In 2000, the Mexican Industrial Property Institute (IMPI) set up Regional Offices to promote the use of intellectual property by small and medium-sized enterprises and researchers throughout the country. This decentralized mode of operations has helped to increase considerably the number of applications for patents, marks and industrial designs by Mexican enterprises, inventors and researchers. In conversation with the SMEs Division, Director of the Western Regional Office, Theodore Schultz, explains the reasons for this success.
Mr. Schultz, why did IMPI decide to set up the Regional Offices?
For two main reasons, the first is the decentralization of the IMPI's main Office. The second is to bring the services closer to the users, which has allowed us to bring forth the "latent demand". Most enterprises are unaware of the possibilities offered by the Industrial Property System for protecting their rights since they are unaware of the very existence of the System. When it is explained to them, they grasp the importance of industrial property and request our advice. This is what I call mobilizing the "latent demand."
What are the main aims of this campaign?
Well, it's not really a campaign, it's more of a continuous task, it's not something which is done once and left, but is a permanent undertaking. Our promotion work carries on all year and every year. The main activities of the IMPI Regional Offices are firstly to generate and locate the underlying demand through appropriately targeted promotion work. Once the demand is generated, employers invariably resort to filing applications, both for marks and for patents. We assist them in relation to the preparation of applications, we make phonetic searches for distinctive signs, or search patent databases to ascertain whether an invention is patentable.
Therefore, this process has two facets. On the one hand, spreading awareness of the industrial property system and creating an "industrial property culture" and, on the other hand, promoting the filing of applications, i.e. selling our services. Consequently, one thing is the general awareness of the service we provide and another is to promote or stimulate the purchase or use of the service.
What results have been achieved thus far?
There has been a dramatic increase in patent applications, but our work started from a very low baseline. For example, prior to the opening of the Western Regional Office, in 1997, 25 applications for inventions were received through the federal delegations of the Secretariat of Economy, which was previously responsible for receiving applications for the States in the region. In 1998, there were 35 applications. However, in the first year of operation of the regional office, from April to December 2000, the number of applications reached 188, i.e. almost eight times more than in the previous financial year! In the second year of operation the figure was almost twice that in the previous year, i.e. we had almost 100 per cent growth. We consider that in any case the level is low and we believe that a larger number of applications can be achieved.
And what is this dependent on?
On our promotion and dissemination work. The aim we have at the Regional Office is to achieve firstly a national share of 10.3 per cent of applications for patents and marks, which is the share in the gross domestic product of Mexico of the States of the region covered by the Western Regional Office. This is the reference which we have. In the calendar year 2002, we reached a share of 6.3 per cent.
How many regional offices exist today?
There are four, the first was the Western one based in Guadalajara, the second is in the North East, based in Monterrey (Nuevo León), then the South East, in Mérida (Yucatán) and the fourth is León in Guanajuato.
Is it very expensive to set up a regional office similar to the one you have set up?
Well, there are two aspects, one is operating expenditure and the other is investment in fixed assets. Of the four IMPI regional offices, three are owned by the Institute, thereby requiring expenditure. The other aspect is the operating expenditure based on income. In the case of the Western Regional Office, I can tell you that the Office was paid for in the first financial year. One year after the launch, the investment and operating expenses were already paid for. In other words, in business terms it is an excellent investment. In this financial year, 2002, we hope to obtain income allowing operations to be paid for, including the assets acquired for the operations, i.e. the computers, a vehicle, furniture and equipment. As a result, when the services are brought closer to the public, the possibility that such services are in demand is greater than when the public is far away and has no access thereto. However, in addition to the financial side, there is the social aspect, the impact that the activity being carried out has. I believe that this is very important.
Each office has, depending on its characteristics, different costs from 150,000 dollars up to 300,000 dollars in purchasing the premises and fixed assets.
What type of obstacles have been encountered in this campaign?
There are more situations than obstacles. In other words, when the Western Regional Office was founded we had to knock on doors, primarily so that we were allowed to give talks in chambers of commerce and universities. Why? Because they were unaware of the protection that may be provided by industrial property and of what the Mexican Industrial Property Institute is. This was the first obstacle to be overcome. Nowadays, thanks to our dissemination work, we are requested to give talks in chambers, research centers and universities. Managing to do all this with a reduced number of staff, i.e. seven people in total including the holder, has also been a significant challenge. We cannot all go out and engage in promotion activities because someone has to stay in the office to receive applications and give advice, and we cover this partly with young guys who provide social services and work with us for four hours per day.
Concerning the users, you mentioned research centers, universities, micro, small and medium-sized enterprises, researchers...
I think that the most important market, the target market, is the micro and small enterprise. Large enterprises know the system and are protected, although not necessarily all, but in general terms they have registered distinctive signs and patents or utility models. The same is true for medium-sized enterprises. The problem of a lack of knowledge exists in micro and small enterprises.
Could you define the typical profile of the person who uses your services?
Any person who has an intellectual creation which may be protected by means of the industrial property system is a potential applicant for the registration of a mark or an invention. The pool of potential applicants is very large and the way to obtain protection is by bringing IMPI's services closer to this market, which is the main function of the Regional Offices.
Which of the sectors has shown most interest?
In terms of the economic make-up of the region, the predominant sector is that of metallurgical and manufacturing. Mainly it is these two. The food sector follows, which has produced applications both for patents and for industrial designs. For example, applications were made for types of sweets with typical figures, ice cream scoops with special shapes such as characters created by them, and many more.
The commerce and services sectors also make substantial use of our services. In these sectors, applications are filed mainly for registration of marks and slogans.
What about the agricultural sector?
There is much less demand in the agricultural sector. However, there is some interest among producers of vegetables and plants. Some people are interested in marketing and creating a mark, and more and more use is being made of our services. The dissemination and promotion work we do in the Regional Offices, and the work carried out by the main IMPI Office for inclusion in the local and national press, has led to a significant number of agricultural producers who learn of the existence of IMPI and the opportunity to protect their marks. On many occasions, the illusion is to create a valuable trademark, but this step cannot be achieved until such producers apply and obtain trademark ownership through registration. In the sector, there are also possibilities for protecting inventive creation, where a farmer designs novel or improved field equipment, for which registration is sought. There is also the aspect of obtaining protection by means of geographical indications, such as appellation of origin, and collective marks which are of benefit to groups of agricultural producers, thereby improving their income and, as a result, their standard of living.
In your opinion, what is the perception of the users of the services you provide?
Well, I can tell you a story which is the easiest way of answering the question. A few months after it was set up, an elderly person arrived at the Western Regional Office and asked: "Tell me, Sir, is this a government office?" He was told that it was. "I congratulate you on the quality of the offices and the service provided here. This doesn't seem to be a government office since it is not what we expect from such a place." This is a true story. In general terms, our service is good and we constantly monitor the quality of the service. Although we are aware that we may be lacking when we have excess demand at the counter and the failing is in the sense that the public has to wait to be seen to, beyond that the attitude and readiness to serve on the part of our staff is excellent.
What is the cost of the services you provide?
The advice service is free of charge and payment is made only for studying applications or for a phonetic search. In general terms, the rates charged by IMPI are internationally competitive.
Is cost perceived as a barrier for employers from micro and small enterprises?
Up to now, no, I think that the rates allow small and medium-sized employers to file applications for marks and patents. It is not something costly which goes beyond their capacity to invest. The important thing is not only that they are familiar with the system and that they have access to professional advice, but the most relevant factor is that their creations and distinctive signs are duly protected. An unprotected invention or mark is not worth a cent.
What type of impact do you consider that the Regional Office may have on the short, medium and long-term development of the Western States?
The impact which this may have on the regional economy is necessarily linked to the protection of rights and to trade which creates wealth and sources of long-term employment...
I believe that as regards marks and distinctive signs it is difficult to demonstrate the economic benefit thereof in large-scale terms. In inventions, it is easier, since the moment the researcher, small inventor or enterprise, that develops or improves processes or products, realizes that he can protect his creativity, a number of possibilities appear. The impact this may have is the sale or transfer of technology, and this provides large-scale benefits for the State through the creation of wealth and sources of work. In the case of trademarks, it is difficult to be precise since the effect is less evident and is not reflected in terms of a regional benefit, apart from the benefit.
The social benefit of the work done by the Regional Offices in Mexico is unquestionable, and allows micro and small businesses to gain access to the advice which we provide and to present adequately prepared applications for the protection of their marks and inventions.
Do you also provide assistance as regards technology transfer and negotiation of licenses?
We try to do so. We have had staff in Japan for three and a half months this year and a very large part of what they studied there was technology transfer and we are constantly concerned with this. We are in contact with the universities that have programs for entrepreneurs and we try to advise them on subjects related to intellectual property and the transfer of technology.
The protection of rights does not avoid infringements. However, holding the registration allows exclusive rights to be protected, irrespective of the cost of the dispute. We are now able to refer to a small employer which, with the passing of time, may have the means to defend his rights, provided they are protected.
In cases where rights are not protected, expenditure must be devoted to protecting them even where this is by the creator or virtual owner of the rights, particularly in cases where the rights have not been protected.
The employers of small and medium-sized enterprises sometimes decide not to protect their inventions, arguing that even if they were to protect them, they would not have the economic resources to enforce their rights
The fact is that it is not necessarily the enterprise or researcher who invented a product the one who is eventually going to develop and commercialize it. If a product has a market potential, a venture capitalist may be sought, as normally a micro enterprise does not have the financial capacity to cover a large market but only a small part of the market. Alternatively, a larger enterprise (or investor) may be sought to join forces in marketing the product, thereby allowing the company to grow and to expand its market. If an entrepreneur has a vision of association, and partners are therefore sought, there is the possibility of generating greater income and, in turn, greater possibilities for defending and enforcing one's rights.
How developed is the venture capital market in Mexico nowadays?
Poorly, really poorly. We are considering what to do in the future in this sense, whether to seek funding and/or seek some organization which can support the small inventor or researcher in investing so as to cover the costs involved in applying for protection and afterwards paying for ownership and other expenditures. But this is only one part of the problem, the other is to ensure that the inventor or researcher can, by means of some innovation grant, obtain the venture capital required, find investors or simply someone who buys the idea of the product he has developed. This is, however, a task which has to be carefully prepared, it is not something immediate and will not appear overnight. The aim of regional offices is to give a hand to the researcher, inventor or enterprise in preparing the application and ensuring that the application is well compiled. That is the first part, the second is possibly to seek those other services and to participate in the management, sale or purchase of the technology.
I hope for greater growth in operating terms and to reach the target we have set of a ten per cent share in the applications received at the national level. Having sufficient staff available to enhance our promotion activities, we have just received the authorization to hire another four people, this is apparently a limited number, however it constitutes more than 50 per cent additional staff, which will allow the States in the administrative area, which we have so far been unable to cater for, to be taken care of.
As regards the functions and capacities of Regional Office, the possibility of conducting substantive examination for marks and patents is being studied, as are rights' protection activities, inspections and activities to combat piracy, so that we are in fact a major player and not just a receiving office. I would like to see the Regional Office carry out the substantive examinations without depending on the main office for the grant of titles.