Case study 11 – Patent Prosecution Strategy for manufacturing in Vietnam
An Austrian SME operating in the sport industry, developed a new patentable technology to manufacture sports equipment and was also seeking for a Vietnamese manufacturer. The company was new to IP knowledge and patent application procedure, and therefore needed to understand the best patent application route to protect their product tailored to their needs to internationalise their operations. To pursue it goals, the company also needed to quickly draw and implement a business strategy to protect its idea and to produce in Asia without incurring in major IP risks. Their plan included manufacturing in Vietnam and sell in Europe and other Asian markets and potentially worldwide,
A step-by-step approach enabling the company to comprehend and become familiar with patent application process for Vietnam as well as IP business strategy for manufacturing and selling was needed. It was also crucial to draw a strategy on how to timely and efficiently proceed with applications while progressing in selecting the right Vietnamese manufacturer without leakage of technical information on their innovative product.
The company consulted with the South-East Asia IP SME Helpdesk as they wished to collect relevant information in order to make IPR informed decisions on the most suitable strategy for their needs. While aware that they will engage a lawyer to assist them with patent prosecution and contract drafting, collecting information and tips on local practice was a priority for the company to analyse various implications and scenarios for business development.
First-line consultation in various aspects included:
- Provision of general IP information and tailored first-line advice during one-on-one consultations in relation to relevant patent prosecution routes including registration under the Patent Cooperation Treaty (PCT).
Patent prosecution refers to the progress from the filing of a patent application to a patent grant and the issuance of a certificate.
While patents registered in Europe, being territorial rights, have no legal effect in any of the ten countries in South-East Asia, under the PCT it is possible to seek patent protection for an invention simultaneously in several countries by filing a single “international” patent application instead of filing several separate national applications. The company therefore started with its patent application in Austria and other EU countries and then filing in Vietnam, Singapore and USA.
- In order for an invention to be patentable, the invention must meet ALL THREE of the following requirements:
1) It must be novel;
2) The advancement or development from the ‘prior art’ (existing technology) must not be obvious to the average person in the relevant industry (commonly referred to as the invention being non-obvious); and
- 3) It must be industrially applicable.
- Once one have come up with an idea which is believed to qualify for patent protection, the idea should not be disclosed except, eventually, to those who have signed an undertaking of confidentiality, i.e. a Non-Disclosure Agreement (NDA). An invention needs to be kept secret because it must be new at the time of filing at a Patent Office. If an invention is disclosed prior to filing, it may not be considered as new and novelty is said to be destroyed. This means that a disclosure of the invention by the inventors themselves while seeking potential manufacturers, before the filing date of the patent application, may also destroy the novelty of the invention.
Subsequently, the company decided to undertake the following actions:
- File for PCT Patent Application in Austria and other EU countries, Vietnam, Singapore, and USA
- Sign Non-Disclosure Agreements (NDAs) with potential manufacturers and with the selected manufacturer
- Sign a Manufacturing Agreement including IP clauses with the selected Vietnamese partner
The company is now aware of routes for patent registration to protect its innovative product and can also use the information for future expansion in other markets as well as understand and plan an ad hoc strategy for Vietnam and South-East Asia. The first-line advice on local practice enabled the company to focus on using contracts to protect IP together with IP registrations, i.e. sign NDAs with manufacturers, to add layered protection to its products.
With the support of the South-East Asia IPR SME Helpdesk, the company’s strategy has optimized the company’s budget. Furthermore, it has minimized the risk and time consumption for the company. The IPR Helpdesk also maintains a long-term dialogue with the company until applications have been submitted and manufacturing in Vietnam has started.
- A patent is an exclusive right granted for the protection of new inventions, which are products or processes offering new technical solutions or providing new ways of doing something. The product or process in question must be applicable in industry. In order to qualify for patent protection, inventors or owners must file a patent application, as registration is a requirement, in order to obtain protection for a patent. Patent protection lasts for a limited period of time, usually 20 years. A patent is a territorial right and has its effects only within the national boundaries of the country for which it is granted. International registrations under PCT enable companies to seek patent protection for an invention simultaneously in several countries by filing a single “international” patent application instead of filing several separate national applications.
- It is important to understand the requirements for patentability and how to maintain the novelty of an invention, especially while looking for local manufacturers.
- It is very important to use contracts such as Non-Disclosure Agreements when dealing with technical and confidential information and, generally, it is recommended not to disclose relevant information when possible.
- Hire a lawyer to assist you with patent prosecution, contract drafting and legal implications. Do not forget to analyse your options and collect information on local practice well in advance to integrate them in your business plan and strategy.