Trading the fruits of intellect

An intellectual property exchange in India will create platform for buying, selling & licensing IPRs

Bill Gates once said, “Intellectual property has the shelf life of a banana.” Well, ask intellectual property rights (IPR) holders and many would agree with the sentiment that it has a short life. Moreover, finding buyers isn’t easy. As a result, some argue that patent holders are often unable to derive value from patents before expiry. On the other hand, companies searching for IPRs don’t know where to find sellers. How about a platform for trading IPRs? This may soon become a reality. The Ministry of Science and Technology is said to have given in-principle approval for an intellectual property (IP) exchange.

With the onset of the Fourth Industrial Revolution, innovation and IPRs will grow exponentially. Here, IP exchanges will become increasingly relevant. These are platforms where IPRs such as patents, trademarks, copyright and industrial designs are bought, sold or licensed. In short, these are one-stop shops for sellers and prospective buyers to trade in IPRs.

Globally, there are several IP exchanges. It’s worthwhile to study some of the existing ones. One is IP Marketplace, managed by the Danish Patent and Trademark Office. It’s a free online platform to trade patents and patent applications, utility models, trademarks and designs. But there is a caveat. It is only a forum for parties to meet; sales happen offline. Further, the “Danish Patent and Trademark Office does not guarantee the rightful ownership, validity or value of these IP rights”. It’s the user’s risk. A special feature of this platform is its foreign collaboration with other platforms, which involves exchange of listings (of IPRs).

Asia IP Exchange (AsiaIPEX) is managed by the Hong Kong Trade Development Council. It lists patents, copyrights, trademarks and designs spanning sectors such as agriculture, machines and green technology. Being online, it attracts global users to create accounts. Some exchanges such as the Intellectual Property Exchange go beyond traditional IPRs and list trade secrets, technology, scientific projects and know-how. It allows universities and public research institutions to sell or license IPRs and helps in attracting external partners for research collaboration. It also has a standardised and automated transaction process, which brings in transparency. 

To protect the confidentiality of information to be shared, Tech Transfer Online makes prospective buyers sign confidentiality agreements. This protects one’s IP even if the deal doesn’t happen. To promote newly listed IPRs, it sends alerts to the relevant people. Some exchanges such as the Hong Kong Intellectual Property Exchange Limited (HKIXL) have detailed terms for complying with the law. It retains the power to restrict/prohibit certain activities such as those creating legal liabilities or infringing on others’ rights. Further, it sets out the dispute resolution mechanism, which includes recourse to arbitration. 

These insights from a comparative study of international exchanges can be a useful starting point for setting up our exchange. While building one, the first question is, who will use it. Broadly, users would fall under two heads. One set would demand IPRs; this would mean companies or individuals. The other set would supply IPRs; this includes innovators, IPR holders, universities and research institutions. As per news, people and commercial entities from India and abroad would trade on the proposed IP exchange. 

Photo: iSTOCK

The second question is, what kinds of IPRs should be listed. From the user’s point of view, patents, trademarks and industrial designs should be there. Only legally protected IPRs would be listed. Potentially infringing items should be barred. The third question is, how would users utilise the platform? They may make an account, which will help alert them about new additions to the platform. Fourth, what services should the platform provide? Based on international comparison, it is clear that platforms are of various kinds. The Danish platform only provides people a meeting place while trade happens offline. In others, people can meet and trade online and use additional services provided by the platform. The latter may be more advantageous.

Fifth, what would be the platform’s role in protecting confidentiality and tackling disputes? It can get parties to sign confidentiality agreements before IP disclosure. Further, it can provide a dispute resolution mechanism, including ADR. 

This can be one possible model. Undoubtedly, an IP exchange has huge potential. It will be a global platform for trading IPR between people and commercial entities. It will bring economic gains for rights holders by commercialising their assets. Coming at a time of growing clamour over job crunch, it will open the way for entrepreneurs and start-ups and help address unemployment. It can also spread a culture of innovation among students. As educational institutions would supply IPRs, students would be encouraged to innovate by seeing demand for their work. On the other side, it would help companies wishing to expand their IPR portfolio. IPR can have social benefits by listing IPRs, such as a patented safety gear for women. By listing eco-friendly devices, this platform can further the environmental cause.

While the potential is immense, there may be some challenges. Before trading, people will need a legally protected IPR. Here, they will need a quick procedure. The authenticity of a listed IP may be an issue, as platforms often don’t take responsibility. IPR valuation may pose another hurdle. Finally, upholding confidentiality is important.

Unquestionably, an IP Exchange is a necessity in this age of innovation. Recognising this, the National Intellectual Property Rights Policy, 2016, mentioned the need for a feasibility study for IP exchanges. The government is on course to come out with one. This shows its commitment towards innovators. That day is not far off when IPR holders will enjoy (trading) the fruits of their (mental) labour.

The author is a lawyer from National Law University, Delhi, and currently a professional at NITI Aayog. The views expressed are personal