The cost of protecting intellectual property

Irish SMEs have improved their record in recent years when it comes to protecting intellectual property, such as trade marks and patents, but still lag behind the rest of the EU in this respect, says Peter Kelly, partner in F R Kelly & Co., a specialised law firm based in Dublin with offices in Belfast and Alicante.

Compared with five years ago, there are perhaps 40 per cent more SMEs registering trade marks and other intellectual property protections, says Kelly, who adds that about half those coming into his offices for the first time are also extending this protection to encompass the entire EU. Previously, Britain represented the limit to the horizons of most SME registrations.

Many small firm managements innocently believe that registering a company name with the Companies Office automatically protects the firm's trading identity, but nothing could be further from the truth. Certainly, no other firm can register with the same name, or even one that is confusingly similar, but this does not prevent a rival firm from adopting a trading identity uncomfortably akin to your own.

Another potential danger is that the brand name adopted by your firm may clash with the already registered trade mark of another company, and this danger is perhaps most evident for exporters. Liam Birkett, marketing specialist at F R Kelly, says it has already happened that an Irish company, having won an order at a trade fair, has its packaging suitably translated and dispatched the goods to the foreign buyer, only to have them returned following a court order obtained by a rival in the local market whose trade mark is identical or uncomfortably similar.

Professional assistance in this regard is advisable, he continues, as a simple reading of the list of local brand names may not expose all the potential dangers. To take a hypothetical example, there seems to be little in common between the product marketed under the name "Peer" and that marketed as PIA. When spoken, however, certain British accents may render both as "peah", thereby causing sufficient confusion among consumers to warrant a court order debarring one of the producers (the one without trade mark protection in the relevant market).

Exclusive rights to your firm's trading identity can be guaranteed only by registering it as a trade name, something which can be done at a cost of about £350 for the initial application, followed by a second £350 when the registration is completed 18 months later. This will give 10 years protection, which can be renewed every decade thereafter.

European-wide registration, which used entail 15 different applications at a cost of around £7,500, has now been standardised by the EU into a Community Trade Mark (CTM) registration which costs about £2,700 and which is effected through a single transaction in the host country. There are now 80,000 such applications pending throughout the EU at present and the number is growing by 500 every day, says Birkett, who advises CTM registration for anyone contemplating export sales at any time, even well into the future.

The cost of failing to protect what is, in essence, a valuable marketing asset can be extreme. Perhaps the most dramatic on record is the case of the Belgian who had claimed the rights to the Neutrogena trade mark. After protracted wrangling with the giant US Neutrogena Corporation, he entered the Beverly Hills home of chief executive Lloyd Costens, shooting dead Costens' wife, one of their children, and a guest before being killed himself.

In another American case, office equipment manufacturer Haworth Inc. was awarded US $211 million from Steelcase Inc. in a row over the latter's illegal use of Haworth patents. Closer to home, a judgment was recently registered against Valley Ice Cream (Ireland) over its use of the Manchester United crest and title on one of its products. The football club's eagerness to prosecute this case is understandable in light of the £26 million it expects to reap from sales to Irish fans this year.