Intellectual Property Protection

Written by Subhash Agrawal | Updated: May 8 2003, 05:30am hrs
The issue of intellectual property rights (IPRs) in India was a major policy issue both politically and economically in the mid-1990s, with spillover effects in Indias diplomatic relations with developed countries. US and western pharmaceutical firms lobbied strongly for product patents and exclusive marketing rights, while local non-governmental organisations and domestic firms opposed vigorously. Now that we are so close to the deadline of January 2005, the issue has become academic, and the focus has shifted to biotechnology and genetically modified crops.

One can endlessly debate whether that pressure brought on us by western firms and governments was inspired by mere selfish interests or loftier goals of fair play, but one thing is for sure: it has created greater awareness and positive outcomes on guarding our own intellectual property, whether individual, corporate or community-based. Indian software and entertainment firms have become active partners rather than adversaries of multinationals in demanding stronger laws, with the level of piracy in the music industry dropping from 90 per cent in 1997 to less than 40 per cent today.

There now exist in place some very clear laws and legislation, especially for copyright, trademarks, geographical indications, engineering designs and various high-technology designs. More importantly, Indian courts are slowly but clearly expanding the whole body of IPR case laws and precedents to provide stronger protection to not just international brands but even domestic ones. And of course, a major procedural milestone is Indias joining the Patent Cooperation Treaty which now allows easier patent application, for both foreign firms (in India) and for Indian firms (in other countries).

But there remain many flaws in the system that need to be addressed fast. First, laws may have become strict but fines remain very low. There is no mandatory provision for monetary compensation in case of IPR violation, and the maximum punishment which courts usually impose is a ban or stay on the use of a brand name. And the principle of penal damage is still not widely accepted or practiced by our courts. In the absence of penal damages there is little deterrence for offenders. Typically, lawyers notice the same bunch of culprits who are restrained from infringing one brand but move on to commit the same crime with another product. Most companies, therefore, prefer an out-of-court settlement since the rewards of a prolonged suit are small indeed. Only a handful of Indian lawyers and institutions are capable of providing proper advice and legal representation to companies, and for every success story there are countless other cases still stuck at various levels of the slow legal process.

Second, the Indian Patent Office is grossly understaffed, with less than 80 patent specialists as compared to China which has over 2,000. There is no patent database, even though the government has been announcing budgetary provisions for many years now. Consequently, the whole process is painfully slow. In theory the time for deciding on an application is a maximum of four months but in reality it is often four years. There is a backlog of almost 30,000 patent applications in all fields, and there is no fast-track mechanism. Administrative delays in the patent regime often hurt our own domestic firms in areas where the window of commercial viability is narrow due to rapid changes in technology. We talk of biotech as a major sunrise industry in India, but from the latest figures I could collect on the net, less than 10 per cent of all biotech applications in the last three years have been awarded a patent.

But for all its flaws, current trends and mood indicate that the overall legal and policy framework of IPR laws has helped Indian industry, as both Ficci and CII will testify. Maybe it was the western pressure, maybe it was our own grudging but organic shift away from a supra-nationalistic and socialist mindset. But there is now a definite recognition of the importance of IPRs. And so, even while food security and crop diversity remain holy cows in our political world, as indeed they should be in any developing country, it would be unwise for India to unlearn the lessons of these past few years and once again embrace reflexive policies. Distrust of multinationals is fine and sometimes even warranted, but it is possible to have win-win outcomes.

The author is an analyst of Indian political and business trends and the editor of India Focus, a political risk report for international investors