Design by Numbers

The publication of the recent Value of Design report caused a stir in New Zealand’s design community. The report claims that last year, design contributed $10.1 billion to New Zealand’s GDP. The study was conducted by accounting firm PwC and commissioned by national design consortium DesignCo.

What is Design?

For the purposes of the study, the UK Design Council’s definition of design was used:

Design is defined as the creation of a proposition in a medium, using tools as part of a process.

Thus, design is defined as a creative process, and one which provides a broad umbrella for all sorts of commercial activity. The report states that the definition was amended in order to gather data for the study.

In the study, Value of Design was classified and measured using five different systems, including classification by industries (“market verticals”) and by design disciplines. The executive summary of the report also contains four case studies of design outcomes, but does not discuss how their value is used to measure Value of Design.

How does Design intersect with Intellectual Property?

The executive summary does not mention intellectual property at all, although “innovation/invention” is one of the design disciplines. Thus, the study enumerated a “Value of Design”, but at least in the executive summary, it stopped short of comparing this value with either investment in the design process, or the value of assets resulting from the design process.

While design is a process, the output of the design process (“design outcome”) can result in an intellectual property (IP) asset. Exactly what types of IP asset might result from the design process will depend on the nature of the design outcome. For example, if the design outcome is a product such as a smartphone, it might possess related IP asset(s) in the form of a patent, copyright, registered design and/or a trade mark. In New Zealand, a copyright IP asset will automatically come into being when an original design outcome (“work”) is created, but other IP assets such as patents or registered designs must be secured, by applying for design registration or grant of a patent respectively. Registration of trade marks is recommended to establish the right to prevent others from using the trade mark.

Design discipline is closely linked to design outcome, so we can correlate design discipline with some expected design outcomes and the intellectual property assets with which they are associated.

In New Zealand, patents can be granted for a new and inventive product or process. So we would expect a reasonable correlation between “innovation/invention” in New Zealand, and patent rights granted to New Zealand companies or individuals.

Similarly, in New Zealand, designs can be registered in respect of any article of manufacture, and most “products” would fit the definition of an article of manufacture. (Designs cannot be registered for printed material which is primarily literary or artistic in character). So we would expect a reasonable correlation between products designed in New Zealand, and designs registered to New Zealand companies or individuals.

Registering a design gives up to fifteen years’ protection for the design applied to the article/product. There is some overlap between design and copyright law. While copyright is free, design registration is relatively inexpensive compared to a request for grant of a patent, and offers protections which are not provided by copyright law.

Are New Zealanders registering their IP assets?

A look at the data shows a striking picture.

It will not be surprising to IP professionals that the rate of design registration lags behind that of patent registration. Registered designs are a somewhat neglected potential IP asset. However, it is remarkable that the “Product design” discipline was valued at more than 2 billion dollars for the 2016 year, and produced only 279 registered design IP assets. What is more, of the 279 designs, only about 200 of these were registered by New Zealand companies, with the remainder being registered by individuals. While an individual can potentially contribute to the value of “Product design” to the New Zealand economy, it appears much more likely that the substantial contributions will be made by companies.

It is also worth noting that while the numbers of granted patents and registered designs are similar, a granted patent generally offers much broader protection than a registered design, as when properly drafted, a patent covers the entire solution to a creative problem, rather than just the appearance of a marketed product. Thus, patents are generally higher value IP assets, and the number of patents granted better reflects the value of “Innovation/Invention” design at $268 million.

These figures suggest that New Zealand companies, particularly those involved in the design, manufacture and marketing of products, should be giving much more thought to protection of their IP assets.

October 2017

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