India: Intellectual Property And Small And Medium-Sized Enterprises

INTRODUCTION

Today, in this progressively knowledge-driven economy, Intellectual property (IP) is considered a magical word that can be understood only by the experts or the skilled people. There is no surprise in asking why and how IP is going to provide an emerging platform in Small and Medium Enterprises (SMEs) sector? At present, the Small and Medium Enterprises (SMEs) in India are at a crossroad and there is a strong debate over the questions like what would be the future of these SMEs? How these SMEs can endure in the international trade ring? What role the government should play in making these SMEs more competitive? How can the Intellectual property (IP) generate wealth in the business? In order to know the answers of all these questions there is a need of writing this article and it is concerned with the recognition and analysis of current approaches of SMEs towards the Intellectual property (IP), the hurdles that they face; and the available & possible solutions.

SMEs at a Glance

Small & Medium Enterprises are the pillars of the Indian manufacturing sector and have become significant in the stable monetary growth of India. There are more than lakhs of SME units in India with investment of above Rs. 1 lakh crore. The sector has recorded strong growth during the past fiscal years and contributes approx 40 percent to industrial production and 6 percent to country's GDP. Approximately 70 percent of the employment growth comes from the SMEs in the Asian region and they contribute towards 90% of industrial units in India and 40% of value addition in the manufacturing sector. In India they accounts for 90% of the industrial units in India1. As the name suggest these businesses are varied from small organization and trading concerns to large retail chains. According to the estimate, there are over 13 million SMEs in India providing employment to 42 million peoples2. Therefore, it is far more vital for these companies to develop and invest in their own IP so that these can commercially exploited to the benefits of all connected with them.

Intellectual property is a rising out of one's idea, thoughts and intellectual influence. Today, government and law makers, identifying its power and wide operation, gave it legal protection in terms of patents, trademarks, copyrights, industrial designs and geographical indications. IP can assist SME to grow worldwide as big as their competitors in all aspects of their business. IP will assist SMEs to develop their industry and aggressive management policy. For example by adopting unique trademarks and brand names, every trader can create a strong recall value and a position for its product and/or service in the market.

In the past era, only tangible assets were given great importance in value count of a business. However, at present, intangible assets, like Intellectual Ventures (IV), Innovation and Technologies form an enormously important part in value addition to a business, maybe even more than the tangible assets.

Further, IP rights have strong potential to raise the value of business through Mergers & Acquisitions, Joint Ventures and various collaboration schemes. A potential IP right may open door to various financial institutions, venture capitalist and banks for SMEs to enhance their growth and to help financially.

Hurdles before SME s

SMEs hold 90% of the total industrial power, however with the opening of trade borders and overall effect of globalization made this industry on a slow track. Due to tough liberalization norms, this industry is facing competition from global counterparts which make SMEs away from IPR awareness and knowledge. Some of the main hurdles are discussed below:

  • In India many SMEs export raw materials to large companies and manufacturing units, and they do not realise the importance of IPR in the business to protect their ideas and innovation of their product as they are more concern on production and operation of raw material. If these SMEs hold their knowledge on IPR, then they would definitely create an asset and huge profits on their ideas and innovation.
  • In India many SMEs operate their business without having technical knowledge on their product and they manufacture it without concerning of IPR issues and profits.
  • Lacks of business intelligence drown this sector from the global counterparts.

How IP Helps Small & Medium Enterprises

In India, Intellectual property plays an important role in SME development and protection. They should identify various prospects viz. how to best use an IP structure for own payback and profits? IP may support SMEs in every part of business development and competitive strategy which ranges from product development to product design, product marketing to service and from raising financial resources to export or mounting business abroad through IP assignments i.e. franchising and licensing. SME can identify various potential such as improvement in the market values and competitiveness of SME by generating an income for SME through IP assignments of IP protected products. IP helps in enhancing the value or worth of the company in the eyes of investors and financial institutions. At the time of sale or merger and acquisitions IP assets plays an important role in increasing the SMEs value to certain level which cannot be achieved without considering IP assets. A successful IP management enables companies to recover their IP system properly and in a profitable way. In a very initial stage acquiring IP may sometimes crucial and costly but if started in a systematic way profits a lot for a company. It involve company's ability to commercialise their inventions, market their brands and license it know how to other companies. Today major steps are to be taken for the upliftment of the SME; some of the major steps are as follows:

Awareness programmes on IPR: In this changing global scenario the issues of IPR have gained special importance in the Micro Small & Medium Enterprise [MSME] Sector. It is felt that different aspects of IPRs require greater understanding and attention by the industry. MSMEs by protecting their intellectual property can increase their competitiveness in a variety of areas. In order to prepare MSME sector to face the present challenges of liberalization one day awareness/ sensitization programmes on IPR are proposed to be held at various parts of the country. The approach of these programmes will be to give an overview of IPR issues with detailed sessions on patents, trade mark, copyrights, industrial design and geographical indications.

Interactive seminars/workshops on specific issues like patents, trademarks, copyrights, industrial design, trade secrets and geographical indications, etc: There is a great need of IP knowledge oriented programmes which are designed for MSMEs in order to shield their IP rights that will be product specific and cluster based. Industries which are proposed to be covered under these programmes are of life sciences, biotechnology, automobile components manufacturers, drugs and formulation industry, chemicals and Dye industry, leather products, electronic products, sports goods etc. These programmes are knowledge rich programmes where every aspects of IP should be taught and their pros and cons are to be added in favor of the industry. These programs help in gaining expertise to the representatives of MSME to understand the product specific to IPR related needs. Apart from various local agencies seminars must include International agencies likes WIPO, European Union various Patent Offices, etc. will also interact with the participants.

Setting up of Intellectual Property Advisory Cell: Size of SMEs in India are not so much bigger in getting all the benefits from the IP system. Although most of the SMEs don't have ample assets to develop own IP resources, however, they exists a huge potential in rising and protection of ideas/inventions. Setting up of IP Advisory Cells will solve some issues and this will assist in developing the data-base of MSME which have significant role in updating the IP system. It will also assist SME for developing system for international patent search.

Specialized training on IPR related issues for the entrepreneurs/ officers, members of industry associations: To generate awareness on IPR issues concerning patents, trademark, copy right, industrial designs, trade secrets and geographical indications, it is proposed to conduct long term and short term training courses for the benefit of MSMEs manufacturers, members of the Industrial Associations, persons engaged in R&D activities, Government officials associated with the implementation of IPR projects and students of the management and engineering institutions. The basic aim is to train participants in the area of IPR who will act as resource persons and serve the various needs of the different target groups, who are involved in the IP value change

Financial assistance on grant of patent: An encouragement given in any way more too as a financial assistance was considered to be best in terms of SME development. Government should organize more financial assistance packages to SME in filling patent and in whole IP process may be domestic or foreign patents.

Interaction with International Agencies: In most mature economies, the exploitation of IP is legally protected through the use of IPRs, which evolved from property rights on land, capital and labour. The global network economy requires that both matters of protection and visibility be addressed at a worldwide level. Initiatives of awareness and actions of harmonization in various fields could be initiated by extending co-operation in the area of Science & Technology (S&T) between various countries3.

Conclusion

This article emphasize on the actual condition of SME system in India where these companies are lacking in lot of strategies and rules and the effect of IPR system to Small and medium enterprises. In the past era Government formed lot of new reforms for the upliftment of the SME, The Government of India has taken several initiatives in the field of IPR, including amendments in patent laws and modernization of the IPR / Patent Offices, as a strategic response to the globalization and liberalization of the Indian economy which not only affects SME growth in the country, now these companies are start adopting IP as a major tool in their business regime. Today SME are holding good position in the country in terms of growth, profits, technology and exposure.

Footnotes

1 http://www.legalera.in/Front-Page/ip-issues-importantfocus-for-smes.html

2 http://mpra.ub.uni-muenchen.de/8232/1/MPRA_paper_8232.pdf

3 http://www.wipo.int/edocs/mdocs/sme/smes/wipo_smes_cju_07_topic

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions