Legal protection turns intellectual assets into commercial winners
HONG KONG LAWYER EXPLAINS WHY COMPANIES NEED TO INVEST IN TRADEMARKS AND PATENTS TO ENSURE FUTURE SUSTAINABILITY
To sustain growth today and secure a place in an uncertain future, businesses must do more to protect their intellectual property (IP), according to a leading Hong Kong lawyer.
Michael Lin, head of Hong Kong and the Chinese mainland biosciences practice at IP specialist Marks & Clerk Hong Kong, said it is a mistake for new firms not to invest in their IP because value in modern companies is increasingly linked to their intangible assets.
“The value of companies is no longer in the factories and trucks, but it is in the processes, institutionalized knowledge, patents, trademarks and trade secrets,” Lin said.
“If you look at companies like Google and Apple, only 3 percent of their value is in tangible items, such as their campuses and buildings. The remaining 97 percent is in intangibles, of which IP is typically about 80 percent. Protecting IP is crucial for modern businesses.”
The Marks & Clerk partner has earned a reputation as a leading IP practitioner in a career that began in 1997. Lin, one of the speakers at this year’s Business of IP (BIP) Asia Forum, said the effective management of IP assets delivered many benefits to organizations.
IP-rich businesses are typically able to charge a premium for their products and services, and deliver higher profit margins. The development of alternative revenue streams from the licensing or sale of IP means that legal protection is important.
“Without some form of IP, a successful company’s product is quickly commoditized in today’s market, as competitors figure out how to copy the product and bring it to the market, often at a lower cost as they have not had to invest in as much research and development,” he said.
“In some cases, IP can be an effective tool to slow down or even stop copiers.” And that makes legal protection important, especially so for smaller organizations developing new products or working in technology or creative industries.
At the fifth edition of the BIP Asia Forum, to be held at the Hong Kong Convention and Exhibition Centre on Dec 3-4, Lin plans to address some of the issues felt most acutely by smaller firms.
He said many startups make the mistake of underestimating the importance of IP.
“In the rush to move from the lab to the market, IP may be forgotten as there are so many other factors which a business needs to pay attention to,” he said.
“During the development process, money and timelines are usually very tight. The cost of fi ling for patent protection around the world may seem too large when the money can be used for paying other things like salaries and rent.”
While the focus on the bottom line is still prevalent among managers, more businesses are beginning to realize that IP is an investment in sustainability.
“It is great to see strong IP make a business difference and see chief executives and presidents of companies starting to understand IP,” he said.
“It is important for them, the board, and their companies to see IP not just as a black hole sucking away money, but as a strategic asset which can actually drive both top and bottom-line growth.”
“I think that the challenge of balancing future investment with the current financial needs and reality is something that all businesses need to struggle with.”
Managers are beginning to build an appreciation of the relevance of IP to individual business lines. For some streams, a strong trademark is the most important IP available, in others, protection may mean a copyright, patent or trade secret, he said.
Marks & Clerk Hong Kong is one of the oldest foreign-owned IP boutique firms in Hong Kong. The practice has 17 offices around the world, with Hong Kong’s headcount of about 70 staff making it the second largest in the network.
The full-service firm has worked with multinational companies, lone inventors, universities and spin-off s to protect their IP rights.
“I recently helped a Hong Kong startup file their first patent application,” Lin said.
“We discussed how their patent application and their trademark position could help bolster their business plan and help assure investors that the company’s business is sustainable.
“It felt really good to know that what we’ve worked on can help this business move forward.” Lin will call on experiences such as these, plus his previous work in Japan with Procter & Gamble, in a breakout session on the second day of the forum called From Lab to Market — A Real Life Story of Commercialization of IP.
Jointly organized by the Hong Kong Special Administrative Region government, Hong Kong Trade Development Council and Hong Kong Design Centre, BIP Asia brings together global IP professionals and business leaders in an exploration of opportunities.
Lin said the scale of BIP Asia meant Marks & Clerk could expand recognition of its brand locally and internationally.
“With IP becoming an increasing focus for Asian businesses and governments, BIP Asia provides an important opportunity to meet people and participate in the development of IP protection,” he said.
With IP becoming an increasing focus for Asian businesses and governments, BIP Asia provides an important opportunity to meet people and participate in the development of IP protection.”
MICHAEL LIN, MARKS & CLERK HONG KONG