Innovation is not just the backbone of technological industry, or any industry for that matter, but also the fuel for human progress and elevation of civilization. Commercialization of any innovation leads to sweeping changes that alter the socio-economic fabric and structure of the society. Intellectual Property, due to its very intangible nature, is subject to evolving legal norms and proprietary notions that necessitate an evolved system in place to manage, protect, and possess those rights in their fullest sense. Management of Intellectual Property Rights [“IPR”], especially those that involve technology, come with unique set of challenges, both legal and practical.
Management of IPR in Technological Innovation
Though IPR are broadly categorised into Industrial Property and Copyright, with the latter dealing mostly with artistic and creative pursuits, it is safe to conclude that technological innovations largely fall under the aegis of the former. IPR that arise out of technological innovations are usually protected through a series of patents, trademarks, and designs, that distinguish these innovations as property unique to the innovator, or the organisation financing or spearheading the innovation. Though the mere owning of these Intellectual Properties[“IP”] is by itself not an indicator of the commercial viability of the innovation, it undercuts possibilities of exploitation of profits by third parties in competition and provides recourse to legal remedies in cases of such sabotage. Thus, a strong correlation between the economic success stemming from innovation, or organisation’s acquiring IP of innovations, and their successful safeguarding of IPR can be deduced, as exemplified by the case of the European Union. Though IPR granted through means like patents give way for exclusive rights to the holder, the impact of technological innovations on society as a whole necessitates that it come with stipulations. These stipulations include the finite nature of such exclusive rights, with patents often being diminutive in its validity of around 20 years at most, when compared to IPR in terms of copyright that is granted for a lifetime plus at least an additional 50 or so years in jurisdictions bound by the Berne Convention. Patents also require the public disclosure of such innovations so as to allow further development of the technology and facilitate further research by interested entities other than the holder.
A company that owns and protects IP therefore also betters their commercial prospects, and the initial steps towards this has to be taken during the Research & Development [“R&D”] phase of the particular innovation. In this scenario, the organisation is able to lay claim to the innovation in its nascent stages, where in it shall be protected by patents and trade secrets, thereby, ensuring harsher sanctions upon those who choose to divulge or leak the particulars of the innovation for commercial gain. This may also help the innovating organisation to prevent any IP infringement from happening, before or after, the successful entry of the Innovation into the market. Such a model can be called the Closed Innovation Model.
However, IPR management in innovation is not merely restrictive to protection. It also eases way for successful and subtle collaboration or coexistence, where one company may make use of an innovation by another company, which is usually perceived as a competitive rival in the market by the public, through means such as licensing agreements. This would succeed the entry of the innovation in the market, and would help out in the larger availability and access to the innovation for the public, from a host of providers, varying based on the extent of IP shared. This is not limited to just already established innovations, but can also aid in the development of new innovations. For example, in industries like the pharmaceutical industry, a new innovation or breakthrough may be arrived at only with the aid of other existing innovations whose IP is held by another. Such a model is referred to as the Open Innovation Model.
Open Innovation Model as an approach to IP Management also advocates for larger diffusion of technological innovations globally. That is, more innovators would be made aware of advancements made in their respective areas of research through patent claims, and such stringent enforcement of IPR protection by countries or international organisations would lead to more players opting for the legally infallible modes of obtaining IP, through modes like Patent Pools, licensing, etc. This would then result in expanded channels of international trade, foreign investment, trade agreements, subsidies, and appropriate tariff measures to facilitate the same and thereby strengthen the subsequent economic boost. Therefore, though the key players in such management strategies are private entities initially, the interested state machineries would be compelled to actively participate and restructure their policies.
Technological cooperation between firms, where they enter into R&D agreements to agree to share data and collaborate on innovations that could contribute to the progress of the industry is part of the Open Innovation Model. There can also be Public-Private research partnerships, which is another management strategy to encourage research in public entities like public universities and centres, with private funding from organisations, where the latter finance the former in return for commercialising the innovation.
An indigenous example which incorporates both such inter-firm technological cooperation and public-private collaboration would be the case of MIDAS in India, who entered into an inter-firm partnership, with Analog Devices, a US firm, and their work in Integrated Circuits, IC. MIDAS was the brainchild of TeNet, Telecommunications and Computer Networks, a group comprising of tenured faculty at IIT Madras. The group developed several technologies and encouraged alumni to form a separate company called MIDAS so that the commercialisation of such technology could take place and equity could be held. Indian laws prevented IIT, which was the core research centre, from holding equity, so the public entity in this public private partnership was awarded royalties instead. Their innovations in Integrated Circuits needed more funding for development and could not be viably commercialised in the Indian market at the time, so this cooperation stipulated that Analog Devices would market the technology abroad with MIDAS receiving royalties.
Case Study for Impact of IPR Management through Policies: Japan and South Korea
The case for stronger IPR regimes to boost and protect technological innovations, and thereby boost economic growth of both the holder of the IP as well as the countries involved, is made evident from recent events in Japan, South Korea, and India.
Post World War II, the Japanese economy had to climb back from rock bottom, but its rise as a technological giant was so rapid and overwhelming that it was described as an “economic miracle”. A small but significant factor in the development of the technological industry in Japan is attributed to their post war IPR regime, particularly its patent system. The patent system emphasised on incremental and adaptive forms of innovation, where new innovators could build upon existing fundamental knowledge and discoveries. These would be granted “utility models” which are essentially patents for a shorter period of time, allowing for legitimate profits to be reaped by the innovator, as well as quicker diffusion of the technology into the economy.
While Japan stuck to IPR protection that encouraged innovation but did not restrict accessibility beyond reasonable time periods for development, South Korea took an alternative approach. South Korea deliberately weakened their IPR regime so as to facilitate the imitation of foreign innovation that arrives in their country, multiplying their profits through lower cost prices due to cheap domestic labour. This case proves how important strategic management of IPR is, as very few organisations and companies chose to patent or create legal fail safes in countries like South Korea, which was previously a developing country. The consequence is a lack of practical legal remedies in instances of infringement and piracy. This saga is seen to be repeated in many developing and under developed countries, where due to increased international trade and globalisation in the latter half of 20th century, exposure to technological innovations were increased but the IPR regime failed to match up.
The significance of proper IPR Strategic Management is insurmountable for both states, as well as private firms. It is evident that the formulation of an IP policy can have a quantifiable impact on the economy of the State concerned, but this may be either compounded or mitigated by the means and methods of IP management adopted by individual organisations within the economy. Therefore, it is imperative that the IP regime of a country is in congruence with the management practices of the firms within its jurisdiction or formulated to aid such practices. The failure to do so may result in lacunae in the legal framework concerning IPR, which, especially in the case of technological innovation, is constantly at risk of being antiquated by the protections required by evolved models of innovation and invention.
This article is authored by K Nazreen Haider, a student at National University of Advanced Legal Studies, Kochi.