New product innovations forged by small business owners are being replicated by corporations every day in Australia.
Sound familiar? Here's how it usually plays out. A large company stumbles across an innovation that would work well for their business. Sometimes, they'll sniff around the small business owner and show some interest in what they're doing, then turn around and launch a strikingly similar product into the market without any hint of concern.
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Chief Scientist for Australia Dr Alan Finkel believes Australia has a strong history of innovation but will need to build on itâs successes in order to move forward.
And it's happening even when confidentiality agreements, design registrations and patents are in place.
Frustrated small business owners explain that the correct legal structures in the early days aren't protecting them from bigger companies with deeper pockets from replicating their idea. Without spending a small fortune to spend on legal fees, they are powerless to stop it from happening.
![Australian cycling accessory company Knog's original design.](/web/20161229160405im_/http://www.smh.com.au/content/dam/images/g/r/p/i/7/4/image.related.articleLeadwide.620x349.grlv42.png/1474952066354.jpg)
Riding away with profits
Melbourne bike light manufacturer Knog is a classic example. The small business has spent years developing a unique range of bike lights that have become legendary around the world.
Knog had a current design registration and a patent on the product, but that didn't stop a Chinese manufacturer openly targeting their market of successful bike lights – even contracting their distributors.
"The bike industry is like a big family. You can't do anything without everyone else in the industry knowing what you're up to. Our distributors had alerted us to this new product entering the market, which looked a lot like ours," head of brand and marketing Sam Moore says.
![Pictured are the similar bike lights by a Chinese manufacturer.](/web/20161229160405im_/http://www.smh.com.au/content/dam/images/g/r/l/x/0/3/image.related.articleLeadwide.620x349.grlv42.png/1474952066354.png)
"We turned up at a European bike trade show and couldn't believe this company had the audacity to set up their stand full of lights identical to ours, despite our design registrations in place.
"This isn't just a tiny knock-off factory. It was infuriating, and quite a distraction that saps your energy. We couldn't let it happen again, so sought legal advice."
![A foreign manufacturer began targeting Knog's cycling light distributors.](/web/20161229160405im_/http://www.smh.com.au/content/dam/images/g/q/8/q/x/c/image.related.articleLeadwide.620x349.grlv42.png/1474952066354.jpg)
Knog acted swiftly, admitting to dragging its heels last time a bike light design had been copied; forced to watch on as the market was flooded by imitations.
After some frantic calls, customs officials stormed the European bike show in recent weeks and removed all items related to bike lights from the Chinese manufacturer's stand, confiscating staff passports and issuing a fine.
They are no more than money hungry corporate bullies, destroying small businesses and with that, Australia's economy
Raw food rip-off
Janine Zappini started producing raw superfood bars from her Bondi home kitchen and initially selling at markets in 2011.
![Simply Raw paleo bars are among Zappini-Rosa's best sellers.](/web/20161229160405im_/http://www.smh.com.au/content/dam/images/g/r/l/x/z/j/image.related.articleLeadwide.620x349.grlv42.png/1474952066354.jpg)
"At the time, the product was unique, the market was niche. Raw superfoods weren't common, but there was increasing demand for them. The business was shaped by consumer demand," she says.
Wisely, she trademarked Simply Raw, structured the marketing, perfected the recipes and formed a business partnership and manufacturing agreements with a manufacturer.
![Gary Cox, an intellectual property expert admits there's no easy path through this process.](/web/20161229160405im_/http://www.smh.com.au/content/dam/images/g/r/l/y/b/y/image.related.articleLeadwide.620x349.grlv42.png/1474952066354.jpg)
She had mutual confidentiality agreements with the manufacturer and trademarks in place, but that didn't make a spit of difference. Just before full-scale production started; her soon-to-be business partner released a strikingly similar product to market without mentioning it once during the past year.
"They're an existing brand with one of the largest markets in Australia. They didn't just release the product to their market, but intentionally targeted our existing distributors to push us off the market. It would have cost us a fortune to fight our rights – a fortune we didn't have. I'd heard of cases like this that have been dragged through court for over 10 years. In the end, the one with the bigger pocket will win unfortunately. My friends kept questioning me why I was taking it so well. But truth was, I was numb. I was slowly dying on the inside, I didn't feel anything," Zappini says.
![Amanda Clark is a dietitian whose idea was stolen by a corporate.](/web/20161229160405im_/http://www.smh.com.au/content/dam/images/g/r/l/w/o/2/image.related.articleLeadNarrow.300x0.grlv42.png/1474952066354.jpg)
"Simply Raw was founded by my passion for healthy food and nutrition. I quit my corporate job and put everything into this business. It was a life lesson I'll never forget and one I'm grateful for at the same time.
"What hurts me most was that I've seen this happen so many times since. Entrepreneurs are vulnerable, it's a risk you take if you want to grow. The shame is on the companies that take advantage of small businesses without regret. They are no more than money hungry corporate bullies, destroying small businesses and with that, Australia's economy."
![Amanda Clark's portion perfection plate was taken from her.](/web/20161229160405im_/http://www.smh.com.au/content/dam/images/g/r/l/y/7/c/image.related.articleLeadNarrow.300x0.grlv42.png/1474952066354.jpg)
Legal distress
It's a similar story for Queensland dietitian Amanda Clark, who says she's been surprised to watch a corporate copy her idea and give it away for free. She launched a range of products called Portion Perfection to help people visualise correct portion control using plates and images. A multinational food company purchased her plates at a trade show and initiated discussions with her on working together, but instead launched a strikingly similar version which even uses similar fonts, colours and graphics.
While she's approached the company numerous times, her calls to stop giving away their plate as a promotion have fallen on deaf ears. This is despite having trademarks and design registrations in place.
"There doesn't seem to be anything you can do. The best I can expect is that consumers and professionals who have their plate also discover the myriad of additional tools that I have created at greatideas.net.au to support easy portion control strategies."
Gary Cox of Wrays admits there's no easy path through this process.
Business owners must never cut corners when it comes to legal protections or shy away from the cost of IP protection. Patent rights, trademarks and design registrations should also all be considered, he says.
"Yes, there are costs associated with IP protection, but one hopes that the business will receive significant financial gains as a result of going through the process given they'll have a complete monopoly on the market. A trademark can be protected in Australia for less than $2000," Cox says.
Businesses disclosing information under a confidentiality agreement should keep very detailed records of when and what they disclosed to others, and preferably have these details witnessed by someone.
"If you want to legally pursue a company for breach of confidentiality, this is the sort of detail you'll need at hand to be able to prove there has been a breach," Cox says.
For Knog, preventing knock-offs entering the market isn't just about protecting your brand, Moore says.
"You've got to protect your intellectual property and creativity. Anyone can make a product for a price, but when it's your point of different that appeals to people. Copying devalues everything.
"When copycats come out of the woodwork, there's less incentive to innovate. There's got to be a reward for designers and the broader industry, or innovations entering the market will decline."
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