INTELLECTUAL PROPERTY: No Unauthorised Use, Please

Intellectual property is a measure of a country’s intellectual superiority
in technology. It represents the ability to innovate and invent to create value.
In the knowledge economy, IP represents the ability to create assets that
multiply. But the field is shrouded in secrecy. When Dataquest asked a few
companies about their IP-related work, responses were not forthcoming.

The reasons for their silence varied from ‘company policy’ to ‘strategy’
that did not allow such information to be shared.

Under such circumstances, it would be difficult to put a fix on the revenue
generated from IP-related work in the country. But it is evident that there are
enough number of companies doing serious IP-related work that has a global
impact. While semiconductor-based IP work is done by a select few, there
definitely is abundant software-related IP activity. Some of the key features of
the operating system, databases, middleware, tools, utilities, design
engineering software, document management systems, security software, CRM, SCM
all emanate from India. Indian companies have now started work even in the area
of processes and methodologies.

IP is being able to create assets from human resources IBM leads globally, with 3,000 patents in a single year Indian copyright laws are among the most stringent, but copyright registration is not compulsory in the country

Pune-based Nihilent Technologies has filed a patent for a holistic knowledge
management methodology called MC3 (read MC cubed). Others in the IP area would
include Sasken Technologies, Texas Instruments, Financial Technologies, Adobe
Systems, Oracle, Intel, Microsoft and IBM to name a few. IBM particularly had an
excellent run in the past one year with its work in the IP-related area.

Lessons from IBM

For the ninth consecutive year, IBM was awarded the maximum number of US
patents in 2001, with a record 3,411 issued by the United States Patent and
Trademark Office. During this period (1993-2001) IBM has received more than
19,000 patents. The total number of patents that IBM holds is 1,450 more than
the company next in line. In fact, IBM’s total number surpassed the combined
total of patents awarded to 12 of the largest US companies in the IT industry–Hewlett-Packard,
Intel, Sun, Microsoft, Compaq, Dell, Apple, EMC, Oracle, EDS, Accenture and AOL.
IBM is also the first patent holder in history to be granted more than 3,000 US
patents in a single year. With eight labs in six countries including India, IBM
invests more than $5.1 billion in R&D. In 2001, IBM’s intellectual
property portfolio generated $1.5 billion in licensing royalties.

Investors often doubt the return on spending in the area of research and
development. Most companies are not able to pinpoint the impact of IP on their
balance sheets. But as per IBM’s annual report, in 2001, IBM recorded an
income of $1.535 billion from IP and custom development. The figure includes
$515 million from licensing and royalty fees.

Handling IP extends far beyond the generation of intellectual capital through
research and development. It demands the ability to handle the entire process
ranging from procuring patents, registering trademarks, and guarding trade
secrets. It also means being responsible enough to provide correct information
to investors about the financial value of IP work done in the company. IP being
intangible, its value is open to interpretation. The recent escalation in
scrutiny of accounts by SEC is forcing companies to be more transparent in
declaring their sources of revenue. Hence companies which disclose more
information about their intangible assets are likely to find more favor in the
minds of investors.

Advises Gartner, "Visionary CEOs should resist from objecting to valuing
intangible assets and task the CFO with identifying and implementing the
appropriate valuation methodology."

The development of IP does not depend only on intrinsic factors like the
R&D spends, the availability of qualified research manpower, revenue
generation potential of IP, and the corporate value that accrues to the
enterprise. The larger factor is environmental. Call it the IP climate or
whatever, it is dictated by the infrastructure available in the country to
protect IP.

India does have IP-related laws. In fact, legal experts aver that Indian
copyright laws are the most stringent compared to other countries. But the
framework to implement these is abysmally lacking. For instance, copyright
registration is not compulsory in India. There are not enough copyright lawyers.
The copyright office does not have a database of copyrights in electronic
format. The patent office is sorely lacking in its ability to implement patent
laws. There are not enough patent examinees with domain specific expertise. Even
though cyber laws have been framed, the linkage to the patent laws is not
explicit and the framework to apply them is lacking. In all, India does not
offer an environment conducive to large-scale IP-related work.

Hence though some global technology companies are doing IP-related work out
of India, it is nowhere near what could have been done if the IP infrastructure
was in place. No wonder India harps more about IT-enabled services and BPO than
IP even though the country possesses the capability to handle both ends of the
chain.

An even more extreme example of what an insufficient IP infrastructure can
mean is that of China. The China example is worth noting for the lessons it
offers India. US semiconductor industry executives say that China could become
one of the world’s top suppliers of computer chips within a few years, but
only if the country puts in place tough laws to prevent piracy of advanced
technology. Global computer companies, mobile phone makers and component
suppliers have been eyeing China for nearly two decades for its potential to
become the center of high-tech manufacturing. But China is being held back from
making a break through into other technology domains.

The director of business advisory services at the US-China Business Council
has explicitly issued a warning that foreign firms should keep critically
important intellectual property away from China and other countries with weaker
enforcement of intellectual property theft. The same fate holds true for biotech
investments in China. Till these laws are made less stringent, China will have
to remain content as a low-cost manufacturing base. This opens up a door for
India to steal a march over China!

TEAM DQ

Projects at IBM IRL

Personalization in Internet Retail: They are developing new algorithms
to infer customer’s needs and preferences at multiple resolutions for more
effectively targeting the customer. 

E-Coupons: The e-Coupon is expected to be a part of IBM’s Commerce
Solutions (WebSphere) in future. 

e-Marketplaces: IRL is involved in designing and implementing e-marketplaces of
the future. Building on established strengths in Internet auctions, new
functionality for online negotiations, dynamic pricing, decision support systems
and international commerce are being conceived and implemented. 

Indian Language Speech Recognition and Synthesis: With no standard
for keyboard input in Indian languages, speech recognition eliminates the need
to learn non-standard keyboard mapping. 

Machine Translation (MT): MT is automatic translation of text from
one language to another. The non-English community is making its presence felt
on the web, requiring information to be available in a number of different
languages. 

e-Governance: The e-Governance framework being developed at IRL will
help impose some standardization to support interoperability across different
governments and hence brings down the costs of implementation
substantially. 

Knowledge Management: Research at IRL is directed towards developing
technologies for organizing the retrieved information in a semi or fully
automatic, intelligent and personalized manner, hence helping reduce the time
information workers or knowledge workers currently spend assimilating the huge
results. 

Media Mining: The key problem being addressed at IRL is to retrieve
images from an image database that match a query image given by the user by
taking feedback from him on how closely a chosen set of test images match his
query. 

Bio-informatics: Microarray or biochip technology makes it possible to
simultaneously study expressions of thousands of genes or proteins in a single
experiment in the laboratory. 

(Source: IBM Research Labs)