Intellectual Property rights are one of the main drivers of innovation, creativity and business growth, and are rising even further in importance as consumers increasingly rely on their perception of a brand to make purchasing decisions. In fact, the significance of intangible assets in a company’s portfolio, as well as the overall economy is reflected in that fact that they contribute 57% of the value of the ASX 100, and approximately 89% of the NASDAQ.*
What is intellectual property (IP)?
IP can be defined as a category of intangible assets that cannot be held and do not have physical presence. They are assets formed using human intellect. Simply put, it is the creations of the minds that work in your business or the exclusive knowledge that exists within the walls of your organisation. Therefore, if you develop a new product, service, process or idea it belongs to you and is considered your IP.
A strong trademark or brand identity enables a business to distinguish itself from competitors, attract and retain loyal customers, as well as thrive in a competitive market. Safeguarding your IP enables you to earn money or recognition from your inventions or creations whilst also preventing others from making use of this property. Furthermore, registered IP rights are valuable assets on any balance sheet looking to attract capital investments and commercialisation opportunities.
Did you know?
- SMEs that own IP rights on average are 3.5 x larger than their peers with no IP rights and pay a higher median wage.
- All else being equal, SMEs that file for IP rights employ more people. A firm with 100 employees has an additional 12 people after adding a trade mark, 4 extra people after adding a design right, and 3 extra people after adding a patent in the 12 months after filing.
- After filing for an IP rights, SMEs are 16% more likely to experience high employment growth than their peers with no recent filings.
- SMEs that file for patents, trade marks & design rights are at least twice as likely to achieve high turnover growth than their peers with no recent filings.
Unfortunately, according to the International Value Standards Council, whilst intangible assets have long been the engine for value creation and are of utmost importance to capital markets, only a small percentage are recognised on balance sheets as most business owners and operators fail to register and protect their IP, missing out on many, if not all, of the benefits.
What are the main forms of IP protection?
There are four main forms of IP protection:
Designs
Design registration protects the overall appearance of a product, as well as the design features of both aesthetic and functional articles.
Trade Marks
A trade mark is your badge or symbol, your customers’ visual cue that you are you, and not a cheap imitation. A good trade mark should ideally have a recognisable association with your brand, be distinctive of the goods and services you offer and be used in the course of trade.
Copyright
All ideas that are written down or materialised into a piece of work, from business to house plans, circuit diagrams through to engineering prototype drawings or artistic works, are automatically protected by copyright for the author of the work.
Patents
A patent is a right granted for any device, substance, method or process, which is new, inventive and useful. It provides protection and longevity in the case of new technology that will apply to a product or process, as it can prevent replicas entering your market space.
Access our FREE IP Guide!
Discover what can be protected, as well as the benefits and requirements under each of these categories, when you download our free Intellectual Property guide here.
It is vital to have a sound understanding of the primary forms of IP protection to not only protect your competitive advantage and market reputation, but to also support your business growth through commercialisation.
What is commercialisation?
Commercialisation is when you extract commercial value from the exercise of legal rights granted to owners of intellectual property by those owners and by others, whether directly or indirectly. Commercialising a new product or service is typically a journey of many steps, comprising a ‘route to market’ or ‘commercialisation pathway’ as outlined below:
Download our FREE IP Guide today!
Discover the numerous paths to commercialisation, the seven traditional commercialisation models plus alternative options when you download our free Intellectual Property guide here.
Case Study: The importance of protecting your IP
The Business
Dermcare-Vet is a family-owned Australian veterinary pharmaceutical company that creates innovative, research-based products for animal skin care with an international reputation for reliable products that treat various skin conditions in pets.
One of their top-selling products, Mala-seb® medicated shampoo, was well known for its success in treating skin issues in pets. Unfortunately, its success made it a target for counterfeiters.
The IP Issue
In 2019, Dermcare-Vet noticed that sales had begun to decline in China. Upon inspection they discovered that counterfeit Mala-seb® products were being sold online through various platforms.
In order to combat the counterfeiting, Dermcare-Vet conducted trap purchases & discovered a network of trade mark squatters linked to counterfeit goods who had registered over 170 trade marks, including a similar brand name, Malaxi, the Chinese transliteration of Mala-seb.
In response to this counterfeit issue, the business gathered evidence and authorised a Chinese distributor to file complaints with the authorities. They also instigated legal action in order to oppose and remove bad-faith trade mark filings and moved to expand their own trade mark registrations, registering copyrights overseas.
The Resolution
Supported by substantial evidence and assistance from Chinese authorities and affiliated distributors, Dermcare-Vet was successful in linking counterfeit products to trade mark squatters. However, even after a successful Police raid, the fight against trade mark squatting continued, consuming significant resources over a period of two years.
As a response to this challenge, Dermcare-Vet implemented significant changes to their IP strategy moving forward as they adopted a more proactive approach, invested heavily in trade mark oppositions, expanded their good & service classes, refined their registration process and registered trade marks for all existing products & potential future products.
The oft-forgotten element: Branding
Branding is more than just the public face of your business, or a collection of colours, fonts and shapes. It represents what your business stands for and is a visual representation of your history and purpose: it IS your business.
The value of a brand lies in its ability to position a product or service differently from its competitors and is the defining asset that streamlines communications, helps you achieve market visibility and credibility, as well as adding value to your products, staff, balance sheet and share price.
Additionally, a strong brand can create brand affinity, which refers to the emotional connection between a business and its consumers, which over time, can evolve into brand loyalty, a strength that contributes to the sustainability of your business.
One look at these Australian businesses makes it clear that it is worth protecting what could be your most valuable intangible asset: your brand.
Case Study: The importance of protecting your brand
Australian cosmetics company, MCoBeauty has become a multi-million business by positioning itself as one that offers luxe for less. It achieves this by duplicating ‘duping’ high-end beauty products and selling them at a much lower price point than the brand originals.
One of their most popular dupes is the “MCoBeauty Flawless Glow’, their own version of a viral product by high-end UK makeup brand Charlotte Tilbury. The two consist of very similar naming, packaging and formula.
However, MCoBeauty’s success has attracted some controversy and court cases as they have on occasion, appeared to push the boundaries of IP law too far. The first lawsuit was filed by American beauty brand Tarte over its concealer packaging, and the second was brought by Australian business Chemcorp, who alleged the company had infringed on the brand and packaging of its 1000 Hour eyelash and brow dye kit.
Whilst both cases reached a confidential settlement and resulted in MCoBeauty rebranding their products and altering the packaging, the question remains how is this degree of duping allowed given the original brands held IP rights?
Across the beauty sector, there are very few patents for truly innovative new formulations or methods of delivery, as most products are merely variations of each other. This means that the only asset businesses can truly protect is their brand assets to prevent replication of these elements.
In addition, there is the wonderment test, which explores whether a consumer walking through a shopping aisle, would confuse the dupe with the original brand and mistakenly purchase it. Given the difference in distribution avenues of high-end brands (which includes channels such as Mecca, Myer, David Jones, Sephora) and MCoBeauty which distributes via Big W, Woolworths or Chemist Warehouse, it is extremely unlikely that the consumer would be misled.
It is factors such as these that has seen the explosion of dupes across the beauty industry, which can be surmised in the below example of three strikingly similar fragrance collections:
- L’occitane Group’s Sol De Janeiro fragrance collection is sold exclusively via retail beauty chain Mecca and retails for $40 to $65 per unit. Viral products upon launch, they have been in high demand since, reflected in sales of $1.38 billion for the quarter ended 31 December 2024.
- Seeing the virality of these fragrances inspired MCoBeauty to launch dupes with a near identical scent which retail for $10-$20 per unit in Big W, Woolworths and Big W. Also in high demand, these have contributed to MCoBeauty’s stellar growth and anticipated sales of $250 million this year.
- Following suit, Kmart created their own collection of dupes that retail for $8 per unit. Part of their new beauty range which focuses on imitating on-trend and must have products, this new focus helped push Kmart to a record $600 million half year profit as of March 2024.
Even though all three of these collections are extremely alike, this is an ideal example of the value of branding. Whilst they may share similar scents and appearances, the underlying brand that embodies their positioning, messaging and appeal to the market is unique, enabling them to successfully attract and retain a particular target market that feels an affinity with a particular brand, helping to ensure their success and sustainability in a fiercely competitive market.
Dupes dupes everywhere..
It’s important to note that dupes are not limited to the beauty industry. A quick look at any social media will see a plethora of ‘dupes’ from water bottles, lounge wear, furniture through to cleaning products, kitchen appliances and even cars, further emphasising the need to protect your brand and business.
How to protect your brand
It’s important to appreciate how your brand is used in your business. The use (or misuse) is something to take seriously as it represents everything your business is and does in the market. Any inconsistent or confusing branding weakens market confidence and undermines your business.
Therefore, developing a style guide or brand manual, alongside a tone of voice deck is vital. This ensures that all your visual and written communications appear consistent across all channels of distribution and all points of contact.
In addition, if your business and branding assets are public, unique or integral to your point of difference, it is worth registering these assets to solidify your business positioning and competitive advantage and prevent others from replicating your identity for their own benefit.
Not sure what to protect?
We have outlined a simple five step process that can help you identify your IP and take the right steps to protect your brand and business. Access this free resource when you download our free Intellectual Property guide here.
Whilst it is optimal to invest in intellectual property at the very beginning of any venture, if you are yet to file for a trade mark or design rights, it is better late than never, to ensure that you can reap the maximum rewards of all your hard work. Plus, IP in a business is ever evolving so there may be something new and novel that needs to be protected. There’s no time like the present to start taking care of your tomorrow.
Please contact us with any questions you may have about how to protect yourself and your business.