Did you know that intellectual property (IP) infringement costs the global economy billions of dollars annually? Experts are hard pressed to say exactly how much given the impact is so staggering and the effects so far reaching. As noted in a report by the U.S. Congress Joint Economic Committee, IP infringement harms companies through lost revenue, the costs of IP protection, damage to brand and decreased incentives to innovate because of potential theft1. One thing is certain: any company can be a victim of IP infringement and while enforcing IP may be difficult there are hefty penalties that can serve as a deterrent, including fines and imprisonment in the case of counterfeiting in some countries.
Indeed the proliferation of unauthorized or counterfeit products is so staggering that the United States government recently appointed Daniel Marti as IP czar under the Pro-IP Act. In this role, Mr. Marti serves as chief adviser to the President on IP enforcement and coordinates efforts for various government departments. Similarly, the European Commission and European Parliament are currently working to develop a cohesive, ten-point action plan toward a renewed consensus on the enforcement of IP rights and a strategy for the protection and enforcement of IP rights of European Businesses.
The ownership of ideas and creations are among the most valuable assets to any company. Businesses invest in these ideas and rights and use the value they create to help promote and grow business for years to come. Printer manufacturers, for example, invest heavily in new ink and toner technologies and realize a return over the life of the device through the sale of supplies and consumables.
When third-party supplies manufacturers, particularly manufacturers of new build ‘cloned products’, violate IP rights and take products to market, they are effectively stealing from the original equipment manufacturer (OEM) – reducing the ability of the OEM to realize the full potential of their investment and, through their sale, securing financial benefit from the OEM who receives no compensation for this lost revenue. These organizations effectively take a ‘free ride’.
The key challenge to the industry against these ‘IP-illegal’ clones is in our defense of the IP rights they disregard, whether patent, trademark or copyrights. Defense is essential not only to preserve corporations’ legitimate property, but also to eliminate product misrepresentation to end-customers that often leads to disruption within legitimate consumer channels. Let’s look a little closer at the different types of IP:
- Patents: Patents are the result of significant investments in research and innovation. Once a printer manufacturer is granted a patent, it serves as the property right in the invention. This right means that the OEM can exclude others from making, using or selling the item. Thus, when clone manufacturers make, use or sell an ink or toner cartridge containing an invention that is patented by another manufacturer, they are trading on someone else’s hard work and investment and are culpable of infringement.
- Trademarks: Trademarks are used to identify the true source of a product or offering. Any external packaging, internal inserts, labeling or other branding on the consumable that would lead a consumer to believe it’s a genuine Xerox product or offering, when it’s not, may constitute trademark infringement.
- Copyrights: Copyright laws prevent other companies from copying the software of a cartridge or unauthorized use of artwork. Third-party consumables that include OEM-copied software, instructions or artwork without the copyright owner’s permission may violate copyright laws.
Avenues OEMs can take in thwarting IP violation will vary according to local laws and the type of infringement being seen. In some cases, the process may be a quick action such as having websites amended or taken down, or prohibiting the use of specific pictures or texts by third-party aftermarket sellers. Other avenues can be much more complicated and costly.
Once a third-party supplier has been identified as infringing one or more IP rights, the key is to develop an individualized IP enforcement plan based on the particular supplies, the right(s) infringed, the local laws and corporate policies. The plan may include cease and desist letters, litigation and working with border agencies and local law enforcement.
Xerox: Defending its IP assets
Within the print industry, IP protection plays a crucial role in the fight against the aftermarket threats and is an area in which all OEM manufactures must remain vigilant. At Xerox, there are teams in place to fight against IP infringement: the brand protection group, legal team and corporate security work with the operating units to track and take action against those found infringing Xerox IP. These groups are in the midst of a five phase IP enforcement program working across the United States, Europe, Canada, Brazil, Romania, Greece and many others countries, to identify, test and remove IP infringing products.
For copyright and trademark violations, it can be as simple as examining the packaging or printers user interface for the use of our trademarks. Testing for patent infringement requires a little more work. Cartridges are disassembled and individual components examined to determine if the suspect cartridge incorporate Xerox’s patented technology. Similarly, toner from the cartridge is analyzed for chemical composition, as well as size and shape, to determine if it is in violation of one or more Xerox patents.
When it comes to enforcement of IP, is formal litigation the path to take? Not always. An effective strategy in this area relies on planning well in advance – by product, target market and channel, taking account of local conditions relating to IP enforcement, such as local laws and rules, time, cost and potential results and remedy. Litigation is costly, time consuming and while in some cases necessary, there are alternative approaches. Defending IP will vary by geography, products and market type, and will require the selection and deployment of the appropriate weapon in the IP protection ‘arsenal’, be it cease and desist letters, injunctions or litigation before courts or administrative agencies, such as the International Trade Commission.
Outlook for the Future
Despite the complexities around IP infringement, the understanding of this subject along with new technologies, policies and controls are enabling progress to be made in the fight against IP abuse. Xerox recognizes that brand protection is something that requires long standing attention. The team is committed to undertaking innovative research to gather crucial information and develop appropriate measures in the face of what has unfortunately become a culture of infringement. With continued insight into the illegal sources and practices of those organizations who disregard IP holder rights, Xerox will strengthen its defense mechanisms by leveraging technology to protect its assets. Just as important, the company will work hand in hand with channel partners to help make them part of the solution for maximizing protection efforts. While this will remain a very active and aggressive field of play, Xerox will continue to fight back to recover and protect its property.