Patent backlog threatens NZ innovators

By PETER GRIFFIN

New Zealand companies looking to make it big with high-tech inventions in the new economy are not doing enough to protect their intellectual property, according to a new paper released by IT law firm Lowndes Associates.

Companies could be wasting valuable time in developing technology that has already been patented in the US, due to backlogs of up to three years in the US Patent and Trademark Office.

Mark Copeland, IT solicitor at Lowndes Associates, said he was unaware of any New Zealand company with a dedicated intellectual property manager, despite the growing number of technology companies developing software locally for the global market.

"In our experience many New Zealand companies are not paying sufficient attention to identifying what is their intellectual property, and strategising for the protection of that intellectual property throughout the organisation," he said at a venture capital conference this week in Auckland.

Mr Copeland said the best protection of intellectual property lay in securing a patent on technology in the countries where the company intended to commercially exploit it, but the sheer number of patents filed in the US was slowing the registration process.

"The US Patent Office is 18-24 months behind in processing software patents, a lifetime in e-commerce terms. Third parties have no access to what is filed.

"If someone else has also developed it and registered it before you, you basically lose, even though when you started work you could have no way of knowing if they have applied to protect their invention."

Intellectual property issues have become more complicated with the proliferation of companies seeking to protect internet-related processes.

Online retailer Amazon.com is involved in a high-profile patent infringement suit against bookseller Barnesandnoble.com in an effort to defend its patented "one-click" system, which enables repeat online customers to place orders without re-entering credit card information.

This year, the US Court of Appeals ruled that Barnesandnoble.com could continue to use the one-click system technology under contention until a ruling is made in September.

Mr Copeland said that while New Zealand companies were conscious of the need for protection, many focused only on the traditional areas of copyright, trademarks and patents, but wider issues, such as managing employees' access to intellectual property, were often neglected.

A dispute over ownership of patented technology is at the centre of a case being played out in the High Court at Auckland. This year, UK-listed IT company Invensys, took action against Invensys' New Zealand chief executive, James Kennedy, five other defendants and Auckland-registered company Load Logic in a dispute over ownership rights to a type of power rectifier.

In March, Invensys was successful in winning an injunction against Mr Kennedy and the other defendants. However, the defendants won counter orders against Invensys, preventing the company from using the disputed technology.

Craig Meek, executive vice-president of technology at sports animation software developer Virtual Spectator, said his company had secured a number of US patents for its locally developed software.

"Patents are very important for developing and leveraging sports rights as well as raising funds.

"The first question a potential investor asks is 'how you are protecting your trade secrets?"'

Mr Meek said that Virtual Spectator was aware of the risk of employees walking away with the company's technology, and he said that involving employees in the business through offering them stock options was wise.

Read the full report:

Intellectual Property in Venture Capital Transactions