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1. WHY IS AN ACCURATE INTELLECTUAL PROPERTY BUDGET REQUIRED?
In today’s knowledge-based global economy, businesses are constantly faced with the challenge
of having to think outside the box to be innovative in order to survive. This cycle of constantly
innovating and creating new products has resulted in a huge accumulation of intangible assets
within businesses, with the last four decades having witnessed a revolutionary reversal in the
proportion of tangible to intangible assets that make up the corporate balance sheet. The proportion
of intangible assets, which was about 20% on average in the late 1970’s, has now risen to meteoric
heights and stands at about 80%. A study of the intangible assets of the ‘Standard & Poor’s 500’
companies conducted by an Intellectual Property financial services company in 2015 estimated the
proportion of intangible assets to be around 87%.
Though the need for companies to innovate is greater than ever before, shrinking budgets have
turned the spotlight to cost-effective innovation and Intellectual Property protection strategies. In
fact, as per a survey conducted by a foreign filing service provider, one-third of polled in-house
Intellectual Property counsels reported a budget cut in 2016, with a significant reduction of over
30% being reported by approximately 20% of the respondents. Thus, the mandate from the C-Suite
seems to be loud and clear: ‘Achieve more with less.’
In light of the above, accurate estimation of an Intellectual Property budget for strategic decision-
making has become a critical necessity for Intellectual Property law firms and in-house Intellectual
Property counsels, especially for those dealing with a large portfolio of Intellectual Property
families. However, this is easier said than done. This was proved in a recent Budgeting and
Forecasting study conducted among corporate counsels by an Intellectual Property management
company, which found Intellectual Property budgeting to be a time-consuming and complex task.
2. WHY IS INTELLECTUAL PROPERTY BUDGETING COMPLEX?
The major complexity in Intellectual Property budgeting stems from the territorial nature of
Intellectual Property, which, in turn, makes budgeting an onerous task. Rapid globalization has
turned the world into a global village, with many businesses having a pan-global presence.
This, in turn, has led to increased foreign filings. In 2016, the World Intellectual Property
Organization, a specialized agency of the United Nations, reported an approximately 7% year-
over-year increase in international patent and trademark applications filed under the Patent
Cooperation Treaty (PCT) and the Madrid System, respectively. Likewise, the agency also
reported a 35% growth in international design applications filed under the Hague System.
Despite the increased foreign filings and the presence of an international body, there is a lack of
harmonization among Intellectual Property laws, with the concept of “International Intellectual
Property” protection being a myth that, sadly, does not exist. As a result, protecting Intellectual
Property in multiple jurisdictions requires skillful navigation through a labyrinth of national and
regional legislations, each mandating a unique set of procedures from filing through grant and
beyond. Further complexities arise from the specific foreign filing strategies used (e.g. PCT v.