When a company starts preparing to offshore elements of their business, concerns often surface about how well-protected its intellectual property, and those of its suppliers, will be. While the red flag is sometimes raised over Central Europe, are worries about the security of IP in the region really justified?
Central Europe has a lot going for it as a location for a service centre or R&D division. The region is relatively cheap, educational standards are high and it has an eager and young workforce.
But Central Europe does receive its share of criticism when it comes to protection of intellectual property - for example, in a report released last year by analyst house Gartner into outsourcing around Europe, Poland only received a 'fair' rating for its level of privacy, IP and data protection. It was the only area in which it did so – on metrics from culture to language and labour pool, the country was rated 'good' or 'very good'.
For US companies in particular, however, it seems concerns stem as much from cultural differences as from a genuine risk to intellectual property.
According to Julia Chlebny, a legal scientist at the University of Lodz and specialist on copyright and intellectual property, Poland's legislation on the subject is solid – "there really isn't anything wrong with the laws," she says - but there is a difference between the continental European and the American approaches to IP and data protection.
It's a difference that can be seen when it comes to patents: while the US allows software patents, the idea is only at the discussion stage in the EU, and there remains considerable opposition to its introduction.
Single European patent
The lack of a single European patent may also be a disincentive for companies looking to outsource to the continent. While US companies would be keen on such a patent, according to Chlebny, it's not an idea that has found favour in Europe.
Countries like Poland are not enthusiastic, because a single patent would put its companies at a diasvantage in terms of language and legal protection. One of the main issues in the single European patent debate is the language that such a patent would be in, with English, French and German proposed. However, Spain and Italy (and others such as Poland) object to that because it would mean patents would have to be written, and contested, in a different language to their own.
A Polish company that has to defend itself against an accusation of patent infringement for example would have to do so in a German court because the patent is written in German, (or French, or English).
"Only a few courts in Europe would be able to rule on those disputes. A Polish company would have to defend its position in front of a German court, which weakens its position," Chlebny adds.
But the lack of software patents, tighter patent regulations and the absence of a pan-European patent do not mean a lack of legal protection, Chlebny argues. "There are many international regulations on the subject of intellectual property," she says. "For example, we have TRIPS, which sets out minimum protection for intellectual property." Poland has been compliant with TRIPS since 2007.
The country, like all Western countries, has gone further in that protection than the minimum set in TRIPS. TRIPS sets a minimum protection period of trademarks of seven years, while Polish law is 10 years, according to Chlebny. Also, TRIPS offers a 50 years protection of copyright, while Europe stretches it for two decades longer, and the European patent protection of 20 years is double that of TRIPS.
"In the US, many still think that we are a gung-ho country legally, where the bears run loose in the wild," Chlebny says, a fear that raised its head during the ACTA debate. "But a different system and philosophy is not automatically worse."
Chlebny can only think of one area in which Polish IP protection could do with improvement. "IP procedures in Poland can take a long time," she says. "It can take two years for your case to wrap up. That's too long." The reason according to Chlebny is quite banale: court capacity. "IP cases are usually very complicated. Only a few courts can handle them," she notes.