Intellectual property rights protection has become a key element in the valuation process of products and brands of companies with merchant bankers often stressing the need to prevent erosion of wealth from potential litigations.

Speaking at a session organised by the Indian Chamber of Commerce on Wednesday, Safir Anand, senior partner and head of the department (trademarks, contractual and commercial IP), Anand and Anand, said that the real value of the intellectual property can erode unless the companies that create them can avoid the mistake of not protecting them.

Anand cited the examples of global brands such as Aspirin, Escalator, and Thermos where the trademarks have become generic identifiers. On the other hand, Disney has been able to successfully monetize Mickey Mouse which has become a perpetual brand globally. He said that legal experts are increasingly being called upon to be part of private equity deals to protect the intellectual property rights of a company.

“Bankers come and tell us if 97 per cent of the wealth of the company is in intangibles, how will we secure that wealth,” Anand said.

He said that as intellectual property is being constantly created and destroyed, it is essential for all businesses to avoid using a non-patented brand because it could result in millions of dollars in losses for the business. He also said that it is important for corporates to keep in mind the jurisdiction of the patents which would be critical for global expansion and also have measures in place to protect a trademark in case a partnership or joint venture dissolves.

He said fashion designers were reluctant to file patents because they did not know which design will take off. That trend is shifting now. Anand said that the government needs to give more incentives to encourage the creation of more patents.