Is your Intellectual Property Strategy closely aligned with your Growth Strategy?

Do you think that the Intellectual Property of your organization is a luxury that you’ll enjoy at a later stage?

Do you think that the growth, whether organic or inorganic, will depend upon the financials, acquisitions, customers, sales, revenue and other critical functions only?

Does Intellectual Property seem like a cumbersome elephant that is unmanageable at the growth stage?

Think Again..!!

Correcting the Misconception

Your Intellectual Property should not be treated as a secondary function to the core business. Treating Intellectual Property as a side product of the core business could hamper your growth. Competitive Markets rely on the innovation and novelty of products and services. With the pace that the products and services are trying to bring more and more convenience, cost benefits, value for money and value for investments to the customers and consumers, the growth strategy of a company cannot be isolated from the Intellectual Property Strategy. Your Intellectual Property could be your trump card that could change the course of business or growth of business within the shortest span of time. A well-defined Intellectual Property strategy acts as a catalyst to the growth functions by outperforming the competitors and leading with the products or services being offered.

Whether you are considering the novelty of the products and services to be launched in the marketplace or considering the next stage funding for your business, a well laid out IP strategy may de-risk the investment for the founders, Venture Capitalists and other Investors. Thus, the Intellectual Property Strategy should be embedded in the core Corporate Strategy right from the day one of inception of a new project, starting up of a new vertical, or even setting up a new company. The MSMEs should work on a de facto inclusion of IP strategy into their overall Corporate Strategy.

Understanding Key Intellectual Property Types

• Trademarks: The world outside of your company know you by this. This is the identification of brand and the corporate logo that your company is identified or know with. The trademark is not just a mark. It is the first visual of how customer identify you. The whole corporate brand building stands behind this mark, a logo or a brand name. The brand experience is felt once the visual identifying the brand hits the cognitive senses of a customer. Hence, securing a trademark is the first step in building a well-known, secure non-confusing and a unique brand.
• Trade Secrets: How can an organization stand out in marketplace without a trade secret? Something confidential that is known only to a handful of top executives of an organization and all strategic and tactical initiatives of the company revolve around these trade secrets. These trade secrets are core of any organization, and they are to be well protected, preserved, rightfully accessed and meticulously implemented to gain advantage in a marketplace. These trade secrets are well researched and developed artefacts that give any organization a competitive advantage over its competitors.
• Patents: These are one of the most powerful forms of Intellectual Property in the form of a recognized binding legal document that gives holder exclusive property rights over specific inventions. A patent is a powerful tool at the hands of Technology, Pharma, Engineering and Research Startups to scale to growth quickly. The legal rights provided by the patents for novel research and innovation could set the course of market leadership for a patent holding organization. Several patents are filed worldwide since 1872 that give competitive advantage to the patent holders irrespective of their size and seniority. Many large organizations, which were once small startups, scaled such heights by bringing innovations to the market or adding to the existing innovations that proved to be highly beneficial and added value to existing products or services and provided exclusive rights to the patent holders. No other similar players are allowed to make, use or sell such inventions for a limited period. This is where a commercial exclusivity for the patent holders of a commercialized technology provides them the competitive advantage over other market players in same arena. It is imperative for MSMEs and Startups to have the innovative mindset since their inception.
• Registered Designs: Registration of Designs and ease of use of industrial designs play a very important role in defining the growth of your products in the marketplace. Registered Designs protect the appearance, shape or decoration of a product. It is important to understand that a whole new product or a part of the product could be registered as a design invention. It is commercially important to hold the rights of the part of the product or whole of the product. The design registration can give the exclusive rights to the organization registering the design of the product. These rights can be used to commercially float the design in the marketplace with exclusive rights giving a direct advantage to exclusively own and license the design for mass production.
• Copyrights: Any literary, artistic, educational or musical form of creative work, which in essence is original, provides the owner with the exclusive rights to copy, distribute, adapt, display or perform for a limited period of time. This is the kind of Intellectual Property which must be leveraged by the organizations involved in the business of art, literature, music, composition and cinematography to prevent their work from piracy or plagiarism and prevent potential revenue loss.

Embedding Intellectual Property Investments in Core Corporate Strategy

Intellectual Property Investments form one of the core pillars of the overall corporate strategy. These investments will give your organization a competitive advantage and exclusivity for your Intellectual Property over a long period of time. This means that your inventions, designs, copyrights etc. will fetch your returns from the marketplace, which would translate directly into the revenues. The commercialization of your Intellectual Property and preserving your rights is an investment which no business can overlook in these competitive times, irrespective of the scale and nature of the business. Earlier you are invested in Intellectual Property, more is the competitive advantage and long-term returns. It is alike early mover or a blue ocean corporate strategy where you try setting foot into the untapped markets with differential products or services. While traversing the IP journey, and after getting your Intellectual property registered (we are not delving into the registration process for now and leaving it for another day), the next step comes the commercializing the Intellectual Property, deriving competitive advantage and protecting your rights against infringements, for which the following actions may be a part of your overall corporate strategy:

• Understanding your IP landscape: This is the first step in ensuring that your Intellectual Property generates maximum returns for your business. This landscaping is important for strategic and tactical business goals and ensuring that the right Intellectual Property is used at the right time during the course of the business. Business must understand what would bring the maximum revenue and which IP inventions etc. are to be parked for a later stage in their commercial journey. Informed decisions about the use of your IP and its commercialization is key to leveraging your IP in the best possible way.

• Licensing and Distribution: You can license your IP for commercial use. Developing or realigning your distribution network that would serve your Licensing goals is the key to ensuring that your products or services are generating the value for your Inventions in the best interests of your business and revenue goals. A thorough understanding of the geographical markets where the products with new invention are likely to do good is a critical decision that every business needs to make. While understanding the licensing requirements, you must also understand the competitors’ strategies, their strength, weaknesses and how your new inventions can disrupt the markets or at least provide you with a competitive advantage. The businesses should also contemplate the challenges of launching the products in certain markets and pre-empt the possible roadblocks in securing the best markets for your Innovations.

• Usage Rights and further Innovation: Your innovation or piece of work can attract potential users for development and use of your invention or innovation for further development of products that could enhance the basic primary use of the innovation done by you. This would mean that your innovation could be an underlying building block for further development of products, services, artistic work, industrial designs etc. How you distribute your user rights to others is a strategic game that you should understand very well so that you invention or innovation is not jeopardized and at the same time potential users can benefit from your innovation, adhering to the user rights given to them. The licensing and formal agreements may provide rights to the potential users for certain use or for specific period of time, with condition precedents that none of the rights of original inventor or innovator would be infringed. Legal and ethical use of user rights promotes further innovation and enables use of the already invented product and services for further innovation. The user rights can be structured in multiple ways like royalty free user rights, rights managed user rights, creative common licenses, limited usage rights etc. depending on the licensing terms and conditions.

• Taking the competition head on: You have got a unique Intellectual Property; you have strategized the commercialization and have meticulously written your license agreements. There could be a possibility that your competitors would also be working on similar Intellectual Property and have taken all the steps which you have taken to safeguard their intellectual property. In such a case a thorough understanding is required on what is their offering, what is unique about their offering, what is unique about your offering and what makes you or them stand apart. This intelligence will not only make you understand where you can compete with them, where you have no ground to compete and where you are ahead of them in the competition. The corporate energies should be focused on the principles of maximum advantage with minimum cost or conflict.

• Tackling the infringement: Despite your best efforts, there could be possibilities of infringement to your Intellectual Property and illegal use thereof. The corporates and MSMEs need to adopt an approach on how to tackle infringement. To do this, the organizations must understand the type, level and scale of infringement. Some of the accidental infringements not intending to harm the reputation of the organization are to be dealt in a different manner. The deliberate and intentional infringements are to be dealt with through the due process of law. The organizations must always be ready with the litigation costs to protect the infringement to their Intellectual Property. However, the consideration here also needs to be given to the cost versus benefit in getting into a litigation to potentially solve an infringement matter. Whether it is in the strategic interest of the organization to litigate and whether the value derived from the litigation would be give the substantial advantage over the competitors, commercially? There has to be a thorough financial and strategic dialogue among the top layer of the organization to chart out a course of action and derive a cost benefit value proposition, considering the organization’s appetite for risk.

In modern times of innovation, it is difficult to isolate the IP strategy with from the overall corporate strategy. The organizations where the IP is the core part and pillar of the corporate strategy are more likely to win in the marketplace. A paradigm shift is needed in the ways organizations structure their funds and resources towards Intellectual Property. A cohesive integration between IP and corporate strategies is the way ahead, with IP attaining the center stage.

Disclaimer: This article in the series of IP Development is for informational purposes only and should not be considered as a legal advice.

For further information or discussion on Intellectual Property and its commercialization, you can write to us at IP-Practice@saurabhkhosla.com