Contrary to common belief, intellectual property (IP) deals with more intricate commercial issues than the surface-level concepts of trademarks, patents, and copyrights. Therefore, it is a frequent error for young, aspirational enterprises to overlook their IP Portfolio while seeking to precisely estimate both their capital and intangible value.
The value of a firm is still heavily influenced by its intellectual property in the innovation-driven economy of today. One’s ability as a business owner to capitalize on the intellectual assets will depend on a complex IP-Management concept called “IP Portfolio Management.” IP Portfolio management is a process where a business can coordinate its strategic patent, trademark, and design filings with its product commercialization strategy.
ROLE OF IP PORTFOLIO IN START-UPS
Start-ups are now recognized as innately powerful centres of creativity, technology, and ideas. To encourage early-stage start-ups, the Indian government unveiled action plans and activities as part of the ambitious “Start-up India, Stand Up India” programme.[1]
To foster their innovation and creativity, as well as to raise awareness and encourage Start-Ups to protect their intellectual property rights (IPRs), the Government of India approved and launched the “Scheme for Facilitating Start-Ups Intellectual Property Protection (SIPP)” as part of this policy.[2] By giving Start-Ups access to top-notch IP services and resources, the scheme hopes to foster and mentor unique and emerging technologies among them that help them defend their technology and commercialize them.
However, it is urgently necessary for entrepreneurs to be aware of the significant importance of IPR and the need to take aggressive measures to safeguard their IPR.
IMPORTANCE OF IP PROTECTION FOR START-UPS
- Prospects of Profitability: There are numerous variables to consider when beginning a business, ranging from branding and market targeting to financial success. However, one of the most important aspects of market difficulties is intellectual property (IP) protection. IP is an intangible asset for any firm, especially for a start-up, thereby, levelling the playing field between entrepreneurs and incumbents, increasing the likelihood of profitability.
- Protecting Inventions: Patents are the most expensive if not managed properly and time-consuming form of acquired IP, yet they provide unequalled protection. When a start-up protects its IP in the inventions, the financial prospects improve. Furthermore, investors are more willing to invest their time and money in a firm with well-protected IPs. This is due to the fact that it creates a larger resource while competing with industry titans.
- Managing Competition: In today’s competitive and dynamic world, intellectual property (IP) can represent a product or service’s unique selling proposition (USP). It contributes to the creation of a durable and defensible differentiation for the start-up and allows companies to develop quickly than their competitors.
- Building Trust: IP is a critical component for entrepreneurs all over the world seeking a competitive advantage in the market. This instils a prominent level of trust in start-up among investors, customers, and other stakeholders. This trust is essential for a company to become market leader in its field.
COMMERCIALISATION OF IP
Any Start-Ups intellectual property (“IP”) is a significant asset. After investing in the development and protection of intellectual property, such as design patents, utility patents, trademarks, and copyrights, the only question that comes up before any entity is how can its company monetize the value of its IP? In general, there are five ways to realize the value of the intellectual property:
- Sell products or offer services using the IP;
- License IP to others;
- Sell the IP;
- Enforce the IP against infringers;
- Use the IP as collateral.
WHAT IS IP VALUATION?
IP valuation is the process of determining the arm’s length of intellectual property assets. The valuation of intellectual property assets helps in determining not just the worth of the IP, but also the genuine value of the firm as a whole. Before an entity can receive a valuation for its start-up, it must first understand the IP portfolio. This includes any patents, trademarks, copyrights, or trade secrets. Furthermore, if you wait until after you have obtained a value to develop your IP portfolio, you may discover that your valuation is substantially lower than it could have been.
IP Valuation methods
- The income method: The income method values IP on the amount of economic income it is expected to generate. This method is best to use when the IP creates a positive cash flow that can be estimated with some degree of reliability.
- The market method: The market method compares the actual price paid for the transfer of rights to a similar IP asset under comparable circumstances.
- The cost method: The Cost method establishes the value of an IP asset by calculating the cost of similar IP asset.
There are several crucial factors to establish and take into consideration when performing an IP valuation. These include:
- Clear identification of the IP;
- Unambiguous title to the asset;
- Qualitative and quantitative characteristics of the IP;
- Earnings capacity and profitability relating to the IP;
- Market share supported by, or because of, the IP;
- Legal rights and restrictions, competition, barriers to entry, and risks associated with the IP;
- Product life cycles and positioning;
- Historical growth and prospects for the future.
THE ROLE OF IP PORTFOLIO MANAGEMENT SOFTWARE
Businesses and IP law firms use intellectual property (IP) management software to manage and defend inventions, patents, copyrights, trademarks, licenses, royalties, brands, and other intellectual property legal rights. It makes easier to prepare and conduct intellectual property filings and manage prosecution.
- It facilitates the identification of violations and infringement cases by using artificial intelligence to keep up with the growing volume of digital IP infringements.
- Helps in docketing and maintain all the database.
- These tools also aid in contract renewal, disclosure agreements, and the resolution of intellectual property issues.
- They encourage collaboration among scientists, engineers, researchers, intellectual property teams, corporate executives, and legal departments.
CONCLUSION
Managing an IP portfolio correctly can boost your productivity and give you a competitive advantage in today’s market. Throughout the last decade, start-ups have become a worldwide trend. The number of people who wish to start a business without or with limited capital is steadily growing. Thus, the role of IP protection in start-ups is one of the most important aspect in today’s highly competitive business climate. To thrive in such an environment, newly established enterprises must successfully handle its intellectual property. Start-ups must overcome the odds in order to succeed and simultaneously cannot afford to make costly mistakes since there is always competition. They can contribute to the safety of their new firm and preserve progress by effectively securing the IP from the very beginning and hence, safeguard their start-up from future legal concerns and position themselves to attract investors, partners, suppliers, and other stakeholders.
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[1] https://www.startupindia.gov.in/content/sih/en/government-schemes/stand-up-india.html
[2] https://ipindia.gov.in/writereaddata/Portal/News/234_1_publicNotice-30May2016.pdf
