Winds of changes

Winds of changes AT A SMALL function in New Delhi in August, the Council for Scientific and Industrial Research (CSIR) honoured six of its scientists who had obtained international patents for their inventions. Three scientists had patents registered in the US and the others in Europe.

N R Subbaram, adviser to CSIR"s patents unit, disclosed the scientists were not the first to hold international patents. However, he confirmed "this was the first time CSIR recognised, in this fashion, the acquisition of patents by our researchers".

Subbaram"s statement is a pointer to a new and significant trend in Indian research and industry: emphasis on patenting. It is not as though patenting does not exist in India, but all of a sudden, patents have become important. India lacks a patent culture and it is under pressure to change its patent laws -- which some have called "archaic" -- to conform with global definitions of patents.

Till as recently as the beginning of the 1990s, Indian bureaucrats and technocrats frowned at notions that India"s intellectual property laws be changed to allow rigourous patent protection. Says former commerce secretary A V Ganesan, who was involved closely with IPR negotiations at the GATT talks, "We have created an atmosphere where patents are regarded as some kind of a social evil."

S Z Qasim, veteran administrator of some leading scientific establishments and presently a member of the Planning Commission, concurs, but emphasises this state of affairs has come about because neither the government nor business and industry has been interested in commercialising Indian innovations. "This was made possible because there was no competition from foreign technology and anything made by the Indian industry would sell."

Qasim points out this also inculcated in scientists working in the vast network of public-funded science and research establishments "a degree of unconcern about the commercial potential of their research". He is certain that these attitudes will change in the context of liberalisation and globalisation of the economy, when industry will be forced to look for new technology.
Redefining patents The question of redefining patents has already attracted controversy. There are those -- such as the militant Karnataka Rajya Raitha Sangha, a pro-farmer group in Karnataka -- who would like the Union government to ignore the provisions on intellectual property rights (IPR) contained in the so-called Dunkel Draft of the on-going Uruguay round of negotiations on the General Agreement on Tariffs and Trade. They fear patenting of seeds will enrich foreign companies and impoverish farmers.

In contrast, there is a lobby -- not militant but equally determined -- that favours "strengthening" Indian patent laws to bring them in tune with Western IPR systems. The most significant element in this lobby, perhaps, is the influential section of the Indian scientific establishment.

India compares badly even with some developing countries in terms of patent applications filed and patents granted every year.  This is because of restricted areas being open to patenting as well as lax, patent laws.   According to the World Intellectual Properly Organisation, Brazil receives about four times more patent applications than India
Country Patent applications (in1990) Granted
Japan 376,792 59,401
USA 176,100 90,366
Russia 123,797 84,658
Federation Germany 110,349 42,860
UK 97,891 32,179
France 81,884 35,149
Italy 55,569 17,794
Spain 49,026 7,597
Austria 43,571 12,584
South Korea 31,387 7,762
Australia 26,507 12,682
Brazil 12,434 3,355
China 10,137 3,838
North Korea 10,033 2,687
India 3,826 1,611
Source: World Intellectual Property Organisation
Existing Indian patent laws protect processes and not products. They were framed especially to nurture R&D in its nascent years. One section of scientists wants the status quo to continue. A proponent of this approach is A V Ramarao, director of the Indian Institute of Chemical Technology (IICT) in Hyderabad. IICT has developed methods to make several expensive drugs, patents for which are held by foreign or multinational companies. A recent example is the AIDS drug, AZT. Foreign firms object to IICT"s process-oriented approach because they stand to lose out on royalties they could have earned from expensive drugs. Says Rao, "We need the present national system of patenting for at least another two decades."

Directly opposed to Rao"s assertions are researchers at the Centre for Cellular and Molecular Biology (CCMB), also in Hyderabad. Many of them assert their research efforts have been unproductive principally due to lack of a patent regime that recognised product patents. CCMB scientist J Gowrishankar feels the "major advantage" enjoyed by his counterparts in the West is "the highly developed patents system they have access to".

Similar sentiments were expressed recently in the corridors of the Indian Council of Agricultural Research (ICAR), whose senior administrators recommended to the Union government that they be allowed to patent key products of their research, which current laws prohibit.

Mangla Rai, an additional director general of ICAR, points out vehemently, "India was the first country to develop hybrids of bajra, cotton, castor and pigeon pea. Yet, ICAR has little to show by way of monetary benefits from this feat." Rai feels if ICAR research had been patented, it would not only have brought the country significant earnings from abroad, but also brought vastly greater recognition to the organisation. "Things would have been different if our laws allowed us the patenting of life forms," he feels.

Unlike ICAR, much of the research in CSIR is patentable under the existing laws. Over the past three years, CSIR has laid greater emphasis on patenting, mainly as a result of the Union government asking CSIR labs to finance a large part of their activities themselves. And, recent CSIR policy papers argue royalties on product patents would augment earnings.

Industrial stakes
Industry, too, is under pressure to become globally competitive and has called for a change in patent laws. Representative organisations of trade and industry feel competitiveness, at least in the early stages of liberalisation, is dependent on foreign collaborations, foreign investments and technology transfer. There is also the grudging realisation that Indian industry will have to step up its R&D.

Two months ago, 72 Indian private sector organisations sent a memorandum to the Union ministry of science and technology, asserting the government"s draft technology policy paper was unacceptable because it "failed to address vital issues relating to patenting of innovations". The memo recommended a review of the entire gamut of laws under the Indian Patents Act.

Among the framers of the memo was V Raghu Raman, former member of the National Productivity Council. "What is needed," he argued, "is a full technology package to promote technological innovations and excellence by recognising and rewarding skilled technicians. We feel the present patenting system is ineffective."

The memorandum argues the poor R&D in Indian industries is a direct result of the weak Indian patent system: "The patent laws disable Indian organisations from sustaining the high cost and high risk necessary for a research programme to produce new products." Canada and Italy are quoted as examples of how a strong patent regime will give a drastic fillip to Indian technological research.

Abhijit Sen, co-chairperson of the Calcutta-based NICCO group and former president of the Indian Chambers of Commerce, says false assumptions have led "to the focus of attention shifting from our poor record of new product development to political debates with Western countries, especially USA".

Sen feels the sharp upward trend in the number of foreign collaborations since 1991 indicates "Indian industry has been unable to develop many goods and services attendant to liberalisation on its own". He finds it greatly interesting that the bulk of technical collaborations for products and services are those for which there are no patent restrictions in India or overseas.

T Thomas, former director of Unilever and presently chairperson of the Bombay-based Indus Venture Management Ltd, is more blunt. "India has to create a climate of free and no-holds-barred access to private foreign investment and technology by removing irritants in the way. The major irritant is the archaic Indian Patent Act." Thomas lists several multinational companies, including Merck, Sharp & Dohme Ltd, Searle and Ciba-Geigy, which have closed their research centres in India because of the patent laws.

Sections of Indian industry and intelligensia are demanding changes in the Indian Patent Act, 1970, to bring it in line with the patent laws of developed countries.  They say this is important for boosting technological innovations and giving Indian industry a competitive edge in the world market
Provisions of the Indian Patent Act, 1970 Changes being demanded
1. Term of patents is 14 years from the date of filing the application It should be 20 years
2. No patents for food, pharmaceuticals and agrochemicals - only seven-year process patents for pharmaceuticals Product patents should be allowed in all these areas
3. Compulsory licences can be granted by the government after three years from the sealing of all patents, if it has not been effected by the patent-holder A compulsory licence for non-working after three years from the sealing of the patent should not be granted if the patent-holder has legitimate reasons for non-working
4. If a patent-holder desires to enforce his patent against an infringer, he has to provide proof of infringement The onus of proof should be on the defendant
5. Any patent can be used for government purposes This should be only with the consent of the patent-holder
Enter the lobbyists
The strong views in industry in favour of patent reform has been accompanied by the emergence of professional lobbyists. Taking advantage of the fact that even senior managers of most Indian enterprises are unaware of foreign patent laws, the lobbyists have found a ready demand for position papers and backgrounders on the subject.

One of the emerging breed is G R Sharma, who this year quit as CGM of a major public sector financial institution and established his lobby firm, Intellectual Consultants Pvt Ltd. A constant refrain of his presentations is how patents actually help the transfer of technology, "even among rivals". He points out this phenomenon is common in industrialised countries, especially in the field of micro-electronics and computers. Sharma cites figures to show all Japanese manufacturers of integrated circuits -- currently world leaders -- owe a major part of their growth to licences from US firms like AT&T, Texas Instruments and Fairchild Ltd.

"Most competing firms in the West take recourse to cross-licensing of patents where they exchange their research. If this isn"t possible, they increase their research efforts, which in any case make them demand stronger patent protection," he points out.

Sharma again cites the example of the Japanese for this. The high expenditure on royalty payments made Japanese companies increase their stock of patents that they could exchange. For this, they increased their R&D expenditure from 2 per cent of sales in the mid-1960s to nearly 25 per cent now. Sharma is also organising a seminar for Indian universities and the Indian Institutes of Technology to "inform them how Harvard, MIT and Carnegie-Mellon earn from patents on their research".

Along with the lobbyists, lawyers specialising in patents are coming to the fore. Some have become representatives of MNCs, but most generally help in filing of patents or advising on whether a product can be registered in India. Pravin Anand of Anand & Anand, the largest legal practitioner in intellectual property in the country and consultants to the World Intellectual Property Organisation, points out several enquiries are made for items that cannot be product-patented in India. He refers to his client Calgene Ltd of the US, a genetic engineering firm, which wanted to register a patent in India for "a process that increases dramatically the yield of several fruits and enhanced their properties for processing and storage". Calgene had to be advised that such patenting was not allowed in India.

Slow justice
Patent litigation is, in fact, rare in India. Says Sunil B Krishna, a Bombay-based patent attorney, "The main problem is we cannot guarantee clients speedy settlement of cases." Most Western countries have special courts for intellectual property related litigation, but in India such disputes are heard in civil courts and fall victim to all the travails of slow justice. "Our courts and police are already too stretched with routine activity. White-collar crime such as patent violations are very low priority for them," feels Krishna.

Anand feels the Indian legal system itself treats intellectual property in a lackadaisical manner. "The recording and documentation of intellectual property cases is usually very tardy. Rarely can we use the facility of precedent case law," he points out.

No uniform pattern
Confirming this, other lawyers point out judgements in patent-related litigation are often not uniform. They cite the example of the Anton Pillar order, which allows the seizure of goods violating a patent and their transfer to the rightful owner. "Only a few judges accept this provision," says a Delhi-based attorney.

Suresh Awasthi, who practices intellectual property law in Calcutta, feels another weakness of Indian courts is the tendency to impose lenient fines. As a result, he says, the cost of patent violations is too low to discourage infringements.

However, for those who expect to patent goods and processes, the need for a more efficient administrative system seems to be more immediate than that of reforming the law. Patents are eventually about recording information and making it public. The administrative set-up of patenting in India is clearly unequal to this task.

In the 1990"s a large number of developing countries have either strengthened their patent laws or are taking steps to do so, largely to attract foreign technology and investment. Another reason being given for this is that tougher patent laws would be incentives for researchers and inventors to perform better and gain more
Country Changes made after 1990 or being made in patent laws
Argentina The new law allows product patent
Brazil Bill moved to allow product patent and increase the term of patents to 20 years
Chile Product patent allowed for pharmaceuticals
China 20-year patent life, product patent, pipeline protection
Indonesia Product patent
Mexico Product patent and other protections in line with developed countries
New zealand Product patent
Poland Product patent for pharmaceutical
Russia Set to introduce product patent and 20-year term
Thailand Product patent
Source: World Intellectual Property Organisation
In India, patents are covered by the Calcutta-headquartered Patent Office, which has branches in Delhi, Bombay and Madras. In direct contrast to the images of high-tech and intensive endeavour they are supposed to record, these offices are dirty and dank. Staff come and go as they please and the level of activity never rises above the tranquil. Says the head of the Delhi office, "I can give you a booklet on how to file a patent, but any other information will take a lot of time."

The Bombay office receives about 1,400 of the nearly 3,000 applications for patents filed annually in the country. But there are only six examiners to familiarise themselves with frontal research in the various fields, research the history of similar products and scrutinise each application for "novelty". And, records are kept in open wooden containers.

The headquarters does not have even a computer. Senior officials lamely point out a modernisation plan is under way and refer to a project initiated last year to develop a team of "specialists in patent information" and efficient documentation centres.

However, progress on documentation has not been so satisfactory. At the Patent Information Service headquartered in Nagpur, an official reveals the practice of receiving details of international patents has been discontinued because "all the storage racks are full"!

Even so, some pro-patent reformers are optimistic that both the rules and patent administration will improve. Some are confident also that obtaining the approval of the nation"s political leadership will not be an insurmountable problem.

Points out Sharma, "Unlike the opponents of reform, who see patent-related issues only in black and white, the political leadership will opt for grey areas of progress." Explaining his statement, he refers to the amendments made by the European Parliament last October to a proposed European directive on biotechnological patents, including a provision to ban patenting on all animals. Sharma acknowledges the proviso would likely be omitted by the European Community when the directive is approved in the final form, but asserts that the case is indicative of the fact that "grey areas of progress are possible while changing patent law, unlike the black-or-white perceptions of those who oppose any change".

Others, like H R Bhojwani, head of CSIR"s department of technology transfer, feel a change is inevitable simply because the demand for improvement will become very strong. "So far in India, the worth of a scientist was evaluated only by the number of articles he wrote in foreign journals. Now, the number of patents a scientist holds will be an indicator."

CSIR authorities have sent a proposal to the Union ministry of science and technology, recommending at least 40 per cent of royalties from its patents be disbursed among teams responsible for the innovation, with individual allocations being proportionate to the degree of participation.

Supporters of patent reform are confronted by an equally strong anti-patent reform lobby that is indebted to the existing Indian Patent Act, namely, the drugs and pharmaceuticals sector, organised under the banner of the Indian Drug Manufacturers" Assocation (IDMA). Its contention is the 1970 Act allows Indian scientists and manufacturers to adopt their own production processes for drugs already patented abroad. This has led to a modern drugs industry flourishing in the country. In their opinion, the Indian drugs sector "is the best organised among all developing countries and is even beginning to become a force in markets in industrialised countries".

IDMA has developed a powerful lobby in support of the existing patent laws, whose arguments have been well-publicised. Their main point is that if product patenting is allowed, the exorbitant cost royalty payments on drugs whose patents are held by multinational firms will be so high that health care will become exorbitant, if not unaffordable.

Says Y K Hameid, chairperson of Cipla Ltd, which has a licence to manufacture AZT from the IICT, "The only supporters of strong product-patenting will be members of the billionaires" club, who will be able to afford the medicines."

The total number of patents - Indian as well as foreign - in force has been declining over the years
Year Number of patents in force
1972-73 3,318 28,718
1973-74 3,948 28,270
1974-75 3,039 24,758
1975-76 2,191 23,453
1976-77 2,746 19,780
1977-78 3,065 19,795
1978-79 2,469 13,966
1979-80 2,786 14,474
1980-81 2,757 14,448
1981-82 3,038 14,892
1982-83 3,329 15,291
1983-84 3,523 15,726
1984-85 3,008 13,162
1985-86 2,594 10,844
1986-87 2,004 10,059
Source: Indian Patent Office

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