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) 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!
Tags: SpicyIP Guest Series