Intellectual Property Creating Value in Entrepreneurship
The effects of globalisation and commercialisation in recent years have been significant, with businesses across the world aiming to stand out against their competition. One of the main routes to success for businesses is through the protection and commercialisation of their ‘knowledge’ and ‘ideas’, which exist in the form of intangible assets or Intellectual Property (IP). Commercial entities build upon their market value through the introduction and advancement of innovation, creativity, and invention, all of which can be protected and exploited if the right approach to IP is taken.
Focus on IP for start-ups
In the initial stages of a start-up, the founders often lack the required focus on IP. However, in order for new businesses (and indeed all types of businesses) to reach greater heights, the existence of both tangible and intangible assets is essential.
While there may be less resource and investment in the initial stages of their entrepreneurial journey, start-ups ought to analyse, prioritise and take legal advice on the level of IP protection they require depending upon their industry and type of business.
Relevance of IP for businesses
There are various types of IP protection available for businesses trading in India.
Copyright protection in India
First, Copyright is a type of IP that the creator owns for the work they have created. Section 13 under Chapter 3 of the Copyright Act, 1957 covers classes of works such as literary work (which could be a book, original articles, original script, original speech, computer programmes, tables including computer database); artistic work (which could be a painting, photographs, work of architecture and any kind of craftsmanship ); musical work (any musical work including graphical notation of such work, but will not include words and actions performed with the music); cinematograph work (includes sound recording accompanied by visual recording). The owner of the Copyright who curates the original work receives an automatic right to claim the authorship of the work.
In India, Copyright registration is completely optional but it helps if it is registered to protect the expression of ideas. You can register your original work with the copyright registrar under Chapter X of the Indian Copyright Act,1957 and Rule 70 of the Copyright Rules 2013.
The Copyrights which are registered with the Copyright Office derive their own set of rights and privileges. The registration aids the owner of the Copyright to sue for Copyright infringement. In case there is a dispute, the registration can establish the authenticity of the work as well as help the Copyright owner claim damages and attorney fees. When your Copyright is registered, it becomes very easy to move to the court to take action against the person who copied your work without the right to do so. In order to provide adequate protection to Copyright holders, the Copyright Act, 1957 provides punishment in the form of imprisonment from six months to three years and a fine of not less than INR 50,000 in case your right is infringed by someone.
The owner of the Copyright who curates the original work receives an automatic right to claim the authorship of the work.
Trademark protection in India
Second, with Trademarks, a business enterprise can protect its logo, slogan, or wordmark. Registering a Trademark in a particular jurisdiction gives your brand an element of differentiating your goods and services from those of your competitors in the market. It helps prevent your company name/brand name from being duplicated or counterfeited.
The validity of a trademark is 10 years as per Section 25 of the Trademark Act of 1999 and is to be registered under a specific jurisdiction for its specialised protection. The registration of a Trademark may be renewed every 10 years. The registration of a Trademark is strong proof of validity of such Trademark right, under the ambit of the Trademark Act, 1999, and is covered under Section 31 of the legislation.
Through its protection and registration, the owner of a Trademark has the right to license or assign the mark in return for a license fee or monetary consideration.
Patent law in India
Third, Patents are another form of IP which protect any new invention that is novel, involves an inventive step and has an industrial application.
The pre-requisite for a Patent to be registered is its level of novelty and uniqueness in the market. The procedures or methods can be patented if a non-obvious step is introduced in it.
Patents in India are governed by the Patents Act, 1970 as amended by the Patents (Amendment) Act, 2005 and Patents Acts Rules, 2006.
Section 2(1)(j) of the Act clearly defines "Invention" as a new product or a process involving an inventive step and capable of industrial application.
As other IPs are jurisdiction-specific, the same is the case with patents. It is a territorial right that is protected within the boundaries of India. The validity for a patent is 20 years as and when it goes public.
Practical advantages of IP for your business in India
The presence of IP generates great value for businesses by providing them with higher market shares through IP exclusivity as well as multiple licensing-based revenue streams.
There are multiple routes through which IP can help generate monetary and business value:
- Differentiation: This IP lets your company distinguish its goods and services from other competitors in the market. If your Trademark, Patent, or Copyright is registered, then it will be difficult for your competitor to develop a product/service which is similar to yours. If that situation occurs, then you can always sue them for infringement and claim the attorney fees and damages. Exclusivity gives you the right to commercialise your services/products without the apprehension of these products/services being copied by competitors in the jurisdiction where you have registered for the IP.
- Licensing: The methodology of licensing creates a pathway for a business to commercialise its IP assets by earning direct revenue. A person can generate a steady revenue by way of royalties through licensing their brand names or patented products/designs and giving them out to licensees. One can easily also do a mix of licensing and exclusivity wherein one can continue to operate and directly sell IP-protected products/services in various territories. On the other hand, a business entity can also license IP to other businesses wherein it doesn’t directly operate.
An exclusive licence is generally granted by foreign companies to Indian companies for them to avoid the risk of entering into a new set of markets themselves but at the same time exploiting the market in that jurisdiction.
- IP Litigation: This is the most effective way to prevent misuse of your IP by the competitors. A person who owns IP rights will usually be able to exercise and safeguard their creation in a court of law in India. If the infringement is proven, then the IP owner can obtain immediate relief from the court by way of injunction which prevents the infringer from selling or manufacturing infringing products. In certain cases, the court also grants the winning party damages and lets them claim attorney fees by the losing party.
- Leasing: Intangible IP assets are similar to physical assets when it comes to selling. Just as land can be leased to earn rent, you can also license your IP in different jurisdictions. There are different ways of monetising your IP but if you believe that your IP is not satisfying your commercial interests, then you may also sell it to those who might benefit from that particular form of IP. You may also go for IP brokers who may help find suitable buyers for purchasing your IP.
- Mortgaging: Recently, it has been seen that accounting practices also recognise the existence of IP assets. In multiple jurisdictions, financial institutions such as banks recognise IP assets and consider them to be collaterals to provide businesses a sense of added liquidity in their endeavours.
Contact our Leading Intellectual Property Lawyers
In today's knowledge-rich and innovative commercial environment, businesses must rely on the existence of intangible assets for the purpose of growth and survival.
With a strong local presence and excellent connections globally, our firm is unique in its offering. To learn more about De Penning & De Penning’s innovative solutions and discover how our knowledgeable legal and attorney team can help your business create invaluable assets, complete our online enquiry form or speak to one of our offices directly.
References:
1. Sonal Sodhani, India. Intellectual Property: A Business Asset (2019): Mondaq https://www.mondaq.com/india/trademark/810462/intellectual-property-a-business-asset
2. Team YS. Classification of Small Industries as per MSME Development Act, 2006 (2019): YourStory https://yourstory.com/2009/12/classification-of-small-industries-as-per-msme-development-act2006
3. Tarun Kumar Bansal. 5 Ways To Create Value From Your Intellectual Property (2021): Entrepreneur.com https://www.entrepreneur.com/article/393054
4. Chapter 9. MSME and Business Entrepreneurship: NCERT https://ncert.nic.in/textbook/pdf/kebs109.pdf
5. https://www.privacyshield.gov/article?id=India-Protecting-Intellectual-Property
6. https://blog.ipleaders.in/ip-licensing-agreements/