Do you run a small business in India? Excellent tips on Intellectual Property rights (IP rights) for small business in India.
By Dr. Ritu Mehdiratta
Small and medium-sized enterprises (SMEs) are critical to any economy – they are the catalysts behind a large number of innovations, they create employment and drive investments and exports. However, few small business in India realize the potential offered by the intellectual property (IP) system to enhance their competitiveness. For many, IP is legal jargon and best left to those specially trained in this field.
In this article, my aim is to highlight the value and benefits of intellectual property for small business in India. (Regardless of what product an enterprise makes or what service it provides, it is likely that it is regularly using and creating a great deal of intellectual property.)
IP refers to the exclusive rights granted by the State over creations of the human mind, in particular, inventions, literary and artistic works, distinctive signs and designs. It is divided into two main categories:
Industrial rights, which includes patents, trademarks, industrial designs, trade secrets, new varieties of plants and geographical indications and Copyright and related rights, which includes literary and artistic works.
If all this seems like jargon to you, I will explain here some of the common terms used in the field of intellectual property rights.
A patent is an exclusive right granted by the State for an invention that is new, involves an inventive step and is capable of industrial application. It gives you, the patent owner the exclusive right to prevent others from making, using, offering for sale, selling or importing the patented invention without your permission. A patent is a powerful business tool for companies to gain exclusivity in the market over a new product or process and develop a strong market position and/or earn additional profits through licensing.
A trademark is any sign capable of distinguishing the goods you make from those made by other enterprises. Any distinctive words, letters, numerals, drawings, pictures, shapes, colors, logotypes, labels or combinations that distinguish the origin of goods may be considered a trademark.
An industrial design is the ornamental or aesthetic aspect of a product. The design may consist of three-dimensional features, such as the shape or surface of a product, or of two-dimensional features, such as patterns, lines or color.
Copyright is meant mainly for authors, artists and other creators (e.g. software companies, multimedia producers, website designers). It gives them legal protection and rights over their literary and artistic creations.
Depending on the nature of your business, you can use IP in a number of ways.
Revenue Enhancement. You could generate income through the licensing, sale, or commercialization of IP-protected products or services to other businesses. This becomes an additional revenue stream for your business or can even raise your profit margins.
Business Value. IP rights can enhance the value of an SME in the eyes of investors and financing institutions. In the event of a sale, merger or acquisition, IP assets may significantly raise the value of the enterprise, and at times may be the primary or only true assets of value.
In addition to the benefits of IP in general, companies that have invented new products or processes stand to gain some additional advantages by patenting these.
Exclusive rights. Patents provide exclusive rights which usually allow the SME to use and exploit the invention for twenty years from the date of filing of the patent application.
Strong market position. Through these exclusive rights, one can prevent others from commercially using the patented invention, thereby reducing competition. (It must be noted though that patents cannot eliminate all competition, since your competitors may use offer customers other benefits or a significantly different product to arrive at the same solution. Patents are however a good tool to prevent competitors from adopting the same strategy as you).
Higher returns on investments. Having invested a considerable amount of money and time in developing innovative products, SME could, under the umbrella of these exclusive rights, commercialize the invention enabling SME to obtain higher returns on investments.
Increase in negotiating power. If an SME is in the process of acquiring the rights to use the patents of another enterprise, through a licensing contract,the patent portfolio will enhance bargaining power.
Positive image. Business partners, investors and shareholders may perceive patent portfolios as a demonstration of the high level of expertise, specialization and technological capacity within the company. This may prove useful for raising funds, finding business partners and raising the company’s market value.
Of course, the more valuable the intellectual property assets of an SME, the greater is the possibility that others would want to make use of them (if possible, without having to pay for them). But that is a subject by itself and one I hope to address in my next piece on this issue!
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