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)