World Intellectual Property Day: Encouraging Creativity And Innovation
World Intellectual Property Day is celebrated annually on 26th April, every year. This event was established in the year 2000, on the day when the WIPO Convention entered into force back in the year 1970. Since then, this day is celebrated to encourage innovation, creativity and the contributions made by creators and innovators to the development of societies across the globe.
On August 9, 1999 the Chinese Delegation had proposed to WIPO for the adoption of World Intellectual Property Day in order to promote the ‘awareness of intellectual property protection, expand the influence of IP protection across the world and urge countries to publicize and popularize IP laws and regulations.’
The approval was granted by the General Assembly of WIPO on October, 1999 to celebrate 26th April as World Intellectual Property Day.
Theme of 2021: Taking Your Ideas to the Market
A business always starts with an idea and IP rights can turn that idea into an opportunity. According to WIPO, ‘Each of the millions of small and medium sized enterprises (SMEs) that operate across the globe everyday started with an idea that took shape in someone’s mind and made its way to the market.’
The theme for World IP Day 2021 is ‘IP and SMEs: Taking Your Idea to the Market’. WIPO Director General Daren Tang referred to SME (Small and Medium-sized Enterprises) as the ‘unsung heroes’ of the global economy and an engine for growth in a post-pandemic world. To justify the theme of the year 2021, Mr. Tang stated that SME’s account for almost 90% all companies worldwide and 70% global employment.
SME’s help in the growth of economy mostly for developing countries and account for majority of the businesses worldwide. Formal SMEs contribute up to 40% of national income (GDP) in emerging countries. It also contributes towards 90% of industrial units and 40% of value addition in the manufacturing sector in India.
Interface between IP and SMEs
The concept of IP and IP assets:
IP is a part of every aspect of life in an increasingly knowledge driven society. It is any right discovered from the creation of mind. It is like an umbrella team that defines a number of series and interrelated doctrines of law like Patents, Copyrights, Trademarks, Trade Secrets, Industrial Designs, Plant Variety Rights and Geographical Indications.
IP assets are crucial for business success and management. These are one of the major concerns for business in today’s world. IP assets have become increasingly powerful tool that an SME can use in order to survive and grow in today’s highly competitive business environment. If any company’s IP strategy is market-centric or product-centric, IP can be used as a tool to generate revenue, license and sell the strategy. For SMEs especially, it can help enhance their valuation for financing M&A, marketing and evaluation.
IP and SMEs: Business perspective
Every product used in our daily lives is a long-chain of big/small innovations. IP system affects business in every stage from product development to product design, service delivery to marketing, raising financial resources to exporting/expanding business, licensing and franchising. In all cases, SMEs should consider how to make the best use of IP rights and effectively utilize its IP in order to get the best possible commercial result from its ownership.
Relevance of IP to SMEs:
Every SME has valuable IP in some form. These can be:
- Trademark which gives brand value to a SME and prevents third parties from using similar logo, name, slogan, shape etc.
- Patents and Utility models protects new inventions/processes and provides the owner with the right to decide how or whether an invention can be used by others.
- Geographical tags increase the price of the product in the international market and boost exports.
- Copyright protects the original, creative, artistic and literary forms of works.
- Industrial Designs protects the external appearance of a product for creative designs.
- Trade Secrets are valuable information not known to the public. These include confidential agreements signed with third parties for commercial purpose.
There are many SMEs which have grown overnight because of their strong IP portfolio. Trademarks contribute a lot in the growth of SMEs as a good trademark with strong reputation in the market would help in enhancing the company’s current value. SMEs should invest in developing a good IP portfolio because it helps in future profitability.
IP asset valuation for the growth of SMEs:
Market will value an SME based on its assets, its current business operations and expectations of future profits. Expectations of future profits are determined by the acquisition of patents in key technologies.
The need for valuation of IP assets:
- Strong market position and enhancing competitiveness: IP assets gives enterprises the exclusive right to prevent others from using a product/service, thereby reducing competition for their innovative product and enabling the enterprise to establish its position in the market.
- Higher profits/returns on investment: IP system helps in recovering research and development investments and obtain higher returns on investment on the enterprise.
- Additional income from licensing/selling of IP assets: IP owner has the exclusive right to license/sell his rights to other enterprises in exchange of payment or royalties to generate extra revenue for the enterprise.
- Improving negotiations: IP assets can be authorized to other enterprises by way of cross-licensing agreements to use as per the manner specified in the agreement.
- Capital raise: IP assets can be used to raise capital, in case when the enterprise is seeking to commercialize a new technology.
- Legal Action: IP assets can be used to improve the ability of the enterprise to take successful legal action against persons infringing their rights.
- Popularity: IP Portfolios are useful when raising funds, finding business partners, raising enterprise’s profile and market value.
Necessity of IP Audits for the growth of SMEs:
An unused IP asset is no longer valuable and it may represent a financial burden on the enterprise owning it. Trying to decide what is valuable and what is not valuable can be a difficult task because even outdated technologies may still have some value in the market. One way an enterprise can know this is performing an IP Audit. It is a systematic review of the IP used by any business. The scope of an IP Audit varies depending upon the purpose of the audit.
In general, it begins by identifying and making an inventory of the IP assets owned/used by an enterprise. It is mainly done to assure that a business is making the most out of its IP assets. For example: a business may decide to sell an unused IP asset or permit others to use its IP assets on mutually agreed terms and conditions, that often include the payment of a one-time fee, or recurring royalty payment. IP Audit is done to determine whether the IP rights are registered or not; who owns the rights; and what are the conditions for use of the right in case the ownership is not with the company.
The advantages of IP Audit are:
- Acquiring IP assets: IP Audit will help in knowing the value of the enterprise’s intellectual property which helps in deciding which type of IP assets to acquire and maintain and how to best manage the IP assets of the SME.
- Merger and Acquisition: IP Audit helps in identifying the IP portfolio of the company and to find the strength and weakness of the IP assets owned by the SME. On successful M&A, the value of SME can significantly increase.
- Licensing: IP Audit will assist the SME in determining the value of IP assets in order to obtain maximum benefit from licensing. Licensing helps to increase the cash-flow and marketing power by licensing IP rights to third parties.
- Enforcement: IP Audit will help in knowing the value of assets of the SME and serve as a deciding factor whether or not to take legal actions in cases of infringement, if any.
- Cost-reduction: IP Audit helps in reducing maintenance cost by helping to identify obsolete IP assets and avoid infringing other people’s IP rights.
SMEs are holding good position in the country in terms of growth, technology, profits and exposure. Over the years, the source of commercial power has shifted from the traditional factors of production which are tangible namely land, labor and capital to knowledge, which is intangible. Despite being a tangible thing, knowledge has great power to change a business for the better and thus contribute in its success in terms of profitability. More and more businesses are coming to conclusion that intangible things such as new knowledge, innovation, creative expression are becoming more valuable business assets and IP gives protection to intangible assets.