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Case Study 04 – Patent ownership dispute in Southeast Asia (Indonesia)

Background

A Belgian entrepreneur set up a local food processing operation called ‘BE Food’ in Indonesia. One of their plant managers developed an innovation to the existing raw material cleaning process. The Belgian entrepreneur, believing that BE Food could commercialise this process by manufacturing equipment with this innovation, offered a reward-sharing scheme and brought the plant manager to an attorney to discuss future contractual arrangements, as the existing employment agreement was silent on ownership of intellectual property in inventions.

In the meantime, the plant manager secretly instructed a patent attorney to apply for a patent in his own name. The patent was drafted by a local attorney in the Indonesian language (Bahasa Indonesia).

As soon as the Belgian entrepreneur discovered the patent filing, he asked the plant manager to surrender the patent application to BE Food. The plant manager refused.

Action Taken

Court litigation ensued over rights to the patent application. Twelve months passed and the plant manager no longer had the funds to file an overseas application within the priority period. The right to file overseas was lost while the dispute dragged on.

Outcome

The court finally ordered that BE Food had the rightful claim to the patent application. The Belgian entrepreneur instructed his own attorney to review the patent application, who quickly realised that the specification of the invention had been badly drafted. The risk now was that a third party could easily design around the patent to achieve the same idea behind the innovation. In other words, the specification was drafted too narrowly to effectively protect the innovative concept, and the rules regarding making amendments meant that the specification could not be improved at that point.

The Belgian entrepreneur was also informed that BE Food had lost the right to apply for patent protection overseas. The grant of the patent locally in Indonesia would also take a long time as examiners do not usually independently examine patents, instead relying on foreign patent grants in order to grant the corresponding local applications.

In the meantime, the plant manager found an investor for an improved version of the earlier innovation. His new investor advised him to have the patent specification prepared in English so that they could file it internationally. BE Food no longer had the resources to pursue the business opportunity behind the innovation.

Lessons Learned

  • Specify ownership of IP rights in employment contracts.
  • It is important to use a trained and experienced patent attorney – standards can vary significantly, even among those who may have passed local professional examinations.
  • Give due consideration to filing overseas when drafting a patent specification.
  • Use the PCT (Patent Cooperation Treaty - http://www.wipo.int/pct/en/) to defer the application deadline by another thirty months. This allows you to assess the commercial viability of the invention and the likely market before you spend money to file locally, which may also require significant costs for translation into the local language.