Intellectual Property Rights (IPR)

Managing Intellectual Property is a Profitable Strategic Option for Business Organizations

By:

Priyanka SARDANA[1]

Trade Mark & Patent Attorney & Advocate, Supreme Court of India 

&

Vijay SARDANA^[2]

 (This article was published in Processed Food Industry magazine)

Businesses and Intellectual Properties

In this series on “Managing Intellectual Property” we have made an attempt to familiarize our readers about new legal environment related to Intellectual property right because Government of India is integrating Indian economy with world economy by adopting code of conduct defined by WTO. There will be implication on the way we are conducting our businesses including food and agribusinesses.

In highly competitive business environment and in the increasingly knowledge-driven economy, intellectual property is a key consideration in day-to-day business decisions. New products, brands and creative designs appear almost daily on the market and are the result of continuous human innovation, creativity and desire to excel.

Freedom for creative thinking in any organization will provide an opportunity to create intellectual wealth to ensure winning edge. Small and medium-sized enterprises because of their nature do provide freedom of expression and creativity and are often the driving force behind such innovations. In common street terminology we call them “jugad (in Hindi)”. At the same time the innovative and creative capacity of small and medium companies is not always fully exploited because many small companies are not aware of the significance of intellectual property system and the protection it can provide for their inventions, brands, and designs.

If left unprotected, a good invention or creation may be lost to larger competitors that are in a better position to commercialize the product or service at a more affordable price, leaving the original inventor or creator without any financial benefit or reward. Adequate protection of a company's intellectual property is a crucial step in preventing potential infringement and turning these unique ideas into business assets with a real market value. By understanding full advantage of the IP systems, companies can benefit from the profits from their innovative capacity and creativity, which will encourage and help fund further innovations in the company.

In order to assist food and agribusinesses, we wrote the series on “Managing Intellectual Property”, so that small and medium enterprises can more fully utilize their creative intellectual property for creating assets in their business activities.

Intellectual Property Enhances Competitiveness

Globally, we have seen release of new seed varieties; new molecules for pesticide, new product formulations, new food launches, new brands in the market, new shapes of packages, more attractive labels, new way of sales promotion and distribution strategy and with all this large number of new players in the market. All these developments have some form of intellectual input and can be protected under intellectual property rights regime. In recent past we have seen large number of innovation in Indian food and agribusiness space with a potential to generate good wealth world over. Large number of Indian products and recipes are now getting patents world over. 

Many new products or services embody different types of intellectual property. In order to survive in highly competitive market, forward-looking enterprises face the challenge of how to identify their intellectual property. Without proper protection it will be difficult to extract maximum value of their Intellectual property by using it effectively in their business strategy. Companies that allocate time and resources to protecting their intellectual property assets can increase their competitiveness in many ways.

Intellectual property protection helps companies by:

• Preventing competitors from copying or closely imitating a company's products or services; Current case of Apple vs. Samsung is one example;
• Proper IP protection will also avoid wasteful investment in research and development (R&D) and marketing of products against copied products;
• It helps in creating a corporate identity through a trademark and branding strategy and respect in market among consumers example all global fast food and retail chains;
• It improves negotiation power in licensing, franchising or other Intellectual property based contractual agreements example all fast food chains;
• It helps increasing the market value of the company example pharma companies
• By acquiring venture capital and enhancing access to finance many It companies are taking benefit of this;
• It helps in obtaining access to new markets like many pharma and seed companies;  

In addition, enterprises which search systematically for conflicting intellectual property rights of others prior to seeking Intellectual property protection are able to avoid unnecessary litigation, thereby saving time, resources and goodwill.

Benefits of Effectively Managing Intellectual Property

Effective intellectual property management enables companies to use their intellectual property assets to improve their competitiveness and strategic advantage. At the same time, acquiring Intellectual property protection is a crucial initial step, but effective Intellectual property management means more than just protecting an enterprise's inventions, trademarks, designs, or copyright.

It also involves a company's ability to commercialize such inventions, market its brands, license its know-how, conclude joint ventures and other contractual agreements involving Intellectual property, and effectively monitor and enforce its intellectual property rights. Indeed, a company's portfolio of Intellectual property must be viewed as a collection of key assets that add significant value to the enterprise. A very visible example is when a pharmaceutical or IT company gets a patent for its new molecule, its share prices go up.

Our suggestion is food and agribusiness companies can also benefit from the wealth of technological and commercial information available in patent and trademark databases to learn about recent technological breakthroughs, identify future partners, and find out about the innovative activities of competitors.

Managing Intellectual property effectively and using it for business strategies is an increasingly critical task for entrepreneurs worldwide. Unless top management is aware of their benefits, it will be uphill task for the rest of the team to effectively utilize the technology and its commercial benefits.

If Indian agriculture and food business companies are keen to promote their businesses world over, it is high time decision makers and managers must learn to operate in knowledge driven economy otherwise either they will lose their intellectual property to the competitor or competitor will make claim on their intellectual property as theirs and management will face the legal battle instead of managing business effectively. Patents on basmati rice, haldi, ayurvedic preparations etc are such examples.

The Challenge Ahead for Food & Agribusiness Companies:

Indian agriculture and food companies may suffer in highly complex and competitive globalized economy because of some of the well known factors as given below:

·         Insufficient information and understanding on the relevance of Intellectual Property in day-to-day business due to ignorance at the decision making level,

·         Lack of willingness to allocate resources for learning about changes in the market and legal system,

·         High costs associated with obtaining and enforcing IP rights,

·         perceptions that the IP system is difficult to understand, too cumbersome and time-consuming:

These are among the reasons why many companies are sometimes either don’t look into these valuable aspects of business or slow to protect their intellectual property assets.

Percentage of value addition in products is directly related to use of protect intellectual property, not the cost of raw material purchased to process into the product. 

Important Questions for Decision Makers:

1.    Can any company go for value addition with knowledge inputs?

2.    What is the percentage of value addition in your business operations? This will help you in understanding what the future of your business is in inflationary economy.

Do this exercise now, before it is too late.

We wish you all the best for future.

Do send your comments / feedback about this article…

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[1] Advocate and Patent Attorney, Supreme Court of India, 35, Lawyers Chamber, New Delhi. Email: pmsardana@gmail.com

[2] Email: sardana.vijay@gmail.com