Innovation Patent

Guest Post: Patents Patents Everywhere, no revenue in sight!


SpicyIP is excited to bring to you yet another guest post from Sheja Ehtesham, a graduate from NALSAR University of Law currently working with Krishna & Saurashtri in Bangalore. Also my classmate, Sheja is now a self-confessed blog-a-holic and we’re pleased to bring to you another post of her’s in such a short span of time.
This post discusses the murky issue of revenue that is gathered from Patent Filing in India.
Patents Patents everywhere, no revenue in sight!
IP awareness has been very strongly advocated in Indian scientific communities for the past decade. A pressing need for such awareness emerged in the light of the negligible number of patents that were being filed by Indian scientists and research institutions. One of the more prominent efforts have been those spearheaded by Mashelkar, which are considered to be a tremendous success, a manifestation of which is the prominent jump in the statistics of number of patents filed by the CSIR alone. Perspectives of the scientific community appear to have undergone a dramatic change, with scientists now wanting to file patents as opposed to merely publishing their research in academic journals. Incentives were provided for the filing of such patents. The CSIR itself had a separate budget allocated for patent filings by CSIR scientists.

…And as the statistics are now flaunted with pride, as a result of these efforts, the CSIR emerged as having the highest number of PCT filings amongst all developing nations in 2002. Also, as per the CSIT website, CSIR alone had 40% share of the US patents granted to Indians in 2002. In fact, as per the most recent data available in the CSIR Annual Report of 2006-07, the Intellectual Property Management Division has filed 169 patents in India and 650 patents abroad. Thus, as the figures themselves speak, Mashelkar’s efforts are perceived to have been a large success.
However, scratching the surface a little deeper reveals this glory to be a tainted one. A massive investment has been put into the filing and maintaining of all these patents, by the CSIR. The important question to be asked at this point is, how many of these patents have actually been marketed, or commercially utilised in any way? How many of these patents serve a purpose? Several academic works point out that 60-70% of the technologies and research processes developed by the CSIR remained unutilized or could not be commercialized. Is the aim purely to have a large number of patents (CSIR as of October 2008, is said to have 3016 patents in force[3]) just so that we can boast about our statistics? Most of us are aware that the kind of investment such activity requires is colossal – and while on the one hand all this investment is being pumped in – there seem to be very feeble signs of any returns. In fact, as per statistics obtained from Mint, in 2004-05, the latest period for which data is available, CSIR filed 50 patents and generated Rs4 crore in royalties and licensing. However, it also spent Rs10 crore in filing for the new patents and in maintaining existing ones. It appears to be a rather futile exercise then, to relentlessly file patents at the cost of tax payer’s money, which are just a financial drain and are incapable of generating any financial returns. Thus, while it was crucial to promote IP awareness amongst the scientific community, the no-holds-barred way this was approached, emerges as unsatisfactory in the extreme – as what has resulted is a large number of patents requiring a correspondingly huge investment but with no returns.
It is in this backdrop that Kruttika’s recent post on incentivising the IITs gains an even greater significance. Companies such as Imperial Innovation, and Intellectual Ventures (Prashant has posted on this already in the light of them being called “Patent Trolls”) emerge as being the potential remedy to this phenomena in Indian science. In fact, several top institutions such as the IITs (for those interested, more details about the MoU between IV and IIT Bombay are available at http://www.dnaindia.com/mumbai/report_iit-b-to-encash-its-intellectual-bonds_1239735), Centre for DNA Fingerprinting and Diagnostics, IISc, and the University of Hyderabad have recognized this potential and tapped on it already. The modus operandi of these companies is that they first sign a CDA (Confidentiality Declaration Agreement) with the institute. They then perform due diligence on all the Research and Development of the institution, sifting through it to select the commercially viable R and D that has potential to actually be marketed. Once the company selects the IP, it is then their job entirely to pursue the patent, by investing their own funds, as opposed to taxpayer’s money being utilised for the same. The inventor receives milestone-linked monetary incentives at various stages, i.e. when the invention has been selected, when the patent is filed and when the patent is finally granted. What the company ordinarily gets out of this arrangement are the licensing rights of the intellectual property, and a royalty percentage is negotiated with the inventor, of all revenues earned. Anna University has also joined the bandwagon and established an in-house Centre for Intellectual Property Rights 3 years ago, that files patents for inventors and students. Till date, they have already filed about 53 patents at the Indian Patent Office at Chennai.

Companies such as these are relatively new on the Indian scene, yet are fast gaining prominence. In fact, the director of one of the top-ranking IITs recently quit in order to join Intellectual Ventures. It would seem that these companies emerge as a very attractive alternative to boost patenting in Indian science!

15 comments.

  1. Avatarkamakhya

    Hi,
    Working of a patent is an integral part of the idea behind patenting. While CSIR is sitting on a heap of unutilized patents, isn’t the Indian patent office at fault in not utilizing the power conferred under section 146 of the Patents Act?

    Best,
    Kamakhya Srivastava

    Reply
  2. Avatarmnbvcxzaq1

    lol. although u r right, yet it is merely ‘passing the buck’ phenomenon that u r advocating, kamakhya. the real/substantive action should be taken at a different front, as the real problem lies not with the inactivity of the Patent Office, but with the indian researchers and their r&d organizations themselves. once i was delivering a lecture on ipr at a seminar at cdri, lucknow and the same issue came up before we panelists. all the top brass of the csir/cdri were unanimous in advising the researchers to strike a balance between patent-filing and commercial viability; to weed out frivolous patenting. striking this balance is a real problem before the indian r&d institutions/researchers. they are lil un-mature in this regard, as till very recently, they ve been ensconced in the state-protectionism under the erstwhile ‘walfaristic’ state. they will take some time to learn the ropes in the free, fully-competitive world. however, the sooner they learn/adapt, the better.

    Reply
  3. AvatarSheja Ehtesham

    Kamakhya, while you are definitely right in saying that Section 146 ought to be brought in in cases like this, I beleive that comes in to the picture at a much later stage, i.e. after the patent has been granted. What I’m attempting to bring out in my write-up is the futility of FILING such patents. 146 does not confer any such power to reject patents that will not be commercially utilised (in fact, that would be outright ridiculous!) hence it cannot really be looked at as a possible remedy to the CSIR situation at hand.

    Reply
  4. AvatarPriyadarshini

    But surely you’ve heard of CSIR Tech. Work in progress.. 🙂

    Priyadarshini
    IP Management Division
    CSIR

    Reply
  5. AvatarPriyadarshini

    But surely you’ve heard of CSIR Tech. Work in progress.. 🙂

    Priyadarshini
    IP Management Division
    CSIR

    Reply
  6. AvatarShankar

    While there is a measure of truth in what the learned commentator (mnb…) says, I believe it is unfair to expect this out of the researcher. Rather, it is for the top technology leadership in these institutions to come out with solutions. For example, in many US universities, there are offices of technology licensing (OTL) where there are experts in market research who can evaluate the potential of a certain technology and advise the university and the researcher on the viability of spending on a certain inventive idea. Often, the OTL will make an recommendation unpalatable to the professor in charge of the research. We have had no equivalent arrangements in India until recently, with the tie-up between IIT Bombay and Intellectual Ventures. The situation in our government institutions is that very little market research is done and patents are pursued for various reasons (another topic altogether!). We are looking at some major technology leadership issues that need to be addressed before any kind of benefits will accrue to our universities and research institutions.

    Reply
  7. AvatarAnonymous

    Dear KV,

    CSIR and its useless policies of filing patents on tax payer money without any revenue in sight is one of my biggest problems with CSIR, which claims to have an IPR cutlure.

    Interestingly, as I understand, CSIR was supposedly in some JV, a few days ago, with Intellectual Ventures..

    Frequently Anon

    Reply
  8. AvatarSheja

    Priyadarshini, I’m not sure if you are referring to the IPMD that was established in 1996? It is definitely heartening to know that the matter is being looked into actively.

    Shankar, I couldn’t agree with you more. In fact, I would go to the extent of saying that the National Institutes of Health (NIH) Office of Technology Transfer at USA is probably one of the most effective and competent in-house bodies in the world today, and are highly skilled in advising research institutes that fall within the NIH on what is the best way to commercialize their technology. I’ve done an internship with their office, and I cannot emphasise enough on the benefits of using their model for Indian research institutions such as the CSIR and the IISc. Maybe this is something you could look into, Priyadarshini! 🙂

    Reply
  9. AvatarHarry

    Quoting Sheja Ehtesham:

    “60-70% of the technologies and research processes developed by the CSIR remained unutilized or could not be commercialized”

    and

    “CSIR filed 50 patents and generated Rs4 crore in royalties and licensing. However, it also spent Rs10 crore in filing for the new patents and in maintaining existing ones.”

    I do not know a lot about this CSIR issue. But reading this simplistically, the flip side appears to be that 30-40% of technologies are utilised or commercialized. And a 4crore licensing revenue compared to a 10 crore expenditure on filing and maintenance appears to be respectable.

    I wonder if the average public-funded institution of a size comparable to the CSIR in the USA or Europe has commercial success of these ratios from their patent portfolios?

    I am not trying to defend CSIR – but merely asking whether any comparable metrics have been done with western research organisations?

    And: will being too risk averse towards patenting kill innovation?

    Harry Thangaraj

    Reply
  10. AvatarMiNNie

    i agree with Harry here… why are people not looking at the 4 crores revenue that has been generated. and it is not that CSIR is just sitting on its patents. recently National Chemical Labs, pune one of the highest patent filers out of all the CSIR labs has started a s25 not for profit company called Venture center in pune which will help commercialize these technologies. i agree that things are not as advanced as it is in the USA but things are moving.

    Reply
  11. AvatarHarry

    Dear MiNNie

    Thanks for your reply comment. One more thing I wish I had added to my previous comment is this – my personal belief:

    Public sector funded institutions actually do very well if the output of their research enables their technologies to be made available to the public – and some degree of IP protection should features in this. The spillover effect into the wider economy cannot be easily measured (jobs, goods, technology diffusion) but is probably far greater than any profit made by the institution. Public sector organisations operate on a different model from the private sector. The private sector will – of course – always get a greater return from their patent portfolios than the public sector. For the public sector, the profit motive is secondary to their primary objective of developing technologies that make our living standards better.

    Harry Thangaraj

    Reply
  12. AvatarMiNNie

    the public sector institutions have a lot of great technologies… i am saying this coz i interact with a lot of scientists as a part of my tech commercialization work…. and one of their main problem is a lot of the good work gets stuck in the long never ending bureaucratic process and secondly most of the scientist value publications more than patents…. as that gets them noticed!!!! so until and unless this is changed no amount of our arguing or discussing on blogs will help….

    secondly many of these govt labs work in collaboration with some company and they ensure the entire IP is locked so despite having the technology the poor scientist is unable to do anything with it.

    thirdly how many of the private company patents are commercialized that we are pointing fingers at the public labs?

    there are a lots of things that need to be changed for success

    Reply
  13. AvatarSheja

    Harry, I agree with you when you say that primary objective of the public sector is developing technologies that make our living standards better. In fact, that’s a very noble perspective, and I heartily endorse the state taking up a very active role – playing out the welfare state role envisaged for it. However, my point is, patenting is an expensive process. When the private sector patents their innovation, they are conscious of the massive investments involved, and do not patent frivolously. However, when it is a public sector institution, and the cost of patenting often is at the expense of tax payers money, the need to weed out the frivolous often goes for a toss. I am of the strong opinion that there ought to be more stringent monitoring at an internal level as to what invention ought to be patented, purely because as a public sector institution, the degree of accountability that needs to be satisfied is much higher than the private sector. And going by your notion that public sector technologies ought to be made available to the public, as their purpose is to improve standards of living, I say they ought to go all the way and publish their work, as opposed to restricting public access to the technology by patenting.

    Minnie, in fact NCL Pune’s initiative is exactly what I am talking about. I believe that there are far more effective ways to commercialise patents, and considering the massive investment that goes into patenting, it only makes sense to go all the way to analyse what the best ways of commercialization would be. I believe that just because it is a public institution does not mean that it does not need to bother with maximizing possible revenues that can come out of its IP. Thus, I endorse the formation of such companies that can help institutions commercialise their patents in the most effective way.

    Reply
  14. AvatarKshitij

    I am agree with few posts above. The spurt in the patent filing activities has been a recent phenomena. It takes time to get patents granted. It takes time and a lot of efforts to commercialize technologies embodying the patents.

    Drawing conclusions about the inability to commercialize at this moment will be a bit unfair.

    Reply

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