Commercialization of IP Rights

Commercialization of IP Rights
 CONTENTS
1 What Is Intellectual Property? 3

2 Commercialization of IP 3

3 Tools to Commercialise 4

4 IP Licence and IP assignment: Comparative Outlook 5

5 Other tools of IP Commercialization 6

6 Conclusion 8

Commercialization of IP Rights
What Is Intellectual Property? the era of Google thing, any person may
find numerous drafts and sample contracts,
Intellectual property is a broad categorical
however it is very important to asses that
description for the set of intangible
these samples are to be followed as a base
assets owned and legally protected by a
of your strategy not to copy them
company from outside use or
verbatim. It is always suggestive to
implementation without consent. An
analyse all the key points and specific
intangible asset is a non-physical asset that
interest of owner to avoid any conflict in
a company owns.
future.
The concept of intellectual property relates
to the fact that certain products of human Before explaining the tools for
intellect should be afforded the same Commercialization of IP Rights, a brief
protective rights that apply to physical idea about IP Rights is required to be kept
property, which are called tangible assets. in mind: -
Most developed economies have legal
measures in place to protect both forms of
IP Rights?
property.
Intellectual property rights are the rights
Commercialization of IP given to persons over the creations of their
minds. These rights cover Copyrights,
Commercialization may be understood as a
trademarks, Geographical Indication,
process of organisation of something in
industrial Design, lay-outs, Trade Secrets
way to generate profit or managing a
etc. which are governed by the respective
product or service or right or anything for
statutes in India. These statutes lay down
financial gain. Assignment agreements are
the procedure to commercial the IP rights
important since they allow the IP rights
and consequences followed by such
holder to transfer the IP for commercial
Commercialization.
returns and monetary gain and the
licensing agreements are documents to While preparing to commercialise the IP

permit the Licence to use the IP for given Rights, many businesses owner think that

period of time. their business does not possess or own any

IP unless they require their business ideas
The creator or Owner of intellectual ideas
to be protected under some defined law
or innovation can convert or transpose
like copyright, Trademark or Patent.
their intellectual property rights into a
However, may other IP Rights like domain
commercially viable product or process or
names, Trade Secrets, third party Licences
service by using the Legal tools such as
(MS Office etc.), IT maintenance and
licensing or assignments and through
support service also constitute the
entering into commercial relationships. In

Commercialization of IP Rights
important IPs while considering the sale of assignment contract. The consideration in
business. form of Lump sum payment of an
assignment is purchase price. The
relevance of an assignment Agreement in
IP Law in India is most important despite
being a

private transaction between the assignor

and the assignee. IPR legal Regime in
India provides specific legal guidelines
[Rules, Regulations, Forms and Procedure]
when dealing with the assignment
agreements. The Different statutes make
provisions for registering the assignment
Agreements and their respective schedules
also specify for forms through which such
agreements can be registered with
Tools to Commercialise concerned authority in order to make it
legal and binding and to avoid any further
There are two important tools by which
discrepancy they safeguarding the interest
owners may commercialise their
of Owner.
intellectual property:

1. Assignment
2. Licence

Assignment

The transfer of ownership in IP Rights

may be affected by a formal assignment or
it may be termed as direct sale of IP Rights
by which the whole or part of IP rights can
be assigned. It is formal document by
Guiding Factors for IP Assignment
which a
Agreements:
IP Rights is transferred by one person to
1. Issue of Ownership must be carefully
another. IP Rights cannot be effectively
dealt with particularly for the
transferred except through a written
Companies.
Commercialization of IP Rights
2. Whether the assignment is being to define the intellectual property
affected with Goodwill or without specifically [described in the schedule]
goodwill which is being licensed in the agreement.

3. All costs and expenses, including direct The Concept of Licence is bases on the
and indirect costs of research and
development, any outsourcing and the cost
of protecting the IP

4. Profit Component

5. Governing Law and Disputes

6. Potential market value of the IP. Legal Maxim “Nemo Dat Quod Non
Habet” meaning thereby that a licensor
7. Complaint with the relevant statute as
can only grant rights which he himself
prevailed in India.
possesses under the law.
Licence A very common and effective
Guiding Factors for IP Licensing
means of Commercialization is the
Agreements:
licensing of intellectual property rights
through one or more licensing agreements. 1. Ownership Right in IP Rights;

The term Licensing means the owner has 2. Usage of IP rights by Licence:
granted permission to another person for Exclusive or Non-exclusive
use of IP under the agreed terms and
3. Terms for Sub-licensing;
conditions. This licensing strategy is a
significant tool of Commercialization if 4. Territorial Scope [ Country or outside]

the owner does not have the resources or 5. Limitations attached to the IP being
experience or innovative strategy to licensed
develop and market the product or service.
6. Reservation or restrictions of any
In general, the licence Agreement is a special right
formal instrument that serves several
7. Termination Clause
purposes. The scope of grant of Licence
depends on the nature of the intellectual 8. Period of licensing
property being licensed. It is sine qua non 9. Royalty or Lump-sum payments

Commercialization of IP Rights
10. Obligation of Parties The difference between the IP Licence and
the IP assignment can never be ascertained
11. Indemnity Clause
as it depends on several factors and
12. Through the use of this tool, the condition of entity and the market space
licensee acquires a rapid expansion in the for such entity, moreover, the contents and
business with a minimum capital
expenditure.

words or terms used in Documents of

arrangement must be handled with utmost
care.

IP Licence and IP assignment:

Comparative Outlook

ASSIGNMENT LICENSING

Advantage 1. One time Consideration 1. Restrictive grant of Rights

2. Reduction in cost for managing IP 2. Restoration of IPR after

completion of period

Disadvantage 1. Permanent Arrangement: One Asset Lost 1. Risk of lowing of Royalties

except certain rights reserved 
2. Competition with the
2. Less attractive in case of specific IPRs licensee.

Commercialization of IP Rights
Other tools of IP Commercialization companies and form a greater part of their
business strategies. The product value,
1. Franchising- Franchising is a fairly
brand value, or the innovation portfolio of
common method of commercialization in
a company plays a pivotal role when it
the food industry, with McDonald’s,
comes to the management of assets of the
Domino’s, Baskin Robbins, Chili’s, and
company. These assets are equally
other big chains using this for expansion.
important and somewhere of more value
Under IP franchising, rights are licensed to
when compared to other assets of the
a third party which enables the concept or
company. They form a greater part of the
idea replication of the franchisor’s
strategic developments of a company in
business, regardless of geographical
the domestic or international market. The
location. Such replication is made possible
IP are also one of the various reasons for
by persistent training, upskilling providing
which different companies go through the
continuous support to the franchisee’s
process of merger or acquisition as it
branch
strengthens their market share, promotes
2. Mergers and Acquisitions (Mergers and improved and efficient management.
Acquisitions)- Intellectual property (herein
3.Joint Venture (JV)- Companies enter a
referred to as IP) is an incorporeal property
JV and combine their IP assets as key
that is invented or created by human
contributions. An IP joint venture can
intellect. These properties are intangible in
involve patent and/or trademark sharing. It
nature and possess right in rem' meaning a
can be extended to an R&D JV.
right against the whole world. It gives
Limitations to a certain field of technology
rights against the creativity and labour of
can occur. Such joint ventures are
the inventor or creator. There are different
common.
types of IP that exist, such as copyright,
trademark, patents, etc. They are a central
asset to the technology or biotechnology
Commercialization of IP Rights
Joint Ventures are the most collaborative is to provide inventors, researchers and
models listed here, having four lifecycle enterprises a guideline on the importance
stages: of IPR and also discussed about
commercialization procedures involved for
 Pre-contract, before the signature the same. Using the U.S. Chamber
of the joint venture agreement International IP Index ranking, some
 Contract, signing a joint venture countries have been highlighted in light of
agreement their legislations and ease to
 Implementation, fulfilment of the commercialize IP assets including the
JV contractual obligations extent of local barriers and contingency on
 Termination, end of the JV sharing IP with local entities or imposition
contractual obligations of restrictions on licensing activities.

All stages incorporate distinct challenges. References

The JV parties must agree on the value of
the contributed IP assets and balance 1. http://www.ecgi.org/codes/docume

contributions somehow in the contract. nts/hampel23.Pdf

2. Bebchuk, Lucian A., Cohen, Alma
and Ferrell, Allen ' What Matters

During the life of the partnership, they

have to work together.
3. Corporate
Conclusion Governance?'(September 1, 2004).
Review of Financial Studies, Vol.
Industry nowadays focuses on growing
22, No. 2, pp. 783- 827, February
trend of innovation and
2009; Harvard Law School John
interconnectedness. These factors entail to
M. Olin Center Discussion Paper
a dire need to protect innovative products
No. 491 (2004)
and procedures from being easily imitated,
4. Bebchuk, Lucian A., Cohen, Alma
weakening an enterprise's competitive
Ferrell, Allen ' What Matters in
advantage. Hence Intellectual Property
Corporate Governance?
Rights (IPR) can serve to protect the
(September 1, 2004). Review of
uniqueness of an invention, which can then
Financial Studies, Vol. 22, No. 2,
be commercialized to foster to the
pp. 783- 827, February 2009;
knowledge and technology transfers for a
Harvard Law School John M. Olin
common cause. The purpose of this paper

Commercialization of IP Rights
 Center Discussion Paper No. 491
(2004)
5. KEY ASPECTS OF IP LICENSE
AGREEMENTS by Donald M.
Cameron and Rowena Borenstein

Commercialization of IP Rights