Prepare for a new era

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Emerging from the downturn is just the beginning. Corporates and their legal advisers will need to raise their game or flounder. But how?

With the end of the era of “easy growth” comes renewed focus on devising and implementing skilful business strategies. In this task, the lawyer – in-house or private practitioner – has a crucial role to play. How the legal profession can help clients squeeze more value out of existing assets, and cut costs while they’re about it, is the theme of this month’s Cover story (Making your mark). India Business Law Journal’s editor, Vandana Chatlani, explores how IP owners with exposure to India can maximize – as well as better protect – their intangible assets within the confines of tough budgetary constraints.

Leader 0905Her findings deserve careful scrutiny, not only on the part of our regular readers, but also the thousands of delegates in attendance at the International Trademark Association’s (INTA) annual meeting in Seattle, where this issue of India Business Law Journal will enjoy special circulation.

Chatlani discovers that through the careful deployment of “smart strategies”, such as conducting strategic IP reviews, abandoning non-performing assets, reducing registrations to a “need-to-register” basis and developing new approaches to innovation, companies can not only maintain acceptable levels of protection, but also use the downturn as an opportunity to increase the value of their IP portfolios. As Rahul Chaudhry of Lall Lahiri & Salhotra points out (Doing away with false economies), now may even be an opportune moment to acquire new intellectual assets at bargain prices.

While many in-house legal departments are under pressure to rein in their spending, the threats facing their intellectual assets are as great as ever. The scale of these challenges is forcefully illustrated by Ameet Datta, a partner at Luthra & Luthra, in a case study of India’s film industry (Inspiration or infringement?). Datta’s analysis of Bollywood “remakes” of Hollywood classics reveals a trend that has worrying implications for all IP owners: the fragile dividing lines between inspiration, imitation and infringement are fast-eroding.

As if to prove the point that the unskilful stewardship of intellectual assets can be as damaging as management blunders in more “concrete” business domains, this month’s What’s the deal? examines a serious pitfall that can trip up US-based IP owners who outsource their patent drafting. With attractive cost savings on offer, patent outsourcing has boomed in recent years, with India picking up the lion’s share of the work. But as distinguished commentator Peter Ludwig cautions, those who engage in the practice may find themselves on the wrong side of US export laws. The penalties are severe: in certain cases, offenders may permanently lose the right to register their technology.

Last month, India Business Law Journal examined the effects of the financial crisis on international law firms’ India strategies. This month we turn our attention to the domestic market and ask how Indian law firms are weathering the storm (Survival of the fittest).

Ironically, the traditional lack of specialization among Indian lawyers is standing many firms in good stead, giving them the flexibility to reassign lawyers from languishing practice areas to more active ones. “While some law firms have downsized, I doubt there will be any closures or significant consolidation,” says the managing partner of one law firm.

The timely recovery of bills has become a thorny issue for many in the profession, but in terms of workload, several firms report that advisories on restructuring and refinancing are compensating for fall-offs in real estate work and conventional commercial practice.

The booming trade in restructuring and refinancing comes under scrutiny in another of our feature articles this month (Rebuilding corporate India). Advising on negotiations with cash-strapped banks and helping client companies take advantage of lower equity prices to buy back their shares are no longer esoteric lines of work. Indeed, grappling with distressed asset and debt portfolios now enjoys the same high status in legal circles as that previously reserved for flagship cross-border M&A deals.

Another field of legal practice that has taken on greater significance in recent months is dispute resolution. Writing in this month’s Vantage point (See you in court), Aditya Birla’s Sonal Godhwani and Devangee Ganatra weigh up the relative merits of litigation and alternative dispute resolution options. While the appeal of arbitration continues to grow, our commentators contend that litigation is not to be ruled out, particularly when disputes involve state-owned entities.

As economies and companies compete for scarce capital, lax enforcement of corporate ethics and anti-corruption rules will drive domestic and international investors away. Yet as the recent Satyam debacle illustrates, India’s lack of an effective framework to facilitate insiders blowing the whistle on malfeasance by their employers is a woeful lacuna in the country’s legal architecture. This month’s Intelligence report (Raising the alarm) details just how far removed from international best practice India is in the crucial legal arena of enhancing corporate transparency and accountability.

The sorry saga – and tragic fates – of the few brave souls who have dared to draw back the veil on corporate misdeeds speak for themselves. The injustices and legal shortcomings are all too evident. Less immediately visible is the lasting damage done to India’s international competitiveness.