Intellectual Property (IP): A Perfect marriage of law and business

With the prevailing conditions of the fourth industrial revolution where business sectors are faced with challenges of vicissitudes in technology such as Artificial Intelligence (AI), Robotics and Smart Computers among others. Industries have to think around the clock on how to reciprocate for the changes, and to remain relevant in the market. Smart innovation should be the order of the day, and we should protect them under Intellectual Property law.  Intellectual property regime provides protection of the intellectual capital (Patents, Trademarks, Industrial designs, and Copyright) against infringers that many business communities cherish because it gives them a monopoly-like kind of operation. Registering IP is not sufficient, we need to think of how to add value to our intangibles; be it software, books, music, industrial designs, trademarks etc.

Legitimately, when an IP is registered it becomes a tradable commodity that has a significant influence on an entity’s face value and can be used as collateral. The International Accounting Standards (IAS 38) requires intangible assets to be recognized in the statements of financial position provided that; the asset can be identified, controlled by the entity; and there is future benefit expected to flow into the business. It is the objective of the business to recover capital invested in research and development. Innovation costs can be very high, and it is unreasonable for a business to depend only on the static sale value of the invention as a means of recouping the invested capital.   

Through innovation, an entity gains competitive advantage for a specific period i.e. the duration of protection. For an inventive product to remain relevant in the market, it needs to be constantly improved so that it suits the market and to ensure it maintains a competitive advantage. We must understand that outdated IP tools and processes can increase a company’s exposure to risks. Thus, to adjust to new technology in the market, business sectors should focus on smart innovation in business strategies. 

A good example of consistent innovation is the Heineken Company, which has a threshold of 6% innovation rate, meaning their six percent of annual sale will come from innovation. Innovation should be at heart of every business because is important for its future success. 

For innovation to matter, it should be legally protected and be commercialized to its maximum. Intellectual Property (IP) assets have become the currency of businesses. It does not protect technology rights only, but it also helps with gaining competitive advantage; generation of revenue; and access to new markets. However, there is still a disconnection between the IP strategies and business strategies in most organizations. Organizations can commercialize their IP by licensing or assigning them out to other entities to gain royalties or revenue respectively. This will increase the market rate and access to other markets that Intellectual Property Rights (IPRs) holders could not when they self-exploit the IP. IP rights are territorial; hence, if you are planning to enter into an international market, it is important to protect such IP in that respective country, because it will keep infringers and free riders away. IP is a critical factor in ensuring revenue maximization of an organization and a well-sought means of commercialization. Furthermore, it helps an entity to remain stable and invest more in innovation.

By:

Onesmus K Joseph - ACIS/BAP/CFIP/PPL

MPHIL Candidate - KNUST (Kumasi; Ghana) 

Governance Practitioner

josephonesmus@yahoo.com