Venture Capital and the value of IP continued….some ideas for bridging the gap?

The VC-IP Interface continued...

Further to an earlier post on Australia’s VC-IP interface, the venturousaustralia Report provides numerous recommendations regarding venture capital with no specific description of how IP can play a role as VC incentive; nor in overcoming some of the hurdles explored in a previous post with respect to the difficulties in securitizing ‘intangible property’: http://www.iproo.net/2008/09/australias-national-innovation-review.html

For example, recommendation 9.6 provides that the government:

“…consider strategies to attract international venture capital fund(s) to Australia as the base for investment in the Asia Pacific Region, with the short term objectives of attracting a major US venture capital firm to Australia and strengthening links to capital markets.”

The goal is not unrealistic given Australia’s close proximity to the Asia-Pacific region. Perhaps, however, Australia’s close geographic ties can be coupled with it matured administrative IP framework to further assist in making the goal an achievable one. Joining such ‘dots’ has recently been explored by Pankaj Ghemawat in his book, ‘Redefining Global Strategy’. The book takes a good look at how administrative, cultural and geographic factors interplay in global strategy.

Applied in the Australian context, unique aspects of IP system could act as a lure to attract innovation and VC investment. The Innovation Patent System is but one example. Despite some faults, the system can provide quick, efficient and affordable patents to applicants: http://www.ipaustralia.gov.au/patents/what_innovation.shtml.

Two further benefits exist:

(a) the innovative step standard provides strong shield against invalidity actions: Delnorth Pty Ltd v Dura-Post (Aust) Pty Ltd [2008] FCA 1225 (13 August 2008) see pars [53] – [55]: http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2008/1225.html?query=%5eDelnorth and

(b) the scope of such patents is as strong as that of standard patents. See Nufarm Ltd v Jurox Pty Ltd[2008] FCA 178: http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2008/178.html?query=%5enufarm

Other forms of IP should not be discounted, such as trade marks and industrial design. Specifically, Australia’s Trade Mark System allows for registration and protection of shape marks without need for secondary meaning evidence. See: Global Brand Marketing Inc v YD Pty Ltd [2008] FCA 605:http://www.iproo.net/2008/05/goods-or-shape-of-goods-as-trade-mark.html

With market distinction critical to investment decisions, the appeal of shape ‘registered’ marks may provide incentive for VCs that are seeking market protection for products against piracy.

As patents, designs and trade marks are ‘registered’ forms of property, they surely provide a form of protection that allows for greater security for VC investors. Fence-posts are figuratively placed around the intangible, but practical, idea. It’s mindful to note, however, that when the useful idea is patented it becomes part of the public domain. Determining when IP is appropriate is critical to any innovation strategy at both a government level and for the entrepreneur (and, of course, the VC who may provide the investment!).