Opinions expressed by Entrepreneur contributors are their own.
With rapid globalization, multinational companies (MNCs) have focused on expanding their reach in new markets across the globe. Since each of these markets has unique sociocultural nuances, MNCs often try to modify their product offerings based on market demand.
However, from an intellectual property (IP) perspective, there are certain risks associated with taking a consumer product to a new market. For companies that intend to launch their consumer products in new markets, here are some steps to follow to prevent any hiccups or serious complications:
1. Understand the market interest
Before venturing into a new market, it is necessary to understand the market interest for your consumer product. Gaining knowledge about the IP filings of your competitors in your target market can be a useful method of evaluating their level of interest in the same domain. For instance, you can study the patent, design and trademark trends in the last 10 years in your target market to know the level of interest in a particular domain.
2. List down active IPs
By performing a Freedom to Operate (FTO) search, you can identify the different active patents that exist in your target market. Thereafter, you can compare the identified patents with your products to check whether you are infringing on any of those patents.
3. Check the level of infringement
Understanding the level up to which your consumer product may infringe upon the existing patents in the new market is also an essential part of the required due diligence. An FTO search (also known as an infringement analysis and clearance search) helps in checking whether a particular product is infringing on any active patents. For performing such an analysis, you can seek help from external IP service providers who have relevant experience in your new target market.
4. Secure licenses, if necessary
A comprehensive infringement analysis helps you in understanding whether or not you need to obtain a patent license. In case you discover that your product might infringe on another entity’s patent(s), it is advisable to secure a license and avoid being embroiled in IP litigation.
Besides this, if the results of your infringement analysis show that a smaller company already has a patent that your consumer product might infringe upon, then you can negotiate a merger and acquisition (M&A) deal with it. Such a deal will also give your company a competitive edge when it comes to understanding the regional trends in consumer behavior in the new market.
5. Consider modifying your product(s)
Patents are secured based on the needs and demands of consumers, which are mainly driven by the cultural differences between countries and their local customs. Therefore, while securing IP licenses, you can incorporate new features into your consumer products to satisfy the needs of the new target market.
Additionally, more often than not, new entrants in a market realize the importance of protecting their IP only after their product has been imitated or they are accused of infringing upon others’ rights. Moreover, many who realize the significance from the get-go make a blunder and end up in hot waters.
Here are some of the most common mistakes companies make while taking their product to new geography:
- Thinking IP protection is universal: Many businesses believe that their trademarks and patents registered in one country are protected globally. However, IP protection is territorial in nature, and you must file for rights in all markets. Inventors can also opt for an international patent application to safeguard their invention in multiple countries.
- Believing IP rules and procedures are the same worldwide: The laws for the protection of IP are unique for different countries. Hence, companies are advised to learn about the legislation of their target market.
- Missing important deadlines: Inventors must file patent applications in other countries within 12 months from the date of application in the first country. This is called the priority period. Failing to adhere to such deadlines may make it impossible to obtain patent rights.
- Disclosing information without confidentiality or non‐disclosure agreements: Disclosing information about your innovative product or technology to potential trade partners, export agents or distributors without filing a patent application or proper confidentiality agreements in place can make inventors lose the IP rights.
- Using inappropriate trademarks: Companies must verify if their existing trademark has undesired or negative connotations in the local culture or language. They must also check if their mark is unlikely to be registered at the country’s trademark office before launching their product.
From an IP perspective, you can get your consumer product to a new market without any risks. However, since performing these activities on your own can be a little tricky, it is important to get help from external IP experts — these specialists have extensive experience that can help you avoid the common mistakes companies usually make, and ensure you successfully launch your consumer products in a new market.