Intellectual Property Strategy is Integral to Business Development Plan-Lessons for India

Intellectual property (IP) simply refers to any creation that can be leveraged for its innovation, ingenuity and monetary value. It typically includes patents, trademarks, copyright, which are the more commonly understood terms. Patents are the staple of the competitive advantage of businesses. If you look at your everyday use gadgets, the cellphone for instance, each one of them out there is protected by at least 400-800 patents. IP has been a ‘protection’ tool for companies for many years. However, the focus has now shifted from simply ‘protecting’ your IP assets to monetising these assets by licencing IP rights to third parties or by selling assets that are no longer core to the business. As per the current Merger & Amalgamation trends and the intense patent litigation between the biggest players in the smartphone field, it is evident that IP assets are at the core of both. The effective commercialization of inventions, creative ideas and innovations is going to lead economies of the world in coming future.

As per US commerce Dept. IP-intensive industries support at least 40 million jobs in the country and contribute more than $5 trillion (34.8%) to US gross domestic product (GDP). European nations aren’t far behind. Asia Pacific too is forging ahead with Korea, Taiwan and China paving the way. Intellectual-property based sectors in both developed and developing countries are substantial drivers of GDP and employment growth. The effective management of IP assets requires not to just managing the business but also more importantly to expand the business. To realise the commercial value of assets is the essence of the IP business today. That’s why you see that the world’s biggest and most successful businesses have one thing in common—their IP strategy has become integral part to their business development plans.

A typical IP strategy has three key steps like getting IP protection, managing IP and then maintaining IP. It looks like as three simple steps, but in-fact a way more complex business than that does an innovation need to be patented. The challenging economic climate of recent years has brought with it a sharper need for innovation in order for businesses to be able to differentiate themselves in the marketplace. Investment in IP will undoubtedly bring with it new technologies, that will eventually lead to fast economic growth.

In 2012, China received a total of 652,777 patent applications, the highest ever received by any single IP office. Among the top 10 IP offices, China’s IP office saw the fastest annual growth in filings received [+24%]. China topped the ranking for both the source (filings by China) and the destination (filed in China) for patents, utility models, trademarks and industrial designs. It recorded a double digit growth of 24%, making its share in the mentioned IPs the largest worldwide. This offers a glimpse into the IP supporting strategy that China has developed viz. a less restrictive R&D tax regime, reduced corporate income tax rate, big deductions for R&D costs, duty exemptions for R&D equipment and concessions for technology transfers. Recognising how critical IP is to economic growth, the Chinese government has incorporated IP into their national policies involving R&D and innovation. As a result, Chinese business investment in R&D remains strong with expenditure in 2012 exceeding $160 billion together with double-digit annual increases in R&D spend.

Apparently, in 2011-2012, intellectual property was responsible for driving close to $25 billion worth of M&A activities globally. In the US alone, 10 million jobs have been created with a need for three million more IP skilled graduates. India too is trying to develop and progress in the area of IP.

To quote a few statistics, in 2012-13, 43,955 patent applications were filed in India—a rise from 8954 in 2008. Out of this, the number of applications filed by Indian applicants in 2011 and 2012 were 8841 and 9553 respectively, an 8% increase from the previous year.

Indian government and Indian MNCs should realize the monetary importance of IP and take lessons from Japan, USA and China to upgrade and reformulate its strategy accordingly. The following steps are sine-qua-non like to upgrade the existing system for online filing of applications and update all IP records to benefit the IP stakeholders and to facilitate the retrieval of data from IP offices. Revision and enactment of IP laws to create a research culture to turn India into an innovation conglomerate. This will help India to get an edge and extract the real benefit of IP-Commercialization, monetization and maintain its claim of future economic power.

Sources:

1. WIPO IP Statistics Data Center.

2. http://www.financialexpress.com/

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