The Hindu Business Line : ICT sector wires up for IP creation

RECENT trends emerging from the information and communication technology industry indicate that companies are increasingly becoming aware of the need for intellectual property (IP) creation.

The IP environment in the country is now set for a transformation, according to the National Association for Software and Services Companies (Nasscom). It bases its optimism on the following trends:

The realisation by companies that IP is a valuable asset, driving business strategy to create revenue streams.

Focus on R&D services outsourcing by leading global multinational companies to India.

Growing awareness among software and services exporters to the US and the EU that they need to "IP-protect" their software to avoid infringing upon IP rights of MNCs.

The need for small and medium enterprise (SME) software and services companies to proactively protect their IP relating to software and business methods in order to remain competitive.

Besides, investors have always been found to value IP that impacts the valuation of an organisation, particularly in cases where mergers/acquisitions are involved. IP helps raise venture capital. Research shows that companies with IP assets ranked under the Chi-Index (a set of 25 companies selected by Chi Research on the basis of their IP assets) grow faster than companies listed, for instance, on Nasdaq.

IP can help raise the entry barrier for competitors through protection. A strong portfolio of patents ensures that rivals are kept out of a particular market. IP also helps generate massive financial gains. Patent licensing in the US is stated to have generated around $120 billion in 2000.

One of the advantages of getting into the "patent culture" is cross-licensing. Companies can also gain through damages awarded in case of patent infringement.

IP is key for innovation and entrepreneurship and leads to a strengthening of IP laws by the Government. This, in turn, spurs flow of foreign direct investment within the sector.

Unlike in the past when IP protection was not a priority, today companies creating original technologies are safeguarded from piracy.