Patent Protection for Manufacturers

By Rodney Wilson

Manufacturers in New Zealand face difficult issues when it comes to investing in innovation. Firstly, there is no guarantee that a development program will result in a product or technology which has real commercial potential. Secondly, the resources required to maximize this potential are significant.

From a legal perspective, care should be taken throughout the development process to ensure that the resulting product or technology does not infringe the intellectual property rights of others. Finally, once publicly disclosed, innovative products/technologies become vulnerable to exploitation by competitors who may legally produce the same or a similar product or technology minus the investment in R&D.

This last issue is usually what pushes manufacturers to seek legal protection for their inventions. Although an application must be filed before the new product or technology has a chance to prove itself in the marketplace, filing for a patent is the best way to ensure that your company’s investment is protected.

The New Zealand patent system was designed to stimulate the development of new industry and technology in this country. The system is based on a reciprocal arrangement between the inventor and the government. In return for a full disclosure of the invention and the best method for manufacturing it, the government grants a monopoly to the inventor for a limited period of time. In New Zealand this period is a maximum of 20 years.

In this sense a patent is a commercial tool which allows your company to exploit your invention commercially. Once granted a patent gives your company the right, through the high court, to:

1.obtain a court injunction against an infringer.

2.receive damages or an account of profits from the infringer for activities going back to the date of publication of your patent application.

3.confiscate the infringer’s stock in hand and any tools specially adapted for producing or using the invention.

In New Zealand, any sale, import, manufacture or use of the patented invention constitutes an infringement. Use for experimental purposes only does not necessarily constitute infringement.

If your company’s patent is infringed, it is up to you as patentee to take steps to stop the infringement. This may involve costly court procedure, although many patent actions are settled before they reach court – often simply by a letter advising the infringer of the existence of a patent.

It is generally advisable to stop infringement as soon as possible – before the infringer has committed thousands of dollars to plant, machinery, tooling, marketing, etc. Once a sizeable investment is at stake, an infringer is less likely to settle out of court.

As mentioned earlier, a patent is a commercial tool and should be treated as such. A good patent can be quite effective in keeping a competitor out of the market, and seeking patent protection needs to be considered as part of an overall business strategy.

The overall capital expenditure required to obtain and enforce a patent should be compared to the expected returns. Export markets should also be analyzed and decisions made as to whether or not to seek protection in those markets.

Finally, it is pointless spending a large proportion of your expected profits on a weak patent. However, the expenditure is warranted if the patent will stand up to close scrutiny and represents a relatively small proportion of expected profits.

Rodney Wilson is a Patent Attorney at Pipers Patent and Trade Mark Attorneys.