In this era of globalisation, the role of Intellectual Property Rights has a significant place in the generation and creation of wealth and welfare, discerns Sunita K Sreedharan
For the business, scientific and legal communities, the turnaround in understanding the significance of using intellectual wealth as a cornerstone for generating wealth is relatively recent.
The first decade of the 21st century is particularly significant in this context. Greater awareness of intellectual wealth arising out of our traditional knowledge systems in the wake of the Basmati rice controversy, the turmeric patent and the WR Grace’s Neem patent amongst others saw the enactment of the Geographical Indications of Goods (Registration and Protection) Act 1999 and the Biological Diversity Act 2002. The Protection of Plant Varieties and the Farmer’s Rights Act 2001, the Semiconductor Integrated Circuits Layout and Designs Act 2000, the Information Technology Act 2000 were all enacted in this decade. As is evident, this decade has seen the enactment of five new intellectual property related laws.
In addition, the laws central to the intellectual properties such as patents, trademarks, copyrights and designs were either amended extensively or repealed altogether to give way to more effective and modern laws. The Patents Act of 1970 was amended in 1999, 2003, 2004 and 2005 to finally reflect both compliances required under Article 27. 3 of the The Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement as well as under the Convention on Biological Diversity (CBD) thereby linking the Patents Act to the Biological Diversity Act. The Copyright Act was revised, while the laws relating to trademarks as well as industrial designs were repealed and replaced by the Trade Marks Act of 1999 and the Designs Act of 2000.
There has also been a rather steep increase in patent litigation in the last two years. The amendments to the patent law granting product patents to the hitherto non-patentable fields of technology including drugs and chemicals have opened up Pandora’s Box using a key called section 3(d). The jurisprudence emerging from this area of litigation range from the ‘bewildering’, as in the patent linkage cases of Bayer v. Cipla and Roche v. Cipla, to the ‘interesting’ as in the Glivec case being fought between Novartis and Cipla. The tension between administering to a monopoly and exclusivity of a statutory right vis-à-vis ensuring the welfare of the people as a responsible sovereign nation makes for fascinating jurisprudential drama.
Sometimes the parties to the cases are not clear as to the interpretation of the law, while at other times the lawyers appear to exceed their brief, but then it is here that case law is evolving and history is being made.
Elsewhere, the 20th century witnessed companies generating immense wealth from their intellectual assets and the exercise of their intellectual property rights. IBM, Sony, Google, Microsoft, Samsung and Coca Cola, have made millions from deft handling of their carefully put-together portfolio of trademarks, trade secrets, patents and copyright.
It is a well known fact that when the century old IBM faced crisis in the mid 20th century, its fading fortunes turned on the strength of a very robust Intellectual Property Rights (IPR) portfolio in a robust IPR regime, earning IBM an annual turnover of USD 2 billion in revenues from just royalties on its patents. It is equally well known that the decade ‘young’ Google Inc. is one of the most recognised brands the world over and is listed in the top 10 brands in 2008 by the ranking agency Interbrand.
An Intellectual Asset (IA) is a creation of the human intellect and includes inventions, artistic work, literary work, logos, trade names, trade secrets and designs. They have great significance in commerce and provide distinct competitive advantage over business rivals. Due to their importance in commerce and their role in nation-building, many countries have formally given these assets a legal status – that of a ’property‘.
IA is protectable as an Intellectual Property (IP) if it fulfills the criteria laid out by that particular statute. Thus, an invention becomes a patent if the invention fulfils the criteria of patentability as laid out in the Patent Act including that of novelty, inventiveness and industrial application. Thereafter, the IP i.e. the patent can be bought, sold, licenced, mortgaged and treated exactly the same way as any tangible property.
Similarly, the Trade Mark Act, the Copyright Act, the Protection of Plant Varieties and Farmers’ Rights Act, etc. set out various rules, regulations regarding the criteria of protection, the rights of the rights holder, the duties of the rights holder, the legal remedies in case of infringement, the duration of the rights and the extent of rights for the third party against the rights holder.
Today, India is in the process of evolving a very robust IPR regime. New laws are being considered to strengthen the IPR system. The more recent ones are being the Protection and Utilisation of the Public Funded IP Bill 2008 (aimed at optimisation of uses of research being generated in laboratories funded by the government) and National Innovation Bill 2008.
In case the IA cannot be protected by way of converting it into an IP, it continues to be an asset of the company. For instance, the pricing strategies adopted by a company to market its product in different countries may not be protectable as a copyright, but may be a good trade secret and therefore an IA of the company. Other examples of a company’s IAs are their client list, information on sourcing of raw materials, man-management, technical know-how, etc.
Today, there is little or no recognition of the significance of trade secrets in the company’s well being. Courts have often ignored the trade secrets. Do the carefully guarded parental lines of a popular hybrid crop qualify as a trade secret? Is a jealously guarded chemical formula for preparing insecticide infused fencing nets and mosquito nets a trade secret? Do the Indian courts recognise that trade secrets that provide competitive advantage to the proprietor are valuable and must be protected?
Keshav S Dhakad Director of IPR & License Compliance in the Legal & Corporate Affairs Division, Microsoft India & the Country Chair of BSA India Committee with the Business Software Alliance (BSA).
Indian IP regime is undoubtedly growing and progressing by leaps and bounds. The last decade has seen many developments, such as enactment of new IP legislations (e.g. Geographical Indications, Border Control Measures); critical amendments to existing IP legislations (Patents, Trademarks, Copyright & Designs); modernisation of IP administrative infrastructure and offices; setting up of IP Training Institute; a considerable increase in the filings of patent, trademark and design applications; and an overall momentum around IP rights through public debates and deliberations. Courts have also been instrumental in passing various landmark IP judgments improving the overall IPR ecosystem. However, this positive movement is not without its own set of problems and issues.
One of the clear challenges which the Indian IP regime today faces is the coordination and collaboration between the various Government ministerial departments to streamline India IP Policy and law in a harmonised manner. India today lacks a National IP Policy or Agenda, although the Government has recently taken some steps towards it. Second most important emerging challenge is to infuse the culture of indigenous innovation leading to the creation of IP rights. Various Indian businesses and industries still do not consider IP as a valuable business asset and tool which could help them stay competitive and ahead of the curve in the global marketplace, and that could be attributed to lack of awareness and sensitisation about the value of IPR. Indigenous private and public investments in R&D and innovation activities remain low as compared to other countries. Another challenge is the spurt in counterfeiting and piracy of various products in the country on one hand and a weakening IP enforcement regime on the other hand. Besides a few select high courts, enforcement of IP rights remains a big challenge across the country, as Police IP enforcement infrastructure is sparsely spread and the criminal prosecution judicial system is also disorganised. Huge pendency of IP cases adds further fuel to the fire. Lastly, it should also be mentioned that the amendment exercises are being extensively debated upon leading to inaction, indecisiveness, controversies and painful long delays compromising the very objective of bringing the laws in conformity with the current times, new developments and immediate necessities.
Since national IP laws and the supporting public policies differ in their formulation, interpretation and implementation, it is not uncommon for IP rights being given a different treatment in different jurisdictions. It is equally true that IP laws are a unique set of laws which have an element of international harmonisation on important IP principles and international filing systems, simultaneously also allowing the countries to enjoy their domestic flexibilities and discretions. Yes, India has its own set of positives and negatives when it comes to IP law and policy issues as compared to other jurisdictions. To highlight one of the positive aspects of Indian IP system is the speed in which courts grant interim remedies to the IP owners to protect their interest and for preservation of infringing evidence. Indian trademark and copyright jurisdiction provisions are extremely unique giving a reasonable advantage to IP owners to sue from the place of business and residence any infringer residing in any other part of India. IP infringements are also made criminal in nature besides being treated as civil wrongs. Not to mention the growing culture of awarding damage judgments by the courts which is a very encouraging trend.
On the other hand, India is perhaps the only country to have four different IP Offices creating its own set of unique problems and harmonisation challenges. Interpretation and implementation of IP laws across the country differs widely, interim remedies to IP owners are not available everywhere which impact the overall enforcement eco-system. In India, judicial system suffers from case back-logs and inadequate infrastructure, besides lacking robust training and sensitisation programs to make the judicial officers aware of more sensitive towards the economic, cultural and social role of IP Rights in the country. In criminal courts, IP cases drag on for years before a final verdict is pronounced, eroding the trust and interest of any IP litigant. Having said that, it must also be mentioned that some progress has been made to shorten the length of civil litigation and the work is in progress under the current Government to overhaul the criminal justice system.
The answer is yes, for both the elements of the question. India does have a strong IPR regime and there is also a scope for improvement. Some of the areas that require special attention are listed below:
TC James Director, National Intellectual Property Organisation & former Director, IPR Division, Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, India
The legal protection for Intellectual Property Rights (IPRs) in India has a history of more than 150 years. Consequent on India’s accession to the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), in 1994, the then existing Intellectual Property (IP) laws have been updated and new legislations introduced wherever necessary. But, economic, social, technological and other changes pose new challenges to IPR regimes everywhere and India is no exception. The laws will have to be modified as per the requirements of the times. The challenge, of course, lies in finding out the requirements. Setting out a vision, plan and strategy is the need of the hour to harmonise various IP legislations, especially since they are being handled by different Ministries and Departments. Moreover, what are the objectives of the IP legislations? They are to help in economic and social development through facilitating investments that contribute to a culture of innovation and creativity. Investors look forward to certainties in policy framework. A clear policy and strategy statement will send a strong signal to both the domestic society and the international community on India’s commitment to protection of rights of innovators and creators, which, in turn should contribute to investment in Indian economy and also promote international trade. However, with the variety of stakeholders and players and diversity of views among them, drawing up such as a plan and strategy is not an easy task. It will have to be done with wide popular support; that would mean consensus building through consultations. The IP community has to take this up as a challenge.
With the accession to the TRIPS Agreement, India had achieved some integration with international IP regime. However, in its own industry’s interest, it may require deeper integration. For example, Indian trademark owners have to move applications separately in each IP territory whereas trading communities of those countries who are members of the Madrid Protocol can achieve protection in multiple jurisdictions through a single application. Besides Madrid Protocol, there are many other IP treaties of which India is not a member. Each of those treaties needs to be examined from the advantages that India may gain or not gain by joining it. Accession to more IP treaties will give India more say in the future development of international IP regime.
The interests of creators and innovators of intellectual property will be properly served only when they are able to acquire and establish their rights over the innovations without unnecessary hurdles. Delays in the administrative systems for registrations and grants are causes for serious concern. Provision of quality infrastructure and human resources is a first necessity. Further upgradation of the facilities and modernisation of the administrative offices of all intellectual property rights need to be taken up as a priority item. This should be accompanied with simplification of the procedures with the objectives of faster grant and transparency.
The issue is do we need a higher level of protection at present. Intellectual property protection is not an end in itself. It is a means to incentivise innovation and creativity which contribute to the enhancement of the quality of life of the people. This can come about only when the level and standards of intellectual property rights are in tune with the socio-economic developmental stage of the society. The TRIPS itself accepted this principle in that it provided for staggered implementation of the obligations under that Agreement by developing and least developed countries. What is needed before thinking of raising the standards of protection is an assessment of the results of the implementation of the existing norms. We should see to it that all the objectives of introducing the present regime have been achieved. Have there been increased innovation and creativity domestically? Have more industrial investment resulted because of the intellectual property protection? Contrarily, whether the present level of protection is a deterrent for investment and research? Empirical studies need to be carried out on these and other issues before we can come to any conclusion in the matter of raising the bar for protection.
At the other end of the spectrum, the emerging importance of intellectual property in a company’s (read as client’s) balance sheet in the recent decades have significantly impacted the scope of services of IP lawyers. A 2002 survey of the Fortune 500 companies estimated that approximately 45 to 75 per cent of the wealth of individual companies comes from their IPR. A number of companies have used IPR as an effective strategy to leverage market share. Qualcomm, known for CDMA (Code-Division Multiple Accesses) technology, has used patents and licenses to generate a reputation in wireless market. Qualcomm licences about 130 patents to mobile phone makers and chip companies.
Moreover, the effect of IP, especially patents has been seen to impact the stock market. The shares of the Internet phone company Vonage Holdings Corp. went down to the lowest level of 96 cents, since the company went public, after the Court of Appeals for the Federal Circuit held it for patent infringement. Shares of Ranbaxy Laboratories reportedly fell more than six per cent after an out-of-court patent dispute settlement with Pfizer allowing it to launch a generic version of cholesterol drug Lipitor from November 30, 2011.
It is only recently that proprietary knowledge has been acknowledged as a key component of a successful business strategy. As markets become increasingly competitive, IA and its proper management become as essential an exercise as conducting tax audits. Strategies have to be formulated to successfully create an effective IP portfolio. This new awareness is bound to impact the role of IP lawyers. The traditional role of being either a litigation lawyer or a prosecution lawyer is juxtaposed against another layer of practice, that of intellectual asset management lawyer. This new role demands that an IP lawyer be sensitive to various aspects of his client’s business, for instance, due-diligence of new business ventures such as examination of the IP portfolio, including conducting an IP audit. An IA lawyer ideally has to be a lawyer, who has had exposure to IP litigation and at least one area of IP prosecution such as patent or trademark prosecution along with sound understanding of contract laws, anticompetitive practices and excellent negotiation tactics.
The benefits of an IP audit become evident after the compilation of the results of an IP audit. The organisation can improve processes to protect its trade secrets, weed out unused patents by selling or licencing it out, examine licences to ensure that all royalties due are received on time or paid on time as well as put processes in place to generate focus areas for future Research and Development. This also leads to the next step of IP valuation to help put a market value on the given IP.
Arth Karicheye Vidya meaning ‘create wealth from knowledge’, in today’s knowledge economy where cutthroat competition exists, businesses need to continuously innovate and protect their Intellectual Property (IP) to stay competitive. Hence, protecting IP is no longer a luxury, but a necessity for businesses. The worldwide market value of patent-based licences is more than USD 1 trillion. The world is becoming flat and global companies are imbibing the concept of ‘borderless innovation’ to scout for the next breakthrough innovation, especially from the emerging economies. A company’s IP assets can help the company put itself up on the radar of these global companies and help take their inventions globally. This is evident from the increased foreign technology licencing in India, with examples like: Imtech and Nostrum, Shasun and Merck, and many others. It is ‘Patent or Perish’. The Indian companies are increasingly realising the role of IP as a driver for business strategy, to attract investment, to generate a revenue stream, and to fuel innovation and entrepreneurship leading to overall economic development. Bajaj vs. TVS is just one example of the growing awareness of IP among the Indian companies.
IPR in biotechnology, pharmaceuticals, mechanics and electronics requires the law to accordingly evolve to balance proprietary rights with social welfare and environmental protection. A body of case law that confuses issues is of little help except for those, who can use the system for their own vested interests. Where the statute is silent or open to interpretation, the judiciary and legal fraternity have to take on the mantle of legal activism to ensure that the best practices prevail within the legal framework.
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