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Commercialisation and Intellectual Property Rights in India

Intellectual property (IP) is an intangible property, where a person uses his own intellect, to create belonging, which is unique and distinctive from others, such as inventions, designs and symbols, literary and artistic works, names, and images used in commerce. The purpose of Intellectual Property Rights is to encourage new creations, artwork, and inventions, that might increase economic growth. Intellectual property includes copyright, trademarks, patents, industrial designs, geographical indicators, etc.

Nowadays, IPR is not only a legal asset but it has commercial value too. For the success of any invention and innovation, the ultimate and critical stage of the innovation process is marketing and Commercialization. Therefore, Commercialization can be defined as the process of converting an invention or creating it into a commercially viable product, service, or process.

What Is The Commercialization Of Intellectual Property?

From intellectual property viewpoint, the process of earning revenue by leveraging one's intellectual assets is called Commercialization of IP. However, the process is complex and entails to a large extent, specialised efficiency, skills, and professional knowledge.

The importance of the commercial value of Intellectual property can be sighted with an example of a movie getting leaked on the internet before its formal realise. Then a copyright theft case can be filed before the police like what happened to the movie named 'Udta Punjab' in 2016.

Types Of IP Commercialization

IP Commercialization is divided into three categories such as:
  1. Commercialization by the owner
    The owners, including an individual or a company, can commercialise their intellectual assets by themselves. This type of commercialization happens when the owner has the required knowledge about marketing and commercialization. Therefore, they believe, that partnering with any third-party organization for the sake of commercialization is not required, or the company or the individual does not have enough financial resources to partner with any other organisation, or the owner does not want to share the details of intellectual property with others then the IPR can be commercially exploited by the owner himself.

    However, it could be very risky as the owners might not be an expert in IP, and they might miss out on certain legal prerequisites which are essential for product Commercialization. Whereas, an IP expert, is expected to know not just the legal sector, but the business environment, hence has the best position to guide the owners.

    The major obstacle in this type of commercialization is availability of necessary financial and technical capabilities to leverage your product by yourself in the market.
     
  2. Commercialization by assignments
    Commercialization Through Assignment

    There are two legal vehicles by which owner may commercialise their intellectual property:
    1. To sale or assign the IP,
    2. To license the IP
    Assignment:
    In this type of commercialization, the individual or the company takes the help of an external agency, Assignment. It is one of the common modes of commercialization on IP. The term 'Assignment' is used interchangeably with 'sale'.

    In this process of assignment, the IPR Owner transfers all or any part of his right to a certain organization that will develop, produce and market the product and services. On assigning the IP to another, the transferee gets all the benefits as well as liabilities that are attached to the owner of the Intellectual Property.

    Selling a patent, trademark, or copyright to a third party so that they have absolute ownership over such IP is one illustration of an assignment. The assignor is the person who transfers possession, and the assignee is the person who receives possession.

    Licensing
    Another very common and effective means of Commercialization is the licensing of intellectual property rights through one or more licensing agreements. The term 'Licensing' means that the owner has granted permission to another person for use of IP for a certain period of time and specific purpose under the agreed terms and conditions.

    The Concept of Licence is based on the Legal Maxim called "Nemo Dat Quod Non-Habet" which means that a licensor can only grant rights that he possesses under the law.

    This type of Commercialization is a significant tool for the owners who do not have the resources or innovative strategy or experience to develop and market the product or service.

    There are some challenges associated with licensing. For the effective use of licensing, the licensor has to disclose certain important features of the intellectual asset, which increases the danger of the proprietary information being lost.

    Unlike in assignment, licensing usually does not require many compliance-oriented formalities to be completed.

    Apart from licensing, there are various other methods of IP Commercialization with the intervention of third-party business transactions:
    1. Franchising
      The concept of franchising is wide, it basically encompasses the concept of licensing. In franchising, the owner not just allows the other entity to use the intellectual assets, but also allows them to use the entire business ecosystem of the owner.

      Some of the advantages of franchising are, that it allows the owner to acquire fresh capital, without incurring any loss of their own and it helps the business to expand its footprint across new market segments.

      Amongst the other things, it has some disadvantages also, like it has reputational risk, miss-use of trade and it is more complex than licensing.
       
    2. Mergers and acquisitions
      A merger is basically a legal merger of two commercial entities into one and whereas an acquisition occurs when an entity acquires another property. Both transactions result in the consolidation of assets and liabilities in a single entity.

      Mergers and acquisitions is an even broader concept than franchising, in which the intellectual property owner is actually either getting merged into a bigger organisation, or getting acquired by another organisation. In this process, not just the intellectual assets of the owner are consumed by the acquiring organisation, but the entire business framework is merged into the latter.
       
    3. Joint ventures
      The joint venture is similar to a merger, but the only difference is that the ownership of the intellectual property remains with the owner.

      It is an agreement between two or more entities to cooperate on a similar point of interest for a specific period of time and later both the entitles will part the different ways after the purpose of the agreement has been served.
     
  3. Commercialization by business partnerships
    The last way to commercialize IP is through building a business collaboration. In this type of Commercialization, the IPR owner enters into a business agreement with a third party who plays the role of an investor and helps in converting IP into marketable products or services.

    This concept is quite new in India IP owner generally prefers to design product by themselves or directly endorses it to other by way of assignment. But for long-term sustainability partnering of IP owners and corporate houses would play an important role.
     
Conclusion
With the passage of time, intellectual property has become a crucial segment of the economy. With the advancement in digital technology, necessitates an increase in the demand for protection. So, therefore, it is important for the owners of the intellectual property to up their game by Commercialization of their product and protect them.

Registration and protection of IPRs is a costly, complex, and time-consuming process. However, these steps lay the foundation for the Commercialization of IPRs and thus, are important in nature.

References:
  1. Legal Vehicles for the Commercialization of Intellectual Property Rights By Priyanka Malhan
    https://www.legalserviceindia.com/legal/article-308-legal-vehicles-for-the-commercialization-of-intellectual-property-rights.html
  2. https://www.wipo.int/about-ip/en
  3. https://blog.ipleaders.in/Commercialization-of-intellectual-property-alchemising-ideas-into-income/
  4. https://taxguru.in/chartered-accountant/commercialization-intellectual-property-rights-key-business-concerns.html

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