Techniques of Intellectual Property Management

Intellectual Property Management (IPM) implies management of various types of Intellectual Property’s(IP’s) in a scientific manner for optimum productivity and utilization of the ideas, inventions, innovations and further Intellectual Property Right’s(IPR’s)possessed by an organization. The process starts with identification of Intellectual Property (IP) which is known as IP Mining. The Intellectual Property Management team makes a survey of the manufacturing process and the various kinds of products of any given organization with the engineers and other technical experts and notes down the inventories of the various manufacturing process and the products. The next step after conducting the physical verification of the Intellectual Property inventories is the IP Mapping and IP Landscaping. It is a common experience that by conducting this process of IP Mining some hidden Intellectual Property is noticed which has not been protected by registration with the respective IP authorities. This leads to a clear distinction between Intellectual Property and Intellectual Property Right’s. Intellectual Property is the invention of the process or the product and it becomes Intellectual Property Right,the moment it is registered with the respective Intellectual Property authorities, in other words the process of IP Mining helps in identification of Intellectual Property within the organization and it helps the management to get a legal right by converting the same into a Intellectual Property Right through a legal process.

Intellectual Property Management can also be defined as Intangible Wealth Management by introduction of proper accounting of the intangibles as per the prescribed norms mentioned in Accounting Standard (AS) 26 as issued by Institute of Chartered Accountants of India and also recognized by IAS 38 issued by International Accounting Standard Board.

According to a study of the World Bank, almost 78 percent of the global wealth is in the form of intangibles. According to a study conducted by Price Water House & Coopers almost 80 percent of the constituent value in case of merger and acquisition is in account of intangibles in the form of technology and the brand valuation. In the recent acquisition by TATA groups of Jaguar and Land Rover from the Ford’s group at a consideration of US $ 5 million entails almost ¾ of the consideration for the established brand MB for technologies. Therefore, the importance of IP Accounting and IP Valuation is gaining importance in today’s knowledge based economy.

The concept of Intellectual Property Management can be classified as follows:

• IP Mining
• IP Protection
• IP Accounting and Valuation
• IP Audit and Due Diligence
• IP Risk Management and IP Insurance
• IP Commercialization through Licensing and Technology Transfer
• IP Broking and IP Auction
• IP Securitization

Each of the above rules of Intellectual Property Management involves different sets of expertise depending upon the nature of the Intellectual Property that may be in the form of Patents, Trademarks, Copyright, Industrial Designs, Geographical Indications, Industrial Designs, Trade Secrets, IC Layout Designs and so on.

What is generally understood in the Indian scenario is Intellectual Property Protection and Intellectual Property Litigation, for both there are professional experts to help the inventors to register their inventions with the Patent authorities or the business firms to get a Trademark registration or an artist to get the Copyright registration. However, there is a big gap between the inventors and the investors. There are research institutions and research scholars who are in possession of inventions with or without legally enforceable rights in the form of Intellectual Property Rights but they are unable to Commercialize the same due to several reasons including, lack of marketing skills. Similarly, there are people in the industry who are looking for new technologies for which there is lack of dialogue and communication between them and the research institutions. This gap between the inventors and investors can be minimized through IP Broking and IP Auction which is a common practice in foreign countries. Ocean Tomo a US based company conducts IP Auction at an interval of every 3 months and helps furthering good revenue for the investors and the patentees and also helps several technological companies to have an easy access to new technology by participating in IP Auction.

In U.K and U.S.A and in several other European countries there are renowned firms which are engaged in IP Valuation and Intangibles Valuation and they help in deciding the price of the brands during takeover, merger, acquisition and amalgamations. The various steps involved in IP Assets Management are as follows:

Step 1: Documents and information related to the clients IP portfolio to be collected.

Step 2: A Non-disclosure agreement is to be signed between service provider and client.

Step 3: A review of IP assets is to be conducted.

• Identification and location of the clients key IP assets.
• Review shall be conducted using the documents and information provided.
• An independent search to be conducted using the various free and paid databases to determine the status of IP assets.
• All patents and/or patentable subject matter, copyrights, trademarks, domain names, trade secrets, mask works, inventions, works of authorship, hardware and devices are to be included in the list of IP assets.
• The nature and scope of company’s rights in IP assets is to be determined.

Step 4: Research on company’s policies and practices related to document retention and the like are to be conducted.

Step 5: An asset management plan, to maximize the value of clients IP assets, is to be developed:

• For managing the process of creating innovation and inventions.
• For protecting developed intellectual property.
• For using IP assets to generate revenue and profits through the direct and indirect sales of products and services.
• For capitalizing on the value of IP assets through the implementation of licensing programs.
• For taking care in development of asset management plan so that it is consistent with business goals of the client.

Step 6: The value of IP assets is to be maximized through the following procedure:

• By determining the most constructive approach in determining the value of IP asset.
• By examination of issues such as the type of IP asset, type of business claiming ownership of IP asset, organizations short and long term goals and intended or possible use of IP assets.
• By determining whether ownership of the patents is firmly established i.e. all the documents are in place with execution of appropriate transfer documents and all necessary documents filed in appropriate public offices.
• By developing a system to reduce unintentional disclosure of trade secrets and other proprietary information.
• By setting up a system to monitor potential IP infringements and enforcement of IP rights.
• By performing business assessment to determine the most productive way to utilize IP assets by guiding the client to become the exclusive provider in the field, determining the companies to which the client can license its IP assets for royalties, to determine the companies for synergies for collaborative effort and determine mergers and acquisitions to be executed.

Therefore, it is beyond doubt that in today’s era of globalization, knowledge or Intellectual Property had become a milking cow, particularly when globalization is penetrating in the Indian economy; there is a growing need for IP Assets Management.