Entrepreneur Clinic – Market Research and IP

Monique: Welcome to the Entrepreneur Clinic with me Monique Chambers. This is a series on setting up your own business or launching a new product. This week my guest is Martina Pace, the manager of the knowledge transfer office here at the University of Malta.
Martina thank you for joining us today.

Martina: Hi.
Monique: Can you tell us first what does the knowledge transfer office do?

Martina: The knowledge transfer offices part of the administration of the university and we deal with managing and protecting intellectual property invented at the University and also with industry academia collaborations. So for example, if an academic has a great idea, they have to come to our office to tell us about it. We then decide whether it has market potential. And if there’s anything we can do to help them reach that market potential. If that is the case, then we assist them through the protection process and trying to commercialize it. And then on the other side, we also set up agreements with companies or government departments, industry, etc. to try and improve the connections between the university and these entities. We also have a student placements and other things like that.

Monique: Brilliant. So in this program today, we want to talk to you about how to perform market research and protecting ideas. So this follows on nicely to last week’s program where we discussed with Professor Russell Smith, how to decide if you actually do have a good idea. So going forward, how can you tell if your idea is unique?

Martina: So in the first instance, you need to assess your market as you mentioned, and then there’s also the aspect of intellectual property. So we’ll deal with those two separately. So on the one hand, if you want to look at your market, you have to do things like understanding who your customers are, who your competition is, you have to understand things like the legal landscape, you have to understand various things, which we can go into in a little more detail. And generally, that starts with a Google search. As you get into more and more detail on a Google search for example, you start to access different reports, different websites, for example, your competition could have a website, which contains information which is useful to you, and so on. Also, as you go through that process, at some point, you must stop using the internet and doing what is called desk market research and move on to primary markets research, which is the actual discussion with potential people who will would be your customers down the line.

Monique: I’m guessing, because it’s not necessarily the fact that a company could have invented something similar to your idea, but it doesn’t mean that your idea doesn’t have space in the marketplace.

Martina: Exactly. And also, it’s important to understand that it’s not important that your idea is unique, because the fact that other things like yours exists also validates the fact that there is a market for your idea. So there is an element of finding your space. But it’s not necessary that you must be the only person in the world providing that one thing. Probably as you do your market research, that space will become more defined. So you will start to realize out of all the potential customers, you want to focus on a particular group. Out of all the possible competition you might have, you want to get a competitive edge over particular competitors, as opposed to over all of them. And that was sort of start to define how you position yourself within the market.

Monique: And this is the elements you discover by speaking to people not by actually doing the desk research?

Martina: The desk research gives you a good overview. For example, if a given industry is growing 10% a year over declining 3% a year, then you know that’s a decent space to get into. Whereas if it’s a shrinking industry, if legislation is becoming most more strict, for example, if you see that other companies that are making it up, all needs billions of dollars of investment, etc, you know then that’s maybe that space that you’re trying to get into, is not suited to your resources. But on the other hand, it’s very important to do that basic research because you start to understand who you’re dealing with, and who to look out for, what other companies are doing, how they’re positioning themselves, which ones have failed, which ones have grown.

Monique: Because you can sort of mimic them, in a sense, piggyback on their success.

Martina: Or not repeat their mistakes. [Laughs]

It also helps you to understand who your potential customer is, so you might have thought that your customer is person A, whereas really, you realize that that person is maybe the end user but not the person who’s purchases your product. So there’s also this element of identifying your customer, which you can also get through market research. For example, in the case of, say, health care products or medical devices, your end user could be a patient, but your customer is doctors or health care providers, or insurance companies, which is completely different to selling obviously, to the patient. So you need to understand all of these different aspects before you can decide exactly how to position yourself or what makes you unique over the others. So that’s from the market research perspective, then from the intellectual property perspective, it’s also

important to understand what is unique about what you are doing. Because you want to, ideally, the future protect your intellectual property, because that adds value to the company. So in a position, let’s say, where you wanted to sell your company down the line, it’s important that your intellectual property status is sort of clear or strong.

Monique: Shows ownership shows the legacy that it’s yours, you created Martina: Exactly.

Monique: So how would you actually go about protecting an idea, once you’ve done this research, you’ve potentially got a prototype really hard, how do you then protect?

Martina: So there are different ways of protecting intellectual property, depending on the type of intellectual property it is. So you can either protect by copyright, which basically covers any artistic work. So that includes the look and feel of something, say, a website, it includes any written text, music, images, so anything like that software also falls on the copyright. So if you code a piece of software, which will become your product that is all protected by copyright, and copyright, importantly, arises automatically. So there’s no registration process, there’s no sort of formal way of registering and therefore it is protected after registration. It arises automatically, you just have to put the little ‘C’ in a circle with your name, and the date.

Monique: On the first document, or the first piece of software.

Martina: Or image or whatever it is, and it’s automatically copyrighted. There is a way of registering copyrightable material such as software, for example, some lawyers or legal firms offer this service where you can give them a sort of a copy of whatever it is with the date so that you have proof that you have developed it on that date. And therefore, if someone copies it after it’s you have sort of tangible evidence that it is yours first.

Monique: How can you find if somebody else has copyrighted your idea?

Martina: So you cannot protect an idea. You can only protect an embodiment of the idea. So you can only protect the thing itself if you like. So if you have an idea of how a software would work, you can’t protect that. But you can write the software and that code is protected, right. So if, for example, Monique, you go and write a piece of software, which does x and I, in parallel, have the same idea and write a different piece of software, which also does x, it does the same thing. Both of us have the rights to use our own software, because we each have copyright over our own thing. And the likelihood that we have written it in the exact same way is very slim, because

we’ve both reached the same conclusion. So Copyright Office, you protection over the actual code, or the actual image or the actual text, it doesn’t offer you protection against someone doing something similar.

Monique: Is there a method that you can protect your idea or how else could you protect an idea itself an idea for an app perhaps, or a piece of software, there’s Is there any methods to be able to stamp your ownership on it?

Martina: So first of all, if somebody uses something which you have copyright over, you have the right to take legal action against them. So that is one element. The second element is keeping the important bit secret.

Martina: Exactly. So trade secrets are a very important form of protection. And with softwares, you can keep certain parts of the software hidden, let’s say to the average user, of course, there are pros and hackers and so on. But they’re not all interested in your specific products. And most coders would be able to, if they really wanted to copy your product code around it to code something different, which does the same thing.

Monique: What if you designed a piece of a, you know, a product for baby that then somebody else could copy and markets.

Martina: So with product, then you move away from copyrights. And you can start putting texting, using other methods which are registered will this time so they don’t arise automatically, you have to go to an intellectual property office in your country and register. And these include patents, designs, and trademarks. So patents generally cover something like the function of something. So like we said earlier, if you have a medical device, for example, you could go and patent that, provided it has not yet been patented by anybody as before.
With designs, you’re generally protecting the form of something less so the function. If the function is the result of that specific form for example, if you want to protect a fork, let’s say, and you protect the design of the fork; automatically, you’re protecting its function, because if it has that design, it’s going to work. So you could you could protect that. Again, you must show that there isn’t a similar design already protected and also for trademark. So trademark generally protects a trade name, the logo that goes with the trade name, potentially a tagline that goes with the trade name. And in the beginning of a company, a trademark may not be a very important thing because it has no value per se. However, as the company grows, it would make sense that that trademark is protected because as the company grows, it is gaining value, is gaining goodwill, spend a lot of money on marketing, etc. And that comes through.

You’re listening to the Entrepreneur Clinic on campus FM with me Monique Chambers. My guest this week. Martina Pace, the manager of knowledge transfer office here at the University of Malta. We’re discussing how to perform market research and protect your idea.

Monique: So Martina tell us then how do you know if somebody else has actually protected, trademarked and patented similar idea?

Martina: So in order to find out if your idea exists, you have to do what is called a patent search or a trademark search or design search. Of course, you can only search for the things that have been registered. So you can’t really search for copyright, of course, but it is assumed that all copyrighted material is unique. Because whoever has come up with it, the author has done it on their own. So it’s highly unlikely that you will have two things developed independently by independent minds in the same way. So for the registered intellectual property, you have databases, for example, there is Espacenet, which is the European Patent Office database, you have WIPO, which is the World Intellectual Property Organization Database, you have the US Patent Office, for example, all of these offices have websites.

Monique: So it’s something you can subscribe to online.

Martina: Yes you just go online it’s free. It’s also trying to find a needle in a very very big haystack. So what so what people often do is they engage the services of a professional. Generally in Malta, we don’t have patent attorneys per se, but we have a lot of legal firms that work in the intellectual property space that can help with a search or can refer you to collaborate as overseas who can carry out these kinds of searches. You also have the Maltese Intellectual Property Office, which has a database for trademarks. So you can set for patents and designs for that office. But you can set for trademarks. There’s also the OHIM which is the sort of European body which deals with trademarks. And they also have a searchable websites for trademarks.

Monique: So you have to go through all of these to see if there’s a whiff of the same idea out there before really, you know, if your idea is worth pursuing?

Martina: I think you wouldn’t necessarily need to do that. It’s not an absolute must. But I think it’s quite important for the simple reason that you before you get into something, or before you start building a brand or before you start producing something which has a design let’s say, if you are not aware of existing design, right, or trademark rights, you might be infringing on somebody else’s registered design or trademark. So that means let’s say I want to open a company which makes snacks and I am not aware of Twistees and Malta and I decide I want to call my brand Twistees, I would soon be shut down after much marketing, etc. Because I would

have infringed on an existing brand. So it’s always good to know sort of the space you’re operating in. And again, as we discussed before, where the space for you is.

Monique: So do you protect your idea then in the space you operate, or the space you actually live? For example, if I invented and I live here in Malta, but I want to sell to America, where do I protect my idea?

Martina: You want to protect your idea in the market, where you’re going to sell, ideally. You also want to try to protect in areas where your product could be manufactured. So for example, in the case of patenting, it gives you the right to prevent somebody else in the space where you will have protection from manufacturing, selling, importing, exporting. So if, for example, I make a medical device, and that medical device is going to be manufactured in the US and sold in England, I would want to protect it in the US and in England, ideally, most importantly, in England, because there’s obviously no point in manufacturing it if it cannot be sold. But ideally, you want to protect it in both spaces. Now, obviously, protection the more regions or countries or territories in which you protect, the costlier it gets. So you obviously want to be more sure about where you want protection. And in some places, you might just accept that it’s okay for people to steal in inverted commas, your idea because the market is small, or because you have no way to know if it’s happening, or no way to protect yourself in that area because you can’t afford the legal battle, etc.

Monique: And what are the typical costs, for example of a patent?

Martina: I mean, usually, if we’re going to have a patent in a few countries, we estimate to about 100,000 euros. And that includes the registration, all of the legal fees that you incur to get your patents from an application to grant, in some cases translation costs, and then you have annual renewal costs. So once your patent is granted, you have to pay annual fees to keep it alive. And it says alive for 20 years. So it’s quite a long a long time. But in theory, during that 20 year period, you have exclusivity over that particular item which is covered by the patent with trademarks and designs, it’s much cheaper. So a trademark in for example, the European community would cost you, let’s say, 1000 euros, and it’s renewable five years later, for a couple of hundred euros. Same thing for a design. So you can see there’s a massive difference in pricing.

Monique: And that would take you to a sort of across the European Union, you can do it one registration, essentially to cover the whole the whole of Europe?

Martina: With designs and trademarks, you can do that it’s a single registration. And it’s valid for the whole of the European Union or everybody who signed up. So the treaty which is it’s practically every country in the EU, I think there’s one or two small countries which are missing.

As for a patent, they that we are moving towards a single European Patent. But right now, you have to get registered in every single country where you would like protection.

Monique: So at what stage then do you decide to protect your idea? Do you have an idea on a piece of paper? Do you have a full blown market? How do you decide at what point?

Martina: So in the case of copyright, as we said before it’s automatic. So copyright is from time zero. A patent must be protected before it is exposed to the public domain. So once patentable material has been released into the public domain, so anybody outside your sort of confidential bubble has access to it, then it’s no longer patentable. With designs and trademarks, you have what is called the grace period of 12 months. So if let’s say, you make a website with your trademark on it, your logo on it, and you want to trademark that logo, you can do so up to 12 months off day, you have released your logo on the website.

Same thing with designs. So if you’ve already shown your design, you can do that. Now, as we said, patenting is very expensive, but it’s the sort of the strongest kind of protection. So depending on what your product is, you might opt for patent protection. And you might also opt to limit the number of countries that you have it in because it gets too expensive. But you need to do that as late as possible, because you want to be sure of what you’re doing. But early enough that you haven’t yet released it in any way to the public domain. With designs and trademarks, you have that sort of year of leeway to prove your market before you need to start thinking about protection.

Monique: What about the people that you work with on your idea as it comes to fruition? How can you protect the intellectual property, the idea everything within that sort of circle that you’re dealing with? How do you know your colleague isn’t going to run away without your idea? Is there is there something you can do there? Because you hear about these stories, is there something you can do to protect your idea from within?

Martina: So the first thing is trust is just human relations. Because, of course, you can put in place confidentiality agreements are non disclosure agreements, and those things are great. But someone can still break the agreement they’ve signed. So the first sort of golden rule is trust, and that everybody is aware of the fact that they need to keep things secret. So in the beginning, just because you know, that it makes sense to keep things confidential, it doesn’t mean it is obvious to other people. So they may even release the information accidentally or in good faith or so it’s really important that everybody is on the same page, everybody is aware that you might seek protection if you seek protection, it can happen within this time frame, and therefore you must not release the information from immaturely so there’s an element of awareness and of trust, I think.

Monique: Okay. So in terms of employing someone, you might be able to put a clause into their contract as well?

Martina: It’s a very very standard thing and employment contracts to have a confidentiality clause and also clauses, which states that any intellectual property developed by the employee will be owned by the employer.

Monique: Right. I see. So if they left actually anything they’ve created, now belongs to the company. I see. So if you discover that your idea is already patented, or registered in another marketplace, what happens then?

Martina: So if that marketplace was going to be your main marketplace, and that idea was not only registered, but granted. So there’s also a little bit of a misconception here when people assume that registration is protection. So if you can have an idea registered, which is either in the form of a patent, trademark or design, but that is not automatically granted. So it’s important to check the status of that registration, whether it’s just an application or a grant. If it is granted, it means that the person who owns those intellectual property rights has the right to enforce them. If it’s not yet granted, it could either be because it will never be granted or it could be that it will be granted in the future. So it’s important to get advice, generally, a lawyer would be able to assist with that. And it’s important to get advice on the status of the application to see what rights the person has.

Monique: What’s the time lapse between actually applying them and having a grant or is that depending on the idea, the markets?

Martina: If it’s a patent, it could be anything between three and seven years. And if it’s a designer, a trademark is generally say, six months or something along those lines. And you can often tell if something is going to go to grant, let’s say you find a patent application that was applied for 10 years ago, and it doesn’t have the word grant on it yet, it’s unlikely that it’s going to get the grant at this stage, it’s also not possible for them to apply for protection in New Territories, because the time frame to do that has elapsed. So if, for example, it gets grounded in the US or it’s only a US application and you know, for a fact they will not have protection in the UK or in Malta or wherever. So it’s important to understand the status of anything that you find. In addition, it’s important to understand which countries they have protection in. So if they have protection in the country where you want to operate, this could present what is called a freedom to operate issue. So that person could ask you to stop doing what you’re doing, because you’re infringing on their intellectual property rights.

Monique: Only in that particular country though?

Martina: Only where they have protection. They might have protection in 10 countries. So it would be in those particular 10.

Monique: Okay.

Martina: But if they have protection in the country where you want to operate, it’s important to know that because you don’t want to set up your whole business and then be asked to stop. However, just because you see a patent granted in a territory, it doesn’t mean that you cannot operate in other territories. So say, it’s granted in the US and you want to operate in the UK, then you can do so because they don’t have protection in that other place.

Monique: Okay. So it’s more about knowing where the audience might be for that product. And they may have registered 10 years before and you’d be hitting seven of the countries and you then have the opportunity to go into the other three countries.

Martina: Exactly. So it’s really important, therefore, to use the intellectual property assessment as part of your market research. So once you’re doing your market research, and you’ve identified which countries you want to go into, who your competition is, those all feed into assessing your intellectual property. And likewise, the intellectual property assessment so feeds back into how you’re going to build your plan based on all the things you found out.
And so going back to the market research part, and I think the main aim has to order be to invalidate all of your assumptions. So you start out assuming you have an amazing idea that this idea is applicable to everyone, in the whole world, etc. No one is doing anything like it and so on. And so everything you do in the market research should invalidate not validate not prove that you are right rather you try to prove yourself wrong. If you don’t manage to prove yourself wrong then you know that you’re starting on a really good footing.

Monique: Really interesting. So we need to wrap up here now. Martina so thank you very much for your time. In fact, next week we’re going to be talking to Ed Muscat Azzopardi about identifying your audience and finding out where they live and what’s interesting and what makes them buy but until then thank you very much. Martina Pace from the knowledge transfer office here at the University of Malta.