Magazine article Management Review

Is Your Product Design Really Protected?

Magazine article Management Review

Is Your Product Design Really Protected?

Article excerpt

Anthony Maglica had a good idea. Design a better looking, more durable flashlight and the world would beat a path to his door. He did and the world did just that. By 1989, a decade after he started the Ontario, Calif.-based Mag Instrument Inc., sales of his revolutionary line of sleek, high-quality Mag Lite and Minimaglite flashlights had gone from nothing to more than $50 million a year.

Like any smart business executive, Maglica patented and trademarked his creation. However, once his product had proven to be a success, Mag Instrument's competitors had their own good idea-simply copy the flashlight's design and flood the market with cheaper look-alikes.

Maglica fought back, spending at least $17 million on legal bills over a three-year period to get these copycat flashlights off the shelves. Yet, despite the courtroom battles to enforce his patent and trademark rights, Mag Instruments still has been stymied by a major hole in U.S. law that makes it difficult, to almost impossible, for companies to protect their unique designs and the physical look of their products from being copied and sold by competitors. As a result, there are now some 50 foreign and domestic firms making and selling low-cost, look-alike versions of Mag Lites around the world. "How can you plan for tomorrow if pirates can just come in and copy what you have made," Maglica asks. DESIGN THEFT

Unlike most other industrialized countries, America is lax when it comes to protecting a product's unique look, as opposed to its patentable internal parts. "We lag behind nearly every other major trading nation when it comes to protecting the design of our commercial products against piracy," says Robert Swartz of the Industrial Design Society of America, a Great Falls, Va.-based professional group. "In Italy, for instance, a product's design features are considered a very valuable property right and are protected as much as any patent or copyright. And the laws are vigorously enforced."

In contrast, ineffective and cumbersome U.S. design-protection laws have helped foreign firms copy consumer goods and capture "markets originally created by the innovative designs and marketing efforts of American companies," states Bruce Lehman, a Washington lawyer specializing in copyright and design litigation.

No one knows exactly how many sales American corporations are losing to copycat designers. However, lost U.S. sales contribute greatly to the $43 billion to $63 billion in annual worldwide revenues that foreign firms are making by infringing on U.S. patents and copyrights, plus other kinds of intellectual property theft, according to the federal International Trade Commission (ITC).

Indeed, U.S. law is so out-of-date and the process so time-consuming that many designers don't even make the effort to secure the protection that is available for their innovations. Those that do make the effort have to wait an average of 32 months to get their application processed. Meantime, their design can be copied legally. Once registered, technical variations in the statutes easily can invalidate any official protection. In fact, four out of 10 design patents challenged in court are eventually overturned, according to one recent study.

Until recently, few companies gave much thought to protecting the look of their products, because industrial design was often considered an afterthought in the overall manufacturing and marketing process. Today, however, product design is becoming an increasingly important part of a company's competitive edge. Fifteen years ago, companies competed on price; today it's quality; tomorrow it will be design," predicts Harvard Business School professor Robert Hayes.

The simple fact is, good product and packaging design sells," says Alan Anderson, managing partner of Package Design of America (PDA), a leading industrial design firm in Bridgeport, Conn. …

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