Intellectual property in a global marketplace.

• Author: Horwitz, Ethan

Owners of intellectual property must have a sense of the value of their assets in a world market and how to secure proper protection on an international basis.

A crucial aspect of international business is the emerging effect of international intellectual property on the market. Products move quickly across borders, but the fastest moving property is intellectual property. As quickly as a fax or a phone call, this property moves around the world. Just as products must be packaged to prevent damage, intellectual property must be protected against damage.

Without adequate protection for their intellectual property, American firms can be undercut by foreign competitors. Production can be stopped, counterfeiting can ruin the local market for the genuine product, and the investment in technology or advertising may be stolen. American firms must protect their intellectual property in order to avoid these pitfalls, in order to maintain equal footing with other international companies, and in order to fully develop various foreign markets.

Intellectual property includes a variety of types of protection. For most companies, the two most important are patents, which protect inventions for products and processes, and trademarks, which protect the name, appearance, and even sometimes the method of selling a product. Also included are copyrights, which cover works of art and publications (including computer programs), and trade secrets, which protect information that gives a business advantage, such as formulae or customer lists.

For the most part, trademarks must be registered to be protected, and patents must always be secured for the invention to be protected. Copyrights and trade secrets, on the other hand, can be protected to a certain extent without formal registration. Intellectual property protection is not without cost, but the cost of registering trademarks or filing patents is far less expensive than the consequences of not filing.

The newspapers are rife with stories about foreign companies that locally registered famous trademarks of United States companies. In one case, a sponsor of the U.S. Olympic team was enjoined from having the team use its clothes in the Barcelona Olympics. In another case, a famous shoe manufacturer had to wage a costly five-year legal battle to recover its mark in Brazil. In yet another case, a company whose source of product was in Hong Kong was enjoined from attaching labels with its mark to its products in Hong...