The cost of litigation: Is it worth it?

With globalization, more and more small to medium sized companies (“SMEs”) in developing companies have proven to be worthy opponents to the larger, more established MNCs (“multi-national corporations”). How so?

With the spirit of entrepreneurship, these SMEs are now producing similar goods and services at much lower costs than those offered by the MNCs. From garments to hardware for your latest gaming system, developing nations currently harbor skilled minds that can replicate, reimagine, and redesign the commodities that were previously only available in the developed nations. While this practice brings in revenue and recognition for the local company, it also leads to heavy losses for the MNC that first produced or offered the goods or services. These losses no doubt form the foundation of a time consuming and excruciating legal battle which begs the question – is it worth it?

“ From garments to hardware for your latest gaming system, developing nations currently harbor skilled minds that can replicate, reimagine, and redesign the commodities that were previously only available in the developed nations.”

The Patent Dispute that was not meant to be

A giant pharmaceutical company (“the pharma company”) from England, renowned for its anti-cancer drug in developed countries, began selling the same drug to developing countries within Southeast Asia. The pharma company had been attentive enough to get the key ingredient of the drug patented but this original product patent eventually expired.

Meanwhile, the company successfully patented an enhanced process for manufacturing the drug and that process patent was still in force in some Southeast Asian countries like Indonesia, Singapore, and Malaysia.

The pharma company detected that a local manufacturer in Vietnam was producing and importing an anti-cancer drug into Malaysia at a reduced cost which ultimately affected the pharma company’s sales, profit margins, and growth in Southeast Asia.

While the pharma company owned a process patent in some Southeast Asian countries, it did not own a product patent for the drug in question. Here, it is interesting to note that a process patent would be infringed by a third party who:

• uses that process without the permission of the patent owner; and

• makes, imports, sells, offers to sell, stores or uses the product directly obtained from that process.

Not surprising, the pharma company wanted to take legal action against the Vietnam manufacturer but could only do so in Malaysia where the drug was being imported into and where it had an existing process patent.