing rights society is a collective that deals with musical works, collecting royalties on behalf of composers, lyricists, songwriters and music publishers for the public performance or broadcasting of their music. Further information is available directly from these organisations.

Almost any form of unauthorised copying of a work will constitute infringement. The law does however allow copying to take place in a limited fashion in certain circumstances where the motivation is clearly not commercial and subject usually to certain procedures being followed. Only the owner of copyright is automatically allowed to reproduce the work in question or to permit anyone else to do so.

A field of rights related to copyright has rapidly developed over the last 50 years. These related rights grew up around copyrighted works. They provide similar, although often more limited rights and of shorter duration. They cover a range of rights, which have been derived from copyright principles and are granted to e.g. performing artists, producers of sound recordings, broadcasting organisations in their radio and television programmes, and creators/owners of databases.

7.1.7. How to obtain a DESIGN?

Essentially any feature which relates purely to the appearance of the article and is not dictated by the way the article is required to function or requirements that it fit into or match other components of a larger article.

The design must be new. Details of it must not have been publicly disclosed prior to filing the application unless a grace period is permitted. The design must have individual character i.e. an informed observer would readily form the overall impression that it can be distinguished from earlier designs.

One applies to ones national office in the first instance. However if one requires wider protection and if ones country has adopted the Designs Directive (Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998) one can apply to the Office for Harmonisation of the Internal Market (OHIM) for registered design protection in all EU Member States. The Directive has also been extended to the European Economic Area.

The story of Grindi Srl. is closely related to the development of the Suberis® invention, an innovative fabric made of cork that is smooth as velvet, light as silk, washable, unscratchable, spotless, waterproof and fireproof. Few other products are said to have similar features of durability, softness and versatility as can be found in Suberis®. In other words, it is a u

nique product, covered by patent protection in a large number of countries, produced solely by Grindi Srl.

Suberis^® fabric originates from the bark, which is extracted from the cork oak tree (Quercus suber L.). This kind of tree has its ideal habitat in the Mediterranean area and one of the highest qualities of cork can be found in Sardinia. Through a long and demanding series of stages, after years of seasoning and sorting out the best kinds, the cork is treated and processed into thin sheets (a few tenths of a millimetre) to get a fabric and yarn branded with the Suberis^® label.

This new fabric came to life out of the instinct, research and hard work of Mrs. Anna Grindi, founder of the company. In 1997, using only raw natural materials, she discovered the recipe for obtaining this silky and resistant fabric from cork.

After testing and codifying the treatment, in order to preserve this revolutionary item, in 1998 Mrs. Grindi filed an International Patent Application through the PCT. In 1999, the International Preliminary Examination Authority (or IPEA) issued a positive International Preliminary Examination Report for the “Process for Treating Linenized Cork Sheets.”

The official presentation of the new product to the press and economic operators happened on March 29, 2000, at the prestigious venue of La Scala in Milan. Since then, both the national and international press busy themselves with Suberis^®, with articles and reports appearing on national television broadcasts as well.

Suberis^®receives attention daily from industrial and commercial sectors around the globe and from government institutions and Chambers of Commerce in Italy and abroad. The fabric is marketed exclusively by Grindi Srl., which has its legal headquarters in Tempio Pausania (SS). The product stirs up more and more growing interest from industry, designer, fashion and furniture operators, as well as from the motor-industry and air-navy sectors.

The Suberis^® fabric is distributed all over the world by the firm that produces it, across specialized channels, in order to be used in car seats, boats, sofas, helicopters interiors, clothes and outfits, footwear, sportswear and so on.

7.2. International Regulations

Sooner or later, many small and medium-sized enterprises (SMEs) operate in more than one market selling their products or services or licensing/franchising their intellectual property (IP) rights and know-how beyond their national borders. IP rights, however, are territorial, implying that they are usually only protected in the home country or region where protection has been applied for and obtained. Protecting IP in export markets is therefore crucial so as to enjoy the same benefits of protection abroad as are enjoyed on the domestic market. You should carefully consider applying for IP protection well within time in all countries to which you are likely to export or license your product or service in the foreseeable future

7.2.1. What are the International Regulations for I.P protection?

International protection regulations significantly simplify the process for simultaneously seeking IP protection in a large number of countries. Rather than filing national applications in many languages, the systems of international protection enable you to file a single application, in one language, and to pay one application fee. These international filing systems not only facilitate the process but also, in the case of marks and industrial designs, considerably reduce your costs for obtaining international protection (in the case of patents, the PCT helps your SME in gaining time to assess the commercial value of your invention before national fees are to be paid in the national phase). International protection regulations include three different mechanisms of protection for specific industrial property rights:

7.2.2. Why International regulations are important and where to use?

As IP rights are ‘territorial’, i.e., are only available to you in the country or region in which they had been applied for and granted, to enjoy exclusive IP rights in foreign markets, you would have to seek and obtain protection abroad (except when it is available automatically without the need to comply with formalities, e.g., through an international treaty mechanism such as the Berne Convention for the Protection of Literary and Artistic Works.

Regarding trademarks, the most attractive feature of Community Trademark (CTM) registration is that it offers trademark protection in all 25 countries of the EU at a cost that is much lower than that of filing separate applications in each Member State. Furthermore, use of the trademark is not required to secure registration or renewal. Also, bona fide use on a reasonable scale in a single Member State is sufficient to maintain the validity of the CTM registration throughout the EU, and prevent it from being vulnerable to cancellation through nonuse over a five-year period. Finally, a CTM application that is refused registration may be converted into national applications, maintaining the priority of the original CTM application

With regard to patents for inventions, most countries allow a 12-month priority period from the date of filing of the first application for applying for patents in other countries. Once this period has elapsed you may no longer be able to obtain patent protection in other countries. This may signify an important loss of earnings from your export operations.

With regard to trademarks and industrial designs, most countries provide a 6-months priority period from the date of filing of the first application for applying for trademarks and industrial designs in other countries.

7.2.3. How to use International regulations to obtain protection?

If you think that you should obtain patent protection outside of your own country, you should consider filing an application for a European Patent, which gives the possibility of obtaining protection in 24 European countries. You could also consider filing an international Patent Co-operation Treaty (PCT) application, which allows you to defer the costs of obtaining patents overseas, while you decide which foreign markets should be protected.

The grant procedure is based on a single application, drafted in one language (English, French or German). If the patent is granted, the applicant may initiate the national procedure in all the States designated or in only some of these States. If the language of the patent is not an official language of the designated State, the corresponding translation must be filed, failing which the patent will not be valid in that State.

Following the PCT (Patent Cooperation Treaty) procedure, a single international application makes easier to obtain protection. Applications may be submitted to the national Patent Office and, if there are no national security constraints, to WIPO (World Intellectual Property Organisation) in Geneva or to European Patent Office in either The Hague or Munich.

Applications for the registration of a trademark should be made on the appropriate form and filed at the National Trademark Office or at one of the Provincial delegate Offices. The following should be attached:

The protection declaration;
A card containing the list of goods and services to be protected and an example of the trade mark;
8 copies of the trade mark;
A receipt for payment of the State grant fees (for ten-years registration period).

If the application is for registration of a collective mark, a copy of the regulation concerning the use of this mark and the controls and sanctions relating thereto must also be attached. To renew a mark without any change, it is merely necessary to submit an application and pay the fees due.

Other Countries - Find out about trademark protection outside of your country in Europe and elsewhere. Costs and procedures involved in obtaining trade mark protection abroad are important factors in considering any potential export markets you may wish to target. Your national patent office can assist with information on the various procedures, which are in place to assist with the obtaining of trademark protection internationally. In addition, the web sites of the Community Trade Mark Office (OHIM) and the World Intellectual Property Organisation are useful sources of information (link to websites)

You can apply for a national trademark registration, which may be appropriate if your business is focused on the domestic market. However, if you do business in Europe then you should consider applying to the Office for Harmonisation in the Internal Market (OHIM), for the registration of a Community Trade Mark. Community trademarks are legally enforceable and enjoy uniform protection throughout the territory of the European Union.

Other Foreign Applications - If you are the proprietor of a trade mark and wish to consider obtaining trade mark protection internationally, the Madrid system of international registration of marks gives you the possibility to have your mark protected in several countries by simply filing one application with a single Office, in one language, with one set of fees in one currency (Swiss francs). An international registration produces the same effects as an application for registration of the mark made in each of the countries designated by the applicant.

Applications should be made on the form drawn up by OHIM (Office for Harmonization in the Internal Market). The single filing may be made at the OHIM, located in Alicante, Spain; by post, courier or fax, and can also be filed at the National Trademark Office. OHIM is responsible for examining the applications. Community trademarks are valid for ten years from their date of filing and may be renewed.

Applications for international registration should be filed at one of the Provincial delegate Offices and should include:

The form drawn up by WIPO, duly filled in;
The deed of proxy or power of attorney (where appropriate);
A reproduction of the trade mark matching the national trademark of reference;
A receipt for payment of the State grant fees;
Payment of the international fees to WIPO.
Registrations are valid for ten years and for renewal purposes, WIPO informs the proprietor, six months prior to expiry.

With regard to copyright, if you are a national or resident of a country party to the Berne Convention for the Protection of Literary and Artistic Works or member of the World Trade Organization (WTO) bound by the provisions of the TRIPS Agreement, or if you have published your work for the first time or at least simultaneously in one of the above countries, your copyright will be automatically protected in all other countries that are party to the Berne Convention or are members of the WTO.

International protection of industrial designs is provided by the Hague Agreement. This system gives the owner of an industrial design the possibility to have his design protected in several countries by simply filing one application with the International Bureau of WIPO, in one language, with one set of fees in one currency. (http://www.wipo.int/hague/en/)

7.2.4. Case Study

Case Study: Design Enforcement

A Scottish company obtained a design registration in the UK and corresponding design registrations in other countries including South Korea which is one of their major overseas markets, for a novel spirit decanter shaped like a golf bag. The product was extremely successful in the Far East. A South Korean company copied the design and began selling counterfeit decanters to other Far East countries including Japan. The Scottish company with the help of Marks & Clerk Scotland, IP experts initiated proceedings in South Korea for infringement of their South Korean design registration and succeeded immediately in stopping further manufacture and sales of the infringing product without having to resort to full litigation.

7.3. Non-Disclosure Agreements

Many businesses often need to reveal some of their confidential information to new employees, independent contractors, venture capitalists or bankers. But they want to make sure the information stays relatively secret. The following paragraph explains how non-disclosure agreements allow confidential information to be revealed without fear.

A confidentiality agreement or non-disclosure agreement (NDA) is a legally binding contract that restricts the disclosure of confidential ideas, designs, plans, concepts or other trade secrets to a third party. Once signed, the non-disclosing party agrees that they will not disclose any information about your idea for competition purposes whether it be producing or selling unless otherwise stated in the contract.

7.3.1. Why NDA is important?

Non-Disclosure Agreements are an important element of business in today’s information age. From employees to potential partners, every business needs a Non-Disclosure Agreement to protect itself. Once you have your own Non-Disclosure Agreement at your disposal, your business will be able to protect ideas, designs, plans, concepts or other trade secrets.

Current and former employees are responsible for most breaches of confidentiality. Employees are under an implied duty not to use trade secrets in a manner that will harm your business. But it is best to get this in writing and to specify to the employee exactly what is confidential, and to make provisions for when the employee leaves your business.

7.3.2. What are the main types of NDAs and where they are used?

A precedent confidentiality agreement is used for mergers and acquisitions. If a company wants to buy your business, it will want to look at your books and assets. An NDA can provide an element of protection for your confidential information and trade secrets if the prospective buyer pulls out of the deal.

If you don't know exactly what information you will need to disclose during a commercial relationship, you can still use an NDA. It is a good idea to classify as confidential any information that will be disclosed later, so that the NDA still applies.

A one-way NDA is used when only one business is sharing information and the other agrees to keep it confidential. A two-way NDA is used when both businesses are sharing confidential information with each other, and want to be sure that neither will disclose their trade secret.

7.3.3. How to prepare a NDA?

1) First, you should list all the parties who will have contact with the confidential information, by category and, where possible, by name. This is not necessarily as simple as it sounds, since many companies, themselves, have subsidiaries or strategic alliances with which they share information. Also, your NDA should include appropriate language both restricting the types of people or entities with whom the other side can share the information and requiring the other side to obtain similar NDAs from employees, principals or agents of theirs who will come into contact with the information.

2) Second, there must be a recitation of confidential relationship between the disclosing party (the one allowing access to its confidential information) and the non-disclosing party (the one getting access to the confidential information).Additionally, there must be a recitation of the confidential materials themselves. In other words, the types of information that is expected to be kept confidential must be stated. You don't have to name every document, but it is wise to name the types of information by category or with even more specificity if the circumstances allow.

Parties to a good NDA usually articulate how confidential materials will be recognised. Sometimes, it is agreed that all confidential materials must be stamped "Confidential!" in bold letters. Other times, particularly for companies that haven't had a history of diligent trade secret classification stamping, the parties will simply say that any information disclosed concerning certain types of information will be deemed confidential.

To avoid disputes and potentially costly litigation, it's usually wise to figure out a way to earmark what will be considered confidential so as to minimise the possibility of accidental disclosure.

3) Third, as important as it is to define what materials will be confidential and how the other side will recognize them, it's just as important to include a straightforward statement of when it will be okay to disclose confidential information. The most common examples here concern being free to disclose information that somehow becomes public knowledge without wrongful disclosure, and freedom to release information when compelled by subpoena or other judicial or governmental process.

4) Fourth, NDAs are usually good only for a specified term or length of time, even though non-disclosure provisions may continue for some time after the end of the agreement. This simply recognises that many of today's trade secrets may lose their value over time and, also, that the purpose of the disclosure may come to an end at some point, say if a proposed deal doesn't go through.

All parties who will be permitted access to the confidential information should be identified by category and if possible by name.
The relationship between the disclosing party and the non-disclosing parties involved must be orally stated. Furthermore, the confidential information itself must be orally stated and the key information to be held confidential must be clearly defined.
How the non-disclosing party can use the confidential information is vital to a Non-Disclosure Agreement. However, it is also important to set a time when the non-disclosing party can disclose the confidential information.
Non-Disclosure Agreements are normally valid for a pre-determined amount of time. However, some non-disclosure conditions may extend beyond the termination of the agreement.
To protect the disclosing party from unauthorised disclosure by the non-disclosing party, a remuneration provision should be included in the agreement.

7.3.4. Case Study

Enterprise S. is a young start-up company from Luxembourg. Its activities are focused on the software and the Internet business. It develops, implements and distributes software management systems in the field of accounting, logistics, process tracking, communication, human resources and CRM. Enterprise S. also offers web solutions including application provider, web hosting, web and application development services.

The owner of Enterprises S. learnt about intellectual property issues by attending seminars and conferences for future company managers. There he became aware of the value of his intangible assets and of the importance of protecting them. So he began to seek information about how to best protect them, by consulting IP experts.

As some IP protection tools require financial resources that a start-up company may not necessarily have, the company owner finally adopted a 2-level strategy, which consists of using as much as possible of the free-of-charge protection tools such as copyright and secrecy and of making a cost benefit analysis in respect to his finance regarding trademark and patent protection. "Why not make use of the free-of-charge intellectual property rights as they give you a legal tool to defend your rights in case of infringement by third parties", is one of his principles.

So the company owner protects his know-how by concluding non-disclosure agreements with future employees, clients and partners before any information is exchanged. He also ensures that all the company's documents have a confidential notice. Furthermore a copyright notice is placed on all the documents, software and web pages produced by the company. Finally the registration of his products' trademarks remains on his list of things to do next.

Regarding intellectual property protection, the company manager has adopted a defensive strategy, because he does not think that his competitors are going to copy the company's products. Nevertheless he wants to be able to assert his rights in case a competitor copies him.

Planning to diversify his business activities, the company owner plans to develop a new innovative service based on a patented system. An exclusive license agreement has been signed between the company and the patent holders. During the negotiation of the contract it was agreed to extend patent protection to more territories, but they missed the deadline of 1 year, which is given to the patent holder to seek protection in other countries without failing the novelty criteria (the priority date). As a matter of fact the company now faces the problem that they can be freely copied and competed in some of their relevant markets.

The company owner considers intellectual property protection as a very important issue for small high-tech firms as it attracts investors and protects one's intangible assets from competitors.

7.4. Intellectual Property Management Strategy

Each organisation has different goals and therefore strategies must be formulated in a way to facilitate the achievement of these goals. The importance of IP to the competitive advantage of an organisation depends on the sector of activity, its business strategy and interactions with the strategies of its competitors. Patents are essential as competitive advantage, particularly in areas where innovations are easy to copy. In some cases, other appropriation methods, particularly secrecy and lead-time advantages are also effective.

There is no “optimum” appropriation strategy. An IP strategy may vary from organisation to organisation. Large enterprises that have significant financial resources often pursue a strategy of procuring and maintaining a large quantity of patents. In contrast, for most start-up companies, developing and building a comprehensive patent portfolio can be prohibitively expensive.

7.4.1. What is an I.P strategy?

Managing an enterprise’s IP assets is more than just acquiring the formal IP rights through the national IP office. Patent or trademark rights are not worth much unless they are adequately exploited. Moreover, part of a company’s valuable IP may not require formal registration but may call for other measures of protection (e.g. confidentiality agreements). Enterprises willing to extract full value from their know-how and creativity should take adequate steps to develop an IP strategy for their business and seek to integrate it within their overall business strategy. This implies including IP considerations when drafting business plans and marketing strategies. A basic IP strategy would include at least the following policies:

A single product or service may be protected by various forms of IP rights covering different aspects of that product or service. SMEs must consider the best protection package and make sure that all the formal rights are acquired as early as possible.

IP assets may be exploited in a variety of ways. These may include the commercialisation of IP-protected products and services; the entering into licensing or franchising agreements; the sale of IP assets to other firms; the creation of joint ventures; the use of IP to obtain access to other companies’ technology through cross-licensing agreements; or the use of IP to obtain business finance. Enterprises should decide in each case how they may best exploit their IP assets both domestically and internationally.

Consulting patent and trademark databases regularly is important in order to find out about recent technical developments and new technologies, identify new licensing partners or suppliers, new market opportunities, monitor activities of competitors, identify possible infringers, and avoid infringing competitors’ rights.

7.4.2. Why an I.P strategy is important?

Small and medium-sized enterprises (SMEs) represent over 90 % of enterprises in most countries, worldwide. They are the driving force behind a large number of innovations and contribute to the growth of the national economy through employment creation, investments and exports. Despite the importance of SMEs for the vitality of the economy and the potential offered by the IP system for enhancing SMEs competitiveness, SMEs often under utilise the IP system.

The linkage between an organisation’s overall strategy and its IP strategy will be more significant in the “new economy” than it was before. In the new economy, one of the preconditions for being able to compete is that an organisation can create, produce, protect and commercialise IP rights. Linking the IP strategy tangible competencies and a strategy based in know-how may be able to create the basis upon which the management can allocate the organisation’s resources.

Decisions concerning IP strategy will often have a long timeframe and period of effect. All other things being equal, these choices result in a high degree of irreversibility. This does not lie, for example, in heavy investments, which are connected with this concept, but simply in the choice itself. An IP strategy, which could be worth hundreds of millions, can be obtained for a relative modest amount of money. On the other hand, errors in this area can be incredibly expensive. IP rights can thus to a large extend, be thought of as a marketing related capacity. Since many areas of business are changing very quickly and since it is not possible for an organisation to pursue all paths, the strategic use of IP rights may be a possibility.

7.4.3. What are the main patent strategies and where they could be used?

This strategy is a result of ad hoc efforts and small resources. One or a few patents are used to protect an innovation in a special application. There are many possibilities to invent around and their costs are low.

Many patentees use the "sniper" strategy. They rely on a few patents to cover their core technology and do not concentrate on protecting possible modifications or improvements of that core technology. This is an inherently risky strategy, however, particularly if the core patents are found wholly or partially invalid, and there are no additional patents to cover improvements or modifications of the original technology. Another risk, which is undertaken without regular updating is that the original patents and the technology they protect may become obsolete.

According to this strategy the patentee aims to obtain as many patents as possible in a particular area of technology. This approach is intended to give the impression that an area of technology is so littered with patents that it is next to impossible for a competitor to patent anything themselves or avoid infringement of one or more of the existing patents. Whilst providing optimum protection, however, this technique may be quite expensive and not an appropriate strategy for a SME, which, by their nature have lower R&D budgets. Therefore, it is of the highest importance for a SME to develop a cost-effective patent portfolio management for its IP, which satisfies a commercially realistic balance somewhere between the “all eggs in one basket” approach and “patent anything and everything”, approach.

In this case, efforts are made to turn an area into a jungle or a minefield of patents e.g. by bombing every step in a manufacturing process with patents, more or less systematically. This strategy may be used in emerging technologies when uncertainty is high, regarding which of R&D directions are fruitful or in situations with uncertainty about the economic importance of the scope of the patent.

Some organisations file patents not only on their basic technologies, but also on incremental advancements, in an effort to erect a fence against their competitors. The Picket Fence Strategy generally involves the filing of numerous patent applications in view of a competitor’s issued patents and products in an effort to patent improvements over the competitor’s technology and “fence” in his future mobility.

This is the case when an important central patent, especially a strategic patent, can be fenced in or surrounded by other patents, which are individually less important but collectively block the effective commercial use of the central patent, even after its expiration.

Some companies perceive that prestige and leadership, which accompany a patent, may help their business and provide the driving force for this strategy. Academic and research institutions are also known for filing patent applications to achieve recognition of their research work. A small company may also seek patent coverage to impress potential investors and to market the uniqueness of its technology.

The patent owner may have no intention to enforce its rights, but instead view that competitors stay clear of the area he has protected. The patent acts merely as a “scarecrow” to keep competitors away from the owner’s business. This strategy is more prevalent in industries unaccustomed to large-scale patent filings and frequent patent disputes. More sophisticated companies will seek ways to design around the patent, instead of less sophisticated companies which prefer to keep their distance rather than to invest in a costly design-around analysis.

7.4.4. What are the most usual types of licensing and where they could be used?

It is the most common type of license. A license is said to be non-exclusive if the rights granted to the licensee may also be granted to others. A typical example is the use of a commercial software product.

A license is said to be exclusive when the licensee is the only entity that is granted the licensed rights. A typical example of this type is when the owner of a fast food franchise may be granted the exclusive right to use franchise trademarks within some specified geographical area.

The owner of a patent (or other type of IP) is given the legal right to exclude the unauthorised use, manufacture, sale, offer for sale or import of products or services that include the protected subject matter.

It is common for one technology-based company to enter a joint development agreement with another in order to collaborate in development of a product calling for the special resources of each company. When development of the new product is completed, the joint development license will grant each party whatever rights may be required to market the product.

Contracting parties will sometime agree that if one party fails to do something, a license is created. For example if a software vendor fails to deliver sufficient quantities of its products to a distributor, the distributor may be granted a license to reproduce such products from master copies for the limited purpose of satisfying orders placed in accordance with the distribution agreement.

A sub-license provision grants the licensee the legal authority to license the IP to others. This would be common when the original licensee completes the R&D in a patent portfolio context, where others have contributed patents to the jointly managed portfolio.

Cost effective return on R&D investments by entering into new markets where the IP owner may not be able to access.
Establishing new relationships, which will lead to R&D collaborations.
Licensing provides a means of control and ongoing access to the development of the new technology.

7.4.5. Case study

Developing an IP Strategy in the ITC Sector - Eidon Ricerca Sviluppo Documentazione S.P.A.

Eidon Ricerca Sviluppo Documentazione S.p.A. is a private and

independent Engineering and Contract Research Centre located in Udine and Trieste, in the north-eastern part of Italy. Acknowledged by the Italian Ministry of Education, University and Research as a highly qualified laboratory in the fields of information and electronic technologies, Eidon supports other companies providing innovation by R&D outsourcing.

Eidon is dedicated to innovation, accomplished through design, development, installation and servicing of software and systems for industrial processes as well as automation and IT integration in organisational processes (ISO9001 certified).

The company gives support to enterprises in activities such as project conception (including realisation of prototypes), overall project management, and presentation of applications for funding. The main technological areas where Eidon has consolidated skills and know-how are: artificial vision systems, control and monitoring of industrial processes, internet/intranet software and technology and systems engineering.

The competitive environment of the applied research in ICT sectors is highly dynamic and subject to a rapid technological evolution. The number of problems proposed by customer SMEs is always higher than the number of technological solutions available. The company considers it crucial to monitor technological changes and advancements that could be critical for the company’s competitiveness. In the last 4 years the company has established an informal technology monitoring activity with professional staff devoted to it.

The monitoring includes studies and informal surveys to identify competitors and is carried out using Internet with "human" filtering, consultation of specialised press, participation in conferences and workshops at national and international level, co-operation with Universities and other research centres, visits and market analysis, use of patent databases (seldom used) and the acquisition of reports from information providers (seldom used).

Since its foundation, in 1979, the company has used trademark protection to create a solid corporate identity and a strong external image. Trademark protection has been associated with the company’s logo, a double arrow representing the idea of researching deeply into a subject and re-emerging out with a solution.

To date, the company has not used trademarks to protect personalised products or platforms when providing complex systems and original solutions developed ad hoc for its customers. However, the firm does not exclude the use of this intellectual property tool for future activities – in particular in relation to software programmes.

Eidon has been granted 15 patents, protecting original systems resulting from different R&D contracts carried out in co-operation with industrial partners in the following industrial sectors: brick industry, ceramics, chemical/petrochemical, food, pharmaceutics, marble processing, screen printing sector, tanning, textile, wine treatment, wood, metal industry, mechanics.

The company regards patent protection as being very important for innovative, high-technology solutions. However, in the case of incremental innovations, when time-to-market becomes more critical than technology issues, the company considers that obtaining a patent is not advantageous. Eidon believes that this can result in the early disclosure of strategic information which is easily accessible to third parties, who can opportunely improve the innovation, thus making the protection worthless. Therefore, when software intensive solutions are involved, Eidon relies on copyright protection.

Eidon’s original software is protected by copyright. Access rights to software, based normally on an exclusive license model, do not usually include access to the source code, which may be granted only in exceptional cases and can be made subject to separate agreements.

Eidon’s standard R&D contract is an interesting mix of different IP tools, which reflects the complexity of its contract research activities. Frequently the interests of customers and R&D centres do not converge when it comes to patentable knowledge created within a project. The customer wants the exclusive right of exploitation, while the R&D organisation wants to use their knowledge for further development. Acknowledging this dilemma, Eidon has adopted a compromise solution to safeguard the core interests of both sides which is based on the following three elements:

Eidon’s IP rights are protected mainly at national level, even though the company has applied for a few European patents. The application process is carried out with the advice of external legal experts, who are responsible for the correct implementation of the different IP protection tools chosen.

7. How to protect innovations and intangible assets