You are on page 1of 5

COMMENTARY

considers the TRIPS compliant patent


New IPR Policy 2016 regime of India to be a very weak one
and has been threatening strong trade
Not Based on Evidence sanctions against India through its gov-
ernment. The newly announced policy
has been very cautiously received by the
Sunil Mani GIPC. It states:
We hope today’s announcement is a pre-

I
A critique of the new Intellectual n May 2016, the Department of cursor to the concrete, structural changes
that are necessary if India is to implement a
Property Rights Policy 2016, Industrial Policy and Promotion (DIPP)
strong IP-led innovation model. We welcome
announced the National Intellectual the government’s understanding that India’s in-
designed to strengthen India’s IPR
Property Rights (IPR) Policy. In all novative economy requires effective IP pro-
regime “to foster creativity and fairness, although this policy has been tection and hope this commitment will lead
to decisive legal reforms. India must provide
innovation,” indicates that it has formulated after due deliberations, it enhanced certainty for the rights of innova-
put the interests of intellectual is totally unnecessary, as India has tors in line with international best practice.
clearly articulated laws on all types of We will be carefully reviewing this policy to
property owners, or global capital determine whether this document creates
IPRs (patents, trademarks, copyright, de-
above that of public. Though the foundation for such steps. Regardless,
signs, geographical indication, Prote- IP will continue to be a central issue for any
some measures delineated in the ction of Plant Varieties and Farmers’ discussions between India and the inter-
policy are laudable, it is clear Rights Act, Semiconductor Integrated national business community. (GIPC 2016)
Circuits Layout–Design Act and Biological We had argued in an earlier article
that the policy objectives are not
Diversity Act). There are also a variety of (Mani 2014) that any composite index of
evidence-based and are tailor- institutions for administering and im- the strength of a nation’s IPR regime is
made to suit the requirements of plementing the various provisions of only of academic interest and is not fac-
the Western governments. these legislations. In fact, many com- tored into crucial technology decisions
mentators are of the view that India’s such as conducting research and devel-
TRIPS Agreement (Agreement on Trade- opment (R&D) in India. For instance,
Related Aspects of Intellectual Property India has now become a major source of
Rights) compliant patent regime is quite R&D service imports to the US economy
adequate for balancing the interests of (National Science Board 2016), and the
both inventors of new technologies and American MNCs are unlikely to resort to
its users. But the pharmaceutical multi- foreign direct investment (FDI) in R&D if
national corporations (MNCs) and the they think that the country has an
government of the United States (US) extremely weak IPR regime.
have been extremely critical of India’s Successive Services Provider Surveys
IPR regime. Private sector organisations conducted by the Offshoring Research
in the US such as the US Chamber of Network have considered India as the
Commerce’s Global Intellectual Property preferred location for R&D processes,
Center (GIPC) consider it as weak and in- engineering services, and indeed for
effectual. Although there has been much product designing. Further, the number
hue and cry that public policymaking of patents granted to foreign residents
should be evidence-based, the new IPR has always far exceeded the number
policy falls short of the standards that issued to Indian inventors by the Indian
are expected of a real evidence-based Patent Office, and among the major pat-
policy, which is formulated on the basis ent offices across the world, the Indian
of results emerging from empirical Patent Office has displayed the least
studies conducted on issues underlying home country bias. The fact that in the
the policy. recent past patents have been rejected by
Indian courts and a compulsory licence
The Context has been issued, all well within legal
The GIPC considers India to have a weak limits, has been blown out of proportion
Sunil Mani (s-mani@grips.ac.jp) teaches IPR regime. In fact, in its IP index, India’s by those against India’s patent regime.
at the Centre for Development Studies, IPR score is only 7.05 out of 30, while it is The forthcoming Trans-Pacific Partner-
Thiruvananthapuram and is currently visiting 10.41 for Brazil, 12.64 for China, 13.06 ship (TPP), which effectively is going to
professor at the National Graduate Institute for for Russia, and 28.61 in the case of US. be far more powerful than the multi-
Policy Studies, Tokyo, Japan.
Therefore, the US industry and trade lateral World Trade Organization (WTO),
28 SEPTEMBER 17, 2016 vol lI no 38 EPW Economic & Political Weekly
COMMENTARY

also insists on a strong IPR regime, legal systems governing IPRs are firmly The recent Supreme Court verdict
which is normally referred to in discus- committed to the Doha Declaration on against Novartis’s patent for the drug
sions as TRIPS plus. It is against this TRIPS Agreement and Public Health. Glivec is an instance where the judicial
backdrop of continued international Then it goes on to argue that existing IP system invoked this rule to deny a patent
pressure to further strengthen India’s laws may be reviewed where necessary, for a so-called invention. The GIPC and
IPR regime that one has to analyse the to update and improve them or to the US government have been relentlessly
present policy pronouncement. remove anomalies and inconsistencies, pursuing the Indian government, even
if any, in consultation with stakeholders. using the bogey of trade sanctions under
The Policy It does not, however, state in clear terms 301, for a review of the contentious
The new IPR policy is quite distinct in its what it considers an anomaly or incon- Section 3(d).
shape and content from other policy pro- sistency. Does it mean that Sections 3(d) Another subsection of the 2005 Act
nouncements of the government—for and 3(k) are anomalies and inconsisten- that has been a bone of contention is
instance, the new Science, Technology cies as pointed out by organisations such Section 3(k), which deals with an un-
and Innovation Policy 2013. The IPR pol- as the GIPC and the US government? conditional exclusion of mathematical
icy document reads more like a commit- The Patents Act 1970 came into force and business methods, computer pro-
tee report, as the essence of the policy in 1972, amending and incorporating the grammes per se, and algorithms from
document is contained in the seven then existing laws relating to Patents patentable subject matter. There are
objectives that are akin to recommenda- and Designs Act 1911 in India. The Patent strong welfare arguments against pat-
tions in a commission of inquiry, except- (Amendment) Act 2005 (hereafter 2005 enting of software per se, as most inven-
ing that the present policy has identified Act) came into force from 1 January tions in computer software are incre-
not only the specific steps that need to 2005 and made India’s Patent Act of 1970 mental in nature and patenting of an
be taken for implementing the objec- compliant with the stringent provisions earlier step will erect strong legal bar-
tives but also the ministry or the nodal of TRIPS. It brought changes in the pre- riers to inventions in later steps. The
agency that is responsible for their vious patent system of India, wherein government has been vacillating on
implementation. This is a refreshingly product patent was extended to all sub- software patents for quite some time
new aspect of public policymaking, where jects of technology, including food, now. Also, evidence from the US where
the policy document itself has given drugs, agro chemicals, and microorgan- software patenting is allowed shows
some specific directives for its imple- isms. Moreover, Section 3(d) of the 2005 that it exacerbates patent litigation. For
mentation. Therefore, monitoring of the Act introduced pharmaceutical product instance, according to Bessen and Meurer
present policy and its evaluation, con- patents in India for the first time. (2009), 38% of all patent litigation in
currently, is likely to be easier. The 2005 Act defines what invention the US is with reference to computer-
However, the seven objectives them- is and makes it clear that any existing related inventions.
selves are not new and most of them knowledge or thing cannot be patented. In India, an attempt made in 2004 to
have been expressed in earlier policy The provision defines that a “novelty” have software patents was thwarted by
pronouncements or actions. In this arti- standard along with “non-obviousness” intense opposition against it both within
cle, we undertake a rather detailed cri- or “inventive step” and industrial appli- and outside Parliament. Although, re-
tique of these, essentially with a view to cability are the three prerequisites for cently in August 2015, the government
find out if these are substantive. “patentability.” “Discovery” essentially sought to reintroduce software patent-
The seven objectives can broadly be refers to finding out something which ing in an ambiguous manner,1 but owing
divided into three categories, those dea- already existed in nature but was un- to strong opposition to it from civil soci-
ling with popularisation and strengthe- known or unrecognised so far. There- ety organisations, it was repealed in
ning the administrative machinery for fore, discoveries were excluded from February 2016. Now it remains to be
dealing with IPR issues (objectives 1, 4 patent protection under Section 3 of the seen whether Sections 3(d) and 3(k)
and 7); those dealing with the generation Patents Act, 1970. In very specific terms, may be reviewed or removed altogether,
and commercialisation of IPRs (objec- Section 3(d) of the 2005 Act has raised as the new policy has such a provision.
tives 2 and 5); and those dealing with legal the bar on the inventive or non-obvious- However, the policy has been rather
aspects, enforcement, and adjudication ness criteria and states that: cautious on certain issues like the pro-
(objectives 3 and 6). Of the three, I con- … the mere discovery of a new form of a tection of trade secrets for which no
sider the third category the more sub- known substance which does not result in legislation exists in India at the moment.2
stantive. In this article, we discuss each the enhancement of the known efficacy At present, in India, parties must rely on
of these three categories in some detail. of that substance or the mere discovery of written down contracts to protect trade
any new property or new use for a known
secrets which increases the transaction
Enforcement and Adjudication substance or of the mere use of a known
costs, especially of R&D outsourcing
process, machine or apparatus unless such
The policy document is a bit ambivalent known process results in a new product or deals between MNCs and Indian infor-
here. It states at the outset that India’s employs at least one new reactant, is not mation technology services companies.
IPR laws are TRIPS compliant, and the patentable. (GOI 2005) In 2008, the Department of Science and
Economic & Political Weekly EPW SEPTEMBER 17, 2016 vol lI no 38 29
COMMENTARY

Technology published a draft legislation for a policy document to propose future fact that the issue of technology transfer
titled the National Innovation Act 2008 studies, as the policy should itself be evi- that has been placed on the table should
that would in part “codify and consoli- dence-based. In other words, the think generate a greater effort on the part of
date the law of confidentiality in aid of tank, which crafted this policy state- government to pursue this matter so
protecting Confidential Information, ment, ought to have conducted such re- that domestic Indian companies are able
trade secrets and innovation.” However, search studies and then made an app- to secure technology licensing under
this piece of legislation has never been ropriate policy pronouncement. This better terms and conditions and also for
taken to its logical conclusion. gives the reader an impression of the the diffusion of energy-saving and envi-
But what are the implications of hav- policy being very comprehensive but in ronmentally-sound technologies that can
ing a legal provision for protecting trade the false sense of the term. hasten the country’s efforts in tackling
secrets. On the positive side, it can inc- Technology transfer, especially in the greenhouse gas emissions and other cli-
rease the scale and nature of R&D out- context of clean energy and environ- mate change issues.
sourcing to India for which the country mental technologies, is another area that The present policy document is com-
has built up a considerable reputation. On is touched upon and rightly so in the pletely silent on incorporating utility
the negative side, it can reduce or com- present policy. This is because the pro- models in India’s IPR legislation. Utility
pletely nullify any kind of technology spil- ponents of greater compliance with TRIPS models or petit patents are the right sort
lovers from MNCs to domestic companies, had argued that a stricter patent regime of IPR mechanisms for incremental inno-
as the main conduit of technology spillo- envisioned under TRIPS will precipitate vations carried out, especially by small
vers is through labour turnover or move- a large-scale technology transfer to and medium enterprises (SMEs). Many
ment of personnel. And if trade secrets are India. However, whatever fragmentary countries, including China and South
protected, this will reduce any form of evidence that is available from succes- Korea, have used this as a way of pro-
positive spillovers to domestic firms. sive Reserve Bank of India (RBI) surveys moting innovations by SMEs. Of course,
The policy also discusses the trade-off on foreign collaboration in Indian indus- the downside is for SMEs to use utility
between patent policy and competition try shows that the number of technology models as a way of thwarting competi-
policy and proposes research studies for collaboration agreements contracted bet- tion. At least the policy document should
properly understanding this trade-off ween MNCs and unaffiliated Indian com- have encouraged research studies so
before legislating on this topic. It is unusual panies have gone down significantly. The that evidence-based policymaking could

ICSSR Data Access Scheme for PhD Scholars


EPW Research Foundation
Applications are invited from PhD students in universities and colleges for one year access to EPWRF India Time Series
(EPWRF ITS) for use in their doctoral research. This is to promote Social Science Research through Online Time Series Data Services.

(i) Up to 50 PhD scholars will be given access to the EPWRF India Time Series for one year.
(ii) Only students outside the ICSSR institutes can apply.
(iii) PhD scholars can request access to any five of the following modules of their choice.

(1) National Accounts Statistics of India (9) Banking Statistics


(2) Domestic Product of States of India (10) Insurance
(3) Price Indices (11) Finances of the Government of India
(4) Agricultural Statistics (12) Finances of State Governments
(5) Annual Survey of Industries (13) Combined Government Finances
(6) Industrial Production Series (14) Power Sector
(7) External Sector (15) Health Statistics
(8) Financial Markets (16) Educational Statistics

The application form can be downloaded from our website and may be processed through the research guide/department. For
further details about the modules, interested candidates can access demo version after free registration. For further details, please
visit www.epwrfits.in.
Address for sending applications and any query:
The Director,
EPW Research Foundation, C-212, Akurli Industrial Estate, Akurli Road,
Kandivli (East), Mumbai-400 101.
Phone : 022 - 2885 4995 / 96 Email : epwrf@epwrf.in
Website: www.epwrf.in and www.epwrfits.in

30 SEPTEMBER 17, 2016 vol lI no 38 EPW Economic & Political Weekly


COMMENTARY

have been attempted. Instead, it has that is in turn due to the fact that the the US. Small but growing number of
chosen to stay totally silent on this issue. country has very few scientists and engi- patent litigation over frivolous patents in
neers engaged in R&D. According to the India has also been overlooked.
Generation and 2010 estimates of Department of Science The policy also seeks to restart the
Commercialisation of IPRs and Technology, India had only 0.44 now defunct conversation on encourag-
The policy has laid great emphasis on million scientists and engineers in R&D ing publicly funded R&D by incentivising
the generation and commercialisation of which works out to just nine scientists it in the manner outlined in the now
IPRs, especially patents. This is because and engineers per 10,000 labour force. aborted Protection and Utilisation of
a lion’s share of the patents granted by Low outturn of scientists and engineers, Public Funded Intellectual Property Bill
the Indian Patent Office in and by Indian increased high skill migration, and also a 2008. The bill stressed on the creation of
inventors in foreign jurisdictions such as hugely varying quality of those that are IPRs as a form of accountability, inspired
the United States Patent and Trademark available are some of the systemic fac- by the American Bayh–Dole Act of 1980.
Office (USPTO) or the European Patent tors that result in a small number of pat- Most of the commentaries on that pro-
Office (EPO) has gone to MNCs either ents granted to resident inventors. With- posed bill, including the parliamentary
based abroad or in India as the case may out correcting these, one cannot in- standing committee were of the view
be. However, most of the measures that crease the number of patents through that the bill was likely to take away crea-
are proposed for generation of IPRs are numerous superficial means suggested tivity from universities and research
for popularising the notion of patents in the policy document. institutions and instead promote crass
among a wide constituency through A further issue is the quality of these competition between scientists. Careful
essentially a large number of superficial patents. Forcing inventors, through arti- studies done in the US context too have
means such as “Creating moving exhib- ficial means, result in low quality frivo- not found the Bayh–Dole Act to be very
its (for example, a train with a theme lous patents, and as a proof of this one beneficial in making the US universities
that will crisscross the nation, road does not have to look any farther than generate more patents.
shows) that can travel to all parts of the the experience of Council of Scientific The government is already committed
country” (GOI 2016). State level patent and Industrial Research (CSIR) with to incentivising the commercialisation
cells have already tried out such sche- respect to patenting. The CSIR has been of patents. In the union budget 2016–17,
mes, and the Patent Facilitating Centre very active in patenting, owing largely to the finance minister has announced a
attached to the Technology Information, the Vision 2020 strategy implemented by patent box type of incentive for the first
Forecasting and Assessment Council its legendary director general. Although a time, wherein income received in the
(TIFAC) has been engaged in various types large number of patents have been grant- form of royalties and technology licence
of activities like training and developing ed to the CSIR, both within and outside fees received by Indian companies will
course materials to popularise IPR issues India, its commercialisation record has be taxed at a reduced rate of 10% from
among scientists and researchers. been very poor. Worldwide, most of the the fiscal year 2016–17 onwards. The in-
In fact, more credible policies for gen- patents are exploited by patent genera- troduction of patent box encourages out-
erating patents through the promotion tors themselves. Valuation of patents is put of R&D. The policy document, how-
of R&D through essentially generous tax also a very tricky issue and is best left to ever, makes no reference to this already
incentives (Mani and Nabar 2016) have the market forces to find its real price or implemented policy initiative.
also been tried but not with much suc- value. The establishment of patent ex- Among other measures, the section on
cess. The fact that India has one of the change makes sense only for those coun- commercialisation of IPRs recommends
most generous R&D tax regime has com- tries which produce high quality com- the encouragement of domestic produc-
pletely escaped the attention of the mercialisable patents. Such recommen- tion of active pharmaceutical ingredi-
think tank that has designed the IPR dations are valid only when the county ents (APIs) and revitalising public sector
policy. This further indicates that the has gone up the technology ladder. undertakings in the health sector. This is
policy is not evidence-based. Innovative In sum, this part of the policy docu- a very worthy and laudable objective but
activities in India are concentrated to a ment is very low on evidence on genera- should be included in the pharmaceuti-
few firms in a select number of indus- tion and commercialisation of patents cal policy instead of a policy on IPRs.
tries such as pharmaceuticals, computer either from India or from abroad. Also,
software, automotive, and in electrical the policy does not consider the strategy Administering IPR Issues
and electronic industries. If one goes by of patenting adopted by modern corpo- This is perhaps the most positive aspect
the Schumpeterian hypothesis, firms rations as a way of entry deterrence and of the policy document. Commentators
have to be large to invest in R&D, so that litigation. Large-scale generation of friv- in the past have pointed out three prob-
they have enough internal resources to olous patents may result in an increasing lems with the way IPRs are administered
invest in R&D that can yield patents. number of patent litigation which is wel- in the country. The first problem deals
Further, one of the major constraints fare reducing. Jaffe and Lerner (2007) with the administration of the various
for patent creation by firms in India is have demonstrated this aspect of in- IPR legislations being handled by a dis-
the fact that they do very little R&D and creasing patent litigation in the case of parate number of organisations. For
Economic & Political Weekly EPW SEPTEMBER 17, 2016 vol lI no 38 31
COMMENTARY

instance, Patents, Trade Marks, Designs IPR policy has nothing much to say on courts have relied on the principles laid out in
the Salman Engineering case.
and Geographical Indications were han- this important aspect that would have
dled by the Controller General of Patents given a real fillip to evidence-based
Designs and Trademarks (CGPDT); the policymaking in the area of innovation. References
copyrights by Department of Higher In conclusion, the democratisation of Bessen, James and Michael J Meurer (2009): Pat-
ent Failure: How Judges, Bureaucrats and Law-
Education; the Semiconductor Circuits the implementation of the IPR policy is yers Put Innovators at Risk, Princeton: Prince-
Layout-Designs by the Department of another noteworthy proposal underlying ton University Press.
Electronics and Information Technology. the new IPR policy. But the fact that IP GIPC (2016): “US Chamber on Release of India’s In-
tellectual Property Policy,” Global Intellectual
The new policy has now recommended laws can be reviewed and updated to re- Property Center, http://www. theglobalipcent-
just two organisations—the CGPDT to be move inconsistencies and anomalies, as er.com/u-s-chamber-on-release-of-indias-in-
tellectual-property-policy, viewed on 23 May
still responsible for patents, trademarks, mentioned in the policy, raises a concern 2016.
designs, geographical indications and whether some of the TRIPS flexibilities GOI (2005): “The Patents (Amendment) Act 2005,”
such, while the administration of the built into our IPR regime—which has Ministry of Law and Justice, Government of
India, http://ipindia.nic.in/ipr/patent/patent_
latter three are to be brought under the made India’s TRIPS compliant IPR regime 2005.pdf.
aegis of the DIPP, which will become de a sort of model for the developing — (2016): “National Intellectual Property Rights
Policy,” Ministry of Commerce and Industry,
facto the nodal agency for administering world—would be subject to changes in Department of Industrial Policy & Promotion,
IPRs in the country, as the Indian Patent response to intense lobbying by MNCs. http://dipp.gov.in/English/Schemes/Intellec-
tual_Property_Rights/National_IPR_Policy_
Office too is a subordinate office under 12.05.2016.pdf.
the DIPP. In fact, the re-designation of Notes Jaffe, Adam B and Josh Lerner (2007): Innovation
the CGPDT as controller general of IPRs is 1 In the August 2015 version, the guidelines and Its Discontents: How Our Broken Patent Sys-
allowed the patenting of software which tem Is Endangering Innovation and Progress and
not just a reform in form but in content demonstrated technical advancement, and did What To Do About It, Princeton: Princeton Uni-
as well. not clarify what this meant, sparking concern versity Press.
from start-ups and software product lobbies. Mani, Sunil (2014): “Doesn’t India Already Have an
The second one deals with the func- IPR Policy?” Economic & Political Weekly,
Subsequently in December 2015, amid con-
tioning of the Indian Patent Office itself, cerns raised by these stakeholders, the Indian Vol 49, No 47, pp 10–13.
which is staffed by a small number of Patent Office stayed the guidelines. Mani, Sunil and Janak Nabar (2016): “Is the Gov-
2 Currently there is no specific or separate legis- ernment Justified in Reducing the R&D Tax
patent examiners. Two problems with lation that regulates the protection of trade se- Incentives?,” Economic & Political Weekly, Vol 41,
respect to this important office are often crets and confidential information in India. No 30, pp 22–25.
However, the courts in India have relied on eq- National Science Board (2016): Science and Engi-
raised. The first one is the very high pen- uitable and common law remedies as a means neering Indicators, Arlington, VA: National
dency rate owing to the small number of of protecting trade secrets. Specifically, Indian Science Foundation.
examiners the patent office has. Accord-
ing to an estimate, 2.46 lakh patent ap-
plications and 5.32-lakh trademark regi- Journal Rank of EPW
strations were pending (as on 1 Novem-
Economic & Political Weekly is indexed on Scopus, “the largest abstract and citation database
ber 2015) due to shortage of human
of peer-reviewed literature,” which is prepared by Elsevier NV (http://tinyurl.com/o44sh7a).
resource. The second one is, again owing
to the small number of patent examin- Scopus has indexed research papers that have been published in EPW from 2008 onwards.
ers, that the quality of patent examina- The Scopus database journal ranks country-wise and journal-wise. It provides three broad sets
tion itself is suffering, leading to both of rankings: (i) Number of Citations, (ii) H-Index and (iii) SCImago Journal and Country Rank.
Types 1 and 2 errors in patent grants. Presented below are EPW’s ranks in 2014 in India, Asia and globally, according to the total
The proposed reform, which includes cites (3 years) indicator.
recruitment of more patent examiners, ● Highest among 36 Indian social science journals and highest among 159 social science
modernisation of the patent office, and journals ranked in Asia.
the training of patent examiners in best
● Highest among 36 journals in the category, “Economics, Econometrics and Finance” in the
practices in patent examination from Asia region, and 36th among 835 journals globally.
some of the best jurisdictions, is likely to
● Highest among 23 journals in the category, “Sociology and Political Science” in the Asia
lead to considerable improvement in the
region, and 15th among 928 journals globally.
quality of examination and grant of all
types of IPRs, especially patents. ● Between 2008 and 2014, EPW’s citations in three categories (“Economics, Econometrics,
There are other challenges too: one of and Finance”; “Political Science and International Relations”; and “Sociology and Political
Science”) were always in the second quartile of all citations recorded globally in the
which deals with timely publication of
Scopus database.
detailed data (organisation and tech-
nology-wise) on IPR applications; grants For a summary of statistics on EPW on Scopus, including of the other journal rank indicators,
and the detailed data on pre- and post- please see http://tinyurl.com/qe949dj
grant opposition to patents (which is EPW consults referees from a database of 200+ academicians in different fields of the social
unique to India); and also detailed data sciences on papers that are published in the Special Article and Notes sections.
on working patents. However, the new
32 SEPTEMBER 17, 2016 vol lI no 38 EPW Economic & Political Weekly

You might also like