FICCI’s latest newsletter carried an article of mine dealing with grassroots innovation and the need to romanticise innovation. For those interested, here is the text:3 idiots, one of the most tasteful Bollywood flicks this year, was embroiled in a “copyright” controversy involving credits to Chetan Bhagat, the author of the book on which the movie was allegedly based. What has been largely missed, however, is the ‘patent’ significance of the movie. The mysterious Phunsuk Wangdu, played by the inimitable Amir Khan, innovates in his open-air Ladakhi lab and owns over 400 patents!
This imagery will no doubt give patents and innovation a tremendous face lift in India. Particularly so, when most media projections of intellectual property have been far from graceful. Newspaper headlines routinely juxtapose the term “patents” with “murder”, “kill” and “exploitation”. Yusuf Hamied, the maverick head of Cipla, celebrated as a modern day Robin Hood, claimed in a television interview in 2005 that the introduction of pharmaceutical product patents was sure to cause genocide in India! Bollywood isn’t far behind either: in a flick titled ‘Laaga Chunri Mein Daag’, Rani Mukherjee plays the role of a high class escort and defines patents as an extortionist instrument devised by the West to milk developing countries.[2]
Given that ‘3 Idiots’ boasts a more intelligent script and better performances, Wangdu’s character is more likely to resonate in the minds of the average Indian viewer than a sizzling hooker with strong views on intellectual property. It also helps that Wangdu’s inventions did not involve pharmaceutical patents, a species of patents that are highly contentious owing to their innate potential to jack up drug prices and impact public health.
Since 2005, when India was forced to introduce pharmaceutical patents at the behest of TRIPS, most innovation debates in India have been framed primarily around drugs. Fortunately, Wangdu’s character helps in stripping innovation of its problematic drug centric focus. The inventions showcased in the movie did not stem from multinational corporations, but from poor grass-root innovators, as below:[3]
i) Remya Jose (20), a student from Kerala, created the exercycle-cum-washing-machine.
ii) Jehangir Painter (49), a painter from Maharashtra, put together a scooter-powered flour mill to escape the vagaries of Indian power cuts.
iii) Mohammed Idris (32), a fifth-standard dropout and a barber from Uttar Pradesh, invented a cycle-powered horse clipper.
Luckily for these inventors, their ideas were captured and leveraged by the National Innovation Foundation. This organization, the brainchild of Prof Anil Gupta and Dr R.A. Mashelkar, has already compiled more than 1,40,000 innovations belonging to the rural “informal” poor and virtually demolished the assumption that innovation is the preserve of the urban rich.[4]
Unfortunately for the NIF, the Indian legal regime that is meant to engender innovation continues to mainly favour only “formal” innovations emanating from the rich. This is despite the fact that almost 90% of India’s economy qualifies as “informal”![5] For one, the existing patent registration process is beset with considerable uncertainties and costs (including steep attorney fees), making it well-nigh impossible for a number of our informal creative minds to participate in India’s IP regime. Indeed, a number of such innovators have often found that applications drafted personally by them have failed time and again to meet the stringent requirements of Indian patent law.[6]
Not too surprising, given that India hiked up its patentability threshold considerably, owing to adverse perceptions against pharmaceutical patents. While this is laudable from the point of view of preventing pharmaceutical ever-greening and keeping drug costs down, it is a double edged sword, in that it impacts the patentability of a great number of grassroots innovations, many of which are “incremental” in nature.[7] Illustratively, consider the example of the inventor father son duo, the Appachans’, whose tree-climbing device was so attractive that even botanists from the US were interested.[8] Unfortunately, both father and son died within a week of each other in 2008. While the father held the “parent” patent over this device, the son obtained a patent over a slight improvement. The son’s improvement is generally thought to be a “weak” patent, which may perhaps explain the reluctance of the NIF to take on the Kerala state government that has been violating this patent with impunity.[9]
Owing to the rather severe standards that India’s patents regime now represents (at least on paper), a large number of grass-root innovation may find it difficult to make the cut, leading to a wide “patent” divide. Indeed, if “access” to patented goods is the key issue today, the problem of access to the patent system itself will be the issue of tomorrow!
A Proposed Utility Model System
One way out of this quagmire is to devise a patent like system with an easier registration threshold, a correspondingly weaker set of rights and most importantly, lower costs. Commonly known as the utility model system, this regime has found takers in several countries including a competitor that we in India watch very carefully, China. The latest figures reveal that of the 310,771 utility model applications filed in China in 2009, 99.4% were filed by domestic entities.[10] Contrast this with regular patents, where domestic entities accounted for only about 72.8% of the total number filed in that year.[11] The percentage of domestic patent filings when compared to foreign applications is considerably lower in the case of India[12], but a utility model system has the potential of helping reverse this trend.
However, there are variations amongst the various prevailing models and India must work towards a model that caters to the India milieu. The system must be an affordable and easy-to-use one, where grass-root innovators can participate without necessarily approaching expensive attorneys. Further, given that the low threshold for registration is likely to cause a spike in the number of applications, the corresponding set of rights associated with such registrations must be weaker than the patent system.
The author proposes a tentative model in this regard, as below:
1. An easy to use and affordable registration system, where the only criterion for registration is that the applicant discloses a useful “new technical advance” (NTA).
2. A registered NTA is protected only for 5 years. If the said NTA is commercialized within the first 5 years of registration, the rights holder gains protection for another 5 years.
3. All NTA-s are subject to compulsory licenses and can be used by any third party that wishes to make a product based on this right. The third party would, however, have to pay reasonable royalties to the NTA holder, based on a percentage of sales from the product. These reasonable royalties depend on the value of contribution made by NTA to the final product. This way, the granted right does not have a “blocking” impact on future inventions, in the way that a patent allegedly does today.
One might even have an amended version of the above, whereby a prototype or model of the alleged invention is insisted upon before registering the NTA in question. The model is best explained through a hypothetical. Consider an improved water pump that is made by company “A”. Assume that there are 3 NTA’s that are implicated in the creation of this pump. The NTA’s are registered in the name of X, Y and Z, various “informal” innovators. Assume that X’s “inventive” contribution to the pump is 30%. Similarly Y contributes 30% and Z contributes 20%. A’s inventive contribution is 20%. Apart from this, it invests money and other resources in creating a commercialized version of the pump. Let us peg this investment and risk at 50% of the total value of the product. The relative contributions to the total product therefore would be:
i) A: 50% (+20% of 50%): .5x + .1x=.6x
ii) X: 30% of 50%: .3 x/2=.15x
iii) Y: 30% of 50%: .3 x/2=.15x
iv) Z: 20% of 50%: .2x/2=.1x
Assume that A now makes Rs 1,00,000 as its profits in the first year. The respective shares will be as under:
i) A: Rs 60,000
ii) X: Rs 15,O00
iii) Y: Rs 15,000
iv) Z: Rs 10,000
The advantage with such a model is that it not only creates more determinacy (as the validity of an NTA is easier to objectively ascertain) but also solves the problem with patent hold ups and thereby fosters greater commercialization of new and valuable ideas. It avoids things like patent trolls and other mystical and mythical problems now associated with the current patent regime. It must be borne in mind that utility model systems in other countries have not always been run-away successes.[13]
But we could at least begin to think along these lines and devise a system that would most appropriately address the Indian milieu. Once grassroots and other informal innovators become familiar with a utility model like system, it may perhaps make it easier for them to gain access to the tougher patent system. In other words, the utility model system has the potential to serve as a “stepping stone” of sorts for such informal innovators.
Romanticisation of Innovation
The Indian government must also take other steps to romanticize innovation and ensure that it becomes a mantra chanted by one and all. In particular, much like the US, a National Inventors’ Hall of Fame to celebrate India’s most well known inventors, would be an excellent start.
Similarly, we also ought to award national medals of innovation to our most promising innovators. Such awards are statutorily mandated in the US through the AMERICA Competes Act. Although the government appears to have drawn inspiration from this Act in framing a tentative Innovation bill, it surprisingly left out this important feature from the Bill.[14] Only a conscious effort at romanticising innovation will help us in leveraging the one advantage that we have over the rest of the world: a large and creative work force. Bollywood has already taken the first step in this direction by giving us a hero who makes innovation look cool. Can we now leverage this sentiment to ensure that life imitates art?
Footnotes:
[1] The author thanks Shouvik Guha for his valuable inputs on this piece.
[2] See Shamnad Basheer, Bollywood and Patents: A Hooker’s Narrative of “Exploitation”!, SpicyIP.
[3] See Samar Halarnkar, Top Grosser 3 Idiots to fund Real Life Inventors, Hindustan Times, Mumbai, December 31, 2009.
[4] For details about this organization, see http://www.nif.org.in/ (Last visited February 26, 2010). The objectives of the Foundation include, inter alia, to help India become an innovative and creative society.. and a global leader in sustainable technologies by scouting, spawning and sustaining grassroots innovations . See http://www.nif.org.in/. NIF has 140,000 inventions from 545 districts in its database, generating 220 patent applications in India and one in the US.. See Samar Halarnkar, Innovation Network plans Giant Leap on the Back of 3 Idiots.
[5] “The “informal” economy either lies outside the scope of state regulation, or is officially subject to state regulation but nevertheless does not operate according to the rules that state regulation officially prescribes. In the former sense it is also known as ‘unregistered’, and defined as consisting of firms with electricity but under 10 workers or without electricity and over 20 workers (very rare outside agriculture). See Barbara Harriss White, India’s Informal Economy – Facing the 21st Century, Paper for the Indian Economy Conference, Cornell University, 19th and 20th April, 2002. See also Shamnad Basheer, Creating ‘Informal’ IP Norms.
[6] Interview with P.H. Kurian, Controller-General of Patents, dated February 26, 2010.
[7] See see Shamnad Basheer, Patent Oppositions in India: The “Efficacy” of Section 3(d)
[8] See MG Radhakrishnan, Fruit of Labour , India Today, June 26, 2008.
[9] Personal interview in July 2008 with MJ Joseph Appachan’s wife and lawyers .
[10] See http://www.sipo.gov.cn/sipo_English/statistics/gnwsznb/2009/201001/t20100127_488773.html.
[11] Id.
[12] In the financial year 2007-08, 35, 218 applications had been filed in India, out of which, 6,296 had been filed by domestic applicants, which is about 18% of the total. See Patenting Landscape in India 2009, Evalueserve Whitepaper.
[13] See generally Uma Suthersanen, Utility Models and Innovation in Developing Countries, February 2006, UNCTAD-ICTSD Project on IPRs and Sustainable Development.
[14] For a draft version of the Bill, see http://dst.gov.in/draftinnovationlaw.pdf. Also see Shamnad Basheer, “Making India Innovative: An Indian Innovation Act”, SpicyIP.
Dear Shamnad,
As usual, a brilliant post.
On this subject matter the paper titled as AN ARGUMENT IN FAVOUR OF ADOPTING LESSER FORMS OF PATENT PROTECTION FOR TECHNICAL ADVANCES,is a good read. Please follow http://works.bepress.com/ayse_odman_boztosun/1/
Regards,
Kamakhya
very good post……
just a suggestion if are proposing /agreeing to a weak patent protection for these utility models then don’ you think even the procedures itself should also be less complicated and more faster.
TC RITU
Hi Shamnad,
Excellent post.The NTA model proposed by you could be a far better option than Bayh Dole type regime.
great work,
Regards,
Sourabh N
This utility model can also act as a double edged sword. Maybe the multinationals would reap the benefits and not poor inventors. Before all these model formulation we need country wide awareness(like pulse polio).
Dear Shamnad
I agree with the earlier comment that this is a very good post. A utility model system would be well worth considering in India. However, alongside this, a streamlined enforcement procedure must be put in place. Although the UK Patents County Court has had its detractors, it proved useful for smaller and impecunious litigants. Something along these lines might prove useful.
Localising the enforcement process seems to make sense particularly in India taking account of its size and complexity.
Regards
Ed
Hai Shamnad,
The idea which you conveyed through the article is impressive. But, i doubt as to how many who watched the movie identified the implied patent strings attached to it. That is the exact crisis which remains to be solved. The intellects behind grass root innovations still do not know that there might be a better cup of coffee awaiting them.
Plain romanticisation of innovations without making them realise its potential would be a crazy ride, in my opinion. I can only think about the hype with which WTO was considered in India, during its inception in this regard.
The option I feel is a better decentralisation of the system so that people could be made aware of the potentials of IP. I just wanted to view the issue from the other side.
Thanks Kamakhya for the reference,
it is indeed a very good piece.
Dear Ritu Saurank and Ed,
Thanks for your comments. Indeed, we must have a more streamlined and low cost registration and enforcement mechanism if this is to work optimally.
Dear Utsab and Ann,
I think both of you highlight the importance of creating more awareness etc. And i am with you on this. Mere models will not work.. And neither will any one solution. All this has to be done together. But I personally feel that more than any wealth creation models through IP or IP like regimes, what really incentivises is “recognition” through prizes etc and the romanticization of innovation by putting our inventors on a pedestal.
The key concern with the proposed model is in terms of the administrative costs of running it. And of course the extent to which it impacts any existing sharing culture between farmers etc.
Dear Shamnad,
Great post!! Our country perhaps needs both-a model for innovation and recognition to an inventor. But more important than the model is the romanticism of an inventor. When inventors are not recognized or get the short end (eg. M.J. Appachan), it is difficult to promote innovation as a culture.
In the post, you mentioned the trend of lower domestic filings. Consider this-Qualcomm which is single largest filer of patents at the Indian Patent Office (IPO), also has a large number of Indian/India qualified engineers as the first named inventors. This is just one example.
For others, see the recent list of top patent filers before the USPTO available at: http://www.patentdocs.org/2010/05/ipo-releases-list-of-top-300-patent-holders-for-2009.html).
Your post forces us to ask the question of why a country that can produce such a prolific number of inventors does not adequately recognize its inventors.
However things are changing: The recent annual patent office report is more recent than the EValueserve study and points out some interesting statistics. The reduction in patent filings for the year 2008-09 is global and is also confirmed by a WIPO report. See
http://ipindia.gov.in/main_text1.htm
2. Awards for the year 2009 were given to the highest patent filers and photos are available at:
http://ipindia.nic.in/PhotoGallery/PhotoGalleryIndex.htm
Rajiv
Thanks much for your comments Rajiv,
We’ll carry something on these patent office awards soon—thanks for pointing us to it.
Here is a very insightful comment I received from someone with real ground level experience with these issues:
“Dear Shamnad:
Thank you for your post regarding the above. As someone who has been handling India, China, and other Asian patent matters for many years, I found your proposal interesting and thought-provoking.
One point to consider is that most Utility Models are not subject to substantive examination prior to grant. Therefore, as long as the paperwork is filled out correctly and the fee paid, the UM will grant (e.g., in China grant is within about 6-10 months). Given that there is no substantive exam, the Chinese system is subject to abuse, where people file to cover already-marketed products, their competitors products, products with little/no inventive or innovative activity, etc. and yet these rights are immediately enforceable. In China, UMs are sometimes used to hassle a competitor, and/or for advertising purposes. When consumers see a patent marking number on a product, then they think that it must be a great, technologically-advanced product. And so many of the UMs granted in China are for marketing, not technological reasons. Also, the Chinese national and local governments provide funds to support filing of IPR by Chinese entities – at times the entity can actually make a profit merely by filing for an IP right. Thus, business concerns often drive filings by Chinese entities and so the Design and UM numbers posted by SIPO must be taken with a grain of salt…
I note that prior to enforcing a Chinese UM, the owner is supposed to get a qualified search report from the SIPO. However, in the past, sophisticated owners abused the system by requesting new search reports until a “clean one” came back from the SIPO. In the new Chinese Patent Law revision, this is supposedly addressed as only 1 search report will be conducted, and it should be in the file forever. However, we will see how this actually develops in practice.
Australia’s system for “innovation patents” is a bit different than China’s, as the patent is “granted” within a month or two as long as the formalities are satisfied. However, it is not enforceable until it has been substantively examined. This system, with its additional required examination step prior to enforcement provides the best of both worlds, allowing a reservation of rights and the authorization to mark products, and yet also prevents the enforcement of unexamined patents against legitimate rights holders.
Moving to India, I personally agree that a well-designed UM system may benefit Indian innovators. However, the devil is in the details: given the traditional IPO examination backlog, the system should be streamlined in order to make it worthwhile for local innovators if they have scant time and funds. Broad dissemination of the actual formality requirements would help those who can not afford attorneys to file something which has a chance of granting. Also, one must give serious thought to the enforcement mechanism for UMs will relate to existing systems and will it be subject to the same bureaucratic hurdles? Will enforcement require rights owners to go to a local court (which is expensive and may take years)? Or will some other enforcement mechanism be used? Oftentimes, the theory is great, but the implementation – on a practical, day-to-day basis – may be so difficult as to become unworkable. Perhaps these are all items for our learned colleagues to discuss.
I look forward to seeing how this thread develops.
Regards,
Michael Lin
Senior Counsel – Patents
Procter & Gamble Technology (Beijing), Ltd.”
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Shamnad sir,
It seems that the Reference 7 link is not working. Could you look into it. Thanks.
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Mr. Lin raises very valid points regarding utility model (UMs) and applicability to India. Generally, UMs are put to widespread use in countries where there is a significant difference between the standards required for patentability of UM application and other patent applications, for example, in China, Taiwan, Korea and Germany. See for example, the statistics relating to UM filings at: http://www.wipo.int/ipstats/en/statistics/models/
As Mr. Lin mentioned, each country treats UMs in a different manner depending upon its outlook. Mr. Lin gave the examples of Australia and China.
Consider the examples of Germany and Korea. Germany for example, provides for a 6 month grace-period for UMs (courtesy the European Patent Convention not including any requirement for UMs-this is a legacy from 1978 when Germany joined the EPC). Today, the only form of invention which is not protected by a UM in Germany is one that is a process or method. (See X ZB 7/03). Also a UMs prior use outside Germany does not constitute a bar to protection. Finally, enforcement procedures differ for UMs and patents. A defendant can plead invalidity of a UM, and Courts have power to amend the scope of protection in view of references cited by a defendant.
Korea requires an applicant to expressly abandon the UM before a counterpart patent can be issued. Note that the UM and the counterpart arise from the the same application. Only the claims are different-regarding scope.
Interestingly, from WIPO statistics cited above regarding UMs, it can be safely concluded that UMs are utilized more by local residents rather than foreigners. If India considers UM patents for such innovations as discussed by you and by Dr. Gupta (NIF), the law would need to consider the following: 1. Criteria for patentability; 2. Novelty requirements; 3. If at all examination is necessary; 4. Duration of protection; 5. Costs; 6. Criteria for bringing an infringement action (is a search report necessary) and defenses against the same; 7. Procedures for handling such cases.
As Mr. Lin said, devil is in the detail. Perhaps India may make tailor the law regarding UMs after considering the practice in Germany, China, Korea and Taiwan-i.e. where the maximum number of UMs are filed/granted.
Personally I favor a vastly simplified model. In the model, the threshold for patentability UMs is lower than other patents, no examination is performed, and filing is done by a simple drawing/photograph with description in vernacular. If the UM patentee decides to convert the UM into a regular patent, abandon the UM to get the regular patent. For asserting an infrigement action, rather than inventor, defendant does search and submits it for a Court to decide. The Patent office simply records the application/grant date (depending on what the statute provides-grant may be mandatory after a fixed period or immediate upon receipt) and publishes the entire application. Publication would be treated like a race notice-first in time-first in right.
Thanks for the elaborate comments Rajiv,
I’m travelling now and thinking through some of these issues. So will respond to both you and Michael’s very thoughtful intervention soon.
Take care,
Shamnad
the correct link for footnote 13 is this – http://www.unctad.org/en/docs/iteipc20066_en.pdf
please update.
Also, I would like to point out that the break up of contributions to a utility model will require a little more robust methodology or some assessment criteria that is solid. Because it can really get difficult at times to determine the contribution and usefulness of individual inventions in an NTA as a whole, cuz after all each invention will be important in its own respect. I am sure this might give rise to an altogether different kinds of lawsuits where people would be disputing about respective royalties and shares each claiming a greater contribution and therefore higher royalties.