BAB II: Making some money out of your IPRs

31 May

BAB II: Making some money out of your IPRs

 

 

Understanding and making money

Out of your Intellectual Property

 

by YOHANES DJINGGA

Faculty of Law UGM

Faculty of Law Queen Mary University of London

 

  1. Making some money out of your IPRs

After going through all the troubles of creating a new invention, what would be on your mind? Of course, it would be how to make money out of it and make a return on your investments.

So in this part, we will analyse the different ways you would be able to successfully commercialize on your new assets and make a gain. To analyse this in depth, we shall venture to the goals of the business, the type of the IP and on the necessary economic disposal of an IP owner.

 

(a) Commercialization by its owner

  1. Organisation’s business objective

Most companies with the objective of keeping their business small and grow sales organically tends to prefer commercializing their IPR themselves. It is evident in the case of Intelligent Textiles Limited.[1] Where they turned down multiple offers from venture capitalists and decided to commercialize their IPR themselves.

       2. The form of IP

Different forms of IPR are generally available for commercialization by its owners, as in the case specified above, the business is in possession of a patent and trademark for their inventions.[2] However, commercialization by an IPR holder is general favourable when it comes to trade secrets. Considering the fact that when the trade secret is public, it no longer is a secret. Hence, the decision was to commercialize it themselves.

         3. The economic resources at its disposal

Only companies or individuals with the sufficient capabilities would be capable to commercialize their IPR on their own.[3] This is very much associated to the business objectives that the owners are targeting their goals to. In cases where an IPR owner aims for fast growth and requires a huge amount of funding to do so themselves, they would seek other methods of commercialization.[4]

 

b) Commercialization by assignment

  1. Organization’s business objectives

An assignment is the transfer of ownership of an IPR from one party to another. This is commonly used in situations where the IPR holder does not have enough capabilities to market the developed intellectual asset and/or when the holder would like to realise an immediate cash flow from an IP asset, which he does not plan to exploit with its own resources.[5] This was evident in Cyberkinetics Neurotechnology Systems Inc (“CNS”),[6] when the board sold of the whole company to raise finances.

2. The form of IP

The form of IP assigned by CNS includes their patent portfolio, their trademark and their domain name. Generally, all sorts of IPR are assignable.

3. The economic resources at its disposal

The only economic resources required would be to generate the innovation and to file for IPR protection in order for it to be sold.

 

c) By business partners

  1. Licensing

  • Organization’s business objectives

Licensing is generally done by businesses that wants to retain ownership, but at the same time obtain some income from those licences.[7] Such is evident in the Indonesian Planters Association for Research and Development, where the inventor managed to generate IDR 150 Million (or equivalent to £70.000) a year in the form of royalties.[8] Or the goal may be to further expand their business, as can be seen in Surface Processing Limited.[9]

 

  • The form of IP

Licensing is generally available for different forms of IP aside from trade secret. In the case above, the IPRs are in the form of a patent and trademark.

 

  • The economic resources at its disposal

The economic resources differs from one to another. Some companies may need additional financing, hence the licensing. Some just wishes to license the IPR as they are sources of income.[10]

     2. Franchising

  • Organization’s business objectives

Franchising is generally done by businesses that wants to expand and enter into a market more easily. These are usually businesses with well established brands. Such as Kebab Turki Baba Rafi, a company in Indonesia, where they used franchising to enter the Malaysian market.[11] Or Es teler 77, a company in Indonesia, who they used franchising as a method to expand within Indonesia.[12]

 

  • The form of IP

In the cases above, the IP involved are trademark, industrial designs (for packaging) and domain names where available.

 

  • The economic resources at its disposal

As the two above would suggest, the companies would generally start off small and the important factor is for them to build up their trademark and brands in their respective areas by having large amount of sales and create awareness from the public.

     3. Joint Venture

  • Organization’s business objectives

Joint ventures are generally employed in situations where two or more independent businesses undertake a specific project or to achieve a certain goal by sharing risks.[13] Such is evident in the Dark Star Brewing company, where they conducted a joint venture with The Kernel Brewery in order to produce new products.[14]

 

  • The form of IP

The parent companies in conducting a joint venture may licence or assign the relevant IP to the joint venture in order to conduct the required activities. This does not limit them to the types of IP. The example above employed trademark and branding. Another example would be the joint venture of Procter and Gamble with Teva Industries (“PGT”), where the companies would use their IP portfolio of different IP forms to penetrate a new market.

 

  • The economic resources at its disposal

As the examples above would suggest, a joint venture may take up quite a huge capital in order to achieve the desired goals. In order for PGT to achieve their joint venture goal, they would need to have the initial individual portfolios.

     4. Spin-offs

  • Organization’s business objectives

Spin-offs are generally used by a parent organisation who may not be entirely capable of commercialization of their own IP assets. They create an intermediary between the research environment and industries.[15] Such is evident in Cyberkinetics Neurotechnology Systems Inc, a company in the US, where the company is a spin-off created in order to exploit the potential of the technology the inventors have developed.[16]

 

  • The form of IP

As seen in the company above, and examples from Tele-Rilevamento Europa,[17] and ITwin,  the forms of IP used may differ, ranging from patents, trademarks and know how.[18]

  • The economic resources at its disposal

Based on the examples above, the economic resources may not necessarily be of abundance. However, with the use of a spin-off, it will definitely assist in proper commercialization of an invention.

 

 

[1] https://www.wipo.int/ipadvantage/en/details.jsp?id=2610.

[2] Ibid.

[3] Guide to IP, op.cit. p.7.

[4] Kebab Turki Baba Rafi, Indonesia, https://www.wipo.int/ipadvantage/en/details.jsp?id=10358.

[5] Guide to IP, op.cit. p.13.

[6] https://www.wipo.int/ipadvantage/en/details.jsp?id=2685.

[7] Bristows IP Licensing handbook, p. 4.

[8] https://www.wipo.int/ipadvantage/en/details.jsp?id=2616.

[9] https://www.wipo.int/ipadvantage/en/details.jsp?id=894.

[10] op.cit. n.8.

[11] https://www.wipo.int/ipadvantage/en/details.jsp?id=10358.

[12] https://www.wipo.int/ipadvantage/en/details.jsp?id=2508.

[13] Guide to IP, op.cit. p.29.

[14] https://www.wipo.int/ipadvantage/en/details.jsp?id=2721.

[15] Guide to IP, op.cit,, p.35.

[16] https://www.wipo.int/ipadvantage/en/details.jsp?id=2685.

[17] https://www.wipo.int/ipadvantage/en/details.jsp?id=2553.

[18] https://www.wipo.int/ipadvantage/en/details.jsp?id=3021.

 

 

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