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Intellectual Property Rights- A Boon to Indian Companies

Written by: Written By : Vandana Vaidya. Advocate/Patent Agent (Bangalore)
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Intellectual property plays an important role in an increasingly broad range of areas, ranging from the Internet to health care to nearly all aspects of science and technology and literature and the arts. Understanding the role of intellectual property in these areas many of them still emerging often requires significant new research and study. To promote informed discussion of the intellectual property, education and awareness in this field is important.

Today, possession of land, labour and capital are just not enough for a country to succeed. Creativity and innovation are the new drivers of the world economy. The policies adopted by a country shall determine the nations well being and further as to how it is developing the trapped intellectual capital. An effective intellectual property system is the foundation of such a strategy. Within knowledge-based, innovation-driven economies, the intellectual property system is a dynamic tool for wealth creation providing an incentive for enterprises and individuals to create and innovate; a fertile setting for the development of, and trade in, intellectual assets; and a stable environment for domestic and foreign investment.

Regarding the laws governing the IPR for Indian companies:

Agreement of Trade Related Intellectual Property Rights - better known as TRIP's- to which India is a signatory, is an integral
part of WTO and it has an enormous impact on Indian business and trade partnerships. Accordingly, India has complied its obligations by amending the Indian Patents Act 1970(based on the Ayyangar Report of 1959) twice, once in 1999 and later again last year and now the third and the final amendment is expected to be done by 2005. In the last few years, India has enacted fully TRIPs compliant Trademarks Act, Copyright Act, Designs Registration Act and such other Acts related to fields of IPR.

However, though most acts have been TRIPs compliant, in the Patents Acts there are areas where substantive or procedural amendments could be considered for complying with the TRIPs. While doing so changes maybe required, specially keeping view the Indian Companies, by giving protection under the Patents Acts to business methods qualifying as technology, which at present is not patentable. Business methods/models or computer programme comprising only of mathematical or scientific principles are not patentable under the present Act.

Computer programmes qualify as expressions and can be protected under the copyright law, however in certain sectors the need is being felt for getting a patent protection for certain software in addition to copyright. Copyright protects the coded expressions of software, while patent protection can protect the qualifying features of the software such as its sequence, structure and organization or its functional elements. On the other, a trademark is a brand name, it identifies the product and its origin, guarantees the quality, advertises the product and creates an image for the product.

How Indian companies can avoid falling into trap over misuse of Trademarks and Patents ie Protection of IPR: One has to be extremely cautious while selecting a good brand name, which is to the extent possible free from potential litigation in future. Good brand names must be easy to remember, easy to pronounce, easy to spell and must be legible, short and appealing to the naked eye and ear and most importantly must be distinctive.

While using a brand name it is not necessary to register with the appropriate Trademarks Office, but it is definitely advantageous to do so as in the event of any dispute over the brand name all that is required to establish is the right to the monopoly of the brand, which is the certificate of registration. Once the brand name is registered, it is as valuable as your fixed assets. It can be assigned to any other party for a consideration and you may even grant a license to the use of the brand by others.

Patents on the other hand are IP created by employees in the course of their employment, but when it comes to the owing of the right to the IP created is on the facts and circumstances of a particular employer-employee relationship. Many Indian Companies have framed an IPR Policy to this effect, but in absence of any such policy the clarity of ownership is again a question mark. To avoid disputes with employees the Companies need to follow a few golden rules:
Seek legal advice- It is essential to get skilled advice before entering into any agreement with the employees. Documentation and maintenance of secrecy is considered as prime issues.

Adopt internal policies and regulations or guidelines on employee inventions- Such policies and regulations should contain
provisions on the categories of inventions which fall within the field of the employers business, the employee inventors obligation to notify the employer of inventions, the employers procedures for handling such notifications, confidentiality requirements and patent prosecution, remuneration/royalty for the inventor, etc.

IP Licensing- Another way by which Indian Companies can benefit monetarily to a large extent is by IP licensing. Licensing is the sharing or the renting of IP through a legally binding contract that specifies certain conditions with another company in exchange for the payment of royalties or may involve a sharing of IP by cross licensing in which both parties have IP and exchange it, here there is no financial exchange between the parties.

The strategy of licensing IP is also perhaps the best way for all Indian companies to walk the middle road between services and products specially software. IP can also act as a competitive barrier to stop other companies from targeting your niche domain. Further, the same IP can also be used to provide services in a faster manner, though commercialization and marketing remains the key issue for an IP.

Importance of Intellectual Property

Intellectual property protection is the key factor for economic growth and advancement in the high technology sector. They are good for business, benefit the public at large and act as catalysts for technical progress. Whether IPRs are a good or bad thing, the developed world has come to an accommodation with them over a long period. Even if their disadvantages sometimes outweigh their advantages, by and large the developed world has the national economic strength and established legal mechanisms to overcome the problems so caused. Insofar as their benefits outweigh their disadvantages, the developed world has the wealth and infrastructure to take advantage of the opportunities provided. It is likely that neither of these holds true for developing and least developed countries. (Extracts from Report on Commission on IPR London September 2002).

Why care about IPR?

Patents benefit none other than the owner of the IP and add value to all industrial as well as business concerns and laboratory
discoveries and in doing so provide incentives for private sector investment into their development. Anyone in the above business should have an independent Research and development (R&D) center. Offering free R&D and processes in over enthusiasm must be avoided.

Globalization and the rapid proliferation of technology have elevated the importance of intellectual property protection for small and medium sized enterprises (SMEs). The intangible nature of intellectual property and the worldwide inconsistency of standard practices create challenges for those businesses wishing to protect their inventions, brands, and business methods in foreign markets. The three most common vehicles for protecting intellectual property are patents, trademarks, and copyrights.

The Biotechnology Industry Organization advocates a strong and effective intellectual property system. Strong intellectual property protection is essential to the success, and in some instances to the survival, of the biotechnology companies in this country. For these companies, the patent system serves to encourage development of new medicines and diagnostics for treatment and monitoring intractable diseases, and agricultural products to meet global needs. While giving holistic interpretation to TRIPS agreement public health should be the prime consideration rather than merely protecting the interest of the companies.

In the era of knowledge age or information age, the fundamental unit of most products and services is information-- in one or another form. Have you seen that n-number of websites, virtual enterprises and virtual products? All these rest upon the cornerstone of 'information': in digital or non-digital form. These have become the top IPR issues, this Internet shall bring several new IPR issues to the fore. In several cases such information is of proprietary nature, hence, the investment in that information product, knowledge product or the virtual product must be protected to encourage other similar initiatives. With increasing worldwide access to electronic distribution, the damage caused by piracy to content producers may completely destroy the value built in their intellectual property.

The same context is valid in the case of companies who have earned consumer recognition for their brand names and trade marks. A recognized brand name or trade mark represents the goodwill that has been built into the product or service. Consumers tend to associate the recognized brand name or trade mark with certain characteristics that are specific to that name or mark. Therefore, companies should manage, protect and safeguard the investment in the related intellectual property rights. Not only this, they should be vigilant if anyone else is misusing or causing infringement of this Intellectual property.

That is the crux of the intellectual property rights: to give credit where, and when, it is due. With the emergence of the knowledge society and virtual products, the issue of safeguarding the investment in the information-based products has certainly gained high importance. We, as consumers or producers in the information chain, cannot afford to be ignorant about the intellectual property rights!! Thus protection of IPR has definite (tangible) benefits, such as to propagate innovative culture, profitability, market leadership and helps creation of wealth for the individual and the nation. India falling one among the developing countries have miles to go, as she has a vulnerable collection of traditional, oral, folklore, customary, agricultural, traditional medicinal like Ayurveda etc. and besides not having much wealth and infrastructure, lack of awareness of IPRs among all stratas of people, is a major set back to a developing country like India.

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