Importance of Intellectual Property Rights (IPR)in Business Growth

Author - Associate Shreya Negandhi

“If you want your income to grow, you too must grow” - Idowu Koyenikan

‘Intellectual Property’ extensively refers to the fabrication of a rational human mind. Intellectual Property Rights or Intangible property rights briefly refer to those rights awarded to a person on such creation. It is a hamper consisting of many rights. A business organization is an economic system where goods or services are exchanged for money.

The world economy has witnessed unfathomable transformation due to the changing conditions which help in the determination of the wealth of nations. These changes have led to an increase in commercial flow whereby the interest in Intellectual Property has increased and the activities related to their protection. The technological advances in areas such as computing, chemistry, interalia have led to the demand for the creation of new forms of protection and the acclimation of existing ones.

Importance of Intellectual Property Rights in business entity lies at the core of it. A business entity should be driven in identifying and implementing IP solutions which will, in turn, help the company reach new heights of success. The myth that only lawyers can handle or deal with IP assets is a hoax because in order for a company to position itself as a leader in the marketplace it is of utmost importance that its IP assets are managed and strategized as required. Development of skills and competence to manage intellectual property assets has become mandatory for sustainable competitiveness. Management professionals are best suited to manage and commercialize these assets in order to generate revenue.

Knowledge has become a crucial factor in differentiating enterprises from their competitors. the 21st century has been called the century of knowledge. As Henry Ford has aptly stated, the only real security a man has in today’s world is the reservoir of knowledge. However, it is of utmost importance that this reservoir is protected under various property rights protection of the human mind. IP assets are very important business assets which need to be utilized and managed effectively to attain and sustain competitive advantage.

How can companies protect their assets in order to generate maximum revenue? Brands can be protected through trademarks, unique and novel inventions can be protected through Patents, and confidential information can be protected under trade secrets and any other intellect work that differentiates the business. With the advent of globalization and thereby the growth of business has made the importance of IP evident in the growth of the economy. The economy of a developed country mostly depends upon IPR. The value of the IP asset class in U.S.is estimated to be at least $5.5 trillion.[1] Craig Venter, the American biochemist has expertly referred to Intellectual Property as being a key aspect of economic development.

Intellectual Property of a company is indispensable to develop and maintain a successful business. In order for the biotechnological companies to succeed, Intellectual Property protection in the form of patents is crucial as it encourages them to develop new medicines and treatments for diseases. This protection benefits the owner as well as adds importance to the industry as well as business and also provides incentives for the private sector to invest in their developments. It is known that most of the products on the World Health Organization’s Essential Drug list are an outcome of the intensive research and development done by the pharmaceutical industry which is covered under Patents. Trade secrets and patents are inordinately valuable to a company, mainly because they give an edge in the competitive market.

Intellectual property rights entitlements to have exclusivity over their innovative new or original products, their creative designs and their brands. The exclusivity creates an appropriate incentive for investing in improving their competitiveness. A company builds strong goodwill with consumers, by its trademark. The brand acts as corroboration of quality and is a source of certain products or services which are extremely valuable. Trademark or brand is considered to be a direct reflection of the owner by clients or customers. Copyrights are an exceptionally valuable asset for creative and software companies, media and film industry as this protection aids the companies in maintaining their business in cut-throat competition. It is a widely known fact that Intellectual Property provides a strong position when it comes to entering into business partnerships.

The asset class of Intellectual Property generates revenue for business entities through licensing, franchising, sale of protected products or services. In case of a merger or acquisition protected IP assets increase the value of business significantly. The importance of Intellectual Property is evident in export markets as well. Protected Intellectual Property assets can be exported abroad or franchising agreements can be sought with foreign companies. It is pivotal to note that the top organizations in the world which have been ranked in billions namely, Apple, Microsoft, Blackberry have developed a powerful revenue stream because of their extensive IP assets. Maximum benefits can be reaped through a strong IP portfolio which can be used to increase revenue through licensing streams.

Importance of Intellectual property Rights in Entrepreneurship

There’s always comes a question, Why is IPR important for EntrepreneursThe rapid rate of development, globalization, advancement of technology, increase in commercial activities, development of international business and last but not the least increase in knowledge has made the business entities perceive the importance of Intellectual Property assets and its stipulation in the growth of business. There is strife in the sector and in order to survive and to grow at the desired pace it is necessary to realize the importance and need of this class of assets because they no longer just add exclusivity to the organization but are also paramount for the foundation of the company. It will be befitting here to conclude by quoting the famous American businessman Mark Getty who suitably reflects that Intellectual Property is directly proportional to the growth of any business organization, ‘Intellectual property is the oil of the 21 century. Look at the richest men a hundred years ago; they all made their money extracting natural resources or moving them around. All today's richest men have made their money out of intellectual property and they know the importance of Intellectual property protection in Entrepreneurship.

[1] Rodney D. Ryder, Ashwin Madhavan, Intellectual Property and Business: The Power of Intangible Assets, (Sage Publications 2013), 2.