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Advantages of Intellectual Property Rights to SMMES

SHARE   |   Sunday, 03 August 2014   |   By Oabona Monnakgatla

Todays’ article focuses on the importance of intellectual property rights to Small, Medium and Micro Enterprises (SMMEs) and how the enterprises could use intellectual property rights to gain competitive advantage in the market place.  The intellectual property rights for SMMEs are usually trademarks, trade secrets, utility models and industrial designs. Todays’ article will however focus on trademarks, and industrial designs and trade secrets.

A trademark is usually defined as a sign that identifies goods or services of an enterprise.  It distinguishes identical or similar goods or services produced by one competitor from those produced by other competitors.  A trademark can be a word, a, sign, number, colour, slogan or any combination of these. For example, may be a customer drinks a particular brand of coffee or use a certain brand of cell-phone because perhaps unaware, these products help to define who you are. Consumers who are satisfied with a given product are likely to buy or use the product again in future. Customers therefore need to be able to distinguish easily between identical or similar products. 

An SMME should know how important the trademark speaks to a customer on an emotional level, to a point where a customer feels strong positive emotional connection with a product. By enabling companies or SMMEs to differentiate themselves and their products from those of the competition, trademarks play an important role in branding and marketing strategies of companies contributing to the definition of the image and reputation of the company’s products in the eyes of the consumers. The image and reputation of a company/SMME create trust which is the basis for establishing a loyal clientele and enhancing a company's goodwill. Consumers often develop an emotional attachment to certain trademarks, based on a set of desired qualities or features embodied in the products bearing such trademarks. It is at this stage that emotion creates brand loyalty which inspires repeat purchase of a product/service.

Quality, class and reliability are some of the messages a trademark can convey to consumers.  For example, some people say Toyota® cars are reliable and affordable to maintain, others say Mercedes Benz® automobiles are high quality and they associate them with a certain class of people in the society. However, for a trademark to communicate this message it should be used consistently and properly. When a consumer buys goods or services he has consumed before, he is sure of a certain level of quality of the goods.  If the quality has been improved the consumer will be satisfied.  If the quality level has declined, the customer will not be happy and may not buy the goods again. It is therefore important for SMMEs to pay attention to the quality of their products to attract and retain customers through use of trademarks.  A trademark can play a number of roles which include attracting and retaining customers and scaring away customers. An SMME constantly checks on the performance of its trademarks, continues to use those that are doing well and abandons those that are not performing to protect its reputation and investment.

 Industrial design rights or design patent is another aspect of intellectual property closely associated with SMMEs. Industrial design rights are granted to creative people to protect the outside appearance of goods or items they create. Enterprises often invest a significant amount of time and resources to enhance the design appeal of their products and this attempts to customize products appeal to specific market segments, create a new market niche and strengthen brands.  However, protection is granted to new, non-functional designs and those that are not against public order and morality.  It is the outside appearance of the good or item that should be new. Not the good itself. A new pattern of a product is one that has never been seen or used elsewhere in the world. Consequently, SMMEs that are into manufacturing like metal fabricators, dress makers, interlocking brick manufacturers, leather works and basket weavers can protect new appearances of their products by applying for and obtaining industrial design rights from the Office of Registrar of Companies and Intellectual Property (ROCIP).

New appearances of products make products more attractive and appealing. They add value to products.  Certain designs or appearances of products may make some products suitable for different age groups (e.g. stilettos), cultures and social groups... Industrial design rights can therefore help an SMME to secure a niche market, make fair profits and grow. This could be through watches, shoes, jewellery, computers, tablets, i-pads and cars. In strengthening brand(s) industrial designs, creative designs are often combined with distinctive trademarks to enhance distinctiveness of a company’s brand. 

Trade secrets are another form of intellectual property right that SMMEs can use effectively to their advantage. Trade secret(s) is a term used in other countries to refer to undisclosed information that has commercial value and give the holder competitive advantage over competitors. The information should be subjected to measures of keeping it secret. It can be any business or technical information. An SMME that would like to benefit from valuable information it produces, should identify the information, label the information as secret, confidential or proprietary and disclose it only on the need-to-know basis. All recipients of the information, should be bound by contracts not to use the information for personal benefit and not to disclose it to others to use. Trade secrets are a viable alternative in instances where other intellectual property rights cannot be used.  KFC recipe is one of the greatest trade secrets in the world today. It was started by one man called Harland David Sanders years back. Sanders tried different combinations of ingredients until the eleventh one that perfected his recipe.  Today, we see a lot of outlets selling KFC chicken using the secret recipe. The outlets even use the KFC trademarks. This simply illustrates to us that SMMEs if they properly use and correctly commercialize their intellectual property rights they can grow and become big companies.

Lastly, it is the responsibility of every intellectual property right holder to manage, enforce and commercialize it effectively. Without proper management, commercialization and enforcement intellectual property rights remain ineffective. Owners cannot earn a living out of them and they cannot create wealth for themselves. Trademarks are renewed after every ten years, trade secrets remain effective for as long as the protected information is kept secret. Industrial designs protection period is a maximum term of fifteen years subject to compliance with relevant provisions of the Industrial Property Act of Botswana.   Where possible these can be used concurrently on the same good/product to strengthen exclusivity or monopoly for the stipulated term of the intellectual property right.