"If you don't have a competitive edge – then don't compete" Jack Welch CEO General Electric
Businesses need to be clear about what constitutes their
competitive edge. Kiwi businesses, in particular, need to be
more astute than their international competitors as New Zealand
often cannot compete by being bigger, cheaper or closer to our
markets.
What usually gives us our edge is our cleverness - our intellectual
property (IP). But that edge can be quickly eroded
if steps are not taken to protect it. Opportunities are often
lost because we haven't chosen to define what makes us
distinctive, capture it and then use that to leverage a position
internationally.
It is crucial to know how to identify distinctiveness, how to
capture, then leverage it - so Kiwi businesses can maximise
their true potential in a competitive market.
First we need to step back and analyse what makes us competitive:
Why do consumers prefer our products or service to others? What
internal systems do we have that enable us to deliver more
effectively? Where do we spend our time?
And, how does this all relate to potential revenue streams -
whether spare parts, consumables, different countries or different
industries?
Capture the edge
Sometimes your competitive edge just arises from your in-house
knowledge. So capture it. Look after your special
people, keep good records of what they know, and have systems and
agreements which control dissemination and ownership of your
valuable IP.
I know a research institution which lost a whole department because
a head researcher left with all his notes and solicited the
remaining staff to follow him. The organisation did not have
clauses in their employment contract and systems in place to
prevent this.
Often your product is preferred because it works better than your
competitor's. But in most cases, unless you file for
patent protection before you commercialise your product (or go
public) then your competitors can copy your functional
advantage. To add insult to injury, they can often sell it
cheaper than you. They do not need to recover research and
development costs - you have already done the hard work for
them.
Many people do not realise that patent protection can be gained for
all sorts of subject matter, not just widgets. For example,
you can patent a new manufacturing process, inventive software and
new combinations and uses of existing products.
Usually the key to patentability is that it is new and gives you an
edge.
A product may sell just because it looks good. A good example is
designer glasses. If you have a design you consider could
become a classic (as opposed to short-lived) then protect it with a
design registration. We did this for international designer
Oakley.
Design registration is critical for exporters as most countries do
not have the strong copyright laws New Zealand has. For
example, a product can be copied exactly in Australia without
infringing copyright laws. However, a registered design there
can stop copying.
It is generally understood that a sustainable business has a
recognised and reputable brand. This can be valuable
intellectual property - the Apple brand alone is estimated to be
worth US$153 billion.
Any branding strategy needs to include choosing a distinctive, non
descriptive trade mark that would work across multicultural
markets. Distinctive because you do not wish your business to
be confused with poorer quality competitors, and non descriptive
because that helps you maintain distinctiveness. These
qualities also make your trade mark more registrable.
Multicultural considerations are likewise important as you do not
want to re-brand because you have chosen an inappropriate word in
another culture. I have some stories I could tell...
Leverage
Capturing the elements that give you an edge is only a first
step. The real value comes from leveraging them.
Leveraging can include the prosaic act of using your IP rights to
deter others until you gain a foothold in the market.
More exciting is that IP rights can be used to generate additional
revenue streams by gaining access to new markets or increasing
market penetration.
For example, you might not have the resource or distribution
channels to explore a particular market - but someone else
has.
IP rights can form the basis of an agreement with a collaborator or
investor who can help. It should be noted that most investors
need to know there is solid IP protection in place - otherwise, why
spend money supporting a business with no competitive edge?
James & Wells Intellectual Property has helped a number of Kiwi
businesses secure outside investment by ensuring their IP portfolio
could not only withstand due diligence from large multinationals
but showcase their potential.
Our client Bomac - New Zealand's largest privately owned animal
healthcare company - was sold to German healthcare giant Bayer last
year. But only after Bayer carried out a rigorous examination of
Bomac's IP portfolio.
Clever thinking around alternate revenue streams, and preparing IP
strategy accordingly, can lead to brand new industries being
exploited. The veterinary and medical industries are typical
examples. Appropriate IP protection enables innovative
companies to licence or sell rights around their innovations.
To compete internationally, New Zealand needs to identify, capture
and use its edge in a way which carves our own global market
niches.
New Zealand's edge is our cleverness, our intellectual property
and the strategies we build around it. We just need to apply
clever thinking to achieve this.
This article first appeared in Her Magazine, and was written by Kate Wilson, a partner in the Hamilton office. To contact Kate please email her on katew@jaws.co.nz or phone 07 957 5660.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
James and Wells is the 2010 New Zealand Law Awards winner of the Intellectual Property Law Award for excellence in client service.
