IP COMMERCIALIZATION

Revathi P (Patent) – Associate, IP Practice

I. Introduction:

IP Commercialisation is the process of bringing the IPRs to the market to get them exploited in return for business profits and growth. Once the IPRs are duly protected through registration, commercialisation of the same should immediately commence so as to recoup the investment made to develop or acquire them and protect them. Thus, IP commercialization/monetization means making the intellectual property (IPR) marketable and profitable.

II. Steps for IP Commercialization:

a.     Market Analysis

b.     IP Audit

c.      IP Valuation

d.     Financing and raising capitals using IPRs

Now let us discuss these steps in detail.

a.     Market Analysis: The term “market” refers both to the geographical market and the specific product market. The market analysis is an evaluation of:

1.     Size of potential market

2.     Customer’s actual and potential demand

3.     Customer’s purchasing power

4.     Competing or similar products already in market or expected in the near future

5.     Competitor’s size and capacity

6.     Potential business partners

7.     Domestic legal framework affecting the business

8.     All relevant logistical issues

b.     IP Audit: It is the systematic review of all the intellectual property rights whether registered or not, what one owns, uses, have acquired from a third party or outsourced to a third party.

c.      IP valuation – It is the process of determining the monetary value of the IP.

1.     Quantitative approach:

i. Cost-based approach – This method focuses on the costs actually expended for the development of the given IP such as materials, equipments, labour, etc.

ii. Market-based approach – This method focuses on the analysis of similar market transactions relating to comparable IP rights.

iii. Income-based approach  – This is the assessment of the ability of an asset to directly or indirectly generate a positive cashflow and future income.

2.     Qualitative approach:

Analysis based on non-numerical aspects such as strengths of the IP, geographical coverage, number of competitors, existence of substitutes, etc.

d.     Financing and raising capitals using IPRs: After valuation, IPRs can be used and marketed directly, or they can be used to raise capitals through IP-backed loans by using IP as collaterals and also by licensing or selling the IPs.

III. IP Management:

The wise ways of managing IPRs are listed below:

a.      Protecting IPRs at Home and abroad: By registration and renewal at the Intellectual Property Office at home country and other countries where there are planning of marketing the product.

b.     Protecting unregistered IPRs: Trade secrets come under this category, but it has its own risks.

c.      Use it or lose it: Using the intellectual property is equally important to its creation, else Compulsory licensing or certain other issues may turn up.

d.     Be your own watchdog: Journal watches and similar other protective measures should be adopted to keep a check on infringement of the IPRs.

IV. Maximizing gains:

There are various ways through which IP can be monetized. The first and foremost step is a well-drafted contract. The contract is of paramount importance in the commercialization process. The following types of contractual agreements are preferred for commercializing IP assets:

1. Non-disclosure agreements
2. Assignment or sale
3. Licensing and cross-licensing agreements
4. Technology transfer agreements
5. Joint venture agreements
6. Franchising agreements
7. Mergers and acquisitions

Conclusion

Evaluating the potential of IP and capitalisation on its true value is the most pivotal aspect for a long-term economic foothold. Being caught off guard by any market entity might cause havoc, both monetarily and in terms of reputation, which would be extremely destructive to the institution’s growth. Registration and protection of IPRs is a costly and time-consuming process. However, these steps lay the foundation for commercialisation for IPRs and thus, are crucial in nature.

Bibliography:

1. https://aanzfta.asean.org/uploads/2020/12/IPPEA-FINAL-HANDBOOK-ON-IP-COMMERCIALISATION.pdf

2. https://blog.ipleaders.in/commercialisation-of-intellectual-property-alchemising-ideas-into-income/