Innovation has produced significant technological improvement, which has caused the global economy to rise rapidly. The importance of Research and Development (R&D) and related spending is not limited to large corporations but also small tech innovators, who majorly contribute to economic advancement and innovation through the creation of new ventures, money, and jobs. When it comes to innovation, protecting intellectual property (IP) rights is crucial if the business hopes to profit commercially from the conception, IP is crucial in facilitating the commercialisation of new technology and boosting the competitiveness of tech-based businesses.
For technology-related innovation and innovators, it is vital to have an approach and a relevant strategy to protect their IP rights. Before selling their innovation in the market or even before starting to get it developed, it is important to carefully consider and develop an IP strategy to protect itself from being taken advantage of by established corporations — this especially applies to small tech innovators and startups.
But the journey of protecting their innovation is not easy, and the creator also faces various challenges while protecting it successfully and thus, this article puts light on various issues faced by tech innovators in India while protecting their IPs and establishing business.
Why is it so important for tech innovators to protect their IPs?
The way you protect your IP can make and break your business. This can be seen with the help of a few real-life incidents.
Incident 1: What happens when your IPs are not rightly protected?
Myntra logo issue. — In December 2020, after an FIR was filed against Myntra, alleging that its logo is offensive towards women. Myntra was forced to change the appearance of its M and immediately replaced its logo, and also ordered fresh printing of the new logo on their new parcels. This shows the importance of rightly planning and strategizing the IP for any entity and also rightly managing the same even after the registration.
This change of logo had a lot of ramifications which the company faced. For instance, the logo was replaced on media channels, packaging boxes, product labels, store fronts, in-store branding, and many other places, adding on to additional expenses.
Incident 2: Benefits when IPs are rightly protected
An organisation can also benefit financially by gaining adequate IP protection. Revenue can be earned by commercially exploiting the trade mark in the form of assignment, licence, franchising or merchandising. In a trade mark assignment complete transfer of ownership from the owner to the other party takes place. In the case of a trade mark licence, partial ownership is transferred to the other party while the owner enjoys ownership rights along with Revenue. For instance, food chain market leaders like — Burger King and McDonald’s, franchise their business to another party and gives them the right to market a product or service using their IP licences and thereby in return receive royalties.
Intellectual property rights (IPR) refer to exclusive right given for a set length of time for inventions or creations which protects inventions, patterns, logos, artistic or literary or dramatic works and also sensitive data of any firm that empowers it to prosper. A tech innovator’s patent portfolio, along with its other intellectual property assets like designs, trade marks, and copyrights, is essential to its potential performance.
The proportion of Indians filing patent applications has increased by more than 50% in the last 7 years1 and India’s placement on the Global Innovation Index (GII) raised 35 places to 46th among the 132 economies featured in the GII 2021 published by the World Intellectual Property Organisation (WIPO).2 These figures ultimately show how India is growing rapidly on the path of tech innovation and simultaneously showcase the relevancy of protecting such innovators and per se their innovation. But are the IPs being protected with equal pace and importance?
IPs, if not rightly protected, may result in the theft of ideas, unfair competition, ultimately leading to commercial loss. For a tech innovator, having its intellectual property protected can be crucial for both securing capital funding as well as avoiding unfair competition from rival businesses. Thus, such tech innovators should make sure that their existing portfolio is utilised to the fullest extent possible, which may be accomplished through efficient IP portfolio management. Such innovators should also be aware of their patent portfolio to assess its capabilities and possible market prospects. Finding white areas where the company can licence its patent portfolio or sell off its assets to make money is also necessary. A tech innovator can manage its patent portfolio with the help of a well-defined and practical patent approach.
What restricts the tech innovators from rightly protecting their innovations?
Lack of awareness about their intellectual property rights. — To be able to devote enough manpower and resources to it, tech innovators must first recognise the necessity of getting patents for their innovations and explain why doing so is important. It is equally important to get your business and brand name trademarked. The lack of awareness in knowing what, when and how to protect is one of the biggest and most significant hurdles tech innovators face.
Theft of IPs and battling competition. — Competitors continuously search for evolving IP in their industry, which might even take the form of copying cutting-edge technologies. As a result, many industry leaders frequently participate in legal disputes. In addition to giving businesses a competitive edge by safeguarding their service and product offerings, a robust patent portfolio can be useful and will also ultimately help in protecting patents from infringement.
Commercialisation of IP. — The majority of tech innovators have very little prior experience in this highly specialised field. It includes promoting IPs that have been granted, locating potential clients, and negotiating licensing terms. Commercialisation not only increases the value of the IP portfolio but, more importantly, it generates visibility, which discourages others from intentionally or unintentionally misusing the IPs.3
High cost of registration and litigation. — In terms of initially registering an IP or protecting it during litigation, the innovators face the continuous challenge of high cost. However, the risk of not registering the IP is far greater compared to its cost, or else, it can cause grave damage to the innovator. Though the Government is continuously taking steps to mitigate the issue of high costs for startups by introducing the Start-ups Intellectual Property Protection (SIPP) Scheme4, still its effects are yet to be seen more efficiently on the ground.
Time-consuming registration. — Filing of IPR applications is seen by tech innovators as a time-taking, lengthy and costly process. The average time lag between patent filing and its disposal [granted, refused, abandoned under Section 21(1)5], until 2016, was five to seven years which was reduced to twelve to eighteen months in 2022.
Administrative inefficiency. — At present, the Patents, Designs & Trade marks, and Geographical Indication Offices are located in Kolkata, Ahmedabad, Delhi, Mumbai and Chennai. Problems are also caused by the absence of transparency and administrative inefficiencies in the system. The availability of experienced and technically competent patent examiners and bureaucratic interference are also some of the hurdles that tech innovators face while protecting their IP in India.
Additional cost. — Furthermore, IP systems impose transaction costs on the creator, on innovators and on society. The rewards that creators and innovators obtain from exclusivity are directly outweighed by the costs of search, maintenance, and enforcement, which they must bear.
Not having the right IP experts on Board. — This is crucial, more than it is thought of. The right IP expert can help to rightly optimise the protection and utilisation of one’s intellectual properties to bring out maximum output in commercialising it and justifying the cost of owning it.
It is necessary to bring about a cognitive and behavioural transformation toward recognising the intellectual property developed by others in a nation where “jugaad” is largely tolerated and frequently appreciated as a method of conducting business. IP-related issues must be rightly and swiftly addressed in a way that is both transparent and effective, and they must also be made more widely known. In addition to ensuring adequate security for technology, a healthy IP ecosystem also encourages growth and ensures less infringement, thereby promoting the technology industry as a whole.
† Patent Manager at KAnlaysis. Author can be reached at firstname.lastname@example.org.
†† Assessment Intern at KAnalysis. Author can be reached at email@example.com.
1. Ministry of Commerce & Industry, PIB Release dated 12-4-2022, <https://pib.gov.in/PressReleasePage.aspx?PRID=1815852 >.
2. WIPO, “Global Innovation Index, 2021”, available at <https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2021/in.pdf>.
3. B.K. Bhuyan, “Strengthening IP and Open Source Systems of Technological Innovations: The Tata Experience”, <http://www.swaminathansivaram.in/publications/articles/Vikalpa.pdf>.
4. Scheme for Facilitating Startups Intellectual Property Protection, <https://ipindia.gov.in/writereaddata/Portal/News/255_1_1statupUps_Scheme_05May2016.pdf>.