Gujarat National Law University
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Director(Vice-Chancellor) Speeches & Important Messages

"'Industry and Business Pro-activeness can mould an effective IPR Policy', Y. J. Trivedi – AMA Academy for Intellectual Property Rights", Ahmedabad Management Association, Ahmedabad, Saturday, 23 January 2010.

Dear friends,
It is an honor for me to speak to you this afternoon at the AMA Summit. I would like to thank Y. J. Trivedi – Ahmedabad Management Association Academy for inviting me here and giving me this opportunity to speak to you about the Industry & Business Pro-activeness and how it can mould an effective IPR Policy.
As technical change and globalisation reshape the world economy, intellectual property (IP) has grown in importance and taken on a central economic role. This is reflected in the increased policy interest with respect to coverage, operation and enforcement of IP rights. IP rights are legal titles permitting their holder to exclude other parties, for a defined period of time, from all or certain uses of the protected item, which, for example, can be an invention (protected by patents), a brand name (protected by trademarks), a creative or artistic work (protected by copyright), an industrial design or a trade secret. The objectives of IP policies are to encourage innovation and to foster the diffusion of knowledge. In this context, IP policies raise competition issues and thus IP agencies and competition authorities benefit from regular dialogue.
The continuous shift towards a knowledge-based and innovation-driven economy has brought to the fore the issue of how knowledge is created, disseminated, retained and used to obtain economic returns. Knowledge embodied in intellectual assets (e.g. human capital, R&D, patents, software and organisational structures) is becoming crucial for firms’ and countries’ economic performance and growth. In this new environment, characterised by increasingly global markets, including those for intellectual assets, companies need to be able to earn economic returns from both developing and using intellectual assets. Policymakers need to ensure that the beneficial effects of intellectual assets are spread throughout the economy, thereby encouraging the dissemination of best practices, and that an appropriate balance is maintained between the legal control and diffusion of knowledge.
A business perspective of IPR is essential and several factors must be taken into consideration to effectively utilise the system. This should be based on a sound and well-crafted institutional Intellectual Property Policy that supports and integrates with the business mission of the organisation. Enabling institutional support on IPR issues and individuals’ awareness of the IPR essentials are imperatives for innovation management.
The various steps towards using IPR in business involve the creation of value-added innovations, their identification and timely protection using diverse tools of IPR in various countries of business interest making best use of international conventions, exploiting the IPR in the products / processes / services, enforcing them against infringements and/or by their transfer through assignments, renting the rights through licenses, selling trade secrets in the form of knowhow at their appropriate value or even bartering the rights through cross licenses, and in several cases acquiring IPR from others to strengthen one’s IPR portfolio and ensure freedom of use, etc. The relation between strategic IPR and revenues of a business has been demonstrated especially by correlating the patenting activity and the turnover of various companies.
To many, intellectual property (IP) is a rather obscure legal concept that can only be properly understood and applied by those who are specially trained. At this forum, I shall try and convey my concern for providing adequate protection to the intellectual property created by Small & Medium Scale Enterprise (SME) You may be asking yourself why any small and medium-sized enterprise (SME) should pay attention to IP, or what benefits a SME could possibly draw from its use. I shall make an earnest endeavour to find answers to such questions which a businessmen faces in his day-to-day routine. Furthermore, how can executive in consonance with academia and legal fraternity mould a more effective IPR policy.

Why You Need This Service?

Ask any company if they realize the importance of managing their Intellectual Property in today’s highly competitive global economy and they will strongly answer in the affirmative. However, in too many cases if you were to ask most employees, including the senior staff, generically what are today’s key intellectual property components, they often tell you that Intellectual Property is something that their legal staff worries about and includes such things as company patents and trademarks. This is a serious flaw in understanding and developing intellectual property as a tool for company growth. Employees must understand the importance of the many types if intellectual property. Today’s IP issues and scope only comes to the attention of executive and employee when they are unexpectedly stung with a crippling lawsuit when they least expect it.

Why Do So Many Corporations Get Into IP Problems?

There are too many costly intellectual property lawsuits clogging up the court systems draining corporate litigation accounts all over the globe. It is surprising how many corporations are caught unawares because of their narrow definition of what they consider intellectual property. A misunderstanding of the true value and scope of what is actually the extent of their company- wide IP resources accompany the reason for this gap in understanding. Too narrow a view of the items constituting a complete IP program, a lack of knowledge, and a reactive style of program management often ignores important high value IP items such as licenses, product specifications, designs, manufacturing processes, software source code, trade secrets, competitive programs, proprietary software application, multi-collaboration design issues and even new product development issues. Unfortunately, this lack of awareness and education in matters of IP is all to typical and therefore most companies are ill prepared to not only respond from a legal point of view, but they are likely not taking advantage of the total worth of the IP resource capability available to them for a competitive advantage. Microsoft, for example, values its significant IP and records it as a high dollar asset on its books.

SMEs in India and Gujarat

Gujarat has been identified as an entrepreneurial hub of India primarily due to the innovative and entrepreneurial nature of the Gujaratis. It is this spirit that ushered the emergence of many small and medium scale industries in the state.
As per United Nations Industrial Development Organization (UNIDO) estimates, there exist around 350 Small and Medium Enterprises (SMEs) clusters in India, of which Gujarat commands a large share. Gujarat highlighted this fact at the global confluence of trade and industry at the India International Trade Fair (IITF) in 2006.
The Micro, Small and Medium Enterprises Development Bill 2006 has been enacted. The Act aims to facilitate promotion and development of micro, small and medium enterprises in a sustainable way. Interestingly, it also empowers the state government with several discretionary measures to facilitate and help such enterprises graduate themselves to new levels of growth. One of its primary objectives is to make provisions for ensuring timely and smooth flow of credit to SMEs and to help them mitigate business risks to effectively achieve a greater success rate.
At present Gujarat has nearly 3 lakh units in the small and medium sector. Some important SME clusters in Gujarat include Readymade Garments, Drugs & Pharmaceuticals, Dyes & Intermediates at Ahmedabad; Ship breaking at Alang; Re-rolling Mills at Bhavnagar/ Shior; Plastic Industry at Dhoraji; Brass Parts at Jamnagar; Wall Clocks at Morbi; Chemicals at Nandesari, Vapi & Ankleshwar; Diesel Engines, Electric motors, Ferrous Castings, Gold & Silver Ornaments, Machine Tools, Wrist Watch & Components at Rajko; Powerlooms, Diamonds, Gems & Jewellery, Jari at Surat; Pottery & Ceramics at Surendranagar (Than) & Wankaner; Ceramic Products at Thangadh and Petrochemicals at Vadodara.
With their share exceeding 30% of total manufacturing and exports, SMEs are rapidly justifying the important role earmarked for them in the state’s economy and are proving to be a vibrant manufacturing base in Gujarat. However, with rapid globalization, SMEs must mitigate business risks and possess a nimble outlook to meet the ever growing challenges. In the wake of economic slow down in international trade territories of USA and the European Union, coupled with severe manufacturing competition from China, SMEs in Gujarat are quickly adapting with capacity building, infrastructure augmentation, innovative financing options, technology up-gradation, investment in research and development, enhancing quality standards, and fine tuning marketing strategies.
At this time when economies of scale and quality play a predominant role in international trade, the Gujarat government is taking requisite initiatives to empower its industry clusters face these challenges. We give equal consideration to both managerial and financial aspects while supporting SMEs. Moreover, sick units with genuine potential are offered a helping hand with the concept of ‘credit against performance’.

SME-case study

There is a small firm of goldsmiths at Chikpet, Bangalore in the Southern Indian State of Karnataka. Over the years, the goldsmith, assisted by his son, has been creating new designs, making ornaments, and selling them directly to customers. One day, while visiting an up market road in downtown Bangalore, he happened to stop at a famous Jewelry retail outlet of a large Indian industrial conglomerate and was horrified to find on display items of jewelry based on some of his original designs.
The goldsmith was shell-shocked and did not know what to do. His son, however, decided not to take things lying down. He approached an intellectual property rights (IPR) Attorney at Bangalore. Although the goldsmith had not registered his novel designs under the Design law in India, he was able to produce before the Attorney a number of paper-based sketches and drawings (protected automatically by copyright) that he had made earlier in respect of the design in question, which clearly indicated the evolution of the designs. A legal notice was sent to the large Indian industrial conglomerate. In reply the large Indian industrial conglomerate’s lawyer argued that there was no malafide and, in fact, the designs had been developed independently by their employees and were co-incidentally common.
On receiving this reply, the goldsmith’s son went through the records of sales. In the sale register, he was able to locate the details of sale to the large Indian industrial conglomerate who had purchased from them a few pieces of this presentation item for distribution as New Year gifts. This turned out to be clinching evidence and the large industrial conglomerate agreed to settle the matter out of court. As a part of the settlement, a lump sum payment was made to the goldsmith. It was also agreed that the large industrial conglomerate would stop manufacturing this item and would outsource its entire requirements over the next five years from the small firm.
This case study provides a number of important insights. Firstly, it shows the importance of keeping good records of any drawings, designs and business transactions that may be used in future as evidence in case of an IP dispute. Admittedly, the case would have been simpler had the goldsmith registered his design under the design law of India in the first place. However, having preserved the drawings in a systematic manner (dated, numbered, signed and properly filed) of the gold ornaments in question and having made proper entries in the sale register showing that the large company had once purchased the items proved crucial in turning the case in the goldsmith’s favor. Secondly, it illustrates the importance of relying on qualified IP advice. Thirdly, it shows how an IP dispute, may be turned into a business opportunity, as the large company has now become a key client of the small firm of goldsmiths.

Relevance of IP for SMEs

It is evident that there is a need for greater understanding on part of SMEs towards IPRs besides how much they know, how they use this knowledge, what are the difficulties in using it and how they can improve the strategic use of IP in the business model. As a result of globalization and liberalization, coupled with WTO regime, Indian SMEs have been passing through a transitional period. With slowing down of economy in India and abroad, particularly USA and European Union and enhanced competition from China and a few low cost centers of production from abroad many units have been facing a tough time.
Those SMEs who have strong technological base, international business outlook, competitive spirit and willingness to restructure themselves shall withstand the present challenges and come out with shining colours to make their own contribution to the Indian economy.
Proactiveness on part of SMEs towards IP is requierd as div class="spacer">
    It maintains the competitive advantage of the industry
    It enhances the market value
    It raises funds
    It provides access to technology
    It enables the industry to gain reputation within peers and with clients
    It nurtures the culture of innovativeness within the industry
    It solves problems by providing intellectual solutions


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The winds of liberalisation are blowing across the globe. With the formation of the World Trade Organisation (WTO) the rules of doing business have changed. Within the WTO, nations have agreed to conduct their trade, based on the agreements signed under the Uruguay Round of discussions that concluded in the mid 90’s. One of the important agreements is the Trade Related Intellectual Property Rights (TRIPS), which sets harmonized minimum standards for the grant, enforcement and administrative processes involving Intellectual Property Rights (IPR). The inclusion of IPR in the GATT discussions was based on the evolving trends that “Knowledge-Centric” activities influence trade significantly and will increasingly continue to do so in the future. Ownership of “niche-domains” of knowledge and its judicious management will play a key role in deciding winners from losers in the market. The members of WTO had to reorganise their national laws to become TRIPS compliant. The developed, developing, and the least developed world is in the process of amending the existing laws or even introducing new legislations to comply with the requirements of TRIPS.
Barriers for SMEs to usage of IP div class="spacer">
1. Lack of Knowledge and information 2. Cost related to Ip protection and enforcement 3. Perceived complexity of the whole process 4. Time and cost factor related to litigation
Way Forward - Suggestions & Recommendations div class="spacer">
Skills enhancement: Business and industry need to working with the intergovernmental agencies as the World Intellectual Property Organization (WIPO), World Customs Organization (WCO) and Interpol in enhancing the effectiveness and efficiency of intellectual property rights enforcement by providing assistance and technical support for capacity building efforts, including practical training with a particular focus on customs administrations, police forces and other competent national enforcement agencies.
Consistency: There is a need to achieve fairness of application and international consistency through offering advice and experience on legislative and procedural reform and implementation.
Information sharing: Support the development of new, imaginative methods of risk assessment, trend analysis and the sharing of information between IP rights holders and public sector organizations and agencies.
Implementation of best practices: Support the development and cascading of international best practices to national enforcement agencies so as to strengthen global IPR enforcement efforts.
Building effective partnerships: By contributing to the enforcement initiatives of WIPO, WCO, Interpol and regional inter-governmental projects we seek to achieve synergy between rights holders and the public sector.

Concluding remarks

Businesses in the years to come will have to develop expertise to manage intellectual property in terms of maintaining a targeted and strategic IPR portfolio, enforcing ones’ rights when necessary, transferring intellectual property rights appropriately and at the optimum value, striking collaborative linkages, in tandem with the institutional business and research strategies.
To encourage and tap potential of IP career professions, GNLU would explore possibilities of hosting as a centre to hold IP exams conducted by the Union Government as it will give more opportunities to aspiring candidates from western region to appear for the exams. It is also imperative that a state level IP Steering Group, including all stakeholders, is established which can provide timely and visionary ideas to the state to craft appropriate policies and mechanisms. A full-fledged Trademark Office in Ahmedabad to cater to the needs and interests of large business, industry, trade, innovator community needs to be seriously considered. Let me take this opportunity to encourage you to use GNLU intellectual resource, in terms of educated and trained young lawyers in your search for getting legal research and advisory assistance.
Thank you.
Bimal N. Patel,
Director (Vice-Chancellor)