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Date: 2008.08.27 19:03:43
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Nuclear Agreement and IPR

By: Aditya Trivedi

India and the United States are set to begin a new chapter. Political economy of our 60 years of trade and
economic relations would soon give way to a new reality. A reality which we all privately recognised but
never had the courage to accept at the political level. By endorsing the nuclear agreement Parliament has
underscored the need to accept that reality, albeit with caution because much more than anything,
economic and strategic considerations have driven the two nations closer. Otherwise, divergences
continue to exist.

One of the divergences is the way the two nations look at intellectual property rights. Profit is a dirty word
in India whereas it is not so in the US. The 22-page text deals extensively with uninterrupted and reliable
fuel supply for India’s nuclear reactors. The assurances are codified in Article 5 of the agreement dealing
with transfer of nuclear material and technology.

Once approved, the civil nuclear agreement will remain in force for a 40-year period, extendible by 10
years more. Critics point out that in those decades India would end up spending more than $200 billion to
refurbish its civilian nuclear power programme, with US firms gaining extensively from supply contracts.
The hidden costs are likely to be expanded defence cooperation and information sharing, and a
commitment to a “world class” (tight) IPR regime.

Interestingly, defence cooperation between India and Russia never raised much dust when the visiting
Russian defence minister Sergei Ivanov in 2005 insisted on an intellectual property right (IPR) agreement
between the two countries, despite the fact that we had our own patent law in place by December 2004. It
is only when dealing with the US that the critics become sceptical about IPRs. Rightly so, because
historically the two nations look at IPRs differently.

Hopefully, nuclear agreement should help remove that deficit of trust on IPRs. It should unleash the forces
whose spin-offs, in due course of time, may provide the required willingness to enforce IPRs in this
country.

What can the coming together of the two greatest democracies do for the realisation of that goal? First, it
can get scientists, social scientists, artists, performers, musicians and activists to engage in a serious and
meaningful dialogue to change the nature of scientific knowledge and knowledge production. The second
is to use this opportunity as the driving force for joint technology development, adaptation and transfer.
We have to alter ways in which we think and design technology.

It requires the development of criteria by which we discriminate between ‘good’ and ‘bad’
innovation/technology. It requires designing a credible intellectual property rights regime that spurs
innovation. It requires the complete redesigning of our educational processes to make education not a
packaged commodity for getting jobs but an active process of discovery, and knowledge production.
It also requires the development of market structures, which promote innovation. Monopolistic and
oligopolistic forms of market structures are believed to induce static allocative inefficiencies, due to the
lack of price competition and existence of profit-motive that such market structures entail. Nevertheless,
these market structures may, due to the existence of IP, give rise to dynamic efficiencies emanating from
the ability of large firms in concentrated industries to conduct socially beneficial R&D, thus lowering
costs (process innovation) and offering a wider range of goods (product innovation). Recent consolidation
in our pharma sector is illustrative of this process.

It would have funds to allocate to innovative R&D out of the profits earned. What is emerging is that the
focus on innovation is too narrow in our country, both sectorally and conceptually, with interest in
manufacturing without developing a more complete picture of the creative process.

It would be more mature for us to acknowledge our systemic weaknesses. The National Knowledge
Commission has called for a complete overhaul of the patent examination system. The report submitted to
the prime minister calls for systemic reforms to ensure accessibility and transparency in the system. We
also need to draw attention to our success stories, like the growing strength of the right to information
movement, public interest litigation processes and competition policy regime which could help regulate
these market structures and their relationship with IP.

There is a growing acceptance of IP as the creative tool by India’s corporates. The Indian version of the
Bay-Dole Bill, which is expected to make our largely cocooned universities more responsive to the
marketplace, is pending before Parliament.

Patenting activity has increased. The IP is the new buzzword in the IT industry in the southern states of
India. More and more corporates are utilising the PCT route of filing the applications, though it still remains
far below expectations. The world’s five largest patent-granting offices — Japan, the US, European patent
office, South Korea and China — together account for 74% of all patents in the world. India figures
virtually nowhere. The four patent offices in India granted 10,132 patents between April and December
2007, a period in which they received about 30,000 applications.

All said and done, the US may still express reservations regarding transfer of sensitive technologies,
especially in the nuclear, dual-use and missile areas for lack of effective enforcement of IP, even though
Anil Kakodkar, chairman of Atomic Energy Commission, has sought to allay apprehensions by stating
that the IP rights are taken care of.

On the other hand, the PM has flagged the need to revisit the IPR regime in the context of food security in
the recent G-8 summit in Japan; the question before us to solve is how we strike a balance between private
interest and public good. As India becomes more relevant in the world, hoping to leapfrog into the league
of developed nations through its brainpower and service capabilities, the importance of intellectual
property and its protection will come to the fore even more sharply. The challenge is to improve
enforcement and to build awareness of IP.