• https://doi.org/10.1007/978-981-10-0406-3_2Copy DOI Icon

Do IPRs Promote Innovation?

  • Jan 1, 2016
  • Uday S Racherla
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Abstract

Innovation can be of two kinds: technological and business model innovations. The goal of innovation is to create value through implementation of viable commercial solutions to customer needs, wants, challenges, problems, or business opportunities that are open to exploitation. The primary role of IPRs is to protect inventions and innovations. The question is: “Do intellectual property rights (IPRs) promote innovation?” Though many expect to receive a clear “Yes” or “No” answer to this question, the right answer might be, “It depends.” This needs insightful analysis. Not all inventions lead to innovations. In fact, inventions made without any commercial understanding are unlikely to be of business interest. Naturally, IPRs protecting such inventions of little or no business interest do not promote innovation. However, IPRs of this kind could still create an alternative stream of revenue to the firm via licensing or sale, provided the firm knows how to effectively manage its intellectual assets. On the other hand, inventions with a strong business focus have a much higher probability of leading to successful innovations. IPRs protecting such inventions and innovations become part of the intellectual capital of firms, affording unique products/services, contributing to protected growth and competitive advantage, and attracting the attention of investors and shareholders. Consequently, this leads to higher market capitalization of such firms and raises the market expectations of shareholders and investors of even higher returns on their investments. Thus, such IPRs actively promote innovation. This paper presents evidence for the above hypothesis based on examples of firms from both the USA and India and the role of IPRs (patents, designs, copyrights, trademarks, trade secrets, and geographical indications) in promoting technological and business model innovations.

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