What Indian entrepreneurs can learn from these IP-Driven companies?

Today the tech companies as well as other industries, are increasingly based on innovation as their primary value driver. Developing IP portfolio is now a basic requirement even for a tech start-up that hopes to raise early-stage financing. Additionally, desire to acquire intellectual property, particularly patents and trade secrets know how that exists is the main reason behind most of the mergers and acquisitions transactions.

As a country, where Indian entrepreneurs are producing globally-competitive IP-driven innovations across themes such as healthcare and biotech, agriculture, energy and enterprise tech. All these innovations are enabled by cutting edge research and trends, including artificial intelligence, machine learning, internet of things etc. The transformation that these deep tech start-ups are trying to bring is phenomenal. But if their innovation is not protected, then the competitive advantage and sustainability of the business to cover R&D costs and generate profits won’t be there in the long term. Here are just a  few examples of Indian companies that will motivate you to patent your innovation.

Arrow Greentech Ltd. monetized 3 out 30 patents which will expire after 20 Years. These three patents generated revenues of Rs.450 Million p.a. over the last three years.

Innorel Systems, a world class innovative reliable solutions provider company both in solar as well as conventional systems. They have a core team having more than 34 patents amongst them.

Cosmic Circuits, a leading provider of analog and mixed signal intellectual property (IP) cores. Cosmic circuits was acquired by Cadence in May 2013. Cosmic’s IP strengthens Cadence’s side in its IP battle with Synopsys, giving it heads up in its solutions to address mobile, Cloud/datacenter and ‘Internet of Things’.

Forus Health is a Bengaluru based technology company that develops innovative products in the field of Ophthalmology to eradicate preventable blindness. The company has protected their technology with 14 patents. Forus Health’s systematic IP creation and management has allowed them to remain competitive in the growing healthcare industry worldwide.

Ittiam is a Bengaluru based technology company that was established in 2001. The company develops solutions in the areas consumer and mobility, digital and broadcast media, industry and defense had automobile infotainment. From the very beginning, Ittiam’s focus was on IP creation. Today, the company has over 128 granted and published patents for their unique inventions. Ittiam earns substantial revenue through licensing and royalty of their IP.

Recently there was a case of software IP infringement of an Indian firm named Reverie language Technologies by a Chinese tech firm. Reverie filed a case of software infringement against Chinese firm and won the verdict in its favor. The Chinese Tech firm has been restrained from using Reverie’s software.

Reverie issued that this incident has been an eye opener for them. It’s a warning for the larger Indian start-up community, as a reminder to keep IPs safe. We can’t let foreign companies, specially Chinese prey on our efforts, work and innovation. 

The number of patents granted by India shoot up by 50 per cent in 2017, keeping a trend of steep increases, according to UN’s World Intellectual Property Organisation(WIPO).

Lesson learned :

Start-ups should also focus in building successful IP portfolios for their businesses. Investors and Venture Capitalists like Yournest invests only in patent-led start-ups. Therefore, IP constitutes an important strategic, competitive and financial asset for start-ups. It is a valuable outcome of the creative and intellectual endeavors of individuals and organizations. They should take IP protection and portfolio strategy more seriously.

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Intellectual Property

What are Intellectual Property Rights?

Intellectual property rights are the rights given to the creator over his/her invention by providing exclusive rights to use them for a certain period of time.

Types of IPR consists of:

  • Patents
  • Trademark
  • Copyright rights
  • Industrial design
  • Trade Secret
  • Layout for integrated design
  • Protection of new plant variety

Why to show patents in accounting?

The potential of revenue generation from IP is growing around the world and because of this accounting need to consider these intangible assets while making a balance sheet. But the problem of valuing these IP is a problem because there is no proper defined method to value them and also there is a gap between economic framework of accounting and legal framework of IPR. This leads to disparity in the between what companies shows in balance sheet and what they actually own.

Examples of company showing IPR as their intangible assets:

  1. Walt Disney- Copyright and trademark valued at $4273 million and accounts for 6% of the total assets.
  2. Microsoft- Technology based IPR worth around $3038 million and accounts for 2% of the total assets.

Patents are classified as long-term assets. Because they have extended life and not indefinite life. Companies generally cannot place internally developed assets in accounting sheets unless they buy it and should have an objectively determinable value.

To know more about accounting for intangible asset and regulation around it click on the link:

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