Quite often, when business people think about intellectual property rights (IPR) and entering a new market, they tend to focus on patents and copyrights. However, their first concern really should be for the protection of their trademark – the words, names, and symbols that comprise a brand.
Companies spend an incredible amount of money and energy in developing their brand and the trademarks that represent that brand; when trademark protection in a market is inadequate, the company loses from both brand perception and monetary standpoints. In fact, Shultz and Saporito (1996) estimate that US firms lose $200 million a year to overseas counterfeits.
Gillespie, Kishore, and Jarvis (2001) point to the Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement developed during the Uruguay Round of the WTO trade talks as having the potential of bringing a minimum standard of trademark protection for companies considering international expansion.
One of the key areas of the agreement has to do with xenophobia, or the treating of foreigners differently than nationals. Many emerging markets have often used protectionist tactics to save local brands; for example, since foreign brands are often viewed warily as potential disrupters of local culture, many countries have imposed restrictions, such as restricting the use of foreign words, disallowing licensing payments, or the forced linkage of foreign brand names to local companies.
While the TRIPS agreement has gone a long way towards normalizing trademark protection around the world, companies should still examine the local market carefully in regards to IPR. In fact, the levels of IPR protection should weigh more heavily in the market investment determination than simple economic variables.
Gillespie, Kate, Krishna, Kishore, and Jarvis, Susan (2001). “Protecting Global Brands: Toward a Global Norm,” Journal of International Marketing, 10 (2), 99-112.
Shultz, Clifford and Saporito, Bill (1996), “Protecting Intellectual Property: Strategies and Recommendations to Deter Counterfeiting and Brand Piracy in Global Markets,” Columbia Journal of World Business, 31 (Spring), 18-28.