Perspectives on the Promotion of Innovation

The link between traditional IP protection and innovation has been coming under greater scrutiny. On this blog too, there has been a good deal of discussion on this aspect.

To give a few instances, Mr. Basheer in an interview to the Hindu (about which he wrote a post here) articulates concerns about formal IP systems actually promoting innovation.An anonymous reader had pointed out in the comments to another post dealing with the Indian Bayh-Dole:

… Thus, heavy-duty IP protection has not apparently lead to any increase in innovation, rather, they have stifled innovation because smaller and nimbler companies which are innovative get gobbled up by the Big Pharma and all their innovative potential is sidelined to protect the big franchises. The software industry, on the other hand, has thrived without much patent protection, at least in the past….

I had highlighted a report of an international Expert Group on moving towards an era of “New IP”. The report dealt with the problems of traditional IP systems in encouraging innovation, and recommended:

Working together, governments, universities and industry should develop new measures of the success of technology transfer, and other means of development and social investment that better correspond to desired social and economic return…

In my post on the Expert Group report, I had been somewhat critical of the report for failing to suggest concrete measures to promote innovation in the framework of the so-called “New IP”. One solution proposed by Mr. Basheer tries to indicate the way forward in conceptualizing “informal” IP norms which would actually promote innovation (also see the comments to that post).

It is in this background that I came across an interesting piece in today’s Business Standard. The article gives instances of what has been done by the government in promoting innovation outside the formal IP framework – namely the setting up of new IITs and IIMs etc. Nonetheless, quite clearly, the mere setting up of newer institutions will not on its own promote greater innovation. One further recommendation made by the Business Standard is worth mentioning:

That in turn raises several other problems: the failure to attract a sufficient number of bright students to the science stream at the secondary and higher secondary school level (which is when a fascination with science can be expected to begin), and perhaps linked to this the poor remuneration level and even poorer career advancement prospects for those who opt for a career in science teaching and research… These disadvantages can be neutralised by offering open learning environments in university departments, along good laboratory and other facilities… With the intellectual property regime getting tighter, shutting out the scope for reverse engineering and re-engineering to launch new products, the need for indigenous research to sustain economic development has become even more important than before. Greater investment in research and development, including fundamental research, is imperative. And both the public and private sectors need to contribute.

Broadly, there seems to be increasing consensus (or at least, there seems to be a movement toward a consensus) that the mere existence of formal structures of IP protection does not go far enough in promoting innovation; indeed, it may well be stifling innovation. How do we go about developing informal norms? What must the content of these informal norms be? Can informal norms be ‘enforced’ in law, or must acceptance of and compliance with such norms necessarily be based on consensus of all participants in the process? If so, how can such consensus be achieved?

A few answers may be found by developing ideas of “social innovation”, as detailed in this post. Additionally, the draft National Innovation Act, 2008 may provide a few leads – Sections 3, 4 and 5 appear to be particularly important. See this post for details on Sections 3 and 4 and for some potential problems in those sections. Section 5 of the Act provides for incentives to angel investors. “Angel investors” are defined in Section 2 to mean:

“(1) ‘Angel Investor’ means a person, or entity that provides risk capital to start up ventures established for facilitating and encouraging Innovation (whether proprietorships, partnerships or cooperatives or companies or any other legal entity), not involved in the management, but adding value through association by providing access to commercialization of products and services through its social, professional or business networks and expertise.

It remains an open question as to whether these provisions will have any actual impact in promoting innovation. Nonetheless, there is at least a beginning to the process of promoting innovation. On the other hand, the Indian Bayh-Dole seems to be more of a disappointment in terms of promoting innovation. Clearly, much remains to be done in terms of finding more solutions…


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