HOW INTELLECTUAL PROPERTY RIGHTS PROMOTES SMALL AND MEDIUM ENTERPRISES

THE 10th COMESA BUSINESS DIALOGUEADDIS ABABA, ETHIOPIA

25 TO 26 MARCH, 2015

BY J N KABARE SENIOR PATENT EXAMINER, ARIPO

Overview

• Introduction to ARIPO• Old Vs New Economy

• Intellectual Property Rights (IPRs) and their use to promote SMEs

• Intellectual Property (IP) Audit• Other mechanisms of Exploiting IP

• Challenges Facing SMEs With Respect to IPRs• Measures Taken by ARIPO To Address The

Challenges

About ARIPO ARIPO: African Regional Intellectual Property Organization

Established: December 9, 1976 (as ESARIPO)

Instrument of creation: Lusaka Agreement (in Zambia)

Headquarters: Harare, Zimbabwe

Member States (19): Botswana, Ghana, Kenya, Lesotho, Liberia, Malawi, Mozambique, Namibia, Rwanda, Sierra Leone, Somalia, Sudan, Swaziland, The Gambia, Uganda, United Republic of Tanzania, Zambia and Zimbabwe

MEMBERSHIP

USA: 14.99 trillion USD

China: 7.318 trillion USD

Switzerland: 659.3 billion USD

ARIPO Market: Population & GDP

Nigeria: 244 Billion USD

South Africa: 408.2 Billion USD

   Population

GDP (2012)

Country Nr (millions)

Growth rate (%)

(Billion USD)

Botswana 2,004 3,7 14.411Gambia 1,791 6,3 0,917Ghana 25, 366 7,9 40,711Kenya 43,178 4,6 40,697Lesotho 2,052 4,0 2,443Liberia 4,190 11,3 1,492Malawi 15,906 1,8 5,653Mozambique 25,203 7,5 14,605Namibia 2,259 5,0 12,807Rwanda 11,458 8,0 7,103Sao Tome & Principe

0,188 6,5 0,261

Sierra Leone 5,979 15,2 4,337Somalia 10,195 2,6 1,306Sudan 37,195 -4,4 51,453Swaziland 1231 -1,5 3,861Tanzania 50,4 6,9 28,249 Uganda 36,346 4,4 21736Zambia 14,075 7,3 21,490Zimbabwe 13,724 4,4 9,802

Total 226.786 6,25% (Aver.)

267,759.4

ARIPO Member StatesPopulation: 226.786GDP: 273 Billion USDGDP growth rate: 5.3%

ARIPO Mandate

Patents and Utility Models

Industrial Designs Marks

CopyrightAccess and

Benefit Sharing

Geographical Indications

TK and Expressions

Folklore

Plant Variety Protection

Harare Protocol (1982) Harare Protocol (1982) Banjul Protocol (1993) Swakopmund Protocol (2010)

Council Min (2002) Draft Regional Framework

Draft Regional FrameworkNational Frameworks

Draft Regional Framework

Old v New Economy (1)

• Industrial economy – focus on physical goods. Dependent on natural resources (finite)

• New economy – greater reliance on know-how, knowledge, human creativity

and innovation (infinite)– 1950 knowledge component in manufactured goods

20%, 1990s 70%, 2000s *?

Old v New Economy (2)

• In 1998 intangible assets constituted 80% of value of Fortune 500 companies.

• “It is estimated that by 2007, as much as 90% of the value of the world’s top 2000 enterprises will consist of intellectual property”

• Source: Building and Enforcing Intellectual Property Value, An International Guide for the Boardroom 2003 Price WaterhouseCoopers

Old v New Economy (3)

• Globalization and trade liberalization has made it crucial for SMEs to become internationally competitive even when competing exclusively in domestic markets

• Application of knowledge, creativity and innovation key in competitiveness

Competitiveness of SMEs

• To be competitive SMEs need to constantly improve their efficiency, reduce production costs and enhance the reputation of their products and services by:

• Investing in research and development• Acquiring new technology• Improving management practices• Developing creative and appealing products and

designs• Effectively marketing their products and services

The Intellectual Property Rights (IPRs) System

• Provides SMEs exclusivity over the exploitation of their innovative products and services, creative designs and brands

• Thus creating an appropriate incentive for investing in improving their competitiveness

• Ensures a competitive market place, honest

trade practices and overall national development

PROTECTION THROUGH INTELLECTUAL PROPERTY

Intellectual Property Rights• Innovative products or

processes

• Cultural artistic and literary works

• Creative designs

• Distinctive signs

• Microchips

• Denominations of goods attributable to a geographical origin

• Confidential business information

• Patents or utility models

• Copyright and related rights

• Industrial design rights

• Trademark

• Layout-designs or integrated circuits

• Geographical indications

• Trade secrets

Intangible to Tangible

• By providing such protection the IP system gives the owner of those intangibles a right of exclusivity, the right to prevent others from using them

• Bringing intangible rights closer to tangible property

Use of Trademarks (1)

• An Italian businessman buys unmarked t-shirts from manufacturers of generic

clothing

• In a garage in the periphery of Rome,

he attaches his trademark (Pickwick®, which has a picture of a rebellious-looking teenager) and begins to sell them to retail stores

Case Study on Trademarks (2)

• Today the Pickwick® trademark is perceived by Italian teenagers as a synonym of style and quality

• Pickwick® has began to export its products across the globe

• Its trademark is its most valuable asset

Use of Industrial Designs

Use of geographical Indications

• Branded vanilla, Branded Coffee and Branded honey

18

Use of Trade Secret – Coca Cola

• Coca Cola formula said to be the best kept secret

• Formula kept in a bank vault• Can only be opened by a resolution of

the company Board of Directors

• Only a few people know the secret at any given time, their identities are unknown, they cannot travel together

BRAND VALUE (billions USD)

119

107

82

72

61

45,48

45,46

42,3

42,2

VALUE OF SOME TOP GLOBAL BRANDS

VALUE OF KENYA BRANDS

One product many IPR (1)

• Patent for the fountain pen that could store ink

• Utility Model for the grip and pippette for injection of ink

• Industrial Design: smart design with the grip in the shape of an arrow

• Trademark: provided on the product and the packaging to distinguish it from other pens

Source: Japanese Patent Office

One product many IPR (2)

• Invention of CD playerprotected by patent

• Brand on CD playerprotected by trademark

• Design of CD player protected by industrial design

• Music played on CD playerprotected by copyright

IP Policy

• Beyond exclusivity – IP rights are not only about exclusivity and the right to prevent others from using and exploiting them

• They are assets as important or even more important than physical assets (buildings, machinery)

• Like any asset they must be identified, protected, maintained, managed, exploited and enforced

IP Audit for SMEs

• Identify the IP assets of a company

• Have rights been acquired for them

• Are they been maintained

• Are they exploited optimally

• Is there any redundant IP

• Is there any infringement of third party rights

Exploiting IP Assets (1)

• Sale or License

• Joint ventures and strategic alliances

• Business format franchising

• Merchandising

Exploiting IP Assets (2)

• Better bargaining position in licensing-in

• Defensive patenting, publication and

• Collateral for finance

Licensing Example

• The inventor of the “can opening system” licensed the system to Coca-Cola at 1/10 of a penny per can. During the period of validity of the patent, the inventor obtained 148,000 UK pounds a day on royalties

Franchising Examples

Merchandising Examples Character merchandising Personality Merchandising

Challenges facing SMEs with respect to Use of IPRs• Enterprises worldwide and particularly in

Africa largely under-utilize the intellectual property system due to:

• Perceived lack of relevance of the IP system

• Perceived high costs and complexity of IP system

• Limited awareness of the IP system and its usefulness

• Lack of qualified human resources to use the IP system

Measures Taken By ARIPO to Address Challenges facing SMEs (1)• Put up a simplified IPRs filing and

protection system

• Upgraded ICT infrastructure for ARIPO and member states to enable on-line filing, processing and management of IPRs

• Awareness-raising through seminars and workshops targeting SMEs

Measures Taken By ARIPO to Address the Challenges facing SMEs (2)• Promotion, development and

harmonization of IPRs in the member states

• Provision of Technological Information Services through searches and publication(e.g. the ARIPO Journal)

• Capacity building and training (offer a Masters Degree in Intellectual Property)

jkabare@aripo.org