From Creating Patent Ecosystem to Building National Innovation System for Industrial Growth

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We are pleased to bring to you a guest post by Prof. (Dr.) Ruchi Sharma. Dr. Ruchi Sharma is a Professor of Economics in the School of Humanities and Social Sciences at IIT Indore. Her research area is the Economics of Innovation with specific focus on R&D, Patent Policy, and Technology Transfer (FDI and Licensing). This post focuses on the need to facilitate data access by IPO for the betterment of the national innovation system. This is in view of a recent report submitted by the Economic Advisory Council to the Prime Minister.


From Creating Patent Ecosystem to Building National Innovation System for Industrial Growth

 Prof. (Dr.) Ruchi Sharma

The Economic Advisory Council to the PM recently submitted their report titled, “Why India needs to urgently invest in its patent ecosystem?” (PDF File) The report highlights the significant role played by the patent ecosystem of an economy in its national innovation system. It brings forward the point of inflexion in India’s patent filing history as “for the first time in the last 11 years, the domestic patent filing has surpassed the number of patents filed by non-Indians at the Indian Patent office in last quarter (Q4) of 2021-2022.” (page 5). Major process reforms have been introduced at Indian Patent Office (IPO) in the last 5 years like online processing of forms, new timelines for disposal of applications, hearing of patent cases through videoconferencing, expedited examination for inventors from startups, Government departments etc. The expedited examination of patent applications for the start-ups, small entities and government departments is likely to boost the start-up ecosystem. Faster patent application processing will support the start-ups and academic institutions to signal the quality and industrial applicability of their technology. For start-ups this implies easy access to funds from the venture capitalists and for academic institutions it means ease in technology transfer. The scheme has witnessed a growth of 67% within one year (2018-19 to 2019-20) of the request received for expedited examination.

Interestingly, the report once again started the discussion on protecting utility models after more than a decade when a white paper was circulated on this issue by the then Department of Industrial Policy and Promotion (DIPP) under the Ministry of Commerce and Industry. The utility model system (UMS) is essentially designed to safeguard innovations that may involve only incremental improvements and may not satisfy the stringent patentability requirements. Such innovations like Mitti Cool Refrigerator are innovative in themselves with mass appeal and are relevant for start-ups and SMEs from developing countries like India. UMS by providing protection to small scale innovations is likely to encourage firms to innovate and develop technological capability. However, there are many challenges in introducing a UMS considering India’s commitments under TRIPs. Hence, a careful policy design is required to support innovations by start-ups, SMEs, grass root innovators and for rural inventors.

The Patent Bargain Also Requires Disclosure

The report, however, has left a few important points that require urgent attention to strengthen a patent ecosystem that contributes effectively to the national innovation system. The provision for patents is not only to incentivize inventors but also to disclose information related to technology. Today’s inventions depend upon earlier creative advances, thus, information disclosure facilitated by IPO with wider and easy access will lead to extra innovations. A single inventor cannot exploit all possible uses of an invention, and ease in access to information will ensure wider use of the idea that will bring huge benefits to the society. Thus, IPO needs to increase the dissemination of information contained in patent documents. Currently, the patent information is available online, but the interface and access are not very user friendly. Specific programs targeting the use of patent information for technology development can also be designed for creating more awareness among the start-ups, MSMEs and academic institutions.

In the same vein, patent documents contain ample information that can be used to understand the different facets of innovation. Recent studies, using information from patent documents have been able to inform policy by suggesting measures to strengthen the innovation ecosystem. For instance, the Bell et al. 2019 paper “Who Becomes an Inventor in America? The Importance of Exposure to Innovation” uses data on 1.2 million inventors from patent records to reveal that children from high-income families are 10 times as likely to become inventors as those from below-median income families. Another 2019 study by USPTO (see here) shows that the “Women Inventor Rate”–the share of U.S. inventors receiving patents who are women is 12.8% in 2019. Such an analysis supported by easy access to patent records helps in identifying the current loopholes and inform policy to make innovation process more inclusive. The IPO has made significant progress in terms of providing information to the researchers online in the past few years, but still has a long way to go as compared to its international counterparts. In fact, World Intellectual Property Organization (WIPO) also assists IP offices around the world in digital transformation that emphasizes the role of data analytics to understand the microtrends in IP filling and technology development. Providing easy access to patent documents will meaningfully contribute to the innovation ecosystem.

Another major concern with patent system has been the strategic use of this tool by companies to block innovation and in locking in incumbents’ advantage. According to the Annual Report of IPO, among the 81279 patents that were in force in 2019-20, data shows that only 28% patents are working (based on data available for 70% of the patents). Non-working of patents can hinder the manufacturing of innovative products by new entrants which can be start-ups and or MSMEs. This channel needs to be opened to ensure that the patent ecosystem supports the national innovation system for much-needed industrial growth. Such information would not have been possible to access and study but for the efforts (see for example details mentioned here) made by Prof. Shamnad Basheer. Clearly, another such mission needs to be started with the efforts of IP academics and consultants, in collaboration with the patent office for taking significant steps to have “ease of accessing patent data.”

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