The Public Funded R & D Bill: Does India need a Bayh-Dole? Part I

Following Shamnad’s comprehensive overview of the Public Funded R & D Bill, I thought it would be relevant to look at some of the history and some of the present…

Given the Bill’s nick name: the “Indian Bayh-Dole”, I started with looking at the history of the US Bayh-Dole to determine how well deserved the nick name is. ☺ I plan a series of posts to (a) compare the situation surrounding the passage of the Bayh Dole Act (BDA) in the US with the current situation in India, and (b) compare the provisions of the now available (albeit from unofficial sources) drafts of the Indian Bill with the provisions of the BDA. Alongside, as ever, I hope to highlight some issues (legal, social, scientific and economic) and raise questions to which I hope the government, and policy makers will provide answers/comments. I also hope that our diverse and very well informed readers would supplement the posts with their own knowledge.

So lets start with a history lesson (I love history and look at it often!). Prior to the passage of the BDA in the US, intellectual property in inventions resulting from R & D funded by government agencies, vested in these agencies. In fact, according to sources, there were 26 government funding agencies in the US, each with its own set of policies (pertaining inter alia, to ownership and use of IP generated from funded research activities). As a result, the transfer of know-how from Universities/laboratories to the industry was rare. The situation was such that prior to the enactment of the BDA, even though the U.S. government held approximately 28,000 patents, only about 5% of these patents were licensed to the industry for commercial development. (See Jennifer A. Henderson, J.D., M.P.H.1 and John J. Smith, M.D., J.D.2 Academia, Industry, and the Bayh-Dole Act: An Implied Duty to Commercialize, October 2002; See also the Wiki page on Bayh-Dole here). It appears therefore that there was a definite and strong patenting trend in the US at the time the BDA was passed and the Government itself perceived creation and protection of intellectual property as important.

In the light of this history in the US, I thought it would be interesting to investigate what the current IPR ownership and licensing climate in India is like. While up to date statistics are not readily available, I did come across a very interesting and comprehensive (albeit a little dated) WIPO document prepared by Dr. P Ganguli in 2003 [See P Ganguli, Industry-Academic Interaction in Technology Transfer and IPR: The Indian Scene —–An Overview. Available here : “the WIPO report”].

The report notes that the total number of patents in force in India (as of 2003) was about 10,000 (see page 37 of report). This is roughly 1/3 the number of patents held by the Government of the US (alone) at the time the BDA was passed. While the patenting activity by multinational corporations and the Indian industry may well have shot up after the 2005 amendments, it would be interesting to see whether the number and frequency of patent filings from Government funded labs/universities has gone up over the past 5 years.

Whats more interesting in this context is the general guidelines (issued by TIFAC) on ownership of IPR resulting from projects funded by the DST. The WIPO report summarizes these guidelines and I reproduce them (with a few edits) here: (Please note that the comments in the brackets relate to what will be discussed next week)

“1. The terms of the projects funded by the technology development board (TDB) are to be a bilateral contractual matter between the technology provider and the enterprise receiving the funds. However, the TDB is permitted to retain a royalty free license and the holder of the IP (namely, the enterprise receiving funds) may be required to license to others on advice of TDB in mutually agreed circumstances.

2. Title over know how generated during Home Grown Technology (HGT) projects would jointly held by the funding agency and the industry partner. The industrial partner will have full rights to commercialize the technology without having to pay any royalty to the funding agency. However, if the know-how is licensed to a third party, the revenue is to be shared. (See Section 6 of the Patents Act)

3. Grants of exclusive rights are not encouraged but are permitted in limited circumstances for limited period.

4. IP rights over inventions emanating from projects funded by the Ministry of Science and Technology and Department of Ocean Development at publicly funded Institutions (such as the AIIMS and the IITs), may be owned by the institutions. However:

(a) Inventors must assign the invention to the institute. (See section 6 of the Patents Act)
(b) Institutions can undertake technology transfer on exclusive/ non-exclusive basis and retain all the revenue. (Contractual matter)
(c) Institution may determine share of inventors and other persons. (Contractual matter)
(d) Such share will be limited to 1/3 rd of the actual earnings. (The Bill now seeks to codify this – proposed Section 8, as detailed by Shamnad)
(e) Government will have a March-in-Right and shall have a royalty free license for use of the property by the government in public interest. (See Government Use and Compulsory Licensing provisions under the Patents Act.)
(f) IPR generated through joint research by institutions and industry can be owned jointly by them on mutually agreed terms.(See section 6 of the Patents Act).
(g) Each institution should establish a Patent Facilitating Fund by setting aside 25% of such earnings. (The Public Funded R & D Bill seeks to codify this requirement)
(h) The institutions shall submit information relating to the details of patent obtained, benefits and earnings arising out of IPR and turnover of the products. (Contractual matter)
(i) The institution and industry may transfer technology to third party for commercialization. (Contractual matter + see section 50 of the Patents Act)
(j) The third party must manufacture the product in India. The revenue sharing arrangements for inventors remain the same. (See provisions on Compulsory licensing under the Patents Act.)

As summarized by the AUTM (The Association of University Technology Managers), the major changes brought about by the BDA in the US were as follows:

# Non-profits, including universities, and small businesses were permitted to elect to retain title to innovations developed under federally-funded research programs
# Universities were encouraged to collaborate with commercial concerns to promote the utilization of inventions arising from federal funding
# Universities were expected to file patents on inventions they elect to own
# Universities were expected to give licensing preference to small businesses
# The government retains a non-exclusive license to practice the patent throughout the world
# The government retains march-in rights.
# The Bayh-Dole Act was especially instrumental in encouraging universities to participate in technology transfer activities.

Interestingly therefore, the guidelines of the DST pertaining to IPR ownership in public funded R&D seem already to “encourage” a number of things that the BDA sought to encourage in the US. The one thing that the policy does not do (and probably cannot do) is mandate applications/filing of patents. However, as Shamnad notes in his post, this mandate may not be the best idea – there could always be situations where the inventor wishes to put his invention in the public domain.

Furthermore, while “guidelines” do not have the force of law, (and policies and guidelines are subject to change with each government) it seems that even without a Public Funded R & D Act, the current government policies permit academic institutions, laboratories and small businesses to own and license out technologies created by them, even if the research resulting in these technologies is funded by government agencies. The guidelines also appear to be consistent with the Patents Act (look out for details in the coming week).

In fact, the government may wish to focus its attention first on creating a balanced awareness about IPRs amongst various Universities and public funded laboratories. As pointed out by Dr. Ganguli in his report, “the concept of Institutional IPR Policies in academic institutions in India is in its nucleating stage with only a handful of institutions such as CSIR, IIT Bombay, IIT Kharagpur, IIT Delhi, Pune University formally announcing their IPR Policies and guidelines for interactions with other institutions, industries etc.”

Over the next couple of weeks, we will take a closer look at the DST guidelines and also walk through some of the provisions under the draft Bill. If its passage is inevitable, we might as well contribute to it such that the best possible version of it (from a public interest and innovation perspective) is passed! We hope that our readers will join this endeavor – please keep all questions, comments and criticisms coming!