Protect & Comply

[Claire Foggo]

A lot of startups head down the patent route really quickly without maybe realising the consequences of disclosure. And you know, if you've got a really fantastic new idea, if you decide to patent that, and your patent application will eventually be published, which means that your invention or your idea or your way of doing you know your cool thing becomes public information. The downside of that is that you can be copied and it can be very hard to prove that your competitor has copied you if what they've taken is you know something that's quite an internal process and they've got it happening in their factory somewhere and some piece of machinery or, you know, without you know you might never know that in fact your idea has been copied by a competitor.

[John Mansell]

Looking at it from a narrow IP focus, it really a lot of it comes down to... disclosing too much about what you're doing at too early a stage when you haven't got appropriate protections in place. And not everything's suitable for being protected by way of a patent application, not everything's suit- sensible to try and and um blackbox beyond what's practical to do so. But understanding the value of your brand, understanding your trademarks, and what- what value you will be building in your brand and your product. Right from an early stage, you can be establishing that reputation in your brand and your product and understanding how that's going to leverage for the future product development. So you know, having a good understanding of what value you achieve from telling people what you tell them and balancing that against what you want to um maintain as, you know, as confidential information is a key- a key first thing. I'd say that's probably one of the biggest pitfalls we see.

You know, scientific publication goes out and then that potentially jeopardizes the ability to file a valid patent application thereafter. Someone's having a great beer at a conference and happens to disclose something that they shouldn't do, and that can really give a competitor an insight into a research project or an angle that you're working on. A product development that they might not have thought of but can rapidly implement because of the scale of their existing operation. Those sorts of things I think are worth bearing in mind.

[Ross Milne]

You need to manage IP really carefully obviously, and be strategic around it, you know. Where's your core IP going to be? And were you working on a more open-source platform. Ultimately, if you're trying to develop a scalable business, you know, and bring in the capital required to do that, IP is going to be critical in that conversation. But just being clear and be transparent with people, you know. This part of the puzzle is our IP, so we're going to ring-fence that and not talk about it.

[Aroha Armstrong]

When you're, sort of, poised and ready to go over and export, understanding the regulatory, labelling, things like that. Those are real- the real blockers. Some of our customers have done all this work because we're focusing on the New Zealand market, and we've done all of our labelling, we've done all of our product development for the New Zealand market. And then we go 'Right, we're ready to go overseas'. And then we want to hit that export market, and then all of the sudden we go 'Uh oh, the US market doesn't like what we've done, we have to pivot'. So, there's a lot of waste going on and not actually thinking- thinking export or global from day one.

[John Mansell]

You definitely have a spectrum of sophistication in terms of the way different businesses manage their intellectual property or even are aware of what intellectual property exists for them. So, right from companies like Fisher and Paykel Healthcare who have very sophisticated intellectual property approaches, Fonterra similarly, you know really- A2 Milk and Synlait have sophisticated visions of what their intellectual property is and how to best use it to leverage their product offerings in the market.

And then at the other end of the spectrum, you have you know startups who often feel as they just don't have the resource to- or the time, often that's the time is probably the larger point of this they, don't have the focus to spend looking at, you know, what can we do to best protect our intellectual property rights, even if they understand that they've got some. So, I'd just counsel those people to right at the early stages, go and have a chat to whether it's an intellectual property advisor, an IP- IP lawyer, a patent attorney. Most of us will offer, you know, sort of half hour- an hour conversations free of charge initially and at least help those companies understand what it is they have and what they can do as a next step to protect their positions. And at least not, you know, give things away unnecessarily and then having a plan for how they might move forward on protecting that, to build value in that aspect of their business, which for a lot of companies represents a huge percentage of the value that that they- that they are, that they possess.

So, it's not just the, you know, the product at the end of it, it's all the features that are embodied in that product or the intellectual property that sits within that product offering or that um that understanding of the market or who the who the client that they're selling this service to is, where that value lies, having an appropriate strategy to protect that and leverage it going forwards.

A lot of products will have brands associated with them. They may not have any patent protection associated with them because the type of product it is just doesn't lend itself to patent protection. There might be decisions that have been made where the product itself can't be reverse-engineered and it's the process that you're using to manufacture that product or the AI that you've got embedded in your analytics systems that- where no one can see that. You want to hold on to that stuff tightly, and you maintaining that as a trade secret. So, the only thing the outward world is seeing is your branding and the results of your product, the results of the process, for example. In those cases, understanding your intellectual property position around your branding becomes a key element of how you're going to leverage your brand and your product in the market. So, in those cases you may not have a patent application or a granted patent to rely on. It's it really is the promotion of your branding that's giving you that market edge.

[Aroha Armstrong]

A number of people think that IP protection means global patents, and there's not a great depth of understanding about what IP strategy is, which there's a difference. If you have a great idea, and I've seen it before, people want to protect their idea. In particular, with Māori companies, we have a desire to protect indigenous flora, indigenous fauna, indigenous culture. So, without a really good understanding of IP strategy, there's a temptation, and I've seen it before, where people will just go for these massively expensive global patents. And what occurs is that it's impossible to maintain the cost of those patents and then it opens up the IP to be taken by- it opens up to be the worst nightmare, they're trying to protect it and then it opens up for- for people to see and to purchase.

[Mark Pennington]

Sometimes we're amazed and concerned at the high percentage of investment we put into actually covering the patents. We put so much into the design, the clever stuff, and make it different and worthy and then you got to put, sometimes, 50% of that into some- any legal contract to defend in.

[Robert Snoep]

So, the value that you have in your new product... be that a mature business or a startup business- right at the outset, it's just a bunch of ideas, maybe you've got a prototype. Then there's a bunch of steps that would ideally be taken to realise the value of that intellectual property, um that may be understanding the freedom to operate, can- do you infringe anybody else? What is the best intellectual property strategy or pathway or set of tools that you can put around this product that will then help you realise value in the long term. But if these sort of steps and thinking isn't- aren't undertaken early on, then often you can get to the point of saying yes we want to sell this product, someone will do due diligence on you and they'll realise actually you don't own that intellectual property, it's owned by somebody else, and suddenly everything's gone all that value you thought you had in that product is not there or the deal that you thought was looking so promising is not there.

[Timonthy Allan]

On the intellectual property side, um we've probably taken a... pretty measured approach because we're partly insulated because you couldn't enter any one of our major developed markets without getting regulatory approval. So, that's your first mode. Second, you know, you have to then register with all these kind of territorial authorities, which is the next one, and you've got to physically comply and have tested all of the regulations. So, there's quite a high regulatory threshold, you know, I'd probably say equivalent to or worse than a medical device in my experience. And so that's there, and the IP thing is so- it's sort of like we've got this assembly of components, what we've done over time is you've got more technology progressively in all the kind of subsystems and you know we're not going to publish that, you know, so you're not going to publish how you manage a vehicle because it's just telling everyone else what you're doing so you can't control that even if you filed a patent. So, we don't file for that, that's just trade secret, you'd have to do it the hard way, you want to reverse engineer a six-layer PCBA, fill your boots.

And then, you know, the registered stuff, the challenge you've got is you got to watch when you choose to get on the escalator, because it is an escalator and it doesn't stop, and the cost will keep going. So, you know once you get through provisional which is the 12-month period, you've got to then, you know, you've got to choose whether or not you're going to go to a complete specification, so you got another 12, once you exit that 12 you got to decide whether you're going to go PCT and go international, and so at that point you know three years and suddenly, you know, half a million dollars a year. So, we've been very measured, like this year we've started to file more aggressively because the level of sophistication keeps on increasing and we've identified areas within our research development programs that have significant benefit to us as a company. And we feel we now have the financial resources to stand behind the applications as they grade through. Because like you know, say, a comprehensive, you know, multi-factor, patent application mean, you know for us, that could be between twenty to fifty thousand dollars to develop into a cohesive set of claims and a fully complete specification, so you know it is- it takes time.

[Robert Snoep]

So much as even 30 or 40 years ago, intellectual property was a lower part of the value of a business, it might have been 20 or 30 percent of the value of- on the book- of a business and mostly that was around their brand name. I think the latest bit of research I saw on this put intellectual property at about 70 or 80 percent of the value with a business and the other 20% was obviously your- your capital, your work in progress, and so forth. So, the tables are really turned, and intellectual property is a real driver of business value these days.

[Sam Burton]

We have trademarks on, I guess, all of our key assets that go through our brand. So, those include the stages, the growth stages that we have, and the Bobux brand itself as well as a couple of other assets.

We do get copied all the time by you know a lot of different brands but because we are continuously developing and bringing out new product, but also really wrapping our own brand in those stories around the product, as I said that has been our number one course of defense. Because when you see it on the shelf, you know visually there might not be too many differences but that really really high quality and the longevity, the word of mouth and all those other stories that wrap around it really carry us forward.

[Robert Snoep]

When you're starting a business or um- maybe a mature business that's coming up with a new product. You're knee-deep and often innovating and producing that product, and aspects of how do we realise value in the new product, aren't always questions that are asked as part of that, sort of, business development process or commercialisation process. And there'll be moments along that process or that journey where you'll ask, 'Well actually can I put this product on the market without infringing anybody else?', 'Can I protect this product?', or better said 'How best am I able to realise value from the IP in this product?'. Is it sinking a bunch of money into that brand name and really being first on the market or is it may I'm going to need a team up with other players, or maybe I should formalise this better with some legal agreements, with patents and other tools.