Intellectual property – strategic use and management in the resources sector

By: Michael Zammit PhD

A strong IP strategy is a vital part of any business, especially in the resources sector where innovation has historically provided key competitive advantages

All businesses face tough competition in the marketplace, and the number of competitors and the intensity of that competition only increase over time. In the resources sector, which is often characterised by volatile commodity prices, for a business to sustain a competitive advantage it must have a thorough understanding of its core competencies as well as what differentiates it from its competitors. Based on that knowledge, the business can then investigate what forms of intellectual property (IP) protection best serve it.

The business should also understand what IP it thinks it has and what IP its competitors may have. Once the answers to these questions are known, the business should ideally investigate whether it is free from competing third-party rights, and whether it needs to licence in or develop more IP to enable it to sustain its competitive advantage. Ideally, these investigations should be ongoing and the business should regularly review its IP rights to ensure that they align with the business plan.

The subject of this article is very broad, and one cannot do justice to every topic in this brief overview. This article will endeavour to provide a summary of the main points that should be considered, and highlight that IP rights are important for any business in the resources sector.

What is intellectual property?

It is important to understand what is meant by IP, its ‘categories’, and how these can be used in a business context. One simple definition of IP is ‘the property of your mind or proprietary knowledge’. As such, IP may encompass everything from literary and artistic works to branding and reputation, industrial and scientific innovations and know-how.

The main forms of IP that are relevant in the mining sector are:

>> patents, which protect inventions such as new products and processes
>> trademarks, which protect indicators of origin such as brand names, logos, packaging, sounds, scents, colours
>> designs, which protect the appearance of products such as their shape or pattern
>> copyright, which protects independently created works such as text, drawings, plans, manuals and computer programs
>> trade secrets, which protect confidential information.

Of the above, only patents, designs and trademarks are registrable forms of IP. In Australia, each of these rights must undergo a process of examination by IP Australia, the government body comprising the Australian Patent Office and Trademark Office that is empowered to review IP applications and grant exclusive rights. Non-registrable IP rights include copyright, confidential information, trade secrets and know-how and, to some extent, reputation.

A significant advantage of registrable forms of IP is that they are an easily tradable asset, which can be bought, sold, licensed or mortgaged. Furthermore, IP is a multi-purpose and strategic business tool which, for example, can lock competitors out of a market either directly or by providing a business with a specific cost or capability advantage. Alternatively, IP may be used to generate revenue, eg as a royalty stream from licensing, or it can attract venture capital or research funds. It can also simply serve as a marketing tool.

What do patents protect?

Imagine your business has spent time, effort and money inventing a new device, process, system or chemical substance, which you believe will provide a commercial advantage over your competitors. You may attempt to protect the invention by keeping it a trade secret. However, nowadays almost any product released to market may be reverse-engineered and methods, trade secrets and know-how invariably transition with personnel. The only real alternative is to file a patent application.

A patent is legally enforceable and provides ‘negative rights’, in that the owner has the right to exclude others from exploiting the invention for the 20-year life of the standard patent. It is worth noting that a patent does not signify commercial usefulness or success of the invention. This is partly because the criteria for patenting (novelty, inventiveness and usefulness) are different from the criteria for commercial success, and partly because a great deal of effort is normally required to bring a successful product to market, irrespective of whether a patent has been granted. Patents are the only means of securing a monopoly for a technical invention, can act as a deterrent to competitors, and patented products may command premium prices.

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