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Infringement of intellectual property can be the ruin companies

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Infringement of intellectual property can be the ruin companies

Just imagine: You see a brand new cleaning machine and would like to buy some for your staff, but during your search you also spot what appears to be almost the same machine for half the money. You decide to opt for the cheap machine from a Chinese manufacturer. After six months, you suddenly receive a letter. The maker of the original cleaning machine has gone to court and as a result, all fifty machines you purchased are confiscated and destroyed. You lose the machines and you lose the money. All because the machines infringed patents of the original developer. It may sound far-fetched, but this is an everyday occurrence.
Finding legal solutions to practical problems through Patent law is something that Maurits Westerik , has plenty of knowledge and experience of , At the request of one of the major innovators in the cleaning industry and working as a partner with top law firm Coupry who have their offices at The Hague , Coupry & Westerik specialise in Technology and Energy legal issue and share that with us .

History lesson
Westerik takes us through the history of intellectual property. “Actually, it is no more than a group of exclusive rights that allow you to prohibit people from reaping the benefits of creative work done by others. In other words: You prevent someone else stealing one of your good ideas or an innovation you have developed. The first real law for the protection of inventions was created in Venice in 1774; this law ensured that people who contributed to innovation were protected. They were given a sort of mini-monopoly to carry out and market their work. As a result, they both got the credits and reaped the economic benefits.”
From that moment, Westerik says, intellectual property law developed into what it is today. And that law now also includes copyright, trade names, brands, and logos for your services. With the Treaty of Paris in 1900, the law was harmonised throughout the world. “From that moment, industries started building on it. Think of, for example, the pharmaceutical, electronics, software and media industries. That was quite a logical consequence. Take music for example. Consumers don’t want to hear a cover version of a song, they want the original. The original represents a certain value, and plenty of thought went into it. In particular, the big film companies – such as Disney – have put in a lot of work into this. But in the meantime it has got even bigger than that. More than half of the Fortune 500 companies owe a large portion of their balance sheet value to intellectual property. It protects the payback model of the companies, and this is why they can spend billions on R&D and marketing. They know they will recoup the costs via their intellectual property.”
Intellectual property offers great advantages to society and the economy. After all, it ensures that innovation is stimulated and unfair competition prevented. Westerik: “So-called copycat producers look for products that have proven successful, and they do so with one aim in mind: to copy and market the product as cheaply as possible. This generally leads to lower quality and poor customer satisfaction. These are not companies that help society move forward. These products are consciously designed to look alike, but are a lot cheaper. But there is a limit to how much these
companies can ride on the coat-tails of successful companies and take advantage of their success. Moreover, patents are the strongest method of protecting intellectual property rights, and they last for 20 years.”
According to Westerik, patents protect innovations that help an industry grow, and there are all sorts of companies that invest heavily in products in order to be first to market. His examples include Philips, as well as Kärcher and i-team Global. “These products offer unique selling points from which consumers benefit. Besides, consumers do not have the same feeling about knock-off products that claim to be taking advantage of the same innovation. Compare this to a Shakira cover. The original always has the most value. And don’t forget that infringing a patent can have major consequences.”
Patents protect inventions so that others cannot copy, sell or market them without consequences. And that goes far, very far indeed, Westerik says. “Imagine you are a cleaning company and you buy twenty machines from your dealer, but later you discover the machines infringe a patent. All the machines in circulation can be seized, including the machines that your cleaning company uses. This means they can be taken away and destroyed. What we even do in practice and see at trade fairs, is that stands of exhibitors who are infringing patents are completely emptied, to prevent a machine from entering the market.”
According to Westerik, the actual victims of this practice are not the companies that infringe the patents, but the end users. After all, they are the parties that lose their products and therefore their money. This is why he calling for proper checks before the purchase, to be conducted by including an indemnity clause in the contract. “In this way, you include a contractual stipulation stating that the products you purchase do not infringe any rights of third parties. You are placing the responsibility on the supplier. If they refuse to sign, you can draw your own conclusions.”
Patent conditions
To obtain a valid patent as a developer, the invention must have a technical character and meet three substantive conditions: novelty, inventiveness, and industrial applicability. According to Westerik, though, there is more to be taken into account, even though this does not fall within the scope of patent law. “Colour rights for example. They too can be protected with some effort and after long-term use; examples of well-known colour brands are the green used by BP, the typical blue of KLM, and the magenta that characterises T-Mobile/Deutsche Telekom. For example, a new airline will not be allowed to use the KLM colours. Recognisability plays an important role in whether a trademark can be protected and to what extent, although this may lead to discussions, especially so with regard to colours. For KLM, of course, there is no discussion about the blue they use because this specific colour has been used for decades and is well recognised.”
Constant innovation = constant protection
According to Westerik, the most important principle is that companies that constantly innovate are also constantly protected, because that is the only way to boost innovation. “Research & Development involves an extremely large amount of money. You have to put smart people to work to develop something, and Development then has to translate this into a useful and working part. New prototypes must be made, produced and tested all the time, in order to be able to standardise and produce them in bulk in a factory. For every new prototype of a cleaning machine, for example, ten thousands of Euros will easily go down the drain. If an organisation is constantly working on the
development of innovations, the costs will rise quickly. As an economic society, you will naturally want to protect this properly.”
Indemnity clause
Westerik emphasises that when purchasing new products, it is always useful for entrepreneurs to have at least one indemnity clause signed by the supplying party: simply put, the supplier must bear all the risks for infringement of the intellectual property rights of third parties. If subsequently there is an infringement of a patent, the entrepreneur will not suffer any damage. You can compare such an indemnity with a guarantee provision: can this party actually fulfil that guarantee when it comes to the crunch? Of course, a shell company or an overseas internet shop makes it difficult to get justice. And what if a supplier won’t sign something like this for its own product? In that case, Westerik suggests, you should not do business with them.
About Maurits Westerik
Maurits Westerik (1977) has been a lawyer since 2004 and specialises in intellectual property law and IT law. As a programmer and electronics hobbyist, he uses his technical knowledge for the strategic protection of innovations. He teaches innovation protection at TU Delft and is a guest lecturer in patent law at Leiden University and the VU. He is an IP/IT partner at Coupry, a law firm that specialises in technology and energy.

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