Background

The judgement creditor is UMBRO International, Inc., and owner of an internationally known trademark UMBRO. The judgment debtor, a Canadian corporation and purveyor of pornographic material over the Internet, registered the domain name “umbro.com”.

The judgment creditor demanded USD$50,000.00 payable to an Internet charity and a free, unlimited supply of Umbro products to the owner of the judgement debtor in exchange for the transfer of the domain name umbro.com.

Umbro sued and obtained judgement and an award of attorney’s fees totalling USD$23,490 which it wished to collect. Umbro proceeded to obtain a writ of fi fa and also commenced garnishment proceedings to force a judicial sale of the Judgement debtor’s other domain names. NSI filed a response that it did not hold any money or garnishable property of the judgement debtor.

Law

The questions of law that follow, considered under Virginia Statute, were whether:

1.             a domain name is the kind of property subject to garnishment;

2.             specifically, the judgement debtor has a possessory interest in the domain name as an intangible property.

In response to the first question, the Virginia statute clearly states that a writ of fi fa is a lien on all the intangible property of the judgement debtor.   With respect to the second question, NSI argued that a writ of fi fa does not apply to domain names because its registration agreement was dependant on unperformed future and continuing conditions.  The court found that NSI, by its dispute policy, undertook to abide by any order and therefore its argument was immaterial. Furthermore, the court, true to fundamental property principles, held that “property can be garnished that may be subject to other liens that affect the value of the property”.

Therefore, it would be entirely possible for an Ontario court to rule with respect to a domain name garnished under the Ontario Personal Property Security Act (PPSA) or under a general security agreement. As a chose in action, an intangible form of personal property, a domain name may be subject to a security interest under, for example, the PPSA or under a general security agreement. The PPSA provides that upon default, the secured party may enforce a security interest, take possession by any method permitted by law, take possession and dispose of the collateral.

Today, India is the world’s largest grower of tea with a total production of 826.17 Million kilograms in the year 2002. Among the teas cultivated in India, the most celebrated one is Darjeeling. Connoisseurs will assert that without Darjeeling, tea would be like wine without the prestige of Champagne.

The district of Darjeeling is situated in the state of West Bengal, India. Tea has been cultivated, grown and produced in tea gardens geographically located in this area for the last 150 years. The unique and complex combination of agro-climatic conditions prevailing in the region and the production regulations imposed, lends the tea a distinctive and naturally-occurring quality and flavor which has won the patronage and recognition of discerning consumers all over the world for well over a century. The tea produced in the region and having special characteristics is and has for long been known to the trade and the public all over the words as “Darjeeling” tea.

According to records, the first commercial tea gardens were planted by British tea interests in 1852. Darjeeling was then only a sparsely populated hamlet which was being used as a hill resort by the army and affluent people. However, by 1866, Darjeeling had 39 gardens producing a total crop of 21,000 kilograms of tea. In 1870, the number of gardens increased to 56 to produce about 71,000 kilograms of tea harvested from 4,400 hectares. By 1874, tea cultivation in Darjeeling was found to be a profitable venture and there were 113 gardens with approximately 6,000 hectares. Today, nearly 17,400 hectares in 85 tea gardens produce around 11.5 million kilograms of tea.

Tea cultivation, being a labor-intensive enterprise, required sufficient number of workers to plant, tend, pluck and finally package the produce. The Darjeeling tea industry at present employs over 52 thousand people on a permanent basis – a further 15,000 persons are engaged during the plucking season which lasts from March to November. A unique feature of this work force is that more than 60 percent are women.

The income of a garden worker is half in the form of cash and the other half by way of perquisites which have over the years effectively provided a cushion against the impact of inflation and scarcities. Workers are provided with free accommodation, subsidized cereal ration and free medical benefits. Gardens used to run primary schools that have since been taken over by the government but the buildings continue to be maintained by the garden management.

A major part of the annual production of Darjeeling tea is exported. The key buyers of Darjeeling tea are Germany, Japan, U.K., U.S.A. and other E.U. countries such as the Netherlands, France, etc. In the year 2000 about 8.5 Million Kilograms of Darjeeling tea was exported, amounting to a total value of USD 30 Million.

While the tea industry in India is almost completely in the private sector, it is statutorily controlled by the Government since 1933 under various enactments culminating in the Tea Act, 1953. The Tea Board in India is a Board set up under the same Act of Parliament. The Board is administratively under the control of the Ministry of Commerce & Industry of the Government of India (the federal or central government). The Tea Board is vested with the authority to administer all stages of tea cultivation, processing and sale of the tea industry, including the Darjeeling segment through various orders. The Tea Board, however, has been working in close cooperation with the Darjeeling Planters’ Association, which is the sole producers’ forum for Darjeeling tea.

Given that Darjeeling has a high reputation, both the Tea Board and the Darjeeling Planters Association have been involved at various levels in protecting this common heritage. The protection is essentially geared to:

• prevent misuse of the word “Darjeeling” for other types of tea sold world-wide
• deliver the authentic product to the consumer
• enable the commercial benefit of the equity of the brand to reach the Indian industry and hence the plantation worker
• achieve international status similar to Champagne or Scotch Whisky both in terms of brand equity and governance/administration

1983 – Darjeeling logo Created

One of the first significant measures was taken by the Tea Board to protect Darjeeling as a geographical indication about 15 years ago by developing a “Darjeeling” logo.

Statutory Protection

Domestic

The Darjeeling logo created in 1983 has since been registered in various jurisdictions including UK, USA, Canada, Japan, and Egypt and some European countries as a Trade mark/ Certification Trade Mark/Collective Mark.

The Tea Board has obtained “home protection” by registering the Darjeeling logo and also the word “Darjeeling” as a Certification Mark under the Indian Trade and Merchandise Marks Act, 1958. Under the new Geographical Indication of Goods (Registration & Protection) Act, 1999, (which has become operational on September 15, 2003), the Tea Board has also filed applications for the Darjeeling logo as well as “Darjeeling” word to be registered as a geographical indication.

Since February 2000, the statutorily compulsory system of certifying the authenticity of the Darjeeling tea being exported was put in place under the provisions of the Tea Act, 1953. The system requires all dealers in Darjeeling tea to compulsorily enter into a license agreement with the Tea Board India and pay an annual license fee. The terms and conditions of the Agreement provide that the licensees would furnish information relating to production, manufacture and sale of Darjeeling tea through auction or otherwise. The Tea Board is thus able to compute and compile the total volume of Darjeeling tea produced and sold in any given same period. No blending whatsoever with teas of other origin is permitted.

Under this authentication process, 171 companies dealing with Darjeeling tea have registered with the Tea Board. Out of 171, 74 are producer companies and 97 are trader/exporter companies. Certificates of Origin are then issued for export consignments. Data is entered from the garden invoices (the first point of movement outside the factory) into a database, and export of each consignment of Darjeeling tea is authenticated by issue of the Certificates of Origin by crosschecking the details. This ensures the supply-chain integrity of Darjeeling tea until consignments leave the shores of India. The Customs authorities in India have, by officially issued instructions, instructed all Customs checkpoints to check for and ensure that Certificates of Origin accompany Darjeeling Tea consignments.

The Tea Board has also sought the support of all overseas buyers, sellers and Tea Councils and Associations in so much as they should insist that Certificates of Origin accompany all export consignments of Darjeeling tea. Overseas importers are thus ensured of 100% authentic Darjeeling tea in all their consignments.

International

Overseas, the Darjeeling logo and word are registered or applied for registration under the relevant laws available in the country where registration is sought. The present position of international registration of Darjeeling and Darjeeling logo is summarized in the chart below.

In addition to the above, the Tea Board is also in the process of putting in place additional applications for “Darjeeling” and/or Darjeeling logo as certification mark/collective mark in Australia, Canada, Germany and a number of other countries.

1998 – Worldwide watch agency for monitoring conflicting attempted registrations appointed

Pursuant to the appointment of the agency, several instances of attempted registrations have been found. Some of these have been challenged through oppositions and cancellations and some through negotiations. Of the fifteen instances, while five have been successfully concluded in countries such as Japan, Sri Lanka and Russia, seven are still pending decision.

One of the key issues faced by the Tea Board is one of mixing whereby a tea packer maintains a level of tasting consistency and price stability in his brand by mixing Darjeeling tea with teas procured from different sources. There is no process change involved but the packer justifies the considerable mark-up in the retail prices on the ground that he has made considerable investments in propagating his mixture under his brand.

The Tea Board and the Darjeeling producers insist and require that, while the use of the expression “Darjeeling blend” would be applicable to a blend of Darjeeling teas drawn from more than one Darjeeling estate, tea may only be called Darjeeling tea if it contains 100% Darjeeling tea. For example, if the name DARJEELING is used as part of the packer’s brand, then the tea to be sold thereunder would require to be 100% Darjeeling tea conforming to the standards prescribed by the Tea Board.

However, if Darjeeling tea is one of the components of a tea mixture and such mixture is sold under the packer’s mark (which does not include the name DARJEELING as part thereof), then the Tea Board requires that the ratio, name and percentage of each of the components including Darjeeling tea, shall be clearly indicated on the packaging, and the font, design and size of the name DARJEELING and other constituents must be in accordance with and proportionate to the contents of the pack: the objective being to ensure that there is no misrepresentation amounting to passing off as to content and origin of the mixture and thus protect the intrinsic value and integrity of Darjeeling as a geographical indication. Further, the consumer must know what he/she is buying and how much Darjeeling tea is contained in the mixture. Unless there is a greater degree of transparency, consumers, as well as producers, will be deprived of their legitimate due.

Difficulties & Inequities in Enforcement

Worldwide, all GIs are primarily faced with two kinds of risk, one arising from their generic use to indicate a class of products without any regional nexus and the other from their dilutive use as trademarks on similar or dissimilar goods or services. Such enforcement is further compounded by the difficulties arising from the civil law and common law divide among various jurisdictions, the former insisting on formal registration in the country of disputed use and the other insisting on proof of local reputation and goodwill in the country of disputed use. Enforcement of Darjeeling as a geographical indication has been no exception to this and it is currently faced with these or similar challenges in France and USA.

Costs of protection and enforcement for the industry and the government

In the last four years, the Tea Board has spent approximately USD 200,000 on legal and registration expenses, costs of hiring an international watch agency and fighting infringements in overseas jurisdictions. This does not account for administrative expenses including manpower working on the job in the Tea Board, cost of setting up monitoring mechanisms, software development costs etc. It is a great challenge for every geographical indication right-holder to incur such expenses for protection.

Considering that protection of Darjeeling as a geographical indication is the responsibility of the Tea Board as a statutory body of the Government of India with other public policy objectives and concerns for the welfare of the average plantation workers and other interests involved in the industry, the exorbitant and phenomenal resources spent by the Tea Board for worldwide protection and enforcement constitute a significant drain on the already strained budgets of developing countries such as India. This is even harsher because India has geographical indications primarily in the field of agriculture and handicrafts. Nevertheless, the Tea Board has recognized the importance of protection and, despite the costs, has striven to ensure that Darjeeling tea is protected for the benefit of the producers and consumers.

In 1997 Pancholos acknowledged that one of the priorities that had a direct bearing on the growth of the business was the need for protection of the trademark; the main reasons for that were two, namely:

1. the level of distinctiveness that the trademark had achieved in the minds of consumers and;
2. the possibility of third parties using it in bad faith.

And so Pancholos became a trademark for the first time. Then, pursuing the same policy of protection of intellectual property rights, it had other trademarks registered for goods and services provided in connection with the original one, including Pizzolos, Pastolos, Lomitolos and Autocholos.

Its manager said that demand for its products had grown enormously from 1997 to date, and that thanks to the registration of the trademark it had successfully avoided the problem of competitors taking advantage of its efforts.

Such is the level of recognition achieved by the trademark that Pancholos has been growing rapidly, and at present has more than 120 people working in nine separate locations within Paraguay. It has a total of five trademarks under which it sells hamburgers, steak sandwiches, chips, pizzas and pasta. It has also a domain name of its own and its own website (www.pancholos.com).

As part of its growth plan, Pancholos makes use of electronic commerce as a means of selling its wares; orders can be placed on the website for home delivery, which has greatly increased the company’s revenue. It would not have been possible, however, if Pancholos had not had its own website and domain name: any consumer can enter the name in a search engine, find the page and place an order.

At present Pancholos is working on a franchising plan with a view to expanding and breaking into new markets. That will enable it to accumulate additional resources using the company’s intangible assets, including its trademarks, business secrets and software, the latter being protected by copyright. For Pancholos, its ownership of intellectual property rights has been a matter of policy since 1997, and has acquired more and more importance as the business has expanded and the trademark become more famous.

Having been brought up in a poor family in a small village in Mauritania where date palms abound, unschooled and unemployed, Abdellahi Ally invented a recipe in 1987 for the manufacture of a date preserve using only fruit, without any added sugar or preserving agents. Abdellahi gave a few pots away to family and friends as gifts, and all of them liked the preserve very much.

It was his father who gave him the idea of producing a certain quantity and marketing it. Abdellahi had no financial reserves, so he went off in search of an associate who could lend him the funds with which to purchase ingredients, the packaging material and the equipment necessary for making the product and also to build up a distribution network.

When he arrived in Nouakchott, hoping to find an associate more easily in the capital, he was however all the more frustrated, as he failed to find the necessary means of setting up the little business that he dreamed of. So he decided to distribute a few pots of his preserve to earn his living, as he had done previously in his village. He collected empty pots in rubbish bins, sterilized them and then filled them with the date preserve in a little workshop. Gradually he became known in the area, and started to sell more and more to small shops and groceries. One day he received a large order from a supermarket, and then very quickly succeeded in finding an associate prepared to invest money. This development excited him, but he did have some misgivings:

• first he was afraid that, if he had to share his takings with an associate, the latter would take over the production and distribution;
• he was also concerned that, when his preserve was sold to a very large number of consumers, someone would have the idea of analyzing his recipe and copying it.

And yet he could not do without the financial assistance if he was to produce a sufficient quantity to meet the demands of the supermarket.

Abdellahi approached the Ministry of Industry and a number of friends and professional advisers on the subject. They advised him to protect his manufacturing processes under intellectual property law, and to do that by approaching the African Intellectual Property Organization (OAPI).

OAPI suggested the following:

(a) Abdellahi’s processes for the manufacture of his preserve, provided that they showed sufficient inventiveness, did constitute patentable subject matter.

A patent confers exclusive rights in an invention. An invention is a product or process that offers a new way of doing something or provides a new technical solution to a problem.

(b) Manufacturing processes can also be protected as business secrets.

Generally speaking, any confidential business information that gives a company a competitive advantage may be considered a business secret. Business secrets include manufacturing secrets (like the recipe for the preserve), and also trade secrets (like the sales and distribution methods, the consumer profiles, the advertising strategies and the lists of suppliers and customers).

Unauthorized use of such information by persons other than Abdellahi would be considered an unfair practice and a violation of his business secret. However, certain conditions have to be met for the legal provisions that protect business secrets to apply. The most important are the following:

• the information has to be secret; once the secret is disclosed, anyone can access it and is free to use it;
• it has to have commercial value due to its secrecy;
• reasonable arrangements must have been made to keep it secret (non-disclosure agreements, for instance).

The protection of business secrets offers the following advantages:

• it takes place without registration or registration fees, whereas patents have to be filed, and the registration fees can be quite high;
• it is unlimited in time, whereas patents have a life of up to 20 years;
• it involves no formalities, whereas patent protection requires disclosure of the information to a government authority.

Such protection for business secrets thus seemed satisfactory in the event of Abdellahi joining up with a partner and entering into non-disclosure agreements. That did not however solve the problem of consumers being able to analyze the preserve, as the protection of an invention as a business secret does not give the exclusive right to prevent third parties from putting it to commercial use.

Abdellahi therefore had to make a choice of either patenting the invention or keeping it as a business secret: if he did not patent his invention someone else, who might later develop an identical or equivalent invention, could do so and then prevent him from marketing his preserve, or charge him a fee for the use of the other invention.

Competitors could also be looking to take advantage of Abdellahi’s invention. As the date preserve was successful, someone else would be tempted to produce it without settling the royalties payable to its creator and to sell it, perhaps even at a lower price. Without a patent, therefore, Abdellahi was reluctant to disclose his invention to a partner for fear that he would take it from him. If on the other hand his invention was patented, he could license it for payment, and so take advantage of his intellectual property without losing his ownership of the manufacturing processes.

After having weighed the advantages and drawbacks of the various courses of action that he was willing to take, Abdellahi decided on patenting.

OAPI had advised him to approach a consultant, so that a full search could be made to determine whether his idea was truly inventive. If it was, the consultant would then have to draw up the patent application.

In any event, before filing a patent application, it is very important not to disclose or publish the contents, which would cancel out from the outset any possibility of obtaining a patent.

Subsequently, Abdellahi’s patent proved extremely useful in attracting credit. Indeed developments followed in quick succession.

The fact of having obtained a patent for the manufacturing processes of the preserve built up the trust of prospective investors; in a relatively short time Abdellahi had identified bank sources of financial support and also partners interested in marketing his products;

• Abdellahi became a member of the Association des inventeurs en Mauritanie.
• In September 2000 he was invited by his country’s Government to take part in the National Invention Fair, whereupon the panel of judges awarded him the first prize for invention and technology;
• On October 16, 2000, on the occasion of World Food Day, Abdellahi received the gold medal of the United Nations Food and Agriculture Organization (FAO) as part of its TéléFood 2000 campaign¹;
• In December 2000 the Mauritanian State invited Abdellahi to take part in the second African Invention and Technological Innovation Fair held in Lomé, Togo, as a result of which he won a medal, namely the prize of the Geneva International Invention Fair for the best invention likely to interest the international market;
• He was interviewed by Mauritanian and French press and television;
• Finally, OAPI gave him the support with which he was able to take part in the Geneva International Invention Fair again in 2002.

In the meantime Abdellahi has been able to enlarge his workshop. Now he produces the date preserve in larger quantities, with the aid of a partner and financial support from the banks and the prices that he has won. He frequently receives orders from companies with which he has become acquainted at various fairs.

Abdellahi is planning to market his product abroad, notably in the main date-producing countries such as Morocco, Algeria, Tunisia, Iraq and Israel, and with that in mind he is considering the grant of a technical license which would enable him to authorize companies established in those countries (the licensees) to use his manufacturing process against payment of an agreed royalty. He has therefore taken steps to file patent applications in the countries to which he wishes to export or grant licenses.

Apart from that Abdellahi has also contacted a specialized company which is helping him devise a suitable trademark for his preserve. He wants it to be a mark that is easy to read, spell, pronounce and remember in all languages, and essentially one that has sufficient distinctiveness to qualify for registration and protection by OAPI and trademark offices abroad.

____________________

1 TéléFood is an annual campaign of broadcasts, concerts and other events. Its aim is to help the victims of famine to fight against it.

Two years ago, Michael noticed that the humble coffee mug was, in fact, not so humble at all, but one of the most popular gift items in the world market. Especially when emblazoned with the latest in movies, famous personalities, cartoon characters, prime-time TV programmes, and other hot imagery.

“The key to a mug’s success,” says Michael, “is not what the consumer is going to put inside it, but what the consumer sees on the outside when it’s sitting on the shop shelf. Like a lot of very popular gift products these day, coffee mugs are really just extremely successful vehicles for licensed imagery.”

Known as licensed properties, this imagery is bought for a set time and price from the license holders, such as Warner Bros, Walt Disney & Company, and Gaffney International.

“This is a multi-billion dollar industry for the simple reason that people all over the world will often choose a product decorated with licensed imagery instead of one without it,” says Michael. “As long as it’s popular, the imagery could just as easily come direct from Hollywood, like Star Wars, or originate from Australia, like Bananas in Pajamas.”

So when Michael decided to do mugs, he decided to produce the best damn coffee mugs you could find and carve out his share in this enormous market. To do this, he went about mastering low-heat transfer technology; already an important step away from the way most mugs are currently produced.

“Traditionally, an expensive decal is applied and then fired on at extremely high temperatures in giant kilns. The whole process means that your average mug is made with a lot of effort and a lot of cost. And amazingly, this does not necessarily result in the best looking mug,” says Michael.

Michael’s aim was to produce mugs that looked alive with colour and imagery, and were cheaper to produce in capital costs and labour. His Living PictureTM process is an incredible mix of cutting edge innovation with low-tech production, so that one person can produce a high volume of mugs per day.

For Michael, the entire Living PictureTM process represents significant and valuable intellectual property. His trade secrets are carefully documented so that Michael can eventually sell or license the Living PictureTM process to another party, but are also guarded from exploitation through confidentiality agreements and employee secrecy agreements.

Living PictureTM – a trade mark registered with the Trade Mark Office of IP Australia – is now a well-known brand in the licensing industry. Michael expects that consumers will come to recognise it as well.

“Just like low-heat transfer technology, I can’t say that I knew much about intellectual property or ways to protect it when I first started out. But IP issues are an essential aspect to the business I am in,” says Michael.

Within a very short time, Michael’s innovative approach has paid off. Living PictureTM mugs carry the most popular of licensed properties – Star Wars, Elvis, and Star Trek to name a few – and are distributed around Australia by one of the country’s largest gift wholesalers, Crystal Craft.

There are immediate plans to use the Living PictureTM process to do justice to a range of all Australian imagery. With stunning colours and striking graphics, expect this range of mugs to jump out at you at a shop nearby.

This case study has been compiled by IP Australia

Until the late 1980s Frazier was shooting wildlife films for David Attenborough. He was frustrated with the limitations of the lens available on the market then and set about making his own.

“Wildlife is very unforgiving – there is no time to set up the camera and position the shot the way you want it. As well, with small subjects, such as insects and spiders, it’s very difficult to get both the subject and background in focus. I wanted it all in focus and I needed a versatile lens which would allow me to rapidly get the shots I wanted.

“In the late `70s I consulted a CSIRO physicist who said that what I wanted was impossible. So I began tinkering myself and started getting the results I’d envisioned.

“Over the next 10 years I kept rebuilding the lens and, with much trial and effort, formulated a lens with deep focus and a single swivel on the end. The optics to do this are very complex but I began to get positive results.”

The new lens has three revolutionary features:

• a ’set and forget’ focus which holds everything, from front of lens to infinity, in focus
• a swivel tip so that, without moving the camera, you can swivel the lens in any direction, completing a sphere if need be
• a built-in image rotator. This allows the image to be rotated inside the lens without spinning the camera.

It’s a brilliant invention and when Frazier began using it in his work, it did not go unnoticed. Nobody has seen the sort of depth and clarity of filming he was achieving and his work was unique. In 1993 he was invited to speak at Montage 93, an imaging conference in the US.

After his talk Line of Fire director John Bailey and the head of the American Society of Cinematography, Victor Kemper, asked to borrow his tape so they could show it to Panavision. Within days, Panavision was knocking on Frazier’s door.

“It was at this point that I thought I should get a lawyer and Peter Leonard, a high technology international contracts lawyer with Gilbert and Tobin in Sydney, did a superb job for me.

“Panavision sent me a standard three page contract which my lawyer advised me not to sign. He rewrote it and we sent back a document of 30 pages which not only protected my invention but helped me negotiate a very sweet deal.”

The contract was structured so that Panavision, regarded as the best lens manufacturer in the world, could never come back and say they’d already known about the optics used in the lens. They met with Frazier on neutral ground in Hong Kong and the company had to sign a confidentiality agreement before they saw the lens.

“The deal was that Panavision would patent the device, at their cost, but that I would own the patent. Mantis Wildlife Films gets a set fee for every lens made and, when Panavision rents them out, a percentage of the rentals.”

When Frazier first showed his lens to Panavision they couldn’t work out how it was done. But they recognized its value. At more than US$1 million, this would have been one of the biggest patent ever taken out by Panavision but the returns are already rolling in. Nearly every second commercial made in the US uses Frazier’s lens and many in the feature film area won’t go on a set without it.

The benefits to the film industry are huge. Quite apart from the unique abilities of the lens itself, it has dramatically lowered production costs. What used to be a three day shoot now takes only one day because Frazier’s lens has done away with the need for teams of people to rig up complicated setups every time the director wants a new angle. It’s as simple as adjusting the swivel tip.

This case study has been compiled by IP Australia

Location: Luxembourg
Business sector: Software and Internet
Activities: Software management systems and web solutions
Number of employees: 7 persons
Annual turnover: 40.000 € (2002), 150.000€ (forecast for 2003)

Enterprise S. is a young start-up company from Luxembourg. Its activities are focused on the software and the Internet business. It develops, implements and distributes software management systems in the field of accounting, logistics, process tracking, communication, human resources and CRM. Enterprise S. also offers web solutions including application provider, web hosting, web and application development services.

The owner of Enterprises S. learnt about intellectual property issues by attending seminars and conferences for future company managers. There he became aware of the value of his intangible assets and of the importance of protecting them. So he began to seek information about how to best protect them, by consulting IP experts.

As some IP protection tools require financial resources that a start-up company may not necessarily have, the company owner finally adopted a 2-level strategy, which consists of using as much as possible of the free-of-charge protection tools such as copyright and secrecy and of making a cost benefit analysis in respect to his finance regarding trademark and patent protection. “Why not make use of the free-of-charge intellectual property rights as they give you a legal tool to defend your rights in case of infringement by third parties”, is one of his principles.

So the company owner protects his know-how by concluding non-disclosure agreements with future employees, clients and partners before any information is exchanged. He also ensures that all the company’s documents have a confidential notice. Furthermore a copyright notice is placed on all the documents, software and web pages produced by the company. Finally the registration of his products’ trademarks remains on his list of next things to do.

Being aware of intellectual property issues for his business, the Enterprise S. owner also takes care to integrate intellectual property in the business plans. He admits that the time it took him to include IP considerations in his business plans is not wasted as it helps him in his business activities today.

Regarding intellectual property protection, the company manager has adopted a defensive strategy, because he does not think that his competitors are going to copy the company’s products. Nevertheless he wants to be able to assert his rights in case a competitor copies him.

Regarding Intellectual property protection, the company manager has adopted a defensive strategy, because he does not think that his competitors are going to copy the company’s products. Nevertheless he wants to be able to assert his rights in case a competitor copies him.

He also made use of IP as an information source by asking the Luxembourg Technology Watch Centre for searches on trade marks and patents. But he does not regularly use IP information to monitor his technological and competitive environment.

Intellectual property issues are managed by him alone. IP questions are dealt with as problems arise by seeking help from IP experts.

Planning to diversify his business activities, the company owner plans to develop a new innovative service based on a patented system. An exclusive license agreement has been signed between the company and the patent holders. During the negotiation of the contract it was agreed to extend patent protection to more territories, but they missed the deadline of 1 year, which is given to the patent holder to seek protection in other countries without failing the novelty criteria (the priority date). As a matter of fact the company now faces the problem that they can be freely copied and competed in some of their relevant markets.

The company owner considers intellectual property protection as a very important issue for small high-tech firms as if attracts investors and protects one’s intangible assets from competitors.

Case study compiled by the LIIP Project.

Since its establishment in 2001, it has successfully completed over 100 development projects, covering e-business, e-government, education, finance, manufacturing and consulting. Its clients are spread over America, Europe, Asia , like US, Australia, UK, Ireland, Finland, Belgium, Norway, Malaysia, and so on.

In 2004, the company received the authorization from China Torch Program to become one of the second batch of experimental enterprises of China Offshore Software Engineering Project (COSEP) which is the most significant brand of China’s Software Export as well as Software Outsourcing. In early 2005, it attained Microsoft Certified Partner status in Microsoft Partner Program with a competency in Integrated E-Business Solutions, recognizing Shinetech’s expertise and total impact in the technology marketplace.

Intellectual Property (IP) protection plays a crucial role in motivating and attracting Shinetech’s customers, and it has already been indispensable to Shinetech’s long-term development strategy. In Shinetech, IP doesn’t just mean patents, trademarks and copyrights, but significantly is the processes, techniques, methodology and talent. Shinetech supports strong intellectual property protection and understands the vital importance of intellectual property to its customers’ business development. The IP protection policy of Shinetech addressed five primary areas, each of which is regularly validated by its internal and third-party audit program.

The five primary areas of this policy are:

Non-Disclosure Agreements

The first step that Shinetech takes, to assure its customers of Shinetech’s commitment to protecting their IP, is the Non-Disclosure Agreement (NDA). As an act of assurance that Shinetech will treat its customers’ intellectual property with the utmost care, it is Shinetech’s policy to sign an NDA with all its customers at the start of a business relationship. This NDA sets out the rules and responsibilities of both parties, and is strictly followed by all Shinetech employees. In addition, the details of the content, in relation to which IP protection is assured, are also included in the contract.

Project-related IP Protection

Throughout the project cycle, Shinetech protects its customers’ IP in both physical and electronic formats .

Shinetech has a special and sensitive office for each client with a security door with password access and only the relevant staffs are permitted to enter the relevant office room(s). No one is allowed access to any hardware devices, except the network administrator. The security procedures and precautions are also enforced systematically after working hours. For example, the monitoring devices record all visitors. Further, it is clearly stated in the company’s policy that talking about project related information even outside working hours is strictly forbidden.

Shinetech guarantees high degree of confidentiality and security in every project to secure the clients’ documents and prototypes. All clients’ information remains strictly confidential by using Active Directory to manage the users’ authorities. The data can only be viewed by the authorized staffs, and all the copies or editions of the data are clearly recorded by logs that clients can check at any time.

Shinetech employs high-level security for client database information. Client database will not be used for any purpose other than development. Access by Shinetech employees is permitted solely on a ‘need-to-know basis’. The database is well protected during the entire project period. Database media storage and management integrity is ensured by Document Control (DC), which is supervised by Shinetech’s Quality Assurance (QA) department. For sensitive data, Shinetech always put it into an isolated data server in a blocked shelf. Access to sensitive information is limited to a key person only.

As each employee of the company has his/her own computer with a startup password, therefore noone, other than the network administrator, cannot access anyone else’s computer. Shinetech has very strict rules for the network administrator to prevent him from disclosing other’s password/information. The company has systems in place to ensure that the access of an employee who has left the company is totally terminated or denied by withdrawing all relevant access authorizations and invalidating access to the computer system of the company. Also, the company promptly terminates the permission of an employee who ends his/her employment with the company, and disables inactive and orphaned accounts.

Shinetech uses only trustworthy and long-term postal service providers to send its deliveries; it has agreements with them to protect its rights and interests. When data needs to be transferred, it is delivered securely by and to an appointed person.

The ownership of jointly created IP assets or of IP assets created by Shinetech, as part of the work done for a client, belongs to its clients. Also all other IP assets, e.g. , patents and copyright involved in its activities concerning outsourcing, belong to its clients, in accordance with the agreement signed prior to the start of any project development work. All the project related data is transferred promptly and in full to the client with the projects’ formal delivery.

Confidential Document Control (DC)

Shinetech has established a stringent process for managing and protecting its customers’ confidential documents. Every copy of every confidential document is separately numbered and tracked, and is distributed to a Shinetech employee only on a ‘need-to-know basis’. All copies of customers’ confidential documents are regularly accounted for, and deleted when usage needs have expired. All such confidential documents are returned and disposed of by the relevant customer/client.

Employee Confidentiality Contract

To provide further assurance that all Shinetech employees are fully aware of, and sensitive to, the critical importance of protecting customers’ rights, all Shinetech employees sign applicable confidentiality contracts along with their employee agreement upon joining Shinetech. These agreements affirm that the employees will comply with Shinetech IP Protection regulations. Employees regularly attend seminars designed to reinforce the importance of customers’ rights regarding confidential information.

Employee Training and Education

Shinetech’s has an IP Protection Manual and conducts regularly training courses to ensure the implementation of its IP Policy. The IP Manual elaborates the IP Policy in a practical way, paying special attention to the particulars of offshore software development and customers’ IP protection. All of the issues and rules on IP are explained in detail in the training of new employees that join the company. To ensure proper enforcement of the IP Policy, Shinetech has regular training programs on IP for its employees, which are conducted by IP experts.

For more information on Shinetech Software Inc., please refer to http://www.shinetechchina.com.

An entire industry has indeed grown up around Mary Engelbreit, but it all began with a young girl who just wanted to draw pictures. Mary moved into her first “studio,” a hastily vacated linen closet in the home where she grew up, when she was just 11 years old.”. We jammed a desk and chair in there, and I’m sure it was 110 degrees,” she remembers. “But I would happily sit in that closet for hours at a time and draw pictures.”

Mary’s passion and dedication to her drawing has never wavered, and although her company now employs a small staff that “reformats” her art to make it appropriate for a myriad of licensed products, Mary herself still imagines every concept in her head and draws every original illustration with her hand.

Mary’s road to becoming a professional illustrator was full of unexpected twists and turns. She went to work directly out of high school at an art supply store in St. Louis (USA). Over the next few years she worked for a small ad agency, accepted free-lance projects on the side, held independent showings of her own art, and even worked for a short time as an editorial cartoonist for the St. Louis Post-Dispatch. In these early years, Mary learned a lot and managed to make a modest living, but she wasn’t satisfied “drawing to order” for free-lance clients. She knew that she did her best work when it was coming from her own head. What she truly wanted was to be a children’s book illustrator.

In 1977, newly wed and with enthusiastic encouragement from her husband, Phil Delano, she took her portfolio to New York City to try her luck at some well-known publishing houses. She received a “mild reception” from publishers and a suggestion from one art director that she try her hand illustrating greeting cards. “I was kind of crushed at the time,” she recalls. “It seemed like a real come-down from illustrating books.” But soon enough, Mary realized that the suggestion had merit. She found that the greeting card format played well into her style of illustration. Within months, she’d made her first licensing deal by selling three card designs for US$150 and signed a short-term contract with another greeting card company.

Once Mary shifted her talent and energy to greeting cards, success came quickly. Several well-known card companies bought her designs, and sales were brisk. Mary Engelbreit has been grasping opportunities ever since. As her greeting card line grew in size and popularity, it drew attention from other companies who were anxious to license Mary’s distinctive artwork on a wide range of products including calendars, T-shirts, mugs, gift books, rubber stamps, ceramic figurines and more. By 1986, Mary Engelbreit greeting cards had blossomed into a million-dollar-a-year business. She decided to license her cards to Sunrise Publications to free up more time for her art and to grow her business in other areas. In 1995, she brought on Greg Hoffmann, long time friend and legal counsel, as Chief Executive Officer to run the business. Mary Engelbreit Studios now has contracts with dozens of manufacturers who have produced more than 6,500 products in all. And in 2001, Mary saw her original dream come true when she signed a contract to illustrate children’s books for publishing giant HarperCollins. Her debut book, “The Night Before Christmas,” spent eleven weeks on the New York Times best-seller list.

Although the range of Mary Engelbreit licensed product has continued to grow robustly, Mary and her staff are careful to make sure the growth is smart and deliberate as well. They take extreme care in choosing only the best companies to work with and go to great lengths to make certain that Mary’s artwork is reproduced as faithfully to her original work as possible.

In the fall of 1996, Mary took on what was probably her most ambitious project to date. She launched a national consumer magazine, Mary Englebreit’s HOME COMPANION.² The home décor and creative lifestyle magazine reflects Mary’s personal decorating vision and showcases the homes of fellow artists. Each issue also covers topics including family life, food, decorating, craft projects, flea markets and collectibles. The magazine has won several prestigious awards and currently enjoys a circulation of over 600,000, with a readership of 2 million.

Over the years, Mary Engelbreit has shared her good fortune with a range of charitable organizations and worthy causes close to her heart. An avid reader, Mary has always been dedicated to the promotion of literacy. In 2000, Mary launched a partnership with First Book, a nonprofit organization that delivers new books to low-income children. Her contribution of a commemorative poster for the organization’s Make a Difference Day event was a key factor in enabling them to deliver 2 million books to literacy groups for low-income children in 2000.

Today, the Mary Engelbreit companies are headquartered in Mary’s hometown, St. Louis, Missouri, USA. Her companies include: Mary Engelbreit Studios, art licensor; The Mary Engelbreit Store, retailer; and Mary Engelbreit’s HOME COMPANION magazine. Thousands of retailers nationally and internationally sell Mary Engelbreit products, spreading what the Wall Street Journal coined a “vast empire of cuteness.” Total retail sales soar above $100 million annually.

It’s an amazing degree of success for any company, but even more remarkable considering that it all began with a single-minded young girl who decided at age 11 that she was going to be an artist. And while Mary Engelbreit Studios has grown into a global licensing and retail business, that same girl still sits at its core, grown up now, but still drawing her pictures with the same sense of wonder, imagination and enthusiasm.

When Mary was young, people told her that being an artist was not a realistic way to make a living, but Mary Engelbreit was never one to be easily discouraged. “I believed in myself,” she says, “and now I’m living my dream.”

Mary Engelbreit was honored with the 2002 Best Art License of the Year award at the 19th Annual LIMA Gala & Awards Ceremony for the International Licensing Industry Merchandisers’ Association (LIMA). A media release can be read at http://www.maryengelbreit.com/PressRoom/Releases/LicenseAward-06-18-03.htm.

This case study has been taken, with the permission of Mary Engelbreit Studios, Inc., from Mary Engelbreit’s website at http://www.maryengelbreit.com/AboutMary/AboutMary.htm. Mary Engelbreit’s products, her craft project ideas, press releases and other information can be viewed on the home page at http://www.maryengelbreit.com. Mary has also written a Getting Started letter for artists, which outlines some practical guidelines for those interested in the art licensing business (see: See: http://www.maryengelbreit.com/ForArtists/GettingStarted.htm). Her website also offers a Licensing 101 Presentation (ppt) that is often given at trade show events (see: http://www.maryengelbreit.com/PPT/Licensing101/sld001.htm).