Entrepreneur Dilip Kumar of Inolyst on IP monetization and innovation management for product tech startups
Dilip, tell us about Inolyst.
We’re essentially innovation and intellectual property (IP) consulting firm. If you look at the IP spectrum, it’s broadly divided into three segments – ideation, protection and monetization/commercialization. In most cases, the IP consultant walks out after the protection stage is complete. There is a tendency to think that it is limited to filing an application at the patent office. But what can an inventor do with the patent? What are the possibilities? We are the first in the country to do monetization of the patent itself.
Sounds interesting. Can you illustrate this with an example?
Let’s say there’s a company using GPS technology to make a device and patents it. Now, that gives the company in question a certain monopoly, in terms of usage of that technology. And GPS has applications in various fields like agriculture, telecom, etc. There might be a player in one of these fields who would not be interested in making a GPS-embedded device from scratch. In such cases, the company can make money by licensing the patent.
Effectively, creating and licensing patents can help you monetize by looking out for the various applications of the patented technology, without getting into a new business space. For instance, companies like Siemens, GE, etc. are known to create futuristic patents. Other patents stay relevant only for a short time span. So, it makes ample sense to quickly monetize.
But is there that much money to be made out of IP licensing?
Absolutely. Take the example of Qualcomm. They were the original creators of CDMA technology. And 70-80% of their revenue is known to come from IP licensing. A patent has a validity of twenty years. So, there’s much benefit to be enjoyed in that duration.
Monetization can also be done through changes in the business model. I mean, you could even just sell the patent as an intangible asset. Of course, in such scenarios, the valuation has to be figured out. But it’s important to note that people, at one level, don’t sell companies. They sell their IP.
What’s your background, Dilip? Also, how does it feel to be an IP consultant in what is seen as a nascent market?
I did my engineering degree in Computer Science from Delhi. I have about 8 to 9 years of experience in the IP domain, mostly in and around the patent space. And this has been across Indian and international markets. My co-founder, Anoop Kurup, is a chemical engineer. He was a researcher at GE and has put an IP stint at GE's Water and Energy businesses.
Abroad, the demands from IP consulting are very high. In India, the concept of IP is still nascent. So, it’s all the more important to tell clients here that it goes beyond just protection and that money can be made out of this. In US & Europe, IP’s considered to be the base and is also viewed as an exit strategy. It’s used to boost valuation. Here, there’s a lot of money being spent on R&D. But not enough IP is being churned out.
I have tremendous experience in drafting patents. But I’m not a patent agent myself. We hire patent agents. Law firms do a lot of patents, as well. But they stick to the non-technology side of things. There is a void in terms of technology guys who understand IP.
According to you, is there a demand for IP created out of India? How does Inolyst get involved in the process?
There’s plenty of demand. A great of IP transacting happens in USA and Europe. And there’s a lot of interest in the work done by startups in India. If IP is available, they would definitely look at buying and taking the innovation to market. We at Inolyst are involved throughout the process – scouting for buyers, due diligence, technical and legal support, closing on a certain price. And for these services, we take a certain percentage cut.
So, if you notice, we make money only if the deal gets closed. And that’s the reason why we pick and choose deals very carefully. The due diligence is thorough. We look very closely at how long the invention would be useful and what would be the cost of using the technology to do business. Also, if we’re trying to take it to an international community, having an international IP becomes a prerequisite. From one end, what we do can be termed as IP monetization. But in reality, it’s innovation management.
How big is the Inolyst team? Are you looking at hiring?
We have about 10 to 12 people in Bangalore and another 4-5 in Delhi. We are definitely looking at hiring. We are looking for technologists who are extremely sound in their domain, with robust knowledge of the basics. We hire only functional experts. And they’ll have to be people with an outlook to learn IP.
How has the journey been so far? And what about expansion plans?
Inolyst was founded in October 2009. So, we’re a little more than 18 months old. We have clients doing very interesting work in mobile advertising, 3G video streaming, semiconductors, medical sector, automobile sector, etc. We can’t reveal any names, though. Recently, we also got registered in the US.
We are looking at growing the IP monetization piece of our business. We’d like to close more deals. We get 5 – 10 enquiries a week. But we don’t have the bandwidth to deal with that. That is changing and that’ll continue to change.
How about some free advice to product tech startups?
Gladly. Here are two tips:
Do a thorough check before you get into product development. There’s a lot of patent data available publicly and going through them to see if anyone’s done something similar will prevent possible heartburn. For instance, searching through the US public patent data would’ve given people information about Apple’s iPad 4 years ago.
Before prototyping or approaching a VC for funding, put in a patent application. It’ll really help. And go for an international patent. I can give the example of this company which had created an anti-collision device and gotten itself an Indian patent. A large MNC in Europe found it out about it, studied the technology and quickly incorporated it into their existing product. Now, that could’ve very easily been avoided if there was more awareness about IP.
We at YourStory wish Dilip and the entire team at Inolyst all the very best. If you’d like to know more about this venture, check out www.inolyst.com. Also, do write to us with your thoughts and views on this story to firstname.lastname@example.org.
Sriram Mohan | YourStory | 18th May 2011 | Bangalore