The IP formula of a merger

In my current round of discussions with a client, he asked me to formulate not only a legal document but also a mathematical prescription to explain his particular boss the importance of measuring their intellectual assets. I hope it helps a few more who read it here. When two firms come together to form a single entity with special focus on merging their assets and liabilities – a business merger is born. If the two entities are equal (in their non-IP value/worth), mostly, an exchange of stocks will take place. The acquirer will issue new shares to the shareholders of the target firm at a ratio. The target’s shares get replaced by the acquirer’s shares. The combined values of the two firms after the merger should be mathematically equal to their values had they been combined before the merger. Now, since we know that because the ratio of the exchange of shares will not be in harmony (the target’s shareholders are paid premiums) with the value of the firms with respect to each other, the individual values of the firms will be different than their values before the merger. One major spin off which emerge out of a merger, I call the ‘BIPE (The benefit of IP exchange). It is the total of the benefits the new entity gains post merger when the intellectual assets have been combined. Abandoning the other ‘share value effecting’ aspects of such a transaction, lets focus on the BIPE for the purposes of this brief. The pre merger price (in relative values) of the share for all the shareholders will always be equal to the post merger prices, if the following can be equated by putting a certain value for the BIPE –

Post merger value of a share = (combined premerger value + BIPE) / post merger no. of shares = post merger value of shares.

If the firms can’t meet the BIPE value so as to make the equations work, then it is indeed a bad merger.

Humanitarian marriage

Indian marriage laws have been, for years, carrying the load of what the religious preachers advocated, in one way or the other. Even a Baha’i faith marriage has ceremonious obligations attached. One Act distinguishes itself to a great degree and is one of the most rational piece of law. That is – the Special Marriage Act 1954. It does not only promote inter-religion marriages but also clearly tells apart the legal principles from the so called ethical norms that generally govern the marriage laws in India. This law, without a doubt trashes the Overlap Legal Theory of Blackstone which says that law and moralities (of course, so called) go hand in hand, and which has attracted the Asian legislatures for long. In fact, the Act looks inspired by the approval of Max Weber’s Interactionism by the post-independent Indian society. The Act does not only give a platform to the non-religious to marry without bowing down to the stupid religious rituals but also gives them a formal and an automatic tool to denounce their religion when it says that – The marriage solemnized under this Act of any member of an undivided family who professes the Hindu, Buddhist, Sikh or Jaina religion shall be deemed to effect his severance from such family. Bravo! Happily live the people who marry this way…or …who at least recognize, appreciate and encourage the way. The rest…nothing to worry…they have their religions to save their sacred knot ..or …knots.

Civil liberties…hmm..good joke.

This date in 1988, The Civil Liberties Act was signed. I consider this legislation to be the one of the most humane the world has seen.

Other than recognizing the wrong done during the World War II on the US citizens and the people of Japanese origin residing permanently in US, it put forward an apology, among other things it stood for. However, it categorically stated that it was intended to: ‘discourage the occurrence of similar injustices and violations of civil liberties in near future’. Many pieces of legislations, inspired by this Act of 1988 were put on paper all over. But what is needed is ‘action’. And India needs a big slice of it. The rise of Thakre, the treatment to Nasrin, the state comatose after 84 and Godhra are a few examples which confirm it has always meant nothing to us. Justice Tarkunde was just joking when he said “I believe in a country of mass poverty and ignorance, like India, humanism must take a radical form. It must be concerned with developing a movement aimed at spreading the humanist-democratic values of freedom, rationalism, and secular morality among the people so that they can take the necessary initiatives for the elimination of poverty and removal of mass ignorance”. Where is the action?

Pollute but sign

India, China and a few other developing nations cold-shouldered the G-8 Summit. The post-Kyoto showdown stands shatterproof. After the Hokkaido summit, this was a big opening. Except, we didn’t even inched. There seems only one leeway now – make a legal agreement without obligatory emission objectives. Besides?

Making money…patents or not

Ranbaxy is a generic drug maker. Daiichi Sankyo is not. They both have completely different industry representations.

The drug making giants will face huge losses between 2010 and 2012, when many of world’s hottest selling and patent protected medicines lose their IP and fakes start to skirt the international marketplace top- speed.

In this rests the logic of Daiichi proffering to Ranbaxy. Good move? Yes, only if exploits like these really bring the prices down, which in the light of enormous size differences between the large companies and generic drug makers looks difficult. In spite of everything, what rule the marketplace are economies of scales.

What ails the Indian Intellectual Property movement?

What ails the Indian Intellectual Property movement?

In the US of A, the entrepreneurs are as dynamic as the government, like I have observed. In India, for the past couple of years the Government has been doing fantastically well in so far as the patent movement is concerned. What we lack is a genuine exertion by the entrepreneurs of their IP. One reason for this is that the CEOs here not only do not recognize the wonders an IP can perform, but also have no access to illuminative means which can lead to this recognition. In all my interviews with Indian corporate managers the one common thing I’ve always heard is ‘We have been thinking about it but…you know…’. Yes we think a lot. And we do act a lot. However both our thinking and our actions are always aiming for the nearest profit. We run our companies with only one thing in mind - how fast can we sell that we produce? But do we identify all that we produce? Like a man can execute only one vocation to his best of ability, similarly an organization also does best what it does. Nonetheless, there are many gifts that are bestowed upon us as spin-offs of our corporate efforts. And the biggest of those gifts is Intellectual Property. Without going into the legal definition of Intellectual Property I will try to explain what exactly IP is.

Everything we see around us is the result of man’s mind. And many a times it is the result of just one mind. It may be a person or an organizational unit. And if we have been justifying for centuries the exchange of products between men for value (read money), how can we not put some value on the fact that products be recognized as original thoughts of the respective producers. Who is stopping us? Not a soul. These products are the direct results of all the strain of brains we went through in bringing them to life. Can’t we claim that whosoever uses those products without being the part of hard work that we went through pays us not only for that product’s use(s) but also for our efforts? Now, if none wants to pay for that particular aspect connected with the product, so be it. That is what democracy and market forces are all about. But how do we come to know it unless we do not try to sell it. There is a treasure chest waiting to get unlocked. It contains trade names, business methods, software processes, writings and much more than we can envision at one go. Are we ready?

Immune to music

Yesterday was The World Music day. And I dedicated my music of this day to a revolutionary lawyer – Kleiberth Mora. Kleiberth has designed a reformist model in Venezuela which helps hardened prisoners and wayward youth learn classical music through organized orchestra programs. The music is not only keeping them become real musicians but also helping them become fine human beings. Now, this is what I call – Music in action. Brilliant job Kleiberth. Unquestionably India also needs lawyers like Kleiberth; it’s just that I doubt if the same system will work there. The glut of musical programs on the Indian television has not helped bring the crime graph down. I think we have become immune to music. Or at least to its constructive upshots.

What a date!

A federal judge today has asked Microsoft to put down about $500 million to Alcatel in damages plus interest, supporting the jury’s verdict that the software maker infringed on two patents. The jury decided that it infringed on an Alcatel patent that is all about software users choosing a calendar DATE from a menu in some programs like Microsoft Outlook. Wow! I am sure today’s DATE will be marked in that calendar eternally. Let’s see what happens when the giant appeals the ruling.

UN declares rape a war tactic

‘a tactic of war to humiliate, dominate, instill fear in, disperse and/or forcibly relocate civilian members of a community or ethnic group’. This is how the resolution by a 15 member council defined rape today. My problem is not with the definition. I am glad about it. Nor do I doubt the intentions of the resolution. My problem is with the UN as it has always been. What I am repulsed by is that why rape limited as ‘a crime against individual victims’ (in this case in the times and regions of war) not big enough an offense to jolt the UN to take extreme measures against it. Why do we need another rationale to take stricter actions against the perpetrators of this grisly sin? Chinese Deputy Ambassador Liu Zhenmin said to the council that “sexual violence should not be treated as a stand-alone issue, nor should attention be given to its symptoms only.” Is he corroborating that till now UN was giving attention to the symptoms of rape only, and not to its prevention? I hope not. In countries like Congo, no less than 50 women are raped every day. I hope this action from US brings this figure down to zero soon.