Innovation

Breaking News: India Unveils "National Innovation Act"


Pursuant to our earlier post on an impending Innovation Act, the government has now released a draft version of the National Innovation Act, 2008 (hereafter “NIA”). The preamble to the Act explains its purpose:

“An Act to facilitate public, private or public- private partnership initiatives for building an Innovation support system to encourage Innovation, evolve a National Integrated Science and Technology Plan and codify and consolidate the law of confidentiality in aid of protecting Confidential Information, trade secrets and Innovation. “

SpicyIP applauds the government for promoting transparency by making available an early version of this bill for public comment. But we’re still unhappy that, despite our protests, the Indian “Bayh Dole” bill (which is considerably older than the NIA) is yet to be made public by the Government.

Sheetal Chopra of FICCI (an organisation which drafted this bill with the help of stakeholders) has promised to do a guest post on this new bill for us. And I eagerly await her insights on this. In the meantime, let me highlight a few key aspects of the Bill.

In large part, the NIA is based on a rudimentary note which we believe had been prepared and submitted to the government (and FICCI) by a leading Indian law firm. We had commented on this rather sketchy note in this post here.

The key provisions of the NIA are:

A. Annual Integrated Science and Technology Plan:

The Ministry of Science and Technology of the Government of India shall, in February of each year, present an Integrated Science and Technology Plan, which aims to enhance things like basic research, scientific manpower, science and tech infrastructure, university-industry partnerships, special innovation zones etc.

Comment: As we queried in our earlier post: Is this an enforceable obligation or is this just a mere policy statement?

B. Specific Measures for Supporting Innovation

i) Low Cost Technologies: The Appropriate Government shall take special measures for supporting public, private or public-private initiatives, which facilitate and encourage Innovation, including in low cost technologies, products and services for the benefit of the common man whether in urban or rural India. These measures could include tax breaks, stamp duty waivers and other fiscal incentives, which could be implemented by amendments to the Income Tax Act etc.

Comment: Here again, is this an enforceable obligation? And if so, to what extent?


ii) Incentives for Angel Investors (such as tax breaks, stamp duty waivers and other fiscal measures).

iii) Designated Special Innovation Zones (SIZ)

The government shall designate SIZ’s and provide a wide variety of incentives and other innovation supporting measures (help with registering patents etc) to entities that are located within these SIZ’s.


C. Creating an Electronic Exchange (and Physical Exchange) for trading in Innovation

The Act stipulates that the Central Government shall facilitate the establishment of an electronic exchange or a physical market place for commercialization of information on or the results of Innovation, including any statutory or non-statutory rights in intellectual property arising in connection with or as a consequence of Innovation.

Comment: This is an extremely welcome provision and would aid the commercialisation of innovative ideas to a considerable extent. Given the internationalisation of innovation and the growth of web 2.0 style social networks, I always wondered as to why there was such a dearth of electronic market places for innovations i.e. why don’t we have a good eBay model for trade in innovations as yet?

However, what would the government role be here? How exactly would it facilitiate this? Tax Breaks again? Would electronic zones considered to be part of the Special Innovation Zone?


D. Trade Secrecy Provisions

The interesting and perhaps most substantive (at least in terms of enforceability) part of this Bill are the provisions on trade secrecy or “breach of confidence”. To appreciate this branch of intellectual property, think the secret Coke formula, the KFC formula and in the Indian context, the Ayurvedic “massage” formula by the famous Kottakal family. Under the “trade secrecy” provisions of the NIA, Kottakal can take steps to prevent the wrongful disclosure of its massage techniques by ex -employees etc to third parties.

With an increasing number of “trade secrecy” cases coming up before Indian courts, this promises to be welcome development for the IP community. So far, courts have protected trade secrets under the common law “breach of confidence” doctrine. With a statutory enactment, there is bound to be more clarity and certainty in the law.

However, the question that needs to be asked is: Do we want the American statutory model of trade secrecy (where trade secrecy norms are codified into a statute) or do we want to retain the flexible case law (judicial) approach that is currently endemic to the UK and India. Both approaches come with their respective pros and cons.


Definining Innovation and “Economic Significance”

Interestingly, the NIA defines “innovation” as “a process for incremental or significant technical advance or change, which provides enhancement of measurable economic value, and shall include:

(a) introducing new or improved goods or services
(b) implementing new or improved operational processes; and
(c) implementing new or improved organizational / managerial processes;

Explanation: measurable value enhancement or economic significance may include one or more of the following:

(i) increase in market share;
(ii) competitive advantage;
(iii) improvement in the quality of products or services;
(iv) reduction of costs.”

Comment: Would the elucidation of the term “economic significance” above help with an interpretation of the 2(ja) of the Indian Patents Act which defines “inventive step”? As readers are aware, in order to be patentable, every invention has to demonstrate an “inventive step” or it has to be non obvious to a person skilled in the art. Section 2(ja) defines an inventive step is “a feature of an invention that involves technical advance as compared to the existing knowledge or having economic significance or both and that makes the invention not obvious to a person skilled in the art”

Conclusion:

An overarching legal structure to regulate/incentivise innovation is certainly a welcome move. However, does the National Innovation Act, 2008 actually regulate/incentivise innovation in a holistic and effective manner?

More importantly, does it have teeth? Does it embody enforceable obligations? Or will it be a mere paper tiger, full of sound and fury, signifying nothing?

Do we need to codify “trade secrecy” or “breach of confidentiality” norms. Or do we want to leave it to develop organically through case law in the way that the UK does?

Hopefully, Sheetal Chopra of FICCI will throw some light on some of these issues in her guest post.

For the moment, we wholeheartedly commend the government (and in particular, Mr Kapil Sibal, the Minister of Science and Technolgy) for furthering transparency by making this Bill public at such an early stage.

Let’s make the best of this opportunity by participating (as members of the public) and sending our comments to the Secretary, Department of Science and Technology (email: dstsec at nic.in)

ps: SpicyIP wishes to thank Rohan Rohatgi for pointing us to this development.

Shamnad Basheer

Shamnad Basheer

Prof (Dr) Shamnad Basheer founded SpicyIP in 2005. He is currently the Honorary Research Chair of IP Law at Nirma University and a visiting professor of law at the National Law School (NLS), Bangalore. He is also the Founder of IDIA, a project to train underprivileged students for admissions to the leading law schools. He served for two years as an expert on the IP global advisory council (GAC) of the World Economic Forum (WEF). In 2015, he received the Infosys Prize in Humanities in 2015 for his work on legal education and on democratising the discourse around intellectual property law and policy. The jury was headed by Nobel laureate, Prof Amartya Sen. Professional History: After graduating from the NLS, Bangalore Professor Basheer joinedAnand and Anand, one of India’s leading IP firms. He went on to head their telecommunication and technology practice and was rated by the IFLR as a leading technology lawyer. He left for the University of Oxford to pursue post-graduate studies, completing the BCL, MPhil and DPhil as a Wellcome Trust scholar. His first academic appointment was at the George Washington University Law School, where he served as the Frank H Marks Visiting Associate Professor of IP Law. He then relocated to India in 2008 to take up the MHRD Chaired Professorship in IP Law at WB NUJS, a leading Indian law school. Prof Basheer has published widely and his articles have won awards, including those instituted by ATRIP and the Stanford Technology Law Review. He is consulted widely by the government, industry, international organisations and civil society on a variety of IP issues. He also serves on several government committees.

2 comments.

  1. AvatarRohan Rohatgi

    Thank You Shamnad for the analysis and looking forward to a point-by-point analysis from FICCI.

    With the Government contemplating the National Innovation Act, the corporate sector has also taken the plunge with Bharti coming out with the Airtel Innovation Fund which is aimed at promoting innovation and entrepreneurship in the field of telecommunications. Hope such endeavours by our corporate sector would help the budding enterpreneurs. More Information on the Airtel Innovation Fund can be accessed at http://airtel.in/airtelinnovationfund/index.html.

    Reply
  2. AvatarAnonymous

    I appreciate the FICCI’s efforts in drafting the bill and govt.’s transparency in this regard to make it public, but a glance through the bill makes me feel that it seems to be drafted like a patent rather than a legislation. May be its psychological after knowing that its been drafted by a law firm, but the provisions looks very leaky in several aspects.

    Reply

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