Commercialization of Intellectual Property Rights and its key business concern

1. COMMERCIALIZATION OF INTELLECTUAL PROPERTY
RIGHTS AND ITS KEY BUSINESS CONCERNS

2. INTRODUCTION:-
■ As you all know copyrights trademarks patents etc are
buzzing words of this decade.
■ To elaborate IPR in India are broadly classified in
following categories that is Copyright, Trademark, Patent,
Designs, Geographical Indication, Plant breeders rights,
Trade secrets.

4. ■ The biggest opportunity/advantage as well as the threat in IPR is that
it is an intangible asset .
■ For example if I want to own a flat in Mumbai it is quite easy to search
for the same, value the property and purchase it.
■ Almost all of us know the legalities involved in buying and selling a flat
but frankly how many of us really do know all of the above mentioned
procedures for say Patents?

5. ■ So today is the need of an hour to throw the light on the
various processes in making IPR marketable .

6. What is commercialisation of IPR?
■ In its Layman sense commercialization of IPR refers to
making your IPR marketable and earning profits through
it.
■ In India if we discuss commercialization of IPR it is like
opening a Pandora's box – One thing leads to many
complications.
■ So I would like to pinpoint the major steps in simple
language

7. ■ Let's go back to our earlier example :-
■ Imagine you have a piece of land and you want to do business from it so
the options available to you is to
■ 1) Sell the land as it is to someone or
■ 2) Another option is to construct a shop on land and give the shop on
rent.

8. ■ Similarly if you own IPR you can either transfer it to someone else
as it is or you can develop marketable product through joint venture
or collaborations and commercially exploited to earn rewards.

9. WAYS IN WHICH IPR CAN BE COMMERCIALISED?
■ Having discussed this now let us enter into a bit technical zone
regarding commercialization of IPR .
■ so first of all let's discuss the ways in which IPR can be exploited
commercially.
■ It is certainly not easy to manage IP commercialization as success of
whole process depends upon various endogenous and exogenous
factors like:-
■ Business objectives,
■ The type of IPR,
■ Capital resources etc.

10. Three Major Waysfor IP Commercialization:-
■ Broadly IPR commercialization can be achieved
through three ways:-
■ 1) Commercialization directly by owner of IP
■ 2) By assignment
■ 3) By building a business partnerships .
■ All these ways have their own pros and cons
let's discuss them in a bit detail.

11. Commercialization directly by owner of IP:
■ As mentioned IPR can be commercially exploited by owner himself
■ This approach comes with best returns as well as it is most risky
because being the individual owner of IP and converting them into
marketable product or service is altogether a different game.
■ The factors to be considered before undertaking this are how an IPR you
own can be developed to a desired product in market ,then time
included ,the funding required and how to get it .

12. ■ Moreover the owner has to keep focus of all the process from view of
market. Once you find the product in the market and it is desired by
customers then your returns are going to be enormous.
■ The major setback in this type of commercialization is availability of
necessary financial and technical capabilities to take your product
to market by yourself

13. ■ For example in biotechnology and nanotechnology the major market is
international market. Thus in many situations and organisation owning
IPR will need commercial partners to develop a product

14. ■ Also the time gap between production and generation of sales
revenue is quite long. Thus it puts pressure on financial position of
IP owner.
Thus it is clear from above
discussion that on one hand this
way of marketing IPR can give
best returns but if not successful
at can lead to enormous financial
losses to IP owner

15. 2) assignment
■ Second way to commercialize IPR is by assignment
■ In this process IPR owner transfers all or any part of his rights.
■ The owner of IPR assigns the right to use IPR to certain organisation
who will develop , produce and market the product or services

16. ■ In this process the reward of owner is limited to the amount of royalty
he gets from the organisation.
■ The Owner is not concerned with the profits or losses owned by
organisation.
■ His amount of ROYALTY is fixed

17. ■ The major problem around this structure is to fix the amount of
royalty
■ In India it is quite difficult to assess valuation of IPR ,we will have
deep insight on valuation aspect in later part of a discussion now
let us restrict our self to the point that valuation of IPR is crucial
issue in assignment of IPR.

18. ■ Next issue to be considered while assigning IPR
is to ensure INTEGRITY OF COUNTERPARTY.
■ For example you are author of novel and have
copyright on it, you have assigned the
copyright to publisher @ 50 rupees per copy
sold of book .
■ Now publisher may manipulate the data
regarding number of copies sold and therefore
financially hitting your royalty.

19. building a business collaborations :-
■ Now let us take into consideration the last
way to commercialize ip i.e building a
business collaborations .
■ In this strategy IPR owner enters into
business agreement with third party who
play role of an investor and helps in
converting IP into marketable product or
services

20. ■ This concept is quite new in India IP owner generally prefers to design
product by himself or directly endorses it to other by way of
assignment.
■ But for long term sustainability partnering of IP owner and corporate
houses would play an important role

21. other important aspect relatedto commercialization of IPR.
■ Valuation:
■ we have briefly discussed valuation in
earlier section now let's detail it out
■ The paradox of valuation is that most
corporates are aware of potential value of
their IP but invariably neglect to determine
its value with accuracy.
■ As rightly said by Peter Drucker “if you
cannot measure it you cannot manage it”

22. ■ Investors can optimise their IP portfolios and increase their returns
with more realistic valuations
■ Various approaches to determine IP valuation replacement cost
approach, market value approach, fair value approach and tax
valuation approach.
■ We would not get into complicated calculations included in IP
valuation
■ Under these approaches and IP valuation will assist in making
informed decisions concerning IP development or acquisitions

23. IPR AUDIT:
Next point is IP audit , the first
and foremost objective of IP
audit is to ascertain the
existence of IP.

24. ■ An IP audit should identify all the IP generated by particular department
of an organisation.
■ An IP audit helps a business to make an inventory of its IP assets or
update it and analyze:
■ a. How the IP assets are used or unused.
■ b. Whether the IP assets used by the business are owned by the
company or by others
■ c. Whether these IP assets are infringing the rights of others or others
are infringing on these rights
■ d. And determine, in the light of all this information, what actions are
required to be taken with respect to each IP asset, or a portfolio of such
assets, to serve the relevant business goals of the company.

25. ■ An IP audit seeks to uncover unused or under‐utilized assets, to
identify any threats to a company’s bottom line, and to enable
business managers to devise informed business and IP strategies
that help maintain and improve its competitive position in the
relevant market(s).

26. IP DUE DILLIGENCE:
■ IP due diligence generally seeks to:
■ Identify and locate IP assets, and then assess the nature and scope
of the IP to evaluate their benefits and allocate risks associated with
the ownership or use of the relevant IP assets; in particular, it seeks
to determine whether the relevant IP is free of encumbrances for its
intended business use(s).
■ Identify problems in and barriers to the transfer, hypothecation or
securitization of the IP assets under consideration.
■ Identify and apportion between the two parties the expenses
incident to the transfer of IP assets under consideration

27. IPR enforcement:-
■ In this penultimate leg of discussion I would like to draw your
attention to the most important aspect as well as the concern in IPR
commercialization i.e IPR enforcement

28. ■ By entering into IP transaction one of the most important assessment
to be made relates not only to validity and market relevance of asset
but also capacity to protect and enforce IP
■ Once new product is offered for sale in market and is successful in the
market it is likely that competitors will attempt to make competing
cheaper product with identical or similar features.
■ This may lead to undue financial pressures.
■ It is therefore important that parties have recourse to effective
enforcement of IPR

29. COMPETETION LAW V/S IPR LAW:

30. Relationship Between Competition Law In India And Intellectual Property
Law :
■ Often these laws are seen conflicting with one another.
■ On one hand it is necessary to create monopolies under intellectual
property law to encourage innovation and on the other hand
competition law seeks to prevent Monopoly
■ but in reality these laws of complementary rather than conflicting
■ Because both laws have same fundamental goals of
■ 1) promoting fair competition and
■ 2) promoting innovation

31. ■ For example : If a pharmaceutical company comes up with medicine
for cancer so it is very obvious that other company will also come up
with similar type of medicine accordingly there will be sustainable
competition

32. CONCLUSION:-
■ To conclude I would like to say that major lacunae in
commercialization of IPR in India to the extent we want is lack of
professionals in this field .
■ Also one of the major setback we have in India is we have
FRAGMENTED STRUCTURE of IPR laws i.e we have Copyright Act,
Trademark Act , Designs Act, Geographical Indication Act
■ If we have uniform IP laws just like how we have Insolvency and
Bankruptcy code 2016 this fragmentation will not be there and it
will be much clearer to understand as well as to implement it on a
large scale.

33. ■ As a lawyer we are proficient to be able to guide our client write from
registration of IPR , commercializing it , protecting it and providing
necessary guidelines regarding infringement of IPR and other cases .
■ I feel lawyer as a professional has a huge opportunity in IPR.
■ In coming 5 to 10 years IPR will be huge demand in country as well
as in the world

34. REFERENCES:
■ For IP audit and Due Diligence :-
https://www.wipo.int/export/sites/www/sme/en/documents/pdf/ip_panorama_10_lear
ning_points.pdf
■ Wikipedia
Thank you .