Why Intellectual Property protection is crucial for startups

World Intellectual Property Day is celebrated on April 26 every year. It is celebrated to create awareness about the role played by intellectual property in encouraging innovationand creativity. The theme of World Intellectual Property Day in 2019 is Intellectual Property Rights and Olympic Sports. However, the purview of intellectual property extends far beyond sporting competitions. Intellectual Property Rights (IPRs) are crucial for businesses as they drive innovation resulting in the delivery of better services and products for consumers. 

Recently, Chris Skidmore, Hon’ble Minister of Intellectual Property, United Kingdom, stated that intellectual property is key to the economic success of the United Kingdom. Indeed, protections of intellectual property instil competition in the industry to produce best products and services that benefits the society to grow.

Intellectual property is crucial for startups

The surest way a startup can succeed against larger rivals is by patenting its inventions and ideas. Patents level the playing field between startups and incumbents by ensuring those who innovate are adequately rewarded. When a startup patents its ideas, its valuation increases and is likely to attract more investors. This is because investors are more likely to acquire a startup whose intellectual property rights are protected.

When a startup patents its ideas, it is the only entity that can take commercial advantage of its patentable ideas. This allows a startup to create unique products and services that have a good chance of success, thereby increasing profits. Unless a startup protects its intellectual property rights, its rivals can copy them and steal market share. An unpatented idea, when copied by a rival entity, can also be patented by its rival making it impossible for the originator of the idea to benefit from it. Hence, patentable ideas are vital to the success of a company.

Intellectual property rights are important reasons for the vast innovation around us. Disruptive startups are challenging incumbents by patenting ideas. Intellectual property rights are also an important reason behind the success of the Indian startup ecosystem. IPR allows a startup that has developed an innovative device to compete effectively against large companies after patenting its invention. If a startup has a unique unpatented invention, larger rivals can easily copy, manufacture, and market it, effectively negating the startup's effort to create its invention. Hence, patents also protect smaller startups against larger rivals that have far greater resources.

IPR and sports

Intellectual property rights are a vital reason why professional and amateur sports are a multi-billion dollar industry globally. In the absence of intellectual property rights, audiences consisting of billions couldn’t enjoy watching their favourite athletes compete. It is because of IP rights that athletes are among the highest paid professionals in the world. Intellectual property rights ensure sports competitions and events generate huge revenues for organisers, who then distribute appropriately to all stakeholders, including athletes, sportsmen, and artists.

Held every four years, the Olympics is the biggest sporting event on Earth. The five-ringed logo of the Olympics is one of the most recognisable in the world. An organisation that wants to use the Olympic logo must sponsor an event. When an Olympic event is sponsored by the company, it pays a royalty to the Olympic Association. The Olympic Association earns millions of dollars in royalty by licensing its trademark logo. The Indian Premier League (IPL) also earns royalty in a similar manner.

The money earned by entities like the Olympic Association and the Indian Premier League is used to encourage sports, pay athletes, develop a robust sports infrastructure, and fund entire sporting ecosystems. The broadcasting rights to sporting events are also a form of IPR. Leading broadcasters compete for such rights which are licensed to a limited number of companies. By selling broadcasting rights, organisers of sporting events earn revenue that is paid to athletes and other stakeholders. Trademarks like the IPL logo is also a form of IPR and must be protected.

Intellectual property rights create wealth

Intellectual property rights include patents, trademarks, copyrights, and trade secrets. IPR cements the integrity of brands and is at the heart of a modern economy. Without IPRs, consumers couldn’t be sure whether a product marked with a particular logo was genuine. Thanks to IPRs, startups and other companies are incentivised to develop new and better technologies because bringing them to market increases their revenues.