Intellectual Property: An engine for your business

When Ms Joyce Chimanye started Zuvva Fashion a few years ago, she did not register it.  Her fashion business made a big break last year and was ready to expand across borders.

However, she only realised that someone was also using the same brand name in a different country.

This made it difficult for her to sell in that country. She did not know what her intellectual property rights were at that time.

Now with a registered trademark for her fashion business under the African Regional Intellectual Property Organisation (ARIPO), Ms Chimanye who is from Zimbabwe is ready to reap from economic opportunities presented by the African Continental Free Trade Area.

Intellectual property rights

Ms Chimanye was speaking during a recent webinar on the World Intellectual Property Day Kickoff event in Africa.

The webinar titled, “Growing Brands: Evolving Opportunities – African SMEs Reflect,” discussed pertinent issues vital to ensuring small and medium-sized enterprises (SMEs) know about Intellectual Property (IP) rights and how to protect their businesses.

Every business begins with an idea. The idea grows and shapes into someone’s mind until it makes it to the market.

The idea when shaped and executed becomes a new product, brand or creative design. This is as a result of continuous innovation and creativity.

But protecting such innovations has not been part of the big budget for many Small and Medium Enterprises which take up a substantial part of the economies across Africa.  

Uganda’s SME sector remains one of the most vibrant and highly competitive in the region.

According to Uganda Investment Authority (UIA), SMEs are spread across all sectors with 49 per cent in the services sector, 33 per cent in commerce and trade, 10 per cent in manufacturing and 8 per cent in other fields.

 Over 2.5 million people are employed in this sector, where they account for approximately 90 per cent of the entire private sector, generating over 80 per cent of manufactured output that contributes 20 per cent of the Gross Domestic Product (GDP).

There remains a high possibility that an invention, creation, brand or design could be lost or have been lost to a competitor in Uganda’s competitive SME sector. Thus the need to protect it.  

Intellectual Property

According to the Uganda Registration Services Bureau (URSB), Intellectual Property (IP) is a product of the mind and human intellect. Intellectual property rights grant the owner of an intellectual creation exclusive rights to exploit and benefit for his or her creation.

Intellectual property exists around us. Every product, or service that we use in our daily lives is a product of someone else’ creativity.

URSB categorises intellectual property in two segments. The first is Copyright and Neighbouring rights which includes literary and artistic works such as novels, poems, and plays, movies, musical works. Photographs, architectural designs, computer programs and electronic databases.

The second consists of Industrial Property which includes inventions for patents, Trademarks, Industrial Designs and Geographical Indications.

These are protected under the Copyright and Neighbouring rights Act of 2006.

 The cost of obtaining intellectual property rights from URSB varies between Shs150, 000 and Shs600,000.

Important tool

Traditionally, most SMEs consider their physical assets as the bulk of the value largely responsible for determining the competitiveness of an enterprise in the market.

However, these scenarios have changed as a result of the revolution of the information technologies, intangible assets ranging from human capital such as know-how to ideas, brands, designs and other intangible assets from the creative and innovative capacity are often today become more valuable than the physical assets.  This is according to a paper titled: ‘Intellectual Assets and Innovation: The SME Dimension’ authored by the Organisation for Economic Cooperation and Development (OECD).

Business development

Owning intellectual property assets, according to Micheal Wabugo, an Intellectual Property lawyer, can assist an enterprise in almost every aspect of business development and competitive strategy.

This can be product development, product design, from service delivery to marketing, and raising financial resources to exporting or expanding your business abroad through licensing or franchising.

IP assets generate market value overtime and this can give SMEs a strong market position and competitive advantage.

 “IP gives enterprises the exclusive right to prevent others from commercially using a product or service, thereby reducing competition for their innovative product and enabling the enterprise to establish its position in the market,” he explains.

Whereas most SMEs consider using tangible assets as collateral to acquire credit facilities, Wabugo says owning IP assets that have generated market value overtime can help to acquire finance at reasonable rates of interest. 

This has been enabled by the enactment of the Security Interest Movable Property Act.

This is also in relation to raising capital. In some circumstances, enterprises seeking to commercialise a new technology may easily raise capital based on their IP assets, for example, by including information about their IP assets in their business plans while approaching investors, financial institutions or government agencies.

Wabugo explains while raising capital; business partners, investors and shareholders may perceive IP portfolios as a demonstration of the high level of expertise, specialisation and technological capacity within your enterprise.

Two cents

To effectively carve out the exclusivity provided by an IP asset, Wabugo advises that it may occasionally be necessary to litigate, or at least to threaten to litigate with enterprises that are infringing on your rights. Owning IP assets will improve your enterprise’s ability to take successful legal action against imitators and free-riders.

For due diligence, Wabugo says it is advisable that an SME conducts due diligence before acquiring or registering an IP. This will help to know the owner, status and third-party interests which may result in litigations.

“But it is also important to know if there is no infringement. In respect to registration like trademarks, it is necessary to conduct a trademark search at the National IP Office at URSB.”