STRATEGY FOR LEVERAGING IPR AS COMPETITIVE ADVANTAGE BY INDIAN THE LEATHER INDUSTRY

 

Leather Industry is one of the major established manufacturing exporting sector of India in the modern as well as traditional sector. It is an indigenous industry in which the country is well endowed with an affluence of raw materials, skilled manpower. The industry has undergone a structural change , from merely an exporter of raw material in the sixties to that of value added products occupying a place of prominence in the Indian economy in terms of foreign trade, employment generation .  The foreign exchange earnings(s) of this sector in the year 2014-2015 stood as USD 6.49 billion. Government of India  as a major Policy initiative  launched the ILDP- Indian Leather Development Programme – The thrust areas of which include ,modernization of production capacities, setting up of institutional facilities, skill development etc. However,  there is a need to  go beyond them.

Surveying the strategic choices before the Indian leather industry, this article essentially refers to the publication  “Intellectual Property, A business tool for SMEs, A Guide for the Leather Industry” published by IPeurope (an EC initiative)  ,while outlining the contours / facets of intellectual property  it unveils a blueprint for the leather industry to use IP as an competitiveness enhancing strategy . The publication initiates the discussion by stating that many surveys in European context reveal that SMEs in the leather sector fear the costs that IPRs could entail or the excessive management requirements for enforcing rights. Few look at IPRs as a strategic company asset that can be effectively protected and that help generate business. The situation in India in this respect is expected to be much worse.

The publication while explaining & elaborating Intellectual property in terms of trade secrets,  copyright and related rights,  industrial property in terms of designs , trade marks , patents & utility models, outlines an action plan for creating value with the firms IPR. When you have an idea for a new product or a design for shoes, clothes, handbags, furniture, etc. or you think about a logo or an image to distinguish and market your company, products or brands, you should ask yourself if these  “ideas” are still protectable (mainly that nobody else is already using and protecting them).

The sale, purchase or licensing of IP can generate substantial profits. However, due to a lack of awareness of the commercial opportunities provided by IP, much of it remains untapped . To make markets more transparent and provide IP owners with a better overview of who owns what, various trading exchanges for IP have emerged recently. The aim of these exchanges is to bring the buyer and the seller together. Similar to other on- line exchanges, such as eBay, these IP exchanges are meant to help firms see whether they can license their various forms of IP. Another useful tool to help understand where there could be a potential seller, buyer, licensor or licensee for your IP is an IP database. Another opportunity to directly commercialize your IP is auctions. While currently used primarily for patents, there is no reason why other forms of IP should not also be sold at auction, where bidders bid for a specific IP and it is sold to the winning bidder. One can also identify potential licensors or licensees through networking. For example, attending the meetings of the Licensing Executive Society (LES) may be a good way to find interesting business partners. For more information on that, visit http://www.lesi. org

Apart from providing new income through commercialization , IP can also boost competitiveness by bringing important indirect benefits to a company. Good management of IP assets in a business or marketing plan helps enhance the value of a company in the eyes of financing institutions and investors who are taking a closer look at intangible assets. In that sense, valuation and management of IP assets become central issues in strategic decision-making. The competitiveness of many companies depends on their ability to transfer intellectual property and other intangible assets to their worldwide production processes. IPs are a factor in these decisions since they allow firms to shift innovative activities abroad, to dedicate more resources to innovation and management activities in advanced countries, and to expand operations in emerging markets. IP enhances strategic alliances with key partners in- side the value chain while establishing more effective, clear, safe and durable business relationships. Non-disclosure agreements should be signed when beginning strategic negotiations, specific clauses in contracts should be put in writing, and clear rules related to IP should be decided upon when setting up partnerships. This will undoubtedly clarify and consolidate their relationship and thus boost business activities.

The primary source of competitive advantage for all businesses is innovation and original creative expressions. Protecting the company’s assets ensures exclusivity, reduces the risk of trampling the IPR of others, and protects against copying. This exclusivity gives a ‘lead-time’ advantage over competitors and can even hinder them from bringing a new product or design to the market or keep them out of specific niche markets! As a result, IP can be used to increase sales in existing markets and to open the door to new potential markets and opportunities, which leads to an improvement in market share.

Managing IP allows secure returns on R&D investments..A company has to protect its core knowledge and prevent the leaking of confidential knowledge to outsiders. Possessing exclusive assets and strong core knowledge makes a strong company that motivates its employees and is attractive to potential collaborators. Involving the company and its staff through formal and informal methods to protect its assets builds a sound company.

The resource intensity of formal IPR management is generally what worries SMEs in the leather sector. However, sound planning, wise delegation and effective operating procedures can significantly reduce the burden on SMEs and increase efficiency. The more IPRs one owns, the more complex and the more costly their management. Resource efficiency in IPR management can be achieved with sound planning. IP management involves the setting of clear goals, but also follow-up to ensure they are being reached. Like in any other business strategy, the IPR business plan for an SME in the leather sector must include “indicators” or milestones that can be monitored.

Monetising IPR resources through a concerted strategy can ensure emergence of the India version of Jimmy Choo and the likes.

 

                                                                                                           

 

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