1. What is Bajaj’s strategy in the Indian motorcycle industry? And that of TVS?
Historically, Bajaj was a strong player in the scooter segment. It dominated the scooter market for few decades, but the scooter market faced a decline with the arrival of motorcycles. Bajaj planned to make an entry into the lucrative motorcycle market. It initially started its foray into the 100cc segment but was not successful as Hero Honda’s products were quite superior and economical. It then entered the 150cc segment because that segment was relatively competition free. With the successful launch of Pulsar and Avenger, Bajaj acquired more than 60% of the market share within no time (Vallabhaneni and Krishnan, 2009). Once back in the motorcycle industry with its highly sensational product 'Pulsar', Bajaj wanted to make use of this good image in the 125cc segment, as well. Bajaj anticipated that 125cc would turn into a large segment in coming days, and having a big percentage of that segment would place Bajaj ahead of its competitors.
TVS, on the other hand, was strong from the very beginning with fuel efficient engines. However, due to internal problems and a conflict with Suzuki, TVS could not come up with great products during 1990s to rival Hero Honda. Once TVS realized about the high growth of the motorcycle market, it forayed into the 100cc segment with 'Victor' (Vallabhaneni and Krishnan, 2009). Though Victor was a success for few years, TVS failed to come up with any other good products in later years. By the turn of the century, TVS understood that competing Hero Honda in terms of price and the 100cc segment was difficult, and so it forayed into the luxury segment. However, TVS failed miserably in that segment too as Bajaj was already dominating that segment. TVS also perceived that the upcoming growth would be in the 125cc segment as more and more customers would become interested in enjoying both power and fuel economy at the same time.
2. What role does intellectual property play in their respective strategies?
125cc was a segment between the typical economical segment (100cc) and the luxury segment (150cc and above). This segment was not popular during the early 2000s because 125cc bikes were neither very powerful nor economical (Vallabhaneni and Krishnan, 2009). However, there was a huge number of customers willing to buy 125cc motorcycles instead of 100cc if the former offered better fuel efficiency. It was important for the existing players to come up with a novel fuel efficient engine or technology which would revolutionize the 125cc segment. It was also important that whosoever came up with such technology protected the invention with intellectual property rights so that the competitors would be unable to copy. That way the early mover in the 125cc segment would get the first mover's advantage.
3. What is the dispute that has arisen between Bajaj and TVS? Why has it arisen?
Bajaj came up with its DTSi engine that had twin spark plug. It applied and received a patent for that in India in 2004. It used that technology to come up with models which had superior fuel efficiency than the existing models. On the other hand in 2006, TVS made a joint venture with AVS for engine design and acquired a twin spark plug technology, through AVS, that was patented in US, in 2003. When TVS used this technology in its motorcycles, Bajaj objected. It claimed that TVS copied its technology and thus violated the IP rights. However, TVS contended that the twin spark plug technology was not uncommon and hence Bajaj could not press charge on the basis of that design.
4. What are your recommendations to Bajaj and TVS for their future competitive and IP
strategies?
IP right is a new tool in the hands of management. This case of Bajaj and TVS is a classic case of IP rights law. As per the IP law, the manufacturer needs to disclose information about the design invented in order to get a patent. Once the information is available in the public domain, there remains no incentive to pay the premium for the invention of the design (Yoffie, 2005). In the case of Bajaj and TVS, TVS knew well in advance that Bajaj had applied for a patent for the twin spark plug technology in India, and hence TVS applied for cross patenting for the same technology in USA (Yoffie, 2005). It acquired similar patent from a different country through a third party vendor. To avoid such scenarios in the future, both the competing companies should be very categorical and secretive about their patents before the invention is in the stage of production. Furthermore, they should protect details about the exact innovation and do proper licensing to avoid any confusion related to the patent.
References
Krishnan, R. T (2013). “Patents are not just about Pharma,” The Hindu Businessline. Retrieved on 7th Feb 2014 from <http://www.thehindubusinessline.com/opinion/patents-are-not-just-about- pharma/article4970765.ece>
Yoffie, D. B. and Deborah, F. (2005). "Intellectual Property and Strategy." Harvard Business School Background Note 704-493.
Vallabhaneni, S. K. and Krishnan, R. T. (2009). Innovation, Technology and Competitive Strategy. Bajaj Auto and the Motorcycle Market. Indian Institute of Technology, Bangalore. Retrieved on 7th Feb 2014 from < http://iimts.com/faculty/wp-content/uploads/2012/12/Bajaj-TVS.pdf>
