IP for Business

AdvantageByProf. Anil B. SurajBrain League IP Services Now BananaIP

© 2009 Brain League IP Services Pvt. Ltd.© 2009 Brain League IP Services Pvt. Ltd.

© 2009 Brain League IP Services Pvt. Ltd Now BananaIP.

Session Objectives

• To appreciate the growing value of innovative/creative behaviour

• To understand the contribution of protected IP in gaining competitive advantage

IPRs – General Bases• Economic (and technological) rationale

– aids overall development

• Social benefits – Public Domain and Basic Research

• Legal monopoly – fair regulation within territory

Forms of IPRs• Patents – Patents Act, 1970

• Copyrights – Copyright Act, 1957

• Trade Marks – Trade Marks Act, 1999

• Industrial Designs – Designs Act, 2000

Forms of IPRs …• Layout Designs of ICs

– Semiconductor Integrated Circuits Layout-Design Act, 2000

• Geographical Indications – Geographical Indications of Goods

(Registration and Protection) Act, 1999

Forms of IPRs …• Trade Secrets – Contractual – no

legislation in India

• Plant varieties – Protection of Plant Varieties and Farmers’ Rights Act, 2001

• Traditional Knowledge – partly by Biological Diversity Act, 2002

Principles of Traditional Management

• Organizing towards:– Perfect replicability & standardization– Ever-increasing scale– Incremental process efficiency

• Efficiency-productivity focus = growth?

• Vulnerability to Market cycles

Present Challenges• Accelerated consolidation - getting ahead first

and then to consolidate

• Value creation through pursuit of innovative achievements – to also overcome price-erosion

• Best practice – not always best strategy; Change need not wait for a crisis!

• Cost-conscious users/consumers – an unique opportunity in emerging economies

Offshore Outsourcing• Typically of three types:

– Captive entity – wholly owned subsidiary – IP is fully owned; but has other legal implications

– Joint venture – a new combined company – IP is based on the Shareholding Agreement

• BOT Model – involves transition risks– Contracting - with a local Supplier – Enforcement

with due diligence – e.g., Confidentiality; Parent-subsidiary relations

• Determining factors = cost, commitment, control, flexibility and liability models

Culture of Innovation• Short-term vs. Long-term goals – need to be

sustainable and balanced – R&D culture

• Granular level innovation to be fostered – what are the incentives – people and firms?

• Innovative organizational design – towards creating “thought-intensive” employees– Attracting high talent – and then to make higher

profits off them!!

IP for Competition …

Return on Innovations• Product variations; Incremental innovations; and Breakthrough

inventions– Breakthrough inventions have been found to be 6 times more

productive than incremental innovations

• Although the count of “new products” being introduced has risen globally; only about 5% of them are found to be significantly innovative

• What are the organizational concerns? Fewer inventions patented by Top-ranked Companies – efficient methodologies have become orthodoxies? In 1997 – top 10 Pharma Cos. = 34% revenues from selling products licensed from other companies

• Intangible assets – any day worth more than sub-prime assets!!

Collaborative efforts• Intellectual Property:

– to source, – jointly create, – timely commercialize, and – legally ownmarket oriented ideas

• Leveraging competitive assets; enhancing product lines; Competitive hedging; Strategic positioning (CDs)

• External perspective – vital for innovations– Open innovations through online communities– Market-makers and customer information aggregators– ASICs and The Patent and License Exchange (pl-X.com)

Collaborative efforts …• Skill-intensive sectors – India is now a

leading sourcing, manufacturing and research base– Process/Product/Capital reengineering and

redesigning – at low costs and high volumes– Economies of scope and scale– Auto parts, Electronics, Machine tools, Pharma

• “Technology partners” to be encouraged – balanced joint ventures have enriched Indian firms

Intellectual assetsKey Principles:

• Visibility and full exploitation

• Internal and external – pursuit of protection

• Ensuring ongoing access and freedom to exploit the intellectual assets

Intellectual assets …Key Issues:

• Prospect of reverse engineering

• Likelihood of aggressive action needed to protect IPRs

• Role of Intellectual assets in business alliances and joint ventures

Intellectual assets …Key Issues:

• Identifying the key geographical areas – for marketing and registration of IPRs

• Study the level of innovative behaviour among the competitors; and suppliers

• Role of “House brands” – towards building brand equity

Intellectual assets …Key Actions:

• Must portray the differentiating and enabling qualities of intellectual assets– IP that must be owned; and IP that is needed

(therefore could be sourced)

• Strategic Licensing to form a key component of business plans – inward and outward – competing by collaborating

Key issues in Contracting

• Confidentiality – specific & assertive

• Non-compete and Exclusivity – limited and only under “reasonable” conditions

• Liability – clear exemption standards

• Termination clause – ownership issues

IP issues in Contracting• Sharing regime + sustained ownership

• Disparities in applicable laws & IP rights

• Identify, define and document – processes and products

• Due diligence & IP Valuation

IP issues …• Enforcement – involves local issues too

• Employer-employee relations – framework of trusteeship

• Data protection and security

• Third party liability – e.g., ISPs

• Dispute settlement and arbitral enforcement

IP Licensing strategies• Monetary gains• Cross-licensing: bargained access• Cross-licensing (with competitors): to avoid

litigation• To establish an industry standard – transfer

of technology with academic entities• Sharing of risks and uncertainties• Provides faster/wider market access• Protection of know-how• Better understanding of IP markets• Provide for bankruptcy of the other party!

IP Licensing …• Only 5% of Patents are being licensed – of

which not more than 1% generates revenue

• What about patenting strategy?– Visibility of infringements to ensure protection

• Stage-Gate processes for Intellectual Assets in a company: periodic review based on a sound plan

If we do not use IP …

Thank You!