States like Maharashtra, Telangana, Karnataka, Gujarat and Odisha are making themselves attractive to IPR-based start-ups
The Indian Intellectual Property Rights (IPR) policy, announced in May 2016, was a landmark declaration by the Department of Industrial Policy & Promotion. It set in motion a domino that would define the future of innovation and India’s IPR readiness in handling technology and IPR transfers, IPR valuation, IP education, and IPR safety (policing, protection and enforcement). Subsequent policies on start-ups, innovation, FDI and yet-to-be-announced state competitiveness framework in attracting large high-tech industries through FDI provide a continual improvement framework amongst Indian states for setting up a gold standard state IPR policy.
These actions could also improve India’s performance in international rankings such as the US Chamber’s International IP Index, which shows that countries that invest in strengthening their IP framework are more likely to create high-value jobs, increase innovative output, attract greater FDI, as well as boost their business-friendly reputation. State-level investments in IPRs are crucial for the early stages of technology development, which can be costly; ambivalent or non-existent IP policies can actually stifle the R&D, which is vital to high-tech industries such as biologic medicines. Such states would not only attract high-value-add industries, but also provide the gravitas for the best talent to its core.
Some states have started focusing on IPR and innovation policies as a central theme, beyond promises of great infrastructure and basic services. Unprecedented response by states, industry and legal system to these initiatives can be classified into five areas.
(a) State IP policy initiatives: In the last three years, most state policies have progressed from merely scant mention of IPR and innovation, to announcing incentives for filing IPRs and attracting large global corporations for not only low-cost and effectiveness parameters and large availability of qualified engineering talent, but also increasingly asserting IPR safety as a linchpin. These policy initiatives created over the last few years are translating into standard operating procedures (SOPs) with industry departments in various states. A close interaction with entrepreneurs from some of these states evoked mixed responses—ranging from a burgeoning and participative ecosystem, too many procedural requirements, non-clarity of regulations, and lack of allocation of funds for fiscal incentives. An interesting perception of a state’s machinery handling IPR issues was the belief of higher weighted average provided to IPR policy effectiveness in the state competitiveness index.
(b) Attitudinal shifts on IP: Few years ago, entrepreneurs would encounter tougher procedures to get refunds on R&D incentives, fight arbitrary interpretations of policy, and spend a lot of time in government departments to seek basic clearances. Today, while there is clarity on SOPs for refunds of IPRs filed, some established companies have begun to assert their ability to create jobs, attract large-scale high-tech collaborations, attract large investments and talent, and participate in the state’s brand building. These companies are seeking further reforms, fiscal incentives, better infrastructure, transparency and speedy decision-making. In a few cases, some industries even offered to relocate to other states offering better and cascaded IP incentives, while the state matched the incentives granted. This marks an attitudinal shift of both the government and industrialists seeking to further their goals.
(c) IPR safety: One of the major requirements of any state to attract high-tech technology and IP transfers is its ability to provide a responsive mechanism on policing, protection and enforcement of transferred technologies. In 2014, FICCI and the ministry of HRD’s initiative in building nationwide awareness, IP policing SOPs, and training police machinery in the states against piracy and counterfeiting on copyright enforcement seems to have taken root. Emergence of legislations like TIBCU and involvement of national law universities, legal professionals and policy experts in the process of SOP creation and training the police machinery is evidence of some states building IP safety as a critical element to attract high-tech industries, FDI and talent to the states.
(d) IPR education and promotion: IPR education is a major element of the national IPR policy. There is an increasing crescendo amongst the states on this aspect. Conversations around IPR education, sharing of best practices amongst industry associations, technology and regulatory bodies, and emergence of discussions around standards setting bodies is growing louder by the day. States have large opportunities in promoting a new brand of educational institutions, using internet and mobile technologies for a wider reach of IP education in local languages, and making innovation and IP education as a part of the curriculum from class 1 onwards. A possibility can be explored in using each law college in promoting IPR education by adopting schools and colleges in nearby districts as part of their CSR.
(e) Legal environment: The necessity of a responsive, transparent availability of sufficient and trained legal professionals in a system can never be overemphasised in the context of growth of an ambitious nation. In the past few years, our legal environment has demonstrated growing jurisprudence, adaptation of global best practices in the Indian context, and readiness to adopt newer mechanisms for addressing issues by involving super-specialists in decision-making and delivering judgments. Clearly, the opportunity lies in building capability, capacity, transparency and delivering time-bound outcomes meeting global benchmarks.
Encouraging IP investments can change the investment landscape from thousands to millions of dollars. Start-ups have the capability to attract immense capital, talent and build breakthrough technologies. States can provide an encouraging environment through tax breaks, R&D funding, low-cost infrastructure financing, and a corruption-free transparent governance to attract and sustain growth. Start-ups can leverage existing government labs and R&D facilities—like the Council of Scientific & Industrial Research, Defence Research and Development Organisation and National Chemical Laboratory—thereby reducing their capital expenditure as well as lowering cost of operations. A brief study of the existing incubators and accelerators clearly shows lack of breakthrough IPRs being filed. In case some start-up has built a breakthrough IPR, the lack of valuation standards causes most of them not only to file, but also raise capital overseas and eventually move abroad for better valuation and opportunities.
Clearly, IPR-based start-ups need special caring and ecosystem to grow and sustain. States like Maharashtra, Telangana, Karnataka, Gujarat, Andhra Pradesh and Odisha have taken some measures to make themselves attractive to these opportunities. These will go a long way in attracting the best talent, technologies and be home to some of the best scientific and high-value-add communities of the world.
May the best state IPR policy win.
The author is founder, World Intellectual Property Rights Bank