Protect Your Intellectual Property

It's not just about patents

David Iwinski Jr.

Managing Director



David Iwinski Jr.

Managing Director

Blue Water Growth

US Mobile: +1 412 352 7997

China Mobile: +86 183 2128 4064

Skype ID: david.iwinski.bluewatergrowth

Protect Your Intellectual Property

It's not just about patents

By David Iwinski

The growth in global markets and the increasing sophistication of both international manufacturing and the expectations of educated and well-heeled consumers has made the demand for advanced US technology stronger than ever. Fully half of the international firms that contact me are looking for access to sophisticated technology, either for distribution or acquisition.


Gaining access to these lucrative markets is important for business growth and to remain competitive, but one of the most crucial issues at the forefront of the decision to move ahead is whether vital intellectual property can be protected. In most cases, initially the inclination is to look at patents, both domestic as well as those available in the international locales where the products are sold or made.


Patents, however, while providing documentation of ownership of intellectual property, have two serious drawbacks when looking at protection globally. The first is that the resolution of patent infringement claims is a civil matter, not a criminal matter. The effectiveness of protecting your intellectual property is directly proportional to your available bank account and your willingness to spend it on this issue. Young firms or those under competitive pressure may find the cost of international patent litigation daunting when compared to the many alternative demands for the use of capital.


The other issue is simply that foreign courts are often predisposed to favor their own citizens. Not only is there a bias against international litigants, but the process is often so long and drawn out that even if you are successful and win a judgment, the evolution of technology may render it a hollow victory, not to mention the additional cost and time needed for will enforcing the verdict.


There are steps you can take to protect yourself.


Fragmentation – If a device is to be assembled and fabricated globally, simply use several widely distributed fabrication shops for the components and then do final assembly and integration with another facility. While this is hardly optimum just-in-time supply chain control, it prevents any single firm from having access to all of your information and components, and makes it much harder for reverse engineering or selling assembled units on the gray market.


Isolation – Another alternative is to maintain control by keeping one or two very specific and vital components of the device (and that might include installed software) that are manufactured in your domestic facilities and sending them over for final assembly. In this model, less critical parts that are easily copied, such as injection molded plastic pieces, can be left to the international vendors, but a mission-critical component (and one sealed against access or tampering) can be dropped in at final assembly preserving the secret nature of its operation.


Contracting party – When selecting your international manufacturing or distribution partner, try to find someone who already has global operations and may have subsidiaries existing in North America. Even if the firm doing the distribution is located in Europe or Asia, sign the contract with the domestic subsidiary and provide for litigation or arbitration to take place in the United States. This gives you the advantage of a more stable judicial forum and doesn’t impose the burden on you of trying a case in a foreign country and a foreign language.


Domestic assets – Further to the above option, any company that also has significant assets located in the United States would be a superior partner to one where all assets are located out of the country. Part of the challenge in protecting intellectual property is that even if you win a judgment, enforcing that judgment without local assets to attach can make it a Pyrrhic victory.


Third-party verification – Finally, since the assessment of damages may often require a detailed analysis of the sales records as to determine the impact of the violation, write into the contract that all audits involving intellectual property and the records related to them be validated and analyzed by recognized and reputable international consulting firm or accounting firm. The cost can be shared equally at first, but ultimately the party in violation should bear the cost of this audit and analysis. This is important because even if you win a judgment, international violators will often do their best to bury the records documenting just how widespread the abuse of your intellectual property was and how much money they made from it. If you have to chase this down on your own, that burden alone will be enormous.


If you plan thoughtfully, tread carefully and use the utmost due diligence when selecting your distribution partner, not only can you unlock those lucrative international markets but you can do so while retaining control of your essential intellectual property.

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