Doesn't India Already Have an IPR Policy?

COMMENTARY
Table of Contents
Vol 49, No 47 - November 22, 2014
Doesn't India Already Have an IPR Policy?
Sunil Mani
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The National Democratic Alliance government has constituted the IPR Think Tank
which, among other things, is to draft the National Intellectual Property Rights Policy.
India may not have a policy per se but it has a strong legislation on IPRs, a functioning
patents office and mechanisms to grant patents as well as protect consumer interests.
The Think Tank has other issues it needs to address, but is this talk of drafting an IPR
policy the thin end of a wedge to dilute existing legislation?
Sunil Mani (mani@cds.edu) teaches at the Centre for Development Studies,
Thiruvananthapuram.
In September, Nirmala Sitharaman, the Minister of State for Commerce and Industry,
expressed the opinion that India does not have an intellectual property rights (IPR)
policy but must have one: India does not have an IPR policy. This is the first time
Government will come out with an IPR policy...Developed nations are picking holes in
Indias IPR regime because we do not have any policy (The Hindu, 9 September 2014).
Towards this end on 22 October 2014, the government constituted a Think Tank (so
titled as well) charged with the responsibility of advising it, inter alia, to draft a National
Intellectual Property Rights policy. Further the Think Tank has the following eight
additional terms of reference:
(ii) to identify areas in the IPRs where study needs to be conducted and to furnish
recommendations in this regard to the Ministry, (iii) to provide views on the possible
implications of demands placed by the negotiating partners, (iv) to keep the
government regularly informed about the developments taking place in IPR cases
which have an impact upon Indias IPR Policy, (v) to advise the Government on best
practices to be followed in Trademark Offices, Patent Offices and other Government
Offices dealing with IPR in order to create an efficient and transparent system of
functioning in the said offices, (vi) to prepare periodic reports on best practice followed
in foreign countries, (vii) to highlight anomalies in the present IPR legislations and to
advise possible solutions to the Ministry, (viii) to give suggestions on the steps that may
be taken for improving infrastructure in IP offices and Tribunals, (ix) to examine the
current issues raised by industry associations and those that may have appeared in
media and to give suggestions to the Ministry on such issues (DIPP 2014).
The term of the Think Tank is not specified and so it appears that this expert groups
term will be coterminous with the current governments term. Appointment of the

Think Tank and especially the idea of drawing up of an IPR policy has raised
considerable concern and doubts in the minds of many analysts who are closely
following Indias legal regime on IPR which had undergone some important changes to
make it compliant with the Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS).
India has a functioning legal regime in each of the IPR mechanisms such as patents,
designs, trademarks and geographical indications and these are administered by the
Indian patent office. All these and especially the legal regime on patents were arrived
at after an extensive debate that took place both inside and outside Parliament. In the
recent past, there have been many instances of India taking a decisive stand on patents
to the advantage of domestic manufacturers and consumers. This, for example, is in
the granting of a compulsory licence for the domestic manufacture of an anti-cancer
drug on grounds of unaffordable prices being charged by the patent holder. A further
example is the denial of a patent for another anti-cancer drug by the Supreme Court on
the ground that the application did not meet Indias higher bar on the criteria of
inventiveness contained in the amended Indian Patent Act of 1970.
US Unhappiness
Eyebrows have therefore been raised about the real intentions behind this thinking on
the part of the National Democratic Alliance government to draw up a comprehensive
IPR policy. The fact is that this exercise was launched after the office of the United
States Trade Representative (USTR) published a special report in 2014 which, based on
an analysis of the strength of Indias IPR regime, has continued to place India along
with nine other countries on a priority watch list. Priority watch list countries are
judged by the USTR as having serious intellectual property rights deficiencies that
require increased USTR attention. India, of course, has the distinction of being in the
priority watch list ever since the inception of the USTR special reports in 1989. The US
has considered India to be an IPR offender of sorts right from inception and the recent
attempts by the country to be compliant with the varied and stringent provisions of
TRIPS have not dented that view. This increased attention of the USTR on Indias patent
regime manifests itself in the form of an Out of Cycle Review of Indias IPR regime
which the USTR initiated in October 2014. In the light of this, much concern has been
expressed by a number of people, both from academia and civil society organisations,
that the present government may be forced to give up some of the notable features of
IPRS especially the countrys patent regime.
This article takes a detailed look at the issues so that an informed conversation takes
place on the topic. The note focuses on three aspects of IPR policy. It first asks the
question whether the country has an IPR policy in place. An answer to this will help us
understand the very first terms of reference. Second, it will look in some more detail at
the unique features of the leading IPR mechanism, namely, the patent policy, and then
identify those aspects of the policy that multinational companies (MNCs) and some
governments have taken exception to. Third, it will analyse whether Indias IPR regime
in general and its patent regime in particular is weak enough to have had a negative
effect on foreign direct investment (FDI) inflows into India. This is because there is
supposed to be a positive relationship between the strength of an IPR regime of a
country and the amount of FDI in technologically intensive areas that a country may
actually receive.

The Think Tank on IPR is, however, headed by someone who has a fair amount of
detailed knowledge and experience in her capacity as the former chairperson of the
Intellectual Property Appellate Board (IPAB) the tribunal which decides three IPR
measures such as patents, trademarks and geographical indications. Justice Prabha
Sridevan, the chairperson, was the former chairperson of the IPAB from 2011 to 2013
and during her tenure pronounced many landmark judgments.
IPR Policy
First of all to believe that India does not have an IPR policy is like playing with words.
An unnecessary distinction seems to be made between having the legal apparatus and
a separate policy as if the two are different in content. We have individual legal acts on
patents, trademarks, designs and geographical indications, all of which were suitably
amended in the last 20 years or so to comply with TRIPS. Further, we have the Indian
patent office (although not officially denoted as such) in the form of the Controller
General of Patents, Designs, Trademarks and Geographical Indications and a tribunal in
the form of the IPAB.
Over the last several years many important pronouncements leading to the actual
implementation of these various IPR mechanisms have also been achieved and almost
all these actions have sought to favour domestic industry. The only obvious lacuna in
Indias IPR policy framework is that the country does not have a policy on utility
models. Utility models, for example, are ideal IPRs for incremental innovations. Indias
industrial structure is characterised by a large number of small and medium firms.
These firms do not make new inventions but incremental changes in known products
and processes for which a utility model is the most appropriate form of IPR.
TRIPS does not specifically mention utility models. However Part I of the agreement
(Articles 2, 3 and 4) refer to the provisions of the Paris Convention. Further, Article 1
mentions
Members may, but shall not be obliged to, implement in their law more extensive
protection than is required by this Agreement, provided that such protection does not
contravene the provisions of this Agreement.
Given this, policymakers in India are favourably disposed to including utility models in
Indias IPR regime. Towards this end, the Department of Industrial Policy and
Performance (DIPP) has floated a discussion paper on utility models. Several reactions
from a variety of stakeholders to the inclusion of utility models have been received. So
whether India should have a policy on utility models is one aspect that the IPR Think
Tank may consider.
There are at least two broad aspects of Indias patent regime that have attracted the
wrath of MNCs and western governments. The first is in Indias actual use of TRIPS
flexibilities and the second is the introduction of the practice of pre- and post-grant
opposition.
India is one of the few developing countries that has made full use of all the flexibilities
inserted into the TRIPS agreement. Of all the flexibilities that are allowed, two stand

out. The first one is on the issuance of compulsory licences (CL) and the second is
exception to patentability.
A CL is an authorisation, which is granted by the government without the permission of
the patent holder but on strict terms. This is one of the most frequently encountered
flexibilities that has actually been used. It means that the government of a country
under certain grounds may issue a compulsory licence to a domestic manufacturer for
producing the generic version of a patented drug. Most countries have provisions for
compulsory licences, either under their patent law or, as in the US, through anti-trust
legislation. In 2012, India issued one compulsory licence to an Indian pharmaceutical
manufacturer to manufacture and sell a patented anti-cancer drug at a significantly
lower price than the original patented version.
Exemption from Patentability
A second flexibility that India has used is the exemptions from patentability. TRIPS
requires patents to be granted for only inventions that are new, involve an inventive
step and are capable of industrial application. A mere discovery of a new form of a
known substance which does not result in the enhancement of the known efficacy of
that substance, or the mere discovery of any new property, or new use for a known
substance, or of the mere new use of a known process, machine or apparatus unless
such known process results in a new product or employs at least one new reactant
does not have to be granted a patent. In fact, countries have invoked this flexibility to
thwart attempts by drug companies from seeking new patents on existing drugs by
simply claiming improvements in its efficacy. To take care of this exemption India has
added Section 3(d) to the Patent Act, which effectively places a higher bar on the
criteria of inventiveness. In March 2013, the Supreme Court invoked this clause to
dismiss the patent application of an MNC.
Ever since this judgment, the use of flexibilities by India has been a bone of contention
and the USTR report too echoes this strong feeling against the insertion of Section 3(d).
Many of the analysts who have expressed strong feelings against the terms of
reference of the Think Tank are of the suspicion that they are an attempt to repeal this
contentious provision on inventiveness.
Another aspect that is unique to our patent regime is the existence of a pre- and postgrant opposition to patenting. Pre-grant opposition can be filed by any person by
representation in the Indian patent office within six months of the date of publication
of the patent application or in case the six months duration is not available then the
representation can be filed till the grant of the patent, whichever expires later. The
grounds of opposition are provided under Section 25(1) of the Indian Patent Act 1970
as amended in 2005.
Pre-Grant Opposition
Some of the important grounds of opposition are wrongful obtainment, anticipation by
prior publication or used or already claimed in any other patent, obviousness, and the
subject matter of the invention falling into non-patentable category under Section 3 of
the Act. The applicant or any party considers pre-grant opposition only after the filing
of an application. The patentee is to submit her statement and evidence against the

opposition within three months of the date of notification by the controller of patents.
A pre-grant opposition has to be disposed off by the controller within one month by
rejecting the opposition and granting the patent or by accepting the opposition and
rejecting the application or amending the application and granting the patent. But the
number of pre-grant opposition applications has always been a very small proportion
of the total number of published cases and it too has decreased over time.
Post-Grant Opposition
Post-grant opposition can be filed by any interested persons who are engaged in or
promoting research in the field of technology. Post-grant opposition can be filed within
a period of 12 months of the grant of a patent. The grounds of opposition are provided
under Section 25(2) of the Patent Act 1970. Some of the grounds are, wrongful
obtaining of the invention by the inventor, anticipation by prior publication, use,
traditional knowledge, the invention is obvious to a person in the art, non-patentable
inventions, disclosure of false information to patent office, non-disclosure or wrongful
disclosure of the biological source, etc. The post-grants opposition, although small in
terms of the number of cases, has been increasing as a share of the total number of
patents granted. Both the pre- and post-grant opposition can, in fact, improve the
quality of the patents granted and will certainly rule out the granting of frivolous
patents. Needless to add, one should not be recommending the watering down of
these special provisions.
Strength of Indias Patent Regime
A third aspect that has come in for much discussion is the strength of Indias IPR
regime, which the USTR report considers weak. A weak patent regime is thought to be a
major hindrance to technology transfer (Hall 2014). The empirical evidence on this
relationship is admittedly ambiguous. In any case it does not hold for India. This could
be deduced from two separate but related pieces of statistics.
Foreign companies now account for a growing share of Indias industrial research and
development (R&D) expenditure and patents (especially US patents). For instance, they
account for about 29% of business enterprise R&D expenditure in 2011 compared to
just 10% in 2003 (Mani 2014a). Likewise in terms of patents granted in the US Patent
and Trademark Office (USPTO) to Indian inventors, their share is almost 82% in 2013
compared to 23% in 1995 (Mani 2014b).
FDI in general and FDI in R&D too have been very much on the increase. MNCs are
unlikely to increase their R&D activities in a country which has a weak patent regime.
Almost all MNC R&D centres in the country have increased their patenting based on
R&D done in India. For instance, the number of US patents secured by IBM increased
from just 64 in 2009 to 239 in 2013. Other US MNCs operating from India have also
registered similar increases. R&D and testing services imported from dedicated US R&D
centres operating from India now account for about 10% of all US imports of R&D and
testing services (National Science Board 2014). Further the CEOs of some leading US
MNCs such as PepsiCo; Honeywell and Boeing have expressed satisfaction at the
strength of Indias patent regime. In the light of these facts, it will be hard for the Think
Tank to further strengthen Indias IPR regime beyond what there is now. The
pharmaceutical MNCs may be less enchanted by our IPR regime and given the fact that

Indias domestic pharmaceutical industry has the technological capability to invent and
manufacture a range of bulk drugs and formulations (Chaudhuri 2005), one need not
worry too much about being in their good books.
Finally, the Think Tank can actually play an important and constructive role in
developing a detailed database on patenting by Indian and foreign companies based
on their R&D in the country. This will help us understand the process of innovative
activity in our country on which we have such inadequate information. Improving the
physical performance of the various institutions such as the patent office and the IPAB
is another constructive one. For instance, the Indian patent office is desperately short
of patent examiners. Each patent examiner has to examine 61 applications a year. The
IPAB is also funded badly, affecting its work. Further, there have also been instances of
bureaucrats from the line ministry interfering with its work. The Think Tank has thus
plenty of constructive and practical areas to examine and recommend to the
government rather than struggle to answer whether or not India has an IPR policy.
India has an IPR policy and a reasonably good one too.
References
Chaudhuri, Sudip (2005): The WTO and Indias Pharmaceutical Industry, Patent
Protection, TRIPS and Developing Countries (Delhi: Oxford University Press).
Department of Industrial Policy and Promotion (2014): Press Release, 22 October,
http://dipp.nic.in/ English/ acts_
rules/Press_Release/ipr_PressRelease_24October2014.pdf, Ministry of Commerce and
Industry, Government of India.
Hall, B (2014): Does Patent Protection Help or Hinder Technology Transfer? in
Sanghoon Ahn, Bronwyn H Hall and Keun Lee (ed.), Intellectual Property for Economic
Development (Cheltenham, UK and Northampton, Mass, USA: Edward Elgar), pp 11-32.
Mani, Sunil (2014a): Innovation: The Worlds Most Generous Tax Regime in Bimal
Jalan and Pulapre Balakrishnan (ed.), Politics Trumps Economics: The Interface of
Economics and Politics in Contemporary India (New Delhi: Rupa), pp 155-16.
(2014b): Dimensions of Indias Innovative Performance, Draft chapter prepared for
the UNESCO World Science Report 2015 (Trivandrum: Centre for Development Studies).
National Science Board (2014): Science and Engineering Indicators 2014 (Arlington VA:
National Science Foundation) (NSB 14-01).
The Hindu (2014): IPR Policy Soon, Says Minister, 9 September, http:// www.thehindu.
com/business/Industry/ govt-to-come-out-with-ipr-policy-sitharaman/article 63914
38.ece
USTR (2014): 2014 Special 301 Out-of-Cycle Review of India, http://www.
regulations.gov/#! documentDetail; D=USTR-2014-0020-0001