Intellectual Property (IP) is a valuable asset for any research and innovation-driven company today. The creation of IP requires investment in terms of money, time and intellect and therefore, it is extremely important for the companies to claim legal rights on IP and prevent others from using the same. At this point of time, India is facing multiple challenges brought upon by COVID-19. Exports and imports have been significantly affected and due to this, it is becoming increasingly important for India to become self-reliant to reduce load on imports and boost local industry. It is now extremely important for startups, SMEs and MSMEs to not only realize the importance of innovation & IP but also to devise correct & effective strategies, processes and policies at the inception stage of ideas to make sure their innovation is well protected, enforced and eventually commercialized.
The most effective IP strategy is the one that is aligned well with the business goals of a company.
The most effective IP strategy is the one that is aligned well with the business goals of a company. For different companies, the importance, effectiveness & meaning of IP strategies may vary depending upon area and type of business, even though the aim of IP strategy may remain the same. Success of IP strategy is dependent upon formulation & implementation of IP practices, processes and policies within the organization.
Five of the most important components of any IP strategy are as listed below:
- Reducing R&D cycle: Every company today, especially product development companies, wants to not only reduce time & expenditure on research and development, but also to develop more innovative products keeping in view of the market. Early entry of these innovative products into the market will results in the products having a competitive edge as well as longevity in the market. This can be achieved by strategically performing a comprehensive prior art search to assess the research already done and explore the ways that the existing knowledge can be utilized for existing products or design. Prior art search may reveal existence of IP having good opportunity to be in-licensed.
- Protection of IP: For any organization, protection of IP at right time and under appropriate legal framework is essential. Trademarks, patents, designs, copyrights and trade-secret are the most important forms of IP. Multiple IPs can be registered for the same product, where if the product is an invention, then it can be registered as patent. Similarly, name of a product/company may be registered as trademark and literal/artistic/cinematographic/musical work may be registered as a copyright. Trade-secret is another powerful form of IP, which is not registered but owner of trade-secret shall take steps to protect it. KFC’s fried chicken recipe, McDonald’s Big Mac Special Sauce, the recipe of Coca-Cola and Google AdWords are a few examples of well protected trade-secrets.
- Infringement risk analysis: For any product company, infringement risk analysis or Freedom to Operate (FTO) search should be an integral part of their IP Policy. This single step saves companies from big litigations and it should be made an integral part of any new product launch process. Let’s understand this with an example; two companies, namely, Anant Electronics and Futuristic Concepts Media Ltd were using “Digital Transmission System” technology to manufacture VCDs using MPEG 1 coding audio compression/expansion system in India. Philips had a patent protection (Patent no 175971) on this technology in India, of which these two companies were not aware of, thus infringing the patent granted to Philips. Delhi High Court ordered both the companies to stop manufacturing the VCDs that infringed Philip’s “digital transmission system” patent. Had they performed an infringement risk analysis before manufacturing and launching the product, they could have saved a significant amount of time and money. Using technology protected by another company can be fatal for any business and prior risk assessment is essential to prevent such undesirable scenarios.
- Monetization of IP: Licensing or assignment are the most popular ways to monetize IP. Licensing is a method to transfer technology rights for a particular period of time, whereas assignment is a permanent transfer of rights. Licensing helps innovators to quickly collaborate with more partners and launch their product in the market quickly, whereas assignment of IP, usually worked out at the time of acquisition/merging, is a way to generate more money in a single transaction. Sree Chitra Tirunal Institute of Medical Sciences & Technology developed the technology for the manufacture of blood bags conforming to international quality requirements. They identified Peninsula Polymers Ltd. for setting up a plant based on indigenous technology and further provided equity assistance of up to 25% of the total equity. The production of the blood bags started for the first time in the country in 1987 by this company. Subsequently, Sree Chitra Tirunal Institute of Medical Sciences & Technology licensed this technology to a number of companies in India who not only met indigenous requirement of blood bags but also provided the product at an affordable price and exported their products to various countries such as the UK, USA, Germany, Netherlands, Kenya and Bangladesh.
- Enforcement of IP: After registration, IP can be enforced by the innovator, if there is any violation. In Merck vs. Glenmark case, Delhi High court passed an injunction against Glenmark for manufacturing the generic drug Sitagliptin and using patented product of Merck as there was prima facie infringement of patent rights of Merck. Delhi High court passed injunction order against Glenmark from manufacturing and selling of Zita and Zitamet. Thereby, patent rights of Merck were protected and enforced.
There is another interesting case-study to see how IP rights can be enforced. VirnetX is an internet security software and technology company based in Zephyr Cove, Nevada. This company’s patent portfolio includes American and international patents in areas such as DNS and network communication. Since 2010, VirnetX has been involved in litigation with big companies like Apple, Cisco, Microsoft, etc. In December 2014, Microsoft and VirnetX settled patent disputes over Skype technology for $23 million. VirnetX, in another law suit with Apple was awarded $368 million in damages for FaceTime infringement.
An effective IP Strategy, aligned with business strategy plays a vital role for growth of a business. Devising strategy itself is not enough till there is a process to implement the same effectively.
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