Ulrich Schraudolph, Vice-President of the DAS, interviews Jan de Visser and Edward Tonino about IP protection.

Ulrich Schraudolph: Could you describe to us the activities in IP protection at Philips?

Jan de Visser: We are in the luxurious position that because of our size we can do a lot of things that others can not. Therefore our IP experience might be a bit more intense compared to a smaller firm, regardless if you talk about trademarks, designs, patents. It is all more intense than what you have in smaller firms. There can be the impression as if only bigger firms can benefit of IP protection, being it to register offensively, or be it to go around and catch people who imitate, and I think to a certain extent that holds a certain truth. For registration you will have to invest and when it comes to defending, you need to invest even more. Size in that concern does matter.

Ulrich Schraudolph: Having such resources at disposal, is it really possible to protect the IP in a product?

Jan de Visser: It is fair to say that no protection is watertight. Let’s take for example this recorder. Let’s focus on design protection regardless of what name is on it or what technology is inside. Somebody copies the product one to one and we would have design protection for it. If it is an exact copy, yes, you would come a long way to get redress. You have a registration, you can enter it into a legal system and you will get a solution. But the moment the design deviates, you already have issues. Of course, changing only a button here and there may not have much influence. But you can say that for design protection in general the protection is quite narrow. It depends very much on the uniqueness of the product. If your designs really stick out, it is easier. A very strong example we can mention is the Sanseo coffee maker. We have a coffee maker, which is based on a different concept of coffee making. So apart from the design there is the concept of coffee making itself. Instead of letting water trickle through a cone-shaped container, steam is pressed through a pad. This is a different principle, technically speaking, from having a conventional coffee maker. Because of a combination of the techniques being different, the shape is also different. It doesn’t make sense to shape a concept like this in a conventional way. It has a quite unique shape. Anything that comes along like this, even if a few buttons are different, will fall within the scope of our protection. The more unique you are in your design, the wider the scope. If there are 20 firms on the market, and they have all a TV that looks basically square like this, and you add a few extras, which nobody has except you, than this will be quite unique. Whereas if there are already these kind of things and you may have two notches instead of three, than the extend you are deviating does not make much of a difference. The more unique your design, the broader the scope of your protection and that enhances the chances that you can do something about copying.

Ulrich Schraudolph: Does that mean that you can design for protection? To make it a stronger case in design protection?

Jan de Visser:We turn that around, we say the designer should design a nice product. ‘Nice’ can be based on price or on attractiveness. It is likely that premium products will generally have more design care than mainstream products which just follow the flow and for which you may design what is generally accepted. But if you have an LCD TV that is top of the range and there is a high price premium on that product, you may presume that the design itself is supporting the positioning of the product in the market. It will look more appealing and stand out more compared to conventional products. It is meant to be more classy and look more special. So if you then talk about design protection it is not that an IP department says: “You should design a nice product” it is more that we say: ” Very nice what you have designed, there is definitively a better basis for strong protection compared to a mainstream product.”

Ulrich Schraudolph: In the case of this coffee maker, do you protect it mainly through design registration or also through patents?

Jan de Visser: No, there are patents as well. But patents are more difficult to enforce. To demonstrate patent infringement is more difficult than to demonstrate design infringement. For patent infringement you talk about the process. It may be that the scope of the protection leaves other solutions as well and somebody may choose other technical solutions that basically produce the same type of result. Perhaps instead of taking a round pad, a square pad with another type of pressing mechanism will produce the same type of coffee. If you talk about pressing steam through a pad, that likely can not be patented, because this idea is already known. But doing it in a certain execution will give you protection. Apart from the technical aspect, there is the design aspect, how do you shape your product. Practically for any product we sell there is a combination of these aspects. Whether you have a fairly mainstream telephone like this, or a high end model, there always will be the elements of technology inside, being it the battery life, the screen, the semiconductors inside; the design, and of course the trademark. It is very often a combination of various IP that can be used to defend yourself.

Ulrich Schraudolph: And these aspects are used as complementary tools, design registration, patent, trademarks, in order to protect a product?

Jan de Visser: That depends on the type of infringement. If someone would copy a product one to one and market it under the Philips brand, the quickest way to go is with trademark. That is the most straightforward legal weapon that you can use. But if someone would copy this and just use other names for it as a product or brand name, than obviously you can’t use trademark, you would use the design registration, if you have one.

Ulrich Schraudolph: You use one of these elements, depending on where the infringement is the most blatant or the most direct to prove?

Jan de Visser: Yes, you look at the imitation and you select the weapon which is the most apt to be used against it.

Ulrich Schraudolph: If you sue a company over copying, how is the success rate, how difficult or long drawn and expensive is it and what is the likely outcome.

Jan de Visser: The problem is, you have to look at how design infringement comes about in different parts of the world. Practically all the copies which we see in the world come from China. In China, when you talk about an infringement of your design right, or of a trademark or patent right, the procedures are completely different from what you have elsewhere in Europe or the US. The basics may be the same, but the execution is different. For copies, we usually try not to go to court; we try to look for other means based on criminal law or administrative law. China being a communist country has a lot of administrative regulations. A remedy can be sought not just by going to court, but by filing a complaint with a certain administrative body, which can be a chamber of commerce type of organization. So you just go there, you show what you have, you file a complaint and they can do a radar shoot for you. So no court action whatsoever, it is just a complaint and based on administrative law or criminal law we will try to get rid of that copy.

Ulrich Schraudolph: How does criminal law apply?

Jan de Visser: In some countries but not in all countries, copying of products can be attacked on the basis of criminal law provisions. It depends what you are looking at; in trademarks, it is almost always to use criminal law. For design rights to a lesser extend; it may also depend on the gravity of the copying. Most likely you would have to rely on civil rights, but in countries like China it is possible to use administrative provisions. If you have a Singapore design infringement, so a copy of your product without a trademark and the only protection you can use is your design registration, it would have to go to court. But that is Singapore, the most suitable weapon here is a court procedure. In China you can go to court, but since there is a cheaper alternative we go for that alternative.

Ulrich Schraudolph: Is this alternative also open for smaller companies, or do you need a critical size?

Jan de Visser: No, everybody can use that. It is perhaps that we, as a bigger company being also more familiar with the procedures, will go to that direction earlier. When you start from scratch to protect your product, than it is the question, where do you protect it, in how many countries, because you need to protect in a country by country basis. The more countries you want to cover, the more it will cost obviously. Whether a smaller firm will go to the same extend as we do for certain products for protection, that is an open question. Likely we will protect more products on a yearly basis and if we protect we will do it in more countries than smaller firms will, because we have deeper pockets and the commercial interest is higher.

Ulrich Schraudolph: Can you roughly quantify what is the investment in the protection of a new product in terms of patents, design registrations.

Jan de Visser: It all depends on the number of countries. If you are only marketing in Europe or the US, it will be smaller than if it is a worldwide product, which is marketed in 40-50 countries. In terms of design protection you are talking about something around $ 20K US for registrations. For trademarks you are looking at a bit keener cost, because the procedure is slightly more expensive and your considerations may be different. If you consider where to protect you might ask where is your market, but you may also want to check where your competitor is based, even if you don’t have a market in this country. You may want to block your competitor for producing something similar. That is usually a consideration that you use for patent protection; you look for countries where your competitors are based. For trademarks you always look for markets. Where my market is where I want to protect. For designs, it can be both. But usually we will look more at where is the market. A lot of our products will be marketed worldwide, so you can say, you protect in Europe, the most important countries, US, Japan, Korea, Taiwan. Then it becomes a bit more critical. We would protect in Argentina, Brazil, Thailand, Malaysia, Singapore. It depends also how sensitive a product is for copying. You can imagine that countries in Asia Pacific will be covered earlier, and we would register also in countries like Paraguay, Uruguay, Peru and Bolivia. For designs, take $ 20K US as a ballpark figure. For trademark you would likely protect in more territories. For, say, domestic appliances it would be $20-30K US.

Ulrich Schraudolph: And for patents?

Jan de Visser: Patent are more expensive than trademarks or designs. You would really look at worldwide competition, if you register from a defensive perspective, to prevent that somebody copies. We also register patents for the purpose of exploiting inventions that we sell, and in this case we look more at where is the market for such inventions is. For patents on average we spend about $40K US per patent. For a product that has it all, it goes easily to amounts that approach $100K US. But that depends very much on what you are looking at. Take a radio like this for example. The lifecycle of consumer electronics will be far shorter than the lifecycle of domestic appliances. For a TV or a DVD player for example, particularly in the lower range, you are looking at two years at the most, while for an iron or a blender it can be easily 6 years or longer. Than we would invest more. There is a certain delay between applying for protection and actually getting it granted and it might not be worth to protect a design for such a radio at all. By the time you get the registration, the product has already disappeared from the market. And by the time somebody has copied, you might have already the next product in the market. It is a bit of a gamble, and the result of this gamble might be that for audio and video I protect in, let’s say in Shanghai and the US in order to have a big market covered and also to prevent manufacturers there from copying. But for an iron which will last 6 years and will be marketed in 30 territories, we might say let’s register it in all 30 territories. The price tag is than much higher.

Ulrich Schraudolph: You mentioned that you might register patents in certain countries to inhibit competitors in doing something. Can you do that also with design registrations?

Jan de Visser: Very often it goes together. Lets take domestic appliances, because for that segment we do most design registrations. If you look at the overlap between where we would have market and where our competitors are based, the overlap is pretty high. Whether we would protect in countries where we would have no markets, but where we do have our competitors based I think it depends who are the competitors. If you look at SEB, they are based in France, and no doubt we would protect in France. But if they would have their factory in, say, Slovakia and we would know that all their products are developed there, even if their markets are elsewhere, well likely, yes we would also register in Slovakia. For designs the elements of markets weights heavier than where your competition is based; but it can be a consideration.

Ulrich Schraudolph: You mentioned before that most copies come from China. Does this mean that for a company, which is active mainly in Europe or the US IP, protection would not be as important?

Jan de Visser: An important part of the market of copies from China is not the local market but export. You can protect in China, but that does not always mean that you are effective in enforcing your position. So on top of registering in China you may want to register in your major markets elsewhere, knowing that the copies made in China will likely also go to those markets. It is not sufficient to say: The copies are from China, so I just protect in China.

Ulrich Schraudolph: You don’t have conflicts with your main competitors?

Jan de Visser: Oh sure, the fact that the majorities of copies come from China does not mean to that all copies come from China. You can say that in most cases the one to one copies come from China, while from other countries you may have more problems with elements of designs being stolen. For certain products we are market leader, and for such products you may have competitors who want to go as close as possible to our design. But not as a one to one copy, because they know that we could immediately use our design protection and wipe them out. But they may want to steal certain elements that might bring to mind a certain association with our product.

Ulrich Schraudolph: What is the boundary, when does it become a copy? Is it possible to define that, or does it depend on how the judge sees it?

Jan de Visser: It is never black and white. But usually it is the overall appreciation of the two products. You put them next to each other one would ask, what is my overall impression. There may be differences, but if the balance is more towards the similarities, you may have a good case.

Ulrich Schraudolph: And then you would fight it all the way through or you typically you settle out of court?

Jan de Visser: That can be expensive. In China you can use administrative or criminal law, but in most other countries you have to use civil law which means a court case and there are countries where court cases are expensive.

Ulrich Schraudolph: How much roughly?

Jan de Visser: If you are pessimistic, you are looking at 20K Euro or more. Likely, if you talk about a full-fledged court case that starts perhaps with an injunction and builds on that, a full court case which leads to a decision, the cost may go up to 40-50K Euro.

Ulrich Schraudolph: And you have typically some of these cases going on or it is rather rare?

Jan de Visser: It is relatively rare, because obviously we are not that keen on spending such amounts of money on court cases. If we have to, if we feel that there is a commercial interest that justifies going there, we will do it. For example we had for a number of years court cases pending against copies of our three-headed shavers. That has not so much to do with design rights. Here we claim that the design of our shavers is such, that we claim the three headed configuration as a trademark. We say this is so well known, it has become a signature of our shaver products. We may still have design rights on the base portion of it, but design rights last only 15 years in steps of five years; you have to renew each five years. This design as such is much older than 15 years. In the beginning it has been filed as a design, but now it has expired and is in the public domain. Because we claim trademark rights on this, which can be extended eternally, we still try to claim a legal position in this type of product. And since shavers are very important for us, we will fight the shaver cases we have in several European countries to the end . There is a tremendous market interest involved.

Ulrich Schraudolph: What is the success rate in these cases?

Jan de Visser: Well, don’t ask me all the details of all the different countries, but for Europe we had some successes, there was a decision of the European court of justice of which we said not too bad, even though the other party said the same. Some countries said, yes you have a position, while other countries said, no.

Ulrich Schraudolph: Is the law and the way it is implemented very different in the various countries in terms of IP?

Jan de Visser: I think throughout the world there are differences you can say that the biggest block you had always was Commonwealth, and that any place connected to the UK had certain formulations which were exactly the same as in the UK; interpretations, people in Singapore are looking at cases in the UK for interpretations on how a certain case should be judged, so that block always existed and still exists. But apart from that, Europe has started to cluster more and more. Now, since a short while you have a European design registration, now that is really something completely new, before you had only protection in each of the European member states, and now you have a registration which covers the whole of Europe with one registration, so that is pretty powerful. But if you look at Asia, there are no such cross-links, so you have to cover in each of the countries concerned and you have to cope with all the national differences in each of these countries.

Ulrich Schraudolph: And there are quite some differences?

Jan de Visser: There are differences, for example the main difference may be, what happens if you don’t have a design registration, what kind of alternative protection is there available. Copyright for example comes to mind quickly. Now in Hong Kong, that is an excellent weapon but here in Singapore you can not claim it. If you don’t have a design registration you can not claim copyright on your product.

Ulrich Schraudolph: How can you claim copyright on a product?

Jan de Visser: Well that is the thing, in some countries it is not recognized, the three-dimensional shape can not be protected under copyright. The drawings, yes, but then the question is will a three-dimensional execution of those drawings will be considered as an infringement, likely often not.

Ulrich Schraudolph: How would you rate the legal situation in Singapore?

Jan de Visser: Well on a scale from 1 to 10 likely 9 out of 10. Singapore is completely compliant with what you see elsewhere, enforcement is quite transparent, but on the other hand I believe we never had any design case here in Singapore, whereas if you look at some of the neighboring countries you have issues regularly.

Ulrich Schraudolph: How important is IP protection for Philips. Is it just linked to R&D, you have to do some protection, or is it a particularly important issue?

Jan de Visser: It would almost be an understatement to say that it is important, it is extremely important for Philips.

Ulrich Schraudolph: If you wouldn’t invest in it would mean that most of the R & D investment would not be

Jan de Visser: We would be sitting ducks where it comes to people who want to copy. If you look at patents in particular, it would mean that, if we can not claim exclusivity on what we invent, but if we just throw it on the street for somebody else to pick it up, it will be likely used against you, meaning that if you don’t protect technology, you have to buy it from others which will make your products likely more expensive and therefore less competitive. So we can not do without the protection. That is one element. The other element is that the technology we have in patents we are willing to share that with others on certain conditions. So for a range of products we have licensing agreements in place that people using our technology can do so, if they pay. It is a revenue source, and that has become more and more important in the last years. There always was certain revenue from patents, but it never has been as important for us than in the last 5 years.

Ulrich Schraudolph: Because it is easier nowadays to trade them?

Jan de Visser: It is a general trend. We did not invent it. Everybody is looking more at how to protect a product, but also at how to exploit technology more. There are various reasons. One is a legal position, it has become more favorable to defend IP, and especially in the US it wasn’t always so easy to defend IP. Another reason is that markets have become more homogeneous in how products appear, the whole environment has become more competitive. So how do you compete with other electronic companies, you must have a technology edge. You want to have an extra feature, which you want to protect.

Edward Tonino: Another important element in design protection for Philips we talk about the last years we call it ‘securing our brand identity’. When you build a brand identity, there are a lot of issues we talked about like trademarks, but also like your total brand appearance in the market. You talk a lot about aligning and to get one form language, respecting the different Business Units, a coffee maker will never look the TV set, but within a domain you want to align the products to give it a specific Philips identity. So there is a brand identity element in the protection, to avoid that other people are actually copying your brand identity and by doing that interfere in the building of your recognition.

Ulrich Schraudolph: If you put yourselves in the shoes of a small company here in Singapore, what would be the most important element, to get the most protection out of the least amount of resources.

Jan de Visser: As I mentioned earlier, size helps, and of course we have more critical mass to use the system available to us for registering and defending. For smaller firms and sole designers the considerations are completely different. If you are talking about a one-man band, a designer or freelancer, he may not be involved at all in the comercialisation of the product. So will he start on his own to build a design portfolio? It is unlikely. If it is a small firm also commercializing, it also depends on your turnaround, if the product lifetime is two to three years you could almost say, don’t bother. It is very directly related to your wallet.

Edward Tonino: For small agencies or freelancers, there is often a need to protect your idea from the moment you start to sell it to a potential client. To avoid this client to copy the idea instead of buying it.

Jan de Visser: The problem is, it is country by country. Even if you do a design registration only in Singapore, say you pay including lawyers fees S$800-1000. But that is only Singapore, if your client is not active in Singapore but elsewhere, he has no choice but follow the market of his client. For design as with patents, you can only protect what has never been exposed to the market, so if you commercialize it and after a few months seek a design registration than you are too late, because your design has been exposed to the market.

Edward Tonino: Perhaps we should talk about the ‘Dos and the Don’ts’, often people make the big mistake of being too late or do not to stick to the rules of the game. So if you seek protection through registration or patents from that moment onwards, not to expose your ideas externally.

Jan de Visser: Yes, you should keep it under the blanket in that sense. Once you have registered you can go ahead, you have secured your position. But before that, the same in patents, you can not disclose it to anybody. There are some countries where you have some redress, where it is not that strict, the US for example you have 12 months after your first exposure to the market to claim design protection, and in the European Community trademark there is also a provision for unregistered designs, but in most countries, in Asia for example, it is not possible. You are almost forced to look beyond Singapore immediately and register in a few key territories and how far you can take it depends on your wallet and the life cycle of your product. You can almost never do it in an exhaustive way, to cover the whole world that doesn’t exist. There is one provision that gives you some delaying factor, that is if you file in one country, you have 6 months to also file in other countries and to make your choice in which territories to protect which gives you some leeway. But after these 6 months I can not do anything except in the US where you can still claim protection later.

Edward Tonino: Another element I like to mention is the timing in the process. We have a creation process at Philips based on a year cycle in which it is defined what is the right moment, and who should take ownership of alerting the organization “we have a unique product here which we want to protect” so we have made it part of the process, and there will be specific moments in the process which is part of the sequence to analyze and check whether we need protection the process owner here is the product manager. Design is supportive to the whole process by delivering drawings and materials. We have very good contacts with the department of Jan, and as well in Europe, where we have a yearly or half-yearly visit of one of the IP people to address all the issues and do quick checks. They will go back to the business side to link up with them. The right moment in the creation process is important. Jan has talked about uniqueness. If you take the EM audio range for which we got the Singapore design prize you can see that is a very unique design, that is very important. Strategic considerations are important as well. In the past I have worked for example on remote controls, and we build on a harmonization range that means that we made a range of remote controls to be used globally on all consumer products. So the design was not so unique, but the fact that it was used on such a global scale made protection strategically very important. But we are not protecting ideas to sue companies, but to higher the threshold and securing competitiveness. We should not forget that nowadays that with all the new digital and virtual applications that while product registrations is important but nowadays we protect also sounds, names we protect interfaces so there is a new era of protection which is more software linked.

Ulrich Schraudolph: What are the tools to protect sounds and interfaces?

Jan de Visser: Sound you can use trademark protection even though it is not so common yet, usually if you talk about a trademark it should be something that should be graphically represented, and music can be represented by note bars, but that might not be a true representation of the sound.

Edward Tonino: Sounds are getting more important, if a phone is ringing, if you get an SMS, and names are also getting more important, as you can see particularly in the car industry. We as designers are also involved in naming workshops were we always come back with proposals of hundreds of names, which we have to check whether they are protected already.

Jan de Visser: For interfaces, you can not register a whole interface as a trademark, perhaps elements of it, or similarly you can register elements as a design. The complex look and feel type of experience and how do you describe this experience. There have been cases in the US where they are always quite advanced in IP development. It is exactly this idea of look and feel, which can be protected under copyright or unfair competition. A computer interface in its looks may be quite unique and offer advantages for the user. There is a trend to provide protection either under copyright or unfair competition. But it is more difficult than in the case of design protection.

Edward Tonino: Another important aspect Jan is involved in is the packagings we are designing. We have a number of one-to-one copies here as well.

Ulrich heads the product design company Xentiq. For more information, do visit their website at http://www.xentiq.sg/