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IP protection mechanism average in India : KPMG

In a survey 59% rated IP protection as 'average', 23% opted for 'excellent', and 18% said it needed 'improvement'.

india Updated: Jul 16, 2006 10:25 IST

One-and-half years after India entered product patents regime, companies here still have "average" mechanism to protect their intellectual property, even as frauds by way of IP infringements have accounted for up to two per cent of losses that firms incur, according to a study by global consulting firm KPMG.

"Given the intangible nature of IP, its management and evaluation is often forgotten or even ignored, resulting in loss of revenue, missed opportunities and increased exposure to competitive threats or even litigation," KPMG said in its India Fraud Survey Report 2006.

According to the study, 59 per cent of the respondents said they rated their control/measure for IP protection to be 'average', while only 23 per cent said it was excellent and 18 per cent admitted it needed improvement.

With a phenomenal increase in the number of patents being applied for and issued and the growing recognition of the value of Intellectual Property (IP), protection against IP infringement is a cause for concern for organisations, the KPMG study, which questioned 1,000 organisations both public and private sector, said.

Financial losses to an organisation on account of IP infringement today stands at two per cent, said the study, adding organisations have to address the challenges of building, utilising and protecting the value of IP they own, use or have developed.

The survey found that of the 68 per cent of respondents who owned some sort of IP, a majority did undertake reviews to safeguard IP, even as one in every five conceded they could do with some improvements on this front.

While 21 per cent respondents said they ensure protection through review legislative compliance (Patents and Copyrights Act), 16 per cent said they used contract compliance reviews to protect IP.

License compliance reviews were sought by 9 per cent of the respondents as means to ensure protection against IP infringement. A majority of the respondents at 54 per cent, however, said they used all the above measures to protect their intellectual property.

The importance for an organisation to enhance its control over IP cannot be ignored. Securing IP would also translate into benefits such as better management of contracts and licences. This in turn leads to improved business relationships, cash realisation and income generation and finally a stronger competitive position, KPMG added.