The National Intellectual Property Rights[2] policy was approved by the cabinet on May 12, 2016 and released to the press on May 13, 2016 by the Finance Minister, Mr Arun Jaitely. It is India’s ‘first of its kind’ policy that covers all forms of intellectual property together in a single framework. The policy follows a completely new set of principles which are pro-intellectual property (IP) owners in every possible way.
The principles laid down in the policy incentivize the IP owners by granting them monopoly rights. The policy rewards the big capital without caring for the balance to be established vis-à-vis public interest or development concerns. Although the present government believes in arguing that it is pursuing the agenda of development, it is ironical that the policy gives very little importance to either the public interest or the challenges facing India in respect of development.
The stated rationale of this policy is that strong intellectual property rights system is necessary in order to promote creativity and innovation in India. Evidence to the contrary however exists in plenty.
Monopoly rights stifle and not promote innovation. Barriers to research collaboration can grow, diffusion of knowledge suffers and access to knowledge and innovation is harmed under any strong IP system.
The policy of the Modi Government is clearly informed by a conservative pro-IP ideology which big capital promotes with the aim to appropriate, to and for itself, all the gains made from progress underway in the systems of science and technology, across the world. The policy was framed with the help of a committee whose convener is from the FICCI and was filled with lawyers who have worked with the Finance Minister in the past. Actually, the rationale behind this policy, is the pressure from the multinationals emerging out of the US, Europe and Japan.
It is no secret that in the recent past India has been under pressure from the US government under their Special 301 law[3]to change its patents regime.For the last two years in the conferences being held on trade and investment, the Ministry of Commerce officials are known to have talked favourably about the benefits of joining the Trans Pacific Partnership (TPP) which has several TRIPS-plus provisions[4]. The argument of how it is not possible for India to keep out of mega-regionals has been invoked by many of these officials. Furthermore the timing of this policy is extremely significant. The Prime Minister is leaving on his fourth visit to the United States on June 7-8 and is expected to address the US Congress.
The policy will govern the Patents Act, Trade Marks Act, Design Act, Geographical Indications of Goods Act, Copyright Act, Protection of Plant Varieties and Farmers’ Rights Act, Semiconductor Integrated Circuits Layout Design Act and Biological Diversity Act.
As a result, the impact of this policy is expected to be felt in sectors as diverse as pharmaceuticals, software, electronics and communications, seeds, environmental goods, renewable energy, agricultural and health biotechnology, and information and communications.
The policy has adopted an IP maximalist agenda (of maximum possible incentive for IP owners) to drive the future course of development of industry, publicly funded research and development organisations, educational institutions and government departments in India from now on.
Even when the policy admits that the intellectual property of foreign corporations has gained from the changes made to India's IP laws after joining the WTO and that the size of Indian IP is small, the policy continues on this path without adducing an iota of evidence in favour of the assumption which states that a strong IP based policy framework is essential to promote creativity and innovation in India.
It is also a matter of significant concern that India is ranked quite low on the index of creativity and innovation; we are at 56, somewhere pretty low down on the ladder.
Indian applicants lead in the matter of trademark applications and not patents. Take, for instance, the number of new drug applications filed by the Indian companies with USFDA—it has never crossed the single digit figure.
However, in the sphere of trademarks, out of the 179, 317 applications in 2010–11, the class consisting of “medicinal, pharmaceuticals, veterinary and sanitary substances” accounted for 31,634 trademarks, representing 17.64 per cent.
Analysis shows that the number of Indian design patent assignees, as provided in the US system, was as small as 271. Thirty three per cent of design patents came from the fields of jewellery and ornaments. Put starkly, there is no point, or need, in exaggerating our ‘creativity in innovation to justify a case for strong IP protection.
The Minister spoke of accelerating the registration and approval of trademarks. The policy speaks of promoting IP as a financial asset and an economic tool. However, policymakers need to be reminded of how the public banking system was robbed when it relied on the valuation of the Kingfisher brand to release funds to Vijay Mallya!
Both the Vision Statement and the Mission Statement[5] of the policy proclaim that creativity and innovation are stimulated by Intellectual Property for the benefit of all. The policy states that it shall promote entrepreneurship and enhance socio-economic and cultural development including access to healthcare, food security and environmental protection; but,what is the basis of this proclamation?
Did the committee set up by the Ministry for the formulation of National IPR Policy sift and analyse the evidence? None of the evaluations made by the committee are clear. Had the committee gone into this question, it would not have been able to argue that the adoption of a stronger IPR is necessary for the enhancement of innovations.
A strong IP based system was not responsible for the creation of foundational elements of new generic technologies such as software, semiconductors, microprocessors, mobile telephony, recombinant DNA technology, monoclonal antibodies and many other such biotechnological tools.
Monopoly rights stifle and not promote innovation. Barriers to research collaboration can grow, diffusion of knowledge suffers and access to knowledge and innovation is harmed under any strong IP system.
The same is the story when applied to the fields of 3 D printing. Patents, designs and layouts were not applicable to such technologies when the foundational tools emerged in the case of all these generic technologies. Scientists had to be pushed to treat some of these cases as IP by the technology transfer offices of the US universities.
Did a strong IP regime work for the benefit of the pharmaceutical industry after the adoption of TRIPS Agreement? The policy does not demonstrate how a regime favouring maximum possible incentive for IP owners and the granting of monopolies will be able to ensure the “socio-cultural development” of India.
Analysis of the impact of the patents granted on new chemical entities (NCEs) by this author in the forthcoming publication for the two hundred sixty two drugs introduced in India since 1995 indicates that the market power of foreign firms is on the rise due to the adoption of the product patent in various therapeutic groups such as anti-cancer, cardiovascular, central nervous system, diabetes, urology and other such non-communicable diseases.
The data clearly reveals that the market power of foreign firms would have been greater had India opted for early TRIPS implementation like many of the countries in Latin America did and made their industries as well as people suffer the adverse consequences of a strong intellectual property regime.[6]
In fact, far more contrary –and interesting –evidence is directly available from the pre-TRIPS period. The Green Revolution took place in India without any IP protection for the breeders of new varieties of seeds.
The Indian pharmaceutical industry became the pharmacy of the Third World because of the rejection of the strong intellectual property rights (IPRs) system in the 1970s. Since the domestic pharmaceutical industry supplies a large number of pharmaceuticals to the regulated markets of US and Europe and is the lifeline for patients particularly in the developing world, it is paradoxical that the policymakers of the Modi Government choose to do little more than give lip service to India's global role in the case of generic pharmaceuticals. With no mention at all of the use of critical safeguards in India's patent law such as compulsory licenses, parallel imports or support for patent oppositions, it seems there was some merit to the news of India's assurances to the US industry that compulsory licenses will no longer be issued in India.
The policy focuses on improving the IPR output of National Research Laboratories, Universities, Technology institutions and researchers by encouraging and facilitating the acquisition of IPR.
It proposes to link research funding and career progression with the creation of IPR and includes this as a key performance metric for public funded R&D institutions as well as Technology institutions. Although it is clear that the policy suggests the harnessing of intellectual property by public institutions to be undertaken in a big way (through, for example, the patenting or licensing of research results) and the partnering of public institutions with the private sector, it chooses not to ask the obvious question of what has been the outcome of the perusal of precisely such policies in the laboratories of the Council of Scientific and Industrial Research (CSIR) and the Indian Council of Agricultural Research (ICAR).
Since the mid-1990s, CSIR researchers were directed to file patents but the policy failed to yield patents that could earn CSIR revenue. A vast majority of patents obtained by CSIR (2001–2010) lie idle and have not able to generate licensing revenue to the extent of covering even four to five percent of the cost incurred on the filing of patents by the CSIR.
The policy on patenting has cost the CSIR not just money to maintain these patents in India and abroad, it has also directed CSIR away from more important directions. In order to generate IP that can be commercialised, the laboratories are required to plan patent portfolios without which enforceable IP will not get generated.
It is not enough to celebrate the intellectual property of individual researchers. Indian patents are the outcome of non-collaborative individual organisation based efforts, both for industry and research institutions. Analysis indicates that 90 per cent are single entity patents and the percentage was as high as 96 per cent in 2010 for India’s US patents. Only seven per cent of the total patents are outcomes of collaborative R&D.[7]
Even in the case of patents filed with the Indian Patent Office (IPO), a large majority (75 per cent) were filed and obtained by individual assignees. Both R&D institutions and industry have been acting separately in their pursuits of technology development related investments.
The same can be said of the collaboration between the academic institutions, universities and research institutions that have been granted patents—the trend is to “go-alone”.
The Indian scenario on international collaboration is no different. Analysis indicates that industry collaboration with universities and R&D laboratories is also negligible. There have been no more than 0–10 patents in any given year. Analysis of the patent assignment database of the USPTO indicates that only 173 out of the total 2420 patents obtained during the period resulted in licensing of other entities.
Further examination reveals that 32 of the 173 patents were instances of internal trading. Just 7.15 per cent of India’s patents were licensed on the whole and 5.83 per cent of the total, if we leave out cases where the transfer was to one’s own subsidiary[8].
Clearly, the message of this analysis is that the Indian industry and R&D organisations are not at the stage of development wherein the patent strategy is going to yield much returns. It seems that our policymaking is not informed by Indian reality but by pressures on and of the multinationals. Multinationals and R&D organizations abroad do not treat the challenge of IP generation without a strategy. They spend money on patent litigation. Does India want its laboratories to focus on science or litigation?
It is also a matter of significant concern that India is ranked quite low on the index of creativity and innovation; we are at 56, somewhere pretty low down on the ladder.
Further, it should not be forgotten that if publicly funded laboratories are encouraged to patent their research contributions, seek exclusionary rights and make money from the private sector from their research contributions, the tax payers will be paying twice.
The private sector will include the total R&D expensesincurred in the cost of product after adding a huge mark-up.
Why should the policymakers opt for exclusive licensing of public IP?
Exclusive licensing is an important element of a strong IP system. This is a matter of serious concern. The policy proposes to establish and strengthen IP facilitation centers as nodal points in industrial and innovation university clusters.
Evidence on the performance of Science and Technology (S&T) parks is not very encouraging with regard to IP based entrepreneurship from India. There is significant gap between scientists and industry with regards to important factors in the process of technology transfer from publicly funded R&D sector to private sector industry. Scientists consider the lack of motivation and demand from industry for investment in indigenous technology development to be a key barrier to sustainable collaboration.
Experience of success with IP based entrepreneurship and technology transfer from National Research and Development Corporation (NRDC), National Innovation Foundation (NIF) and Technology and Information Forecasting and Assessment Council (TIFAC), SIBRI and BIRAC of Department of Biotechnology is hardly encouraging.
However, thanks to the high voltage propaganda that favors a strong IP, the same mantra of IP based entrepreneurship is repeated. Take the case of NRDC which manages the IP generated from the programme aimed at technological self-reliance[9] (PATSER) of the Department of Scientific and Industrial Research (DSIR).
In royalty paying projects, there was only one case where the firm paid on a regular basis. In most cases it was paid for one or two years by the firms. The amount of royalty paid varied widely, from as low as Rupees 954 to Rupees 86 lakhs. Most common reasons mentioned for non-commercialisation were either that the technologies developed were obsolete or there was no market demand for the technology developed[10].
The policy considers IP rights as private rights. The policy wants to promote IPRs as marketable financial assets. The policy views IP as an economic tool. But intellectual property is a regulatory tool for the government. The government should not be using it only as an incentive.
The government needs to provide safeguards to protect public interest when statutory monopolies are being offered to IP owners. The objectives and instruments of policy need to be guided by a social contract between state and society on the basis of the consequences of intellectual property regime for the development process.
As a regulatory tool, the state has to ask how and what benefits will corporates deliver and what kind of costs it entails to the Indian people.
A social bargain should reward or grant incentives to innovators but not without asking what kind of innovation and access to innovation is being offered by this particular system of reward,that is, exclusive rights through IP.
Incentive has to be as per the stage of development and be commensurate with the quality of intellectual property. Intellectual property has to maximize disclosure, diffusion and dissemination, access to knowledge, and public interest.
The policy is vague in how such a balance is to be achieved and how the rights of IP owners will be implemented in a manner conducive to social and economic welfare and to prevent misuse or abuse of IP rights. Although the policy speaks of encouraging open source drug discovery (OSDD), it is well known that the OSDD programme is no longer being pursued by CSIR.
While the policy speaks of promoting free and open source software, it could have given a genuine boost to the idea of open source in the areas of software, seeds and creative publishing if the government was willing to announce a public procurement policy for encouraging open source in software and seeds.
The policy should have announced a law favoring open source licensing. Special licenses for non-exclusive dissemination of intellectual property could have been encouraged. Twenty-five countries including Australia, Belgium, Croatia, Czech Republic, France, Germany, Greece, Hungary and Italy provide for legislative support to open source[11].
The policy also refers to open innovation as part of the promotion of corporate social responsibility (CSR). Open innovation is practiced by large companies as a programme of collaborative R&D strategy, and it is not a CSR activity for them. Apart from the NIF (National Innovation Foundation) which has tried collaborating with Big Bazar to market the “outcomes of grassroots innovations” (wherein also we are yet to see the market being developed for such innovations), there are not too many corporate social responsibility (CSR) examples which can be multiplied by the R&D organizations. The CSIR has many rural technologies to offer from its own shelf, but we have not seen large companies being willing to transfer these technologies to the base of pyramid population.
The policy provides for the enhancement of the capacity of IP enforcement agencies at various levels, including strengthening of IPR cells in State police forces. It proposes to adjudicate IP disputes through Commercial courts. The policy marks a major departure from the earlier well-stated understanding by BakshiTekchand and Justice Iyengar committees[12] that guided the framing of Indian patent law. These committees created the Patent Act, 1970.
The model patent act provided for granting of rights for the use of new processes for the benefit of the pharmaceutical and food industries and laid the basis for creative imitation or reverse engineering approach which led the Indian R&D institutions to create over fifty new chemical reactions processes for more than one hundred essential drugs.
The policy states in writing that the government will engage constructively in the negotiation of international treaties and agreements. It also states that it will examine accession to some multilateral treaties which are in India's interest. Is this a signal that India could be party to Trans-pacific partnership (TPP) where the TRIPS plus agenda is already in place?
Needless to say, the IP maximalist agenda of the new IPR policy will warm the heart of the US government in a big way. It seems that the government wanted to gift something to the USA, and decided on gifting the IPR policy. This particular gift to the US must be withdrawn. It should be prevented from becoming the national policy.
The policy seeks respect for IP and in its usual style the present government wants this message to be taken to the schools, colleges and public.
It wants to involve multinational corporations in the IP awareness programmes. The policy proposes to strengthen and spread IPR facilitation centers. The policy proposes to open up the traditional knowledge digital library (TKDL) to the corporates. What is of greatest concern perhaps is the targeting of the judiciary through “awareness” and “training” on an IP maximalist agenda that is likely to threaten the fine balance between public interest and IP that the courts have struggled to maintain. This is going to be a big change.
The policy says India will remain committed to the Doha Declaration on TRIPS Agreement and Public Health with no real provisions of the policy dedicated to the actual use of public health safeguards in India's patent law.
Nor can it be ignored that the Government of India agreed to give in to the US Government’s twenty-first century issues of trade and investment at the Nairobi Ministerial at the WTO. According to the United States Trade Representative (USTR), the Doha Development Agenda is dead. There has been no progress.
Needless to say, the IP maximalist agenda of the new IPR policy will warm the heart of the US government in a big way. It seems that the government wanted to gift something to the USA, and decided on gifting the IPR policy. This particular gift to the US must be withdrawn. It should be prevented from becoming the national policy.
(The author is Convener, National Working Group on Patent Laws)