Protecting innovation in business

More intellectual property (IP) is now generated by emerging market economies than ever before, literally changing the IP geography in the world, says Karen Lee Rata, head of the executive programme at the World Intellectual Property Organisation (WIPO) Academy in Geneva, Switzerland.

WIPO is a specialised agency of the United Nations dedicated to developing a balanced and accessible international IP system, which rewards creativity, stimulates innovation and contributes to economic development while safeguarding the public interest.

Indeed, emerging markets are producing industrial property (inventions, patents, trademarks, designs) and copyright (literary and artistic works) that add to new knowledge, and could be profitable for companies and countries, these nations are not capitalising on their innovations or seeing benefits in line with output.

And even though the growing intellectual property rights systems around the world have stimulated greater cross-border trade in knowledge assets, developing nations are still paying much more in licensing and royalty fees to third parties than they receive, says a recent World Bank report.

For example, International Monetary Fund records show that South Africa received less than US$48 million in royalty and license fees but paid out nearly US$1.7 billion; compared to the USA, which received US$90 trillion and spent US$25trillion.

Strategic intellectual property management is becoming increasingly significant for the majority of businesses now, says Rata.

In an increasingly cut-throat business environment, protected innovation is the way to stay ahead, gain an edge over competitors and grow market share. It can turn solid brands into market leaders.

“Effective IP management requires executives and lawyers to tightly integrate their company approach to IP with broader strategic considerations. Failure to do so can be detrimental or even catastrophic.”

A case in point is the current IP dispute between Apple and Samsung over patents relating to the iPhone.

The jury in the landmark case ruled overwhelmingly in favor of Apple in August, awarding the iPhone maker more than US$1 billion in damages, one of the largest and most significant patent verdicts ever.

The jury deemed that Apple’s iPhone-related design patents and user interface patents infringed upon across such a wide spectrum of products. Other handset manufacturers (in particular Android makers) may soon also find themselves on the receiving end of lawsuits from Apple.

While Apple benefits from the fruits of the innovations that it is entitled to, it is a devastating blow to Samsung who may well see an exodus of customers. Samsung is facing enormous spend on R&D to develop their own innovations, or they will have to pay licensing fees to continue manufacturing. Either way, the price of their Android devices is likely to rise.

The case has been a wake-up call for other companies in the technology space and further a field, highlighting the need for effective and strategic IP management.

“The question today is not whether businesses use IP, but how to maximise the use of IP for competitiveness, and for this, effective IP management is very important,” says Rata.

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