Guest Post on the Conference on Publicly Funded Patents and Technology Transfer: A Review of the Indian “Bayh Dole” Bill

“The Bayh Dole Conference (organized by the NUJS IP Chair, and student organizations ShARE and IPTLS) held at NUJS on 12th September 2009 saw a much needed debate on the Protection and Utilization of Public Funded Intellectual Property Bill. The conference, which stretched across 4 sessions, proved to be a comprehensive discussion on not only the academic and legal perspective to the Bill on issues such as its origins, provisions, and theoretical basis but it also looked at what the impact of the Act is likely to be on the ground through statistical studies and case examples.

Prof. Shamnad Basheer, NUJS IP Chair, threw open the discussion by essentially outlining what were the key aspects of the Bill and discussing the broad issues which have been points of contention on this blog and elsewhere. He argued that there is a misrepresentation that the Act introduces patents for the first time which is not true. Universities and public funded institutions have been involved in patenting for some time now. What is true is that the Act for the first time seeks to regulate patenting of public funded research. The Bill, based on the American Bayh Dole Act, provides that whenever universities or a public funded institutions make an innovation, they will intimate the government about the innovation and then would within a certain period of time decide whether to retain the title for this innovation or not. If they chose to keep the title, they must file for a patent for it, following which they must take mandatory steps to commercialize this product through licensing, royalty systems etc. What is interesting about this Act is that it has a clause which makes it compulsory for the universities commercializing an innovation to share a minimum of 30% of the returns with the inventor which cannot be contracted away.

There have been questions as to why the American Bayh Dole Act has served as a model for the Indian Act and whether the adulation that this Act has received from its proponents has been balanced out against its criticisms. Though it is true that the amount of patenting increased in America following the Act, there is not enough evidence to show that there exist a connecting link between the Act and this increased patenting. The problem with this Bill is that it seems to have been introduced with very little study into the existing Indian university structure, the universities culture of patenting and the industries practice of picking up innovations. It seems as if the proponents of this Bill had picked up the American Bayh Dole Act, changed the words around a little bit and introduced it. This sort of blind transfer is exactly what should be avoided and there needs to be a more intelligent importation.

Professor Josh Sarnoff, of the Washington University, talking about the American experience with the Bayh Dole Act in Session 1 stressed on this point when he said the bottom line when introducing such a Bill was to be careful what you ask for and to be sure if that is what you want. It is undoubted that after the Bayh Dole Act commercialisation of products increased but whether the costs of such a system were really balanced out by its benefits is questionable. For instance, the Universities that make money out of Bayh Dole are few in which again it is the bigger universities that seem disproportionately represented. University-Industry Partnership in America also has had a long history which stretches back even before the Bayh Dole Act where companies would utilise the basic research of the universities for their innovations. After the Bayh Dole, there has only been increased one on one commercial relationship for product development. Question is whether the restricted nature of research, delayed publication and dissemination of research materials has in fact restricted general usage of university research by industries. There is also the change in the nature of the Universities from public institutions to commercial entities that is likely to take place even in India if the Bill is introduced. In 2002 for example the rigorous experimental use clause that had previously protected the Universities from being sued for patent infringement was watered down when the federal circuit courts held that due to their commercial nature universities too could be sued. This reflects the changing perception towards universities in America. There is also a change in the nature of research, with scientists engaging more in product development than in basic research – which might have in the long term had greater public benefit for the public. Thus, when India imports such an act, it may be pertinent for it to look at some of these effects of the Act in America and to modify the Act accordingly.

Shouvik Kumar Guha, a 5th year NUJS student, presenting on Miss Susan Finston’s behalf, was more positive regarding the likely impact of a legislation modelled on the Bayh Dole Act in India. He pointed out that there has been a record growth in the knowledge intensive sectors especially biotech in India and with its high quality human capital, India was in a position to reap the benefits from a Bayh Dole styled legislation which may help in greater R& D and employment opportunities in India. However, there were a few features in the existing Indian system which may not be conducive for the Act. One, was the ‘local working’ requirements that seemed to be built into section 12 of the Bill and section 3(d) of the Patent Act, 1970 which may discourage international cross border partnerships for R&D. The second was the broad scale compulsory licensing system – the impact of which was not clear on University patenting. The assumption that Technology Transfer Offices (TTOs) would be able to sustain themselves from the royalties they earn needed to be dropped and there was a need for capacity building measures to be introduced for TTO’s and academic researchers as well as allocation of funds for patent filing.

Session 2 of the Conference shifted away from the American perspective and looked at the Indian position regarding patents and technology transfer. Prof. Amit Shovon Ray, JNU, presenting his own sample econometric study felt that there was need to identify a target group within the vast heterogeneity of public funded institutions and research who were more likely to respond positively to such an Act. His study reflected that foreign returned scientist and younger faculty were more attuned to the idea of patenting while industry exposure seems to have had no impact on a scientist’s will to patent. He also felt that it was wrong to perceive the Indian academia as being aloof from the industry, as there is industry-university interface even though it is on a very small level. Most importantly, he pointed out that the driving force for scientific research in the academia remained intrinsic factors (such as actual interest in the research or a quest for knowledge) rather than extrinsic factors (such as financial gains and career advancement). In this regard, labelling patents as incentives for research and development may not help in achieving any concrete results rather it may be better to stress on the scientist their social obligation to place their innovative ideas with the industries that would be able to commercialise them for public use.

Dr. Rekha Chaturvedi, IGIB, CSIR, talking on the CSIR experience regarding patenting and technology transfer felt that CSIR had made a conscious shift towards greater patenting and commercialisation with Patent, Publish and Prosper becoming a hallmark objective of the institution under Dr. Mashelkar. CSIR encouraged innovation with provisions for – patenting being given weightage during scientists’ work reviews, 40% share in revenue returns, and programs for inculcating innovation in the PhD students etc. In the process of joint collaboration with industries, it had also developed standard contracts necessary for material transfers, confidentiality and joint agreements. However there still exist several impediments to this policy. Though in terms of number, CSIR had been quite successful with over 4000 patents, she admitted that successful commercialisation had only happened in a handful of cases. One reason for this was that many of the patents were in early stages of development which needed further R&D. When companies bought licenses to these innovations they needed to invest further in their development and many a times the companies were unable to do so because of lack of infrastructure and funds. CSIR had tried to solve this problem by introducing several schemes to help fund such ventures such as the New Millennium Indian Technology Leadership Initiative (NMITLI) and was also looking into starting incubator companies but the problems still persisted. She also pointed out that though CSIR made attempts to increase academia-industry interface with annual biannual meets there was still much that needed to be done to increase this interface and she hoped that the Act would facilitate both the industry and academia in doing so.

Dr. Vivekananda, Dean, Rajiv Gandhi School of law, IIT Kharagpur highlighting IIT Kharagpur’s patenting policy was of the opinion that colleges like IIT where the work of incentivising, patenting and capacity building had already been underway, the impact of Bayh Dole may not be much. It was the other colleges the ones under the UGC that needed to be examined as to whether they had the capacity to implement such an Act and whether without this capacity building measures in place the Act would serve any purpose. There was also the growing concern that public funded research would be walled off from the public domain and not accessible for further research and development and that the tax payers may end up paying double – first paying for the creation of the innovation and then paying the commercial entities for access to it. To combat this, he recommended that there should be clear research exemptions by which public entities would agree to share public funded research for further R&D and there should also be scope for open source or patent pooling so that research dissemination is not hindered. In this regard, it is interesting to note that the decision making as regards patenting in IIT Kharagpur is on the scientist who has the option to not patent. He also felt that the stress in the Act should be on utilization rather than commercialisation of the innovation and for this reason there should be measures such as audit committees to monitoring technology transfers, inventor freedom clauses for commercialisation and non exclusive licensing.

Session 3 began with Mr. Shashwat Purohit, Franklin Pearce Law Centre, looking at the Triple Helix Model – theoretical model that forms the basis of the Bayh Dole Act. The Triple Helix Model essentially consist of people from different spheres – academia, industry and government acting outside their spheres in a collaborative manner for social development and economic growth which is in their common interest. He analysed the Triple Helix Model in various countries in EU – the developing as well as the developed and came to the conclusion that while in the developed countries the Triple Helix Model helped in capturing and conceptualising a regime that already was for most parts already present and only needed improvement, the Triple Helix Model in developing countries is an end goal that is hoped to be achieved by building up the structure. He pointed out the independent university structure such as that of Stanford was absent in India and collaboration between universities and industry in India could not be without the involvement of the government and its funding. He felt therefore that the developing countries needed to do more than just put in a model allowing licensing instead they needed to build space for open innovation and have other important structures in place such as venture capital and angel funding to build up incubator structures which would lead to greater success.

Mr. Prathiban Srinivasan, Founder, Patent Eagle, talked of the actual transaction process that is involved in transfer of technology from the universities to the commercial entities with statistical data from the US to illustrate the process. He highlighted the fact that the revenue earned by universities through technology transfer was extremely small in comparison to the investment for research and he was sceptical about the returns to the inventor even if there were specific clauses assigning a share to them, due to the costs involved. The Act in India, he felt, had to be looked at from a more holistic angle as a source of direct and indirect job creation. In America for example over 40,000 jobs were created directly from university patenting, each of which created indirect job opportunities. Innovations are needed to combat problems of disease, environmental degradation and food shortages and technology transfer was a means of ensuring that the innovations reached the public domain.

Dr. V Premnath, Head, NCL Innovations and Director of Venture Centre, was again sceptical about the Act’s ability to deliver on its stated objectives. Speaking from the experience of patenting and commercialisation in NCL, he felt that the Act was likely to increase the administrative burden of the TTOs and make the process of patenting more bothersome for scientist. As and when an innovation is created the scientist is expected to inform the TTO or face penalties. Faced with this ultimatum it is likely that scientists will send anything and everything they create to the Technology Transfer Committees set up under this Act. Whether these committees will be able to review such large number of applications and identify the patentable innovations etc is a cause for concern. The NCL experience has already shown that it is not a good idea to depend on these committees as they are likely to further delays and most of their decisions are ad hoc and not based on actual reviews of the applications received. This is likely to increase with government under this Act demanding more procedures to be followed at every step of the patenting and commercialization process. It may be better in this regard to only lay down a minimum set of guidelines that the public funded universities and institutions are to follow and have a one time approval of the institutions policy and by default vest the title with them. The government needs to trust these institutions which are involved more directly in the innovation process to decide matters of patenting and commercialisation on their own and have a one time disclosure and reporting mechanism for them with incentives such as fast racking of funding for following the guidelines.

Prof. (Dr.) N.S. Gopalakrishnan, in the last session raised some specific questions regarding the applicability of the Act to all public funded innovation especially when one looks at the nature of copyright and trademarks. Under the Copyright Act, 1970, a copyright vests automatically on the author (Sec. 17) save in cases where 1) it is a work by or under the direction or control of the government in which case the right vests with the government (Section 2(k) and Section 17 (d)) and 2) where copyright vests with the employer by contractual agreement (Section 17 (c)). In the cases of public funded works it is practically always the creator who has the copyright as the institutions hardly ever claim it contractually and the government usually has very little control over the way research is conducted in public funded institutions. To add to this lack of clarity regarding ownership, the new Bill provisions regarding protection of intellectual property – Section 5, 6, 7 and 9 – seem to have been all drafted keeping in minded IPR for which registration is required. In case of intellectual property protected by copyright, IPR is automatically conferred and there is usually no need for registration thus raising the question of whether copyright was ever intended to be included or can be included under the present draft. In case of trademark, there is the threshold question of irrationality of supposing that a trademark can emerge from public funded research as trademarks are names meant for trade. They again do not always require registration as they can acquire protection by use. Thus there is need to remove trademark altogether from this Act. He felt that there needed to be a shift in the objectives of the Act from the unnecessary stress on greater and broader IP protection to ensuring quality and social relevance of IP protected. There should not be a waste of public resources in protecting and maintaining useless patents and thus there should be obligations to explain why there has been no commercialization rather than pressure on scientist to patent.

The conference concluded with a panel discussion headed by Prof. Shamnad Basheer rounding off some of the key points raised and discussed in the conference. According to him, the Bill is most likely to pass, in which case the real need of the hour is to look for ways to improve the bill and inject more public interest into it. There are some technical flaws in the bill such as the circuitous nature of the definition of intellectual property as regards copyright and trademark which would have to be changed. Along with which he made a host of other recommendation such as the need to put the public at notice when issuing licenses, the need to try and mandate that public funded research be used to make socially useful products, to have compulsory licensing requirements to help the public as well as the Indian industries all of which would help make the Bill more effective and accountable to the public. Mr. Pranesh Prakash, Centre for Internet and Society, warned against the dangers of excessive patenting as over patenting may lead to the formation of a gridlock which may in fact stifle further innovation and research. He felt that the fact that CSIR earned the majority of its income not from patents but from other forms of technology transfer was something that was not taken into account when framing this Bill which only deals with a narrow mechanism of technology transfer. He also felt that the Bill may end up stifling open access and collaboration among universities as well as publication in the field of research and development. Mr. Yogesh Pai, Centad was again critical about the lack of public involvement in the framing of this Bill, and felt that the very premise of the bill was faulty as there was no conclusive evidence linking innovation and patents. He also raised the worry that the drive for commercialization may shift funds from areas of research which was far from lucrative but a real necessity such as R & D in the realm of neglected diseases. The public interest point was again stressed upon by Mr. C. H Unnikrishnan, Mint who felt that the Bill if passed in its present form may lead to the public paying twice – first in funding the research, and later in paying for the end product and thus there was a need to ensure that the product would reach the public at affordable prices. Prof Madhukar Sinha, Centre for WTO, was especially critical about the involvement of the government in the procedure of patenting and commercialization as he felt that it would lead to increased delays and paperwork and would add to the already present transaction costs. Dr. V K Unni, IIM Calcutta the last panelist rounded off this discussion by reflecting how some of the main presumptions on which the Bill is based such as the presumption that public funded innovation is languishing because of the lack of patent incentives, that patents would lead to innovation, that the universities will be able to become self sufficient by the application of such a policy etc all stand defeated by the facts presented through the conference. Instead the real dangers of the Bill such as the changes that will be wrought in the public nature of the universities, the stifling of R&D due to delay in publications etc stand exposed. Thus more than anything, the conference drove home the point that the Bill in its present form should not be applied and there is need to involve key stakeholders -industry, academia and in fact the public at large for injecting greater public interest into this Act.“