Intellectual Property Rights
Johann, a German, is an inventor who has invented a new device called a Magna-Hickey. Johann owns a company, TekWunder, that will manufacture and distribute this device. It is estimated that the device will generate world sales of $20 million per year. At some point within the next three years, Johann plans to have the device manufactured in China, because he can produce it in China at half the cost of German production.
Johann plans to obtain patent protection for his device in Germany, France, the USA, and Japan. (Note that applying for patents is expensive – even large companies, such as IBM, limit the number of countries in which they apply for patents.)
Why should Johann obtain patent protection for this device? How will such patent protection be beneficial to him?
What dangers does he face if he does not obtain patent protection for the device?
What are the drawbacks associated with obtaining patents for the device?
If the Chinese start producing his device without his permission, are they breaking the law? Explain your response.
If the Chinese export the device to Germany without Johann’s approval, are they breaking the law? Explain your response.
Johann also plans to obtain trademark protection for the name “Magna-Hickey.”
Why is it important for him to obtain such protection?
What dangers does he face if he does not have trademark protection?
If he obtains a trademark for the Magna-Hickey name in Germany, will this protect his mark throughout the world? Explain your answer.
Johann encounters a manufacturer in Shenzhen, China that would like to enter into a licensing agreement with TekWunder to produce Magna-Hickey devices. This manufacturer would produce the device for sale in Asia and would pay Magna-Hickey 5% royalties on sales. It would also sell Magna-Hickeys back to TekWunder at a price that is half of TekWunder’s German production costs.
What intellectual property concerns should Johann have in regard to entering into a licensing agreement with the Chinese manufacturer?
What challenges will Johann likely face in managing the licensing arrangement if he were to enter into a licensing agreement with the Chinese manufacturer (identify at least four).