Patent officers help U.S. companies manage global risks

Brian J. O'Connor
Detroit News Finance Editor

Ty Faulkner has a problem, and that problem is China.

The quandary facing Faulkner, director of business development for QiP Solutions, with offices in Ann Arbor, is that if he and his partners move production of their just-patented, $120,000 remote medical diagnostic invention to China, they can knock $40,000 off their cost. But they also fear that China’s Wild West approach to things like patents and trademarks means their technology will be pirated and knocked off by competitors — or even their own partners.

“It’s a looming concern that we have to manage,” says Faulkner, who’s also an adjunct professor in health information technology at Lawrence Technological University in Southfield. “The opportunity is bigger than the risk.”

When those risks hit U.S. businesses exporting to China, Mexico, Russia or elsewhere, executives can turn to a little-known arm of the Patent and Trademark Office — the 14 Intellectual Property Attaches. These legal and technical experts work abroad and intervene on behalf of companies that run into patent and trademark issues. The director of the program and five attaches and staffers told two dozen Detroit business leaders from Business Forward how they can help.

Dominic Keating, director of the attache program, said the office works with foreign governments to educate and advocate for intellectual property protections, and intervenes when problems arise. He recounted a recent case where an attache helped to fight “trademark squatters.”

“An Indonesian company had registered a number of trademarks in Indonesia that were the same as and confusingly similar as those from the U.S. company,” Keating said.

The attache advised the U.S. company on how to file a trademark infringement complaint locally, and worked with the embassy in Bangkok and Washington agencies to get the matter before Indonesian authorities. Eventually, the company filed 18 successful trademark disputes, Keating said.

Russia and China can be particularly risky for intellectual property, the experts said, while Mexico is serving as an example for other Central American countries. In Brazil, a special police unit has been formed to fight counterfeiting during the upcoming Olympic games there.

The attaches also work to educate local officials on how strengthening trademark, patent and other intellectual property laws benefit economic development. They also advise businesses entering countries on how to proceed. Business should, for example, file their own trademark registrations instead of going through local partners, who may put the trademarks in their names and not that of the U.S. owners. They also should check out local attorneys and advisers with the attaches, since many have conflicts of interest. The office is adding two attaches next year, one for Kiev in the Ukraine and one for Lima, Peru.

There’s also the tricky question of the north-south divide between established economies and emerging ones. Deborah Lashley-Johnson, the attache to the World Trade Organization in Geneva, noted that the United Nation’s World Intellectual Property Organization, “doesn’t like to use the word enforcement,” when it comes to protecting intellectual property. “They call it, ‘building respect for IP.’ ”

U.S. businesses need to do their homework on how to handle their intellectual property, from things like where to apply for a patent to registering trademarks long before they may enter a country, since many nations award a trademark to whomever is first to file for it. That’s because even a small country such as Armenia can export into the huge Russian market, while China is simply too big a market to ignore.

Take “Singles Day” in China, said Timothy Browning, the attache for the Guangzhou province of China. The Nov. 11 holiday was an obscure, Valentine’s kind of celebration until online retailer Alibaba promoted it as a day to shop online for yourself. This past Singles Day recorded $15 billion in sales in one day — five times what U.S. retailers moved here on Cyber Monday.

“That just goes to show you how big that market is,” Browning said. “There are horror stories but things are improving and the Chinese domestic market is only going to continue to grow. If you have a good product and you do the homework to protect it, you can make a lot of money in China.”

Twitter: @BrianOCTweet

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