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Intellectual Property (IP) is a set of legally enforceable rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields. It includes the rights relating to the areas such as literary, artistic or scientific works, performances or performing artists, phonograms, broadcasts, inventions, industrial designs, trademarks, service marks, commercial names and designations, protection against unfair competition, geographical indications, and new varieties of plants, undisclosed information and layout designs of integrated circuits. In Sri Lanka IP is statutorily recognised and protected by the provisions of the IP Act No.36 of 2003.
AIPPI is the world’s leading organisation for research into and formulation of policy for and the law relating to the protection of intellectual property (www.aippi.org). It is a non-political, non-profit international organisation which unites practitioners, academics and owners of intellectual property. This was the first event of this nature to be organised by the Sri Lanka IP Association since the establishment of the Sri Lankan IP Association in 2012 when a program on Intellectual Property Strategy for Importers and Exporters was conducted.
In addition to recognising IPRs as an asset that forms part of the wealth of an organisation, the seminar also highlighted the importance of Intellectual Property as a factor in the making of foreign investment decisions, of the countries capacity for innovation, its significance for long term growth and its relevance to the national economic goals.
High tech revolution
Project Director of the Coordinating Secretariat for Science, Technology and Innovation (COSTI) Sri Lanka, Professor Ajith De Alwis spoke on ‘Innovation and the importance of IP in moving the Sri Lankan economy forward.’ IP patents can serve as an important indicator on how much a nation engages in innovation. As an emerging nation reaching towards a $ 7,000 per capita income, there must be visible changes taking place in both the industry and the economy. This is not limited to simply strengthening Sri Lanka’s current industries, but requires a change in the economic landscape itself. Therefore Sri Lanka should not be a hub for knowledge transfer but should instead aspire towards knowledge creation as well. The Professor pointed out that with innovation the $ 7,000 per capita income will be an easy target for S
ri Lanka to achieve, especially considering the fact that Sri Lanka already has a high literacy level on par with any developed nation. However what is lacking is the utilisation of this knowledge towards achieving our economic goals.
The Professor indicated this point when he said, “The Sri Lankan industry composition has to change when the economy changes – and if you want that mega change then you will find that the commodity industries, such as those relying simply on agriculture, are no longer sufficient to reach our goals. We need to ensure we reach the required export income as a percentage of GDP and support a healthy balance of trade. In light of the 2020 macroeconomic framework this implies the industry and services components will need to grow and grow with specific innovative characteristics in place. I mean, NY was stitching clothes at one point.”
He said this in relation to the work done by COSTI in addressing the need to improve high tech innovation in the country. High tech innovation currently accounts for only 1.5% of all exports. Considering the fact that re exports claim a large share of this percentage, the number is dismally low. COSTI together with the Government hopes to increase this percentage to 15% by 2020. The professor alluded to this fact by saying, “We’re talking about improving our high tech exports from 1.5% to 15%. All our regional friends have much more than 1.5% and when we analyse this value of 1.5% we find that there is much more re exports than even production from inside. 15% (high tech exports) is very important for the economy because it’s a transformation for the economy.”
While Sri Lanka boasts of a high literacy level on par with any developed nation, we cannot claim much in the sphere of IP in terms of a creative economy. As Professor De Alwis said, “We can beat any developing nation and compare with any developing nation (in terms of literacy). We have failed to recognise the literacy dividend. We have the numbers and the skills but it’s not being translated.”
Furthermore, Sri Lanka’s journey towards the $ 7,000 per capita income faces the danger of falling into the ‘lower middle income’ and ‘middle income trap’ which can be avoided through innovation in keeping pace with today’s fast paced world and maintaining a more stable economy necessary for a long term result. The Professor pointed out, “It’s very important for us to remember and understand that if we want to progress through these mileposts, the innovation pathway offers us a better way of getting there and also a more stable future for the economy rather than the current composition.”
He further added, “So our mindset needs to be in a different alignment and bring out the creativity spark among all individuals and then looking at the creativity, the ideas should be rea
lised in invention and the inventions should follow up resulting in innovation. It is the innovation that matters to the economy at the end. Having ideas is not sufficient. You need to translate them into action.”
Fastest growing region
AIPPI Secretary-General Laurent Thibon spoke on ‘An introduction to AIPPI – and the world of patenting in the context of evolving Asia’. As the protection of IP can be quite a costly affair Thibon referred to the concept of utility model patents (also known as petty patents) which are recognised in certain countries and which are well adapted for products with a short life cycle and do not cost as much as regular patents. It also gives the owner the freedom to decide when to sue for infringement thus avoiding the cost of substantive examinations when it is not desired. For patents and utility model patents Thibon outlined the salient features of obtaining patent protection internationally through the Patent Cooperation Treaty. He explained, “The international aspect is made available through a tool called a PCT (Patent Cooperation Treaty) which is an international application which covers many countries.” PCTs are advantageous in terms of flexibility as it gives the creator time – up to 30 months – to find investors to partner with before proceeding further which is beneficial for universities and research. In the context of Sri Lanka he pointed out that applicants from Sri Lanka who are natural persons enjoy a 90% reduction in the fees payable to WIPO which is the organisation which administers the PCT.
He further pointed out that Asia is rapidly emerging as the leading region in terms of innovation. According to Thibon, “75% of the annual growth in patent filing came from Asia, mainly from China, Japan and Korea. This shows that Sri Lanka finds itself in position and a part of the world where there is a huge opportunity for growth.”
Intellectual property rights (IPR) are a way to protect your investment in research and secure innovation, build partnerships and demonstrate a capacity for innovation. Speaking of its significance he said, “Patents protect investments. Because you’re spending on research and universities are spending on researchers, you also need to secure your innovation. When building partnerships with local and foreign companies you should protect the parts coming from Sri Lanka in such global innovation,” while further adding, “It also 
demonstrates that your industries are innovating. You must protect that innovation and show this to the world.”
IPRs also allow an organisation to protect their market share as Thibon elaborated, “Any product or process may contain a patentable invention. Each time you think that you want to sell or start to sell a product you have to keep in mind that there might be something to protect.”
The value of IP
AIPPI Assistant Secretary General Karen Abraham spoke on ‘Developing and formulating strategic IP policies in the context of evolving Asia’ which touched on why IP is crucial to an organisation and how to protect and develop Intellectual Property and how this impacts development in terms of attracting foreign investment.
IP is crucial to an organisation because it forms part of its assets, which in turn impacts its valuation. The protection of IP in terms of trademarks, copyrights, and licensing, co-branding, packaging, patents and trade secrets should be looked into keeping this in mind.
Foreign investors will prioritise the IP regime in the country when deciding to make an investment as Abraham pointed out, “First thing a foreign investor looks at is the IP regime in the country and how it is protected, maintained and who will prosecute if it’s violated. It’s important to have a system to safeguard investment. Especially in developing countries where we want investment, we want to cultivate a culture of innovation within our domestic market.” Companies should have an IP policy and have a methodical system of managing their intellectual property through an IP audit.
An IP audit allows the company to periodically review the available IP resources and decide what patents they may not want to exploit so that they may no longer deplete company resources. She pointed out, “One of the things you need to do is to see what you’re not exploiting anymore and if it’s not of use to the company don’t renew those (patents) and don’t throw money in that direction.”
She further cautioned companies to be vigilant of similar products and strategies that may be present in the regional and global market. “Companies fail to do searches. It’s imperative that you do online searches to decide before you come up with a brand, tagline, strategy, a company name or a variation of a company name. You need to know what’s in the global, regional, local market so tell the marketing people to do their searches.”
Proper IP protection can add to the value of a company as is the case with many well known global giants such as Microsoft, Apple, Google and Samsung as a large part of their wealth is accounted for by their intellectual property. “Once you have a good IP protection, and value the IP it will give you a price tag. It may be collateral. You can walk into a bank and they will give you money for that collateral. That’s what we want; for IP to be recognised by financial institutions.”
Furthermore, intellectual property can even lead to global franchises such as McDonalds or Starbucks originating from Sri Lanka in the future.
Building strong brands
Nielsen Sri Lanka Managing Director Shaheen Cader who delivered a presentation on ‘Evaluating brand health’ discussed the correlation between intellectual property and building a brand.
Cader used the example of bottled water which, compared to tap water, can call a higher price in the market because of the value addition that is contributed to a product through branding.
Numerous elements such as logos, packaging, taglines and advertising come together to build the brand image surrounding a product and create a familiarity which draws customers. These elements need to be protected to avoid infringement that could undermine the hard work and investment made by the organisation in bringing these elements together. According to him, most of the brand infringement done in Sri Lanka is with relation to the packaging elements.
As Cader pointed out, “About Rs. 15 billion was spent on advertising in 2013. When IP is violated it means others are making use of the efforts that you have put in.”
He also laid out three important qualities of a ‘strong’ brand which are that people prefer the brand over alternatives, they would recommend the brand to others and, people are willing to pay a premium price for that brand.
When building strong brands, organisations should look at creating awareness, consideration, proximity, and association with regard to the brand. Creating awareness is one of the main aspects of branding, while proximity and consideration make the brand feel closer to the consumer and ensure that they’re positively disposed towards it. The association of the brand can be created through research on the imagery of the brand and how a brand can be positioned in the customer’s mind.
Multinational companies will have to face challenges such as the invasion of duplicate products when operating in markets such as the FMCG market of Sri Lanka as he said, pointing out that grey imports and expired products entering the local market will damage the brands that are being legitimately marketed, “85% of Sri Lanka’s FMCG business is in the normal grocery stores and eating and drinking outlets as opposed to supermarkets. In the supermarkets it’s far easier to control because it’s a centralised buying system which is far more legitimate but a general trader might buy from a wholesaler who imports something that for instance might have fallen off the back of a lorry in Dubai,” he said, pointing out that most of the FMCG market in Sri Lanka consists of general traders which makes it difficult to monitor and control the quality of the items being sold.
Cader also addressed a reason why some organisations don’t enforce their IPRs and called for greater assurances that IPRs will be protected. Relating the fears expressed by some organisations during research studies, that they will lose the battle with the infringers setting a precedent which will open doors to further infringement Cader said, “They’re concerned that they’ll get defeated and it will set a precedent for others to do what they want to with the brand. There needs to be a reassurance given, and stronger legal support given for brand protection.”
Necessary skill
In house legal counsel, ECCSL and Managing Partner of John Wilson Partners, Attorneys-at-Law & Notaries Public, Co President of the Sri Lanka IP Association – Sri Lanka Group of AIPPI, John Wilson spoke on ‘IP Strategies for business in today’s global context’ saying, “The level of Sri Lankan patenting is dismally low,” and pointed out that there have been only 165 outgoing patent applications from Sri Lanka since 1982 under the Patent Cooperation Treaty route. The actual number may be lower than what is indicated since the rules of PCT require the applications to be made from the country of residence or citizenship and therefore this number would include Sri Lankan innovators working for foreign organisations.
His presentation covered what patents are, what they are granted in respect of and how an inventor could obtain a patent. It was explained that a patent can be obtained in respect of any invention (as defined in the IP Act).
An application for the grant of a patent must be made to the National Intellectual Property Office of Sri Lanka (NIPO). An application must be accompanied by a patent specification. A patent specification must contain a description of the invention, one or more claims, and any drawings which are referred to in the description to illustrate the invention. NIPO grants patents without substantive examination though the IP Act does provide that an invention must be new (novel), involve an inventive step and be industrially applicable.
Sri Lanka is a party to the Paris Convention, and an applicant originating in Sri Lanka can therefore, when seeking patent protection in another member country, claim priority back to the date on which the first application was filed in Sri Lanka.
One of the biggest problems faced when applying for patents is the drafting of the specification and this is an aspect in which inventors should be supported. As Wilson raised the question, “How are we going to hone the skills of IP professionals to be able to help the inventor to draft a specification? As for he said: “It’s not easy. If you get one word wrong you can lose your rights to protection.”
With the proper protection of IP, organisations can keep out competitors and enjoy a bigger market share for their products as Wilson pointed out, “It can help you wall out competitors, keep them away from what you’re doing. Your market is bigger and generates more revenue for your product.” He also discussed opportunities such as cross licenses, and entering into agreements with other patent owners. Patents are territorial and this too needs to be considered while protecting intellectual property. A business would therefore do well to focus on the markets you wish to capture as Wilson pointed out, “You have to remember that patents are territorial. You have to focus on where your markets are and that’s where you need the protection. Not where you think the infringers are.”
In the context of limited resources for spending on securing IP protection he advised that the pursuit of IP protection should be according to the markets that should be secured rather than according to the infringers that need to be stopped. This is because IP protection in countries such as China where a massive amount of duplicate products originate (though the situation appears to be improving there) could be difficult. It’s therefore a better strategy to stop such products at the borders and keep them from entering the market.
Turning to the local IP regime, his presentation referred to Section 181 of the IP Act which provides that any person who wilfully infringes the rights of any registered owner, assignee or licensee of a patent shall be guilty of an offence, and shall be liable on conviction after trial before a Magistrate to a fine not exceeding Rs. 500,000 or to imprisonment for a term not exceeding six months or to both such fine and imprisonment, and in the case of a second or subsequent conviction to double the amount of such fine or term of imprisonment or both.
Wilson also spoke of the importance of proper IP management in an organisation by the use of innovation disclosure forms, and the implementation of a system of tracking and recording innovation as well as possibly, a system of incentivising new ideas.
As a service initiative, he informed those attending the event, who are members of the ECCSL, about an initiative currently being developed, a Sri Lankan IPR Helpdesk of the ECCSL. The aim of this helpdesk is to raise awareness of IPR matters, to provide customised support for tackling general or specific IP questions, and finally to empower beneficiaries of the services of the helpdesk to develop their own capacities to deal with IP in their daily business.
Commenting on the work of AIPPI, Amice van der Burg-Dissanayake, who is involved in IP Strategy at John Wilson Partners, had this to say: “The AIPPI requests the national groups to do academic and practical legal research in regard to specific topics that have been identified at the highest levels within AIPPI. Normally, four questions are circulated each year. Each national group should respond. Then the overall coordinator or rapporteur for the question produces a global summary report.
Each year, at the annual AIPPI conference, a draft resolution in respect of each working question is discussed – and debated. The Sri Lanka IP Association – Sri Lanka Group of AIPPI intends to respond to questions that are relevant to the Sri Lankan legal context. After all, who would not want to wish that a viewpoint which takes into consideration Sri Lankan IP interests should not be included in the global debate?
Involving a new generation
Sri Lanka Inventors Commission (SLIC) Commissioner, Deepal Sooriyarachchi spoke on ‘Promoting an Innovation Eco System in Sri Lanka.’ In his presentation he elaborated on the various aspects in which innovators need support to take their inventions to the next level and the manner in which SLIC has provided such help.
One such challenge was to get children interested in innovation and harnessing their creativity to build new inventions. SLIC has been able to build such excitement by creating a reality show that follows various students in their endeavour to create new inventions.
Companies should also be interested in investing in such innovators, while giving them the freedom to create, without worrying about failure or deadlines. When commercialising an invention, he also pointed out that organisations should be able to see the wider picture in terms of the real world applications of a certain invention. He likened inventors to artists who can be absorbed in their creation and fail to realise other applications of what they are creating saying, “Inventors are pre occupied with what they’re doing, like artists, they don’t see its full application.”
He illustrated this with an example of a local inventor who created a device to monitor when the bails fall off a wicket while playing cricket. An Australian inventor who had created a similar device however, had introduced it as a device that can detect when an object has been moved, which has a wider real world application for example, security measures taken in museums. Failing to realise such potential can create a huge difference in the marketability of that intellectual property.
Organisations can help inventors with the proper protection of intellectual property, in applying and drafting patents, and re imagine the application of a product and open up a much wider market rather than limiting its scope to what was originally intended.
At the same time not every invention will be profitable and there may be instances when technology clashes with marketability.
He also pointed out that not every invention had to be high tech adding that organisations should identify the potential of various inventions as they get involved. According to him, there is an economic factor involved in the type of inventions that are being made as he said, “When the economy is doing well inventions will be more sophisticated and advanced.” He then went on to say that with more and more children being exposed to the sciences we can expect innovators frequently coming up with more sophisticated ideas in the future.
Further, he called for investors, a positive media culture and corporates to provide a safety net for graduates so that they may engage in innovation without the worry of family obligations that are a part of the Sri Lankan culture.
Sooriyarachchi said, “There needs to be a safety net for graduates. There are students with brilliant ideas in universities such as Moratuwa University but they may not proceed because families expect them to bring salaries home. Corporates can support them in a way that suits Sri Lanka.”
“Innovation should be main stream,” he concluded saying, the SLIC which is a government organisation set up to promote invention was willing to partner with the private sector to further this cause.
Pix by Daminda Harsha Perera
