The Importance of Copyright and Patent Protection in Start-Up Business - Kleerex International Ltd
Firm: KLEEREX INTERNATIONAL LTD.
Business sector: Plastics industry
Activities: Manufacture and supply of products for the display of goods in Retail outlets e.g. shelving systems, racks, point of sale items etc.
Number of employees: 105 persons
Annual turnover: 24m € p.a.
The company founder had a business designing display systems for retail outlets. He would design them to order, have them made up (usually in acrylic plastic) and fit them. He found that some large customers were requesting several units for different outlets. He also became aware that competitors appeared to be using some of his ideas in units that they designed. He sought specialist advice from IP experts. He was advised that he could have some redress under copyright but that it was possible that some of his designs could qualify for patent protection. Patents were not widely used in this industry.
He decided to set up a manufacturing company to make and sell a range of display products and to protect them using the patent system. He started with about five employees and two main products, one of which quickly became very successful. Before the patents were granted, some copies of this product appeared in the marketplace. An action on copyright against a UK company was commenced and was successful in that the copying ceased without the need to go to court.
A more substantial competitor commenced manufacture and sale of a product very similar to the leading product in the Kleerex range. A patent infringement action was commenced. As is normal in such cases, the alleged infringer sought to have the Kleerex patent declared null and void. Legal exchanges between the companies went on for some considerable time (about two years). The shopfitting industry is notoriously competitive and copying is normally rife. Kleerex was the first company to file patent applications and actively police them. Other competitors who might have considered copying held back when they heard of the impending patent suit. Also distributors and customers were wary of handling the allegedly infringing product for fear of being drawn into the legal action.
Eventually a legal device was agreed by Kleerex and the alleged infringer so that the action did not actually go to court. However, although the action never came to court and the competitor never completely desisted, the respite obtained by the legal exchanges allowed Kleerex the time to become well established in the market in terms of product quality, customer loyalty and product range.
From a small start-up it is now a substantial company (see turnover) selling and products and licensing its technology. IP is a vital part of the company strategy. It has an R & D programme expanding its product range, which includes IP protection for new products. The company founder has now sold his interest in the company and retired on the considerable income he received. The company believes strongly that without the patent protection in its start-up phase, there would have been many copiers and it would not have survived.
Compiled by the LIIP Project, 2003.