Top Indian IT firms have sharply increased the pace and number of patents filed in the past 12 months to protect revenues and drive growth. This is a game changer for the companies, showing how far they have traveled from just adapting software off the shelves as they aggressively try to acquire intellectual property rights (IPR) to fuel future revenue growth.
The country’s largest IT firm, TCS, had filed for around 60 patents last fiscal and hopes to touch the 100-mark in financial year ?10-11. Wipro and Infosys Technologies are equally aggressive about patents. Ananth Krishnan, chief technology officer, TCS, told FE that the company started formulating an IP policy over the past two years. ?We have started using patents to protect our revenues and also to minimise risk to our business. The monetisation of our IP will gradually increase with time and is already happening,? he said.
IT firms say as competition in the space increases, it is important to get patents to avoid loss of revenue. It is well known by now how IBM tried to patent the process of offshoring of US jobs twice and withdrew its application both times in wake of widespread protests. Most IT companies that resort to offshoring would have had to pay a hefty royalty to IBM to use the “computerised process” patented by the company, leading to massive loss of revenue. Many such incidents have catapulted IPR to the top of the priority list of IT companies.
In the case of Wipro, the combined value of its brands, patents, trademarks and rights is around Rs 180 crore. While the company filed for 13 patents last year, the number will double to up to 25 this year. Sudipto Ghosh, IPR Strategist at Wipro, said the company has so far filed 137 patent applications, of which it has been granted 59. The company, which files similar patents simultaneously in several countries, has filed for five patents in India as well.
For Infosys Technologies, providing more IP-based solutions and services to its clients is part of its long-term strategy of differentiating its offerings. Subu Goparaju, vice-president and head of software engineering and technology labs at Infosys, told FE that apart from driving better revenues, IP-based solutions are expected to help win deals as well.
Technology experts say owning software brands or IP means that firms will not have to pay royalty to companies such as SAP or Oracle for implementing their software and can derive better margins from deals.
Infosys’ core banking solution, Finacle, is a case in point. It is used by 114 banks across 62 countries and contributes a significant chunk to the company’s topline. Goparaju said though Infosys has only been granted five patents so far, the company has filed 220-225 patent applications. ?The number of filings has accelerated by 75% in the past two years and we expect many more patents to be granted in the next one year,? he said. The shortlist includes fields such as cloud and grid computing, communications, enterprise and mobility.
Ghosh added that compared to other countries, the Indian patent office is more restrictive in granting patents. Around half of its patent applications are filed in the US, which is the main market for the company. “As we increase our footprint in the enterprise business, you will see us getting more IP in sectors such as manufacturing, retail, banking, financial services and insurance,? he said.