Recent news reports have suggested a rising trend of withdrawal of patent applications in India, and cited instances of the civil courts pulling up the Patent Office for being “extremely arbitrary and whimsical”. The narrative is about the authorities being stingy and callous about granting intellectual property right (IPR), and their feckless, rent-seeking behaviour, forcing the frustrated applicants to pull out. It may be true that the spate of withdrawals has something to do with bureaucratic intransigence. However, in many cases, these could well be commercial decisions taken by the patent seekers. At the same time, patent grants in India jumped 8-fold in five years to cross the 100,000 mark in 2023-24, a feat described by the commerce and industry ministry as demonstrative of the country’s rising “innovation stock”. Just as the withdrawals shouldn’t be a big source of worry, the surge in patent filings and grants aren’t necessarily because of the coming of age of Indian technology or R&D sector either.
Patents are a legitimate, multilaterally-facilitated avenue for firms to protect the fruits of innovation from third-party piggy-backing or commercial exploitation. Holding such IPR enables firms to increase the (remote) chances of getting exclusive marketing rights for the relevant product/s for a specified period. In the real world, large R&D-oriented firms form “patent thickets” or a dense web of overlapping rights as a preemptive strategy. So, the number of patent applications with a national patent office in the times of “global patents” doesn’t as such say much about that country in a world making rapid technological strides. A better indicator would be the share of patents granted to residents. This for India is just a quarter of total grants, compared with 87% for China and over 75% for Korea RP. India’s per capita R&D spend is woefully low at $43. The country’s gross expenditure on R&D has stagnated at less than 0.7% of the GDP in the last decade. This explains the huge and fast-rising forex outflows as the royalty and technical fees (as high as $10.5 billion in FY23). There is a continuing stranglehold of foreign firms in the Indian tech space.
This is not to paint an all-round dismal picture, as the country has indeed come a long way over the last few decades, from an era where IPRs were treated as hostile territory. It’s true, however, that though product patents were allowed in pharmaceuticals way back in 2005, barely 6% of India’s medicinal formulation market is under patents yet. The deliberately designed Section 3(d) of the Patents Act, which disallows patenting of “the mere discovery of a new form of a known substance..”, is one reason for this. The industrial focus on profitable “branded generics”, and the policy support to pure generics (via nearly 11,000 Janaushadhi Kendras) too have played a role.
The slow advent of patented medicines is also due to Big Pharma turning more risk-averse, when it comes to hugely expensive basic drug research. The interim Budget FY25 announced a corpus of Rs 1 trillion to bolster the innovation ecosystem. The country needs to harness its potential in artificial intelligence, data science, climate research, and drugs/vaccine science of special relevance to the country, by augmenting public and private R&D funding. Its principal advantage is the abundant and low-cost STEM (science, technology, engineering, and mathematics) talent pool, which has already encouraged over 1,800 global firms to set up R&D units here.