A robust intellectual property rights plan mitigates risks and inspires innovation, says Subramaniam Vutha

Subramaniam Vutha is an intellectual property rights consultant with the Group Technology and Innovation Office of Tata Sons.

To innovate and not have intellectual property rights (IPR) plans to protect your innovations is like batting in cricket without gloves, pads and a helmet. You throw yourself open to various risks and eliminate avenues through which you can protect yourself and your innovation.

Here are some risks you can anticipate if you do not have an IPR plan in place when you pursue innovation:

You run the risk of not knowing the truly innovative aspects of your own work

Besides scanning existing products or services in the market to find out whether you have been really innovative, you need to search for patents that already exist for the product or process features you have incorporated in your new product or service. Only a truly innovative feature not developed and claimed by someone earlier will qualify for a patent. Therefore the surest way of knowing whether you have innovated, or not, is to do a search (or have a professional do a search) for ‘novelty’, by examining patent databases and scientific or technical literature.

You diminish, considerably, the chances of gaining commercial value from your innovations

Innovations not protected by patents, trade secrets, trademarks, copyright and design registrations can be replicated without significant risk. And the investments you make in innovation efforts could easily benefit your competitors because you are unable to assert any IPR that could give you a lead over your rivals in the marketplace. Even worse, your competitors can improve upon your innovations and preclude you from making, using or selling such improvements if they patent them.

Limited ability to attract and retain business partners

Your ability to attract value-added resellers, distributors and dealers, and to retain them, depends, among other things, on your ability to restrain others from copying your innovations. And an IPR plan is crucial for this purpose.

Moreover, your negotiating strength vis-a-vis your vendors, partners and collaborators is directly linked to the power and scope of your IP asset portfolio. How else can you prevent your vendors or partners from manufacturing or supplying your innovative products or components to your competitors in the marketplace?

Consider this situation: Your engineers have provided a key vendor with an improved design and data for a product that you plan to launch soon. Without trade secret protection for the data and designs that you share, copyright protection for the documents and patents for the innovative technological features in the improved design, how can you stop that vendor from making the same product for a competitor of yours in the marketplace? How can you negotiate preferred pricing for yourself without IP rights? How else can you impose costs on your competitors except by seeking royalty fees from the vendor if he decides to provide to others the improvements which have been an outcome of your innovation efforts?

Loss of investment in vendor development

Your innovations can often benefit one or more vendors who execute or implement the innovations. Investment in vendor development should result in benefits for your business. Consider this scenario: By sharing knowledge and providing testing and other facilities, you have developed a few vendors who are now crucial to your plans for cost competitiveness. If you have not protected your innovations using patents, copyright, trade secret and other forms of IP protection, how can you prevent your competitors from benefiting freely from all your innovative efforts? All that your competitors would need to do is to use the same set of vendors!

Risk of third-party claims for IPR infringement

IPR infringement could happen in several ways:

  • Your “innovation” leads to a feature already patented by a third party, but you are not aware of the earlier patent.
  • Your innovation includes concepts and facts that are the trade secrets of a third party (often a vendor, or a partner, or a collaborator), and you have agreed to treat them as proprietary information of that party.
  • The making, using or selling of your innovative product requires the use of technology patented by others.
  • You use drawings, designs or code, the copyright of which belongs to third parties; or you use modified or adapted versions of these.
  • You use a trademark or service mark that is confusingly similar to one that already exists and is owned by a third party.
  • Your product design infringes the registered design of a third party. Here, we refer to the ornamental, external, and nonfunctional aspects of a product design.

The risk of not knowing that you have something valuable, which you have lost or could lose

It is possible for an innovator (or his company) to have failed in identifying the IP aspects of various innovations. This could lead to an inability to protect them appropriately. Take the example of software that is shared without authorisation. Or, designs or drawings shared with rivals by a vendor or prototype-maker. In many such cases, the owners of the trade secrets may not even realise that they hold valuable trade secrets which have been leaked, thereby reducing their value totally or significantly.

In conclusion, innovators who invest time in understanding and leveraging IP rights will considerably enhance their chances of success and significantly reduce the risks outlined in this article. Innovators should work closely with their legal teams or other advisors to identify, protect and leverage their IP rights and to avoid risks of third-party IP claims.