1. IPR must promote local innovation

IPR must promote local innovation

India can appropriately balance IP rights, innovation and development priorities

By: | Published: April 27, 2015 3:13 AM

The government is eager to draw up a National IPR Policy building upon the existing IPR regime in India, supposedly to provide an unambiguous picture of national priorities both to the domestic and international audience. The necessity of a new policy, despite India’s adherence to the TRIPS agreement, may be read in the light of IP concerns raised by foreign IP owners and other stakeholders (including foreign governments) rather frequently. It is feared that such perceptions can have a dampening effect on business sentiments and could come in the way of investment and sales by foreign producers. We are aware that the government, under the Make-in-India initiative, is running a positive campaign in a concerted manner to attract global attention and foreign investments. Manufacturing has been accorded the highest priority given that India has been lagging in industrialisation.

There has been intense lobbying by pharma companies in the US to invoke stronger measures for international IP compliance, particularly against countries such as India which is a large exporter as well as an importer of such products. The Pharmaceutical Research and Manufacturers of America alleged that India systematically undermines medicine patents and supported out-of-cycle review of India which would have led to India being called a Priority Foreign Country as per US parlance. According to the US Chamber of Commerce’s Global Intellectual Property Center, India continued to score lowest in its International Intellectual Property Index (for 25 countries), and most notably in categories relating to patents, copyrights and international treaties. India did slightly better in categories such as enforcement, trademarks and trade-secrets.

Evidence indicates that stronger IPR in the south has encouraged multinationals to shift their production out there. Multinationals are more likely to respond to changes in the IPR regime when products have longer life-cycles (such as in automobiles), suggesting lagged imitation risks in the south that gets further minimised due to stronger IP protection. In segments where the life-cycle of products is short (computers and electronics), imitation risks are low and hence there may not be any perceptible change in the behaviour of multinationals in response to changes in the provisions of IPR laws. The fear of reduced consumer welfare due to delayed introduction of new products (in pharmaceuticals) by foreign suppliers in the absence of strong IPR protection may not be universally true. While India continues to have strong reverse engineering capabilities in pharmaceuticals, the first-mover advantages for foreign manufacturers in large markets such as India can be substantial.

While technological capability facilitates industrialisation, innovation drives competitiveness. Technological capability of the south is largely linked with technological learning that often thrives in a flexible IPR regime. Before TRIPS, some of the developing countries including India relaxed IP rights in favour of process and low-cost innovations which they were capable of. In many of the developed nations, in the initial stages of development, a not-so-strong IPR environment helped rampant industrialisation. Therefore, in a post-TRIPS world, issues having implications for technological capability as well as development must be carefully handled. While novelty in case of patent applications (foreign) must be seen through, benefits of incremental innovations should be optimised to promote entrepreneurship for social sector development. Increased R&D and patenting activity by foreign affiliate firms (subsequent to strengthening of IP regimes) have rarely strengthened local innovation systems in developing countries. The Indian experience in this regard is no different.

Access to innovations is crucial for welfare and development. Access to innovations in the area of pharmaceuticals for obvious reasons generates worldwide attention. It is alleged that post-TRIPS new drugs have become exclusive monopoly of innovating firms. The Indian experience indicates that post-TRIPS, multinationals in India have started marketing new patented drugs at higher prices, particularly for life-threatening diseases such as cancer. Imports of highly-priced finished formulations have been expanding with less satisfactory progress in domestic manufacturing investments. No wonder that Indian courts have often upheld pro-consumer and pro-competitive merits in cases of IP conflicts between foreign and domestic drug manufacturers, fuelling discontent among foreign IP owners.

While TRIPS allows for flexibilities such as compulsory licensing, US apprehensions in this regard have been clearly stated in the 2014 Special 301 Report. Although the report acknowledges that the Indian government has issued only one compulsory licence, the US appears to be concerned about the fact that India views compulsory licensing as an important tool of industrial policy in areas other than pharmaceuticals as well. The report points out that India has promoted compulsory licensing in its National Manufacturing Policy as a mechanism available for government entities to effectuate technology transfer in the clean energy sector. The report also highlights India’s stand to multilateralise compulsory licensing approach in ongoing negotiations under the UNFCCC.

India has a fully TRIPS-compliant IP regime and hence any policy needs to be placed in the appropriate context. IPR regime should be such that it promotes local innovation, entrepreneurship and access to technologies. India, in the past, has been keen on upholding access over private rights to promote public goods concerns of the global south like public health, food security and environment. Any new policy should continue to reflect this unwavering prerogative. In doing so, India can appropriately balance IP rights, innovation and development priorities towards a comprehensive agenda of national welfare.

The author is assistant professor, Research & Information System for Developing Countries (RIS), New Delhi

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  1. S
    Saradindu Bhaduri
    Apr 28, 2015 at 1:21 pm
    For a very similar view:
  2. S
    Saradindu Bhaduri
    Apr 28, 2015 at 1:24 pm
    This is an important issue, and I agree with the viewpoint of this article. Sharing an article written for a website for your opinion.
  3. S
    Apr 28, 2015 at 9:13 am
    Agree with the viewpoint. My comments are summarised in an article written a few months back for a website. Tagging it here. Saradindu Bhaduri
  4. S
    Apr 28, 2015 at 9:11 am
    Agree with the viewpoint. Thought of tagging an article I wrote for a website. Hope it is acceptable.

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