In the world of intellectual property, obtaining exclusive rights to an invention is just the beginning. Behind the technical specifications and legal jargon lies the world of data exclusivity and commercial exclusivity, which can significantly affect the success and profitability of a patented invention. Let’s have a look at what data exclusivity and commercial exclusivity mean, how they shape the innovation and business landscape and, above all, how the income they generate is a source of a substantial tax deduction.
The innovation income deduction, IPBox or Patent Box, is a tax incentive that allows companies to reduce their tax base. As long as a company can prove that income is generated from the exploitation of data exclusivity and commercial exclusivity, the experts at FI Group can help you calculate the deduction, which amounts to 85% of the net income linked to these exclusivities.
In the tax context we are dealing with here, data exclusivity refers to the protection of test, study and clinical or preclinical trial report data submitted to the regulatory agencies for approval of pharmaceutical products (plant protection products, medicines for human use, medicines for veterinary use, orphan drugs, etc.).
Data exclusivity is essential to encourage innovation in sectors where substantial investment in R&D is required. By protecting the data generated during the testing and approval process, companies can recoup their investments and maintain a competitive edge in the marketplace. Without data exclusivity, generic competitors could exploit the originator’s research efforts without bearing the costs, undermining incentives for innovation and investment in new therapies, treatments, agricultural protection products and so on.
As for commercial exclusivity, it goes beyond pharmaceuticals and encompasses a variety of industries in which intellectual property plays a central role. This is the period during which the right holder enjoys exclusivity to commercially exploit the invention, preventing competitors from selling the product without authorisation.
Commercial exclusivity provides a crucial window of opportunity for companies to capitalise on their innovations, recoup investment costs and generate revenue streams. During this period of exclusivity, companies can establish their dominant position in the market, develop brand awareness and capture a significant share of the market before their competitors enter the fray. In the pharmaceutical sector, this period of exclusivity follows the 8-year period of data exclusivity by two years, and can be extended by one year.
Although data exclusivity and commercial exclusivity may seem different, they are closely linked. In the pharmaceutical industry, where innovation is largely based on scientific research and clinical trials, commercial exclusivity complements data exclusivity by ensuring that companies have sufficient time to recoup their investments and enhance the value of their intellectual property.
In addition, commercial exclusivity extends the time needed for generic competitors to enter the market.
With FI Group as your trusted partner, you can navigate your way through the changing landscape of R&D funding and make the most of the incentives available.
