Articles

Nexus between Intellectual Property Rights Strategy and Innovative Policies - Indias’ road to Intellectual capitalism

“Human genius is the source of all works of art and invention. These works are the guarantee of a life worthy of men. It is the duty of the State to ensure with diligence the protection of Arts and inventions” Inscription on the Copula in the WIPO HQ building in Geneva.

Intellectual Property Rights:

IPR is an abbreviation for Intellectual Property Rights, which in short is referred to as IP or Intellectual Property. The phrase has come into common English language use only within the last two or three decades and has acquired a degree of International acceptance and been in the lime light globally.

Black's Law Dictionary defines "intellectual property" as "a category of intangible rights protecting commercially valuable products of the human intellect. The category comprises primarily trademark, copyright, and patent rights, but also includes trade-secret rights, publicity rights, moral rights, and rights against unfair competition".

The principle of IP is basically and substantially the same in all countries , except with some variations , with a view to suit the local requirements of each country. The subject is being taken very seriously and has attained importance, especially, with the industrialized world, since these nations have realized that IP, in its various forms, is wealth which a nation cannot afford to ignore. Thus a the new concept of Intellectual capitalism is on the rise amongst the world community. The returns on the commercial side are considerable and not measurable by any standards.

Innovation:

Innovation is a complex process that coalesces ideas, technology, knowledge and know-how into either a product or service. In simple terms innovation is the conversion of knowledge into new products and services. A successful invention is an innovation. Innovation is a continuous process of evolution of ideas and perceptions and not an one-off event. It’s a process of continuing response to the changing circumstances. Innovation is neither lineal in progression nor it is clustered around a specific technology. Innovation progresses in ebbs and flows and through all manners of social alliances. Alliances, which are contractual and obligatory. Alliances forged between two intending parties. Alliance which are again essentials for further innovations.

IPR In India:

As a result of rapid industrialization, new set of Government policies relieved of bureautic control, regulation and supervision, shift in government policies and approach relating to trade, investment in economy saw India emerge as a major global industrial player in the 80’s and 90’s. As a consequence of such opening up, transnational or multinational corporations showed interest in India for trade in inventions, technologies, goods and services. These entities being the sources of investment and technology flow were concerned about the legal protection of such technologies they were ready to invest and bring in, as they anticipated huge commercial and financial benefits. The protection sought for was under the Intellectual Property Rights laws.

IPR laws in India had a very docile and stagnant existence ever since the related laws were framed. The inadequacies prevalent in the acts were exploited commercially by opportunist advanced nations. Cases like the basmati, Turmeric, tamarind sounded warning bells and alerted the IPR community in India to the reality that along with the continuation of our heritage of resources, products and devices a statutory protection and preservation is necessary to prevent their transfer into the hands of other countries.

India also signed and ratified in the year 1996, the TRIPS Agreement. By signing the TRIPS India agreed to amend all IPR legislations and bring them in conformity to the provisions of the TRIPS. TRIPS primarily sought to reduce distortions and impediments to international trade. This meant that effective and adequate protection of IPR had to be done through measures and procedures which do not become barriers to legitimate trade. TRIPS also sought to harmonise the prevalent IPR laws amongst the signatory countries. The concept of achieving “internationally consistent IPR across the nations” had been uncertain since each economy was affected by the recent economic crisis. Yet, as the world moves towards global consistency in IPR legislations the world is yet to see the actual benefactors.

Industry in India:

Ever since India achieved independence the Government and people resolved to pursue a planned economy. This was reflected when the Industrial policy was adopted in 1948 and 1956. The idea was institutionalized in 5 year plans. The country allocated the available resources to ensure a balanced development in industry and agriculture. Industrial sectors like machinery, petroleum, cement, chemicals, automobiles, paper, textiles, rubber, plastic etc contributed outstandingly to the economy. The late 80’s and through out 90’ saw the Information technology industry perform outstandingly. The budget of 1992, the Industrial and Trade policy ushered in a new market era. Increased trade regulations and domestic deregulation changes to trade and commerce saw competition scale new heights. Privatisation also had a role to play. New entrants came in. Scope of competition broadened. Entities had to come up with new and innovative ideas to stay ahead and in race with the competition.

IP Strategy of Indian Industry :

The last few years saw the Industry, development agencies and government promote the strategy on the IP system. The strategy involved educating the Industry on concept of IPR, the commercial value it can give to the industries products and services and also the financial benefits that flow. The Indian industry comprises of Public sector, the Private sector, the medium industries , small scale industries and the cottage industries. Though majority of the industry could churn out a good output and some of them built a appreciable bulk of R&D, only part of the industry, particularly those of machinery and bulk drugs had a semblance of policy on Intellectual Property. Few of them realized that management of IP was a major factor in successful technological innovation. Only few saw the benefit of protecting the scientific technological knowledge they innovated. This trend however started to change, at least for the Pharma industry, in the middle of 90’s when India became a member of WTO in 1996 and signed and ratified the TRIPS. Many Pharma companies started seeking for IP protections in India and abroad. Though the numbers of applications filed under patents had been less, but substantial number of application for trade marks were filed in India and abroad. The determination of the entrepreneurs in these sectors to protect their innovation and brand is most encouraging.

IP Strategy and Policy that needs to be Promoted:

An IPR strategy basically can be defined as that bulk of principles, decisions and implementations that are designed to serve as to how the intellectual property matters pertaining to an Innovation are to be handled within that entity, how they need to be protected from infringements, and how they can be best exploited commercially. The strategy involves and takes into consideration the legal protection that could be afforded to an particular IP, the commercial value the IP has, the exclusive right the invention or innovation secures for its owner etc. Management of IP raises issues that are broader than legal protection and enforcement of IP.

Corporate house also need to develop their in house IPR Policy, comprising of the initiative that needs to be taken by the Corporate house, the documentation that needs to be evolved, methodology of record maintenance, accessibility of such confidential and non disclosable records on need to know basis, and safe destruction of such material too. Corporate, specially in the lines of software development, pharmaceuticals, engineering, chemicals etc where lot of research is invested by a team or individual before coming out with a product, need to develop their in house confidential and non disclosable documentation to protect trade secrets.

Trade Secrets:

Trade secret information includes information, regarding a formula, pattern, compilation, program, device, method, technique or process. The information should derive independent economic value, actual or potential, not being generally known to, not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and is the subject of effort that reasonably warrants under the circumstances to maintain its secrect

Thus, trade secret can protect the unauthorized use or disclosure of the secret information by anyone who obtains it through improper means or through a confidential relationship. Secrecy can be divided into two parts: 1) prevention of disclosure to external competitors, and 2) imposition of confidentiality on one's employee's. Most of the Pharmaceutical. Software, chemical and engineering companies are protected atleast to some extent by trade secrets.

Unfortunately the Indian Legal system has not seen much development in this sphere of law. Much needs to be done by the Government and the Judiciary in this field of law.

Following are the facts to consider in determining whether a particular information is a trade secret or not:

  1. the extent to which the subject information is know outside of the business;
  2. the extent to which it is know to the employees and others involved in the business;
  3. the extent of measure taken to guard the secrecy of the subject information;
  4. the amount of money, time, efforts spnt by the Company to develop the said information
  5. the value of the subject information to the company and to the competitors;
  6. the ease or difficulty at which the subject information could be acquired or duplicated by others.

To obtain the trade secret status two important requirements are to be met:

  1. the subject information provides a commercial advantage and
  2. the information is a secret

Trade secret protection is a viable and useful tool in protecting such information because it's protection is immediate and can be perpetual. Indian Companies should use this protection to keep their former employees from stealing the work product that rightfully belongs to the Company. Additionally, trade secret protection can protect the Company again stealing of part/s of the code in violation of an express agreement.

Strategy to evolve on different protective components:

The IP protection being contemplated for the intellectual property can fringe upon the various forms of IP protection like, Patents, Copyrights, Trade Marks, mask works, Confidential and non disclosable agreements, Geographical indication of goods etc. It is for the strategist to zero in on the right form of IP protection. Protection can also evolve in a combination of the above components. For example for Software Copyright though is most preferred form of protection, it is always recommended that non disclosure and confidential agreements be also signed with the employees. Similarly for Pharmaceuticals a combination of Trademark for the brand name, logo, and label along with the product patent for the formulation would give the product a complete protection. What component of protection to be adopted and when is purely the strategist analysis.

Apart from the above important exercise of trade secret protection following are some important point and milestones which a corporate house should endeavour into:

  1. Increase the awareness of IPR in the Industry sector. This is the need of the hour and very important. Highest priority need to be given to spread the awareness. IPR awareness needs to be done with the various sectors in industry. To start with priority could be afforded to specific industries like, Pharma, machinery, bulk drugs etc. For the purpose following modes need to be adopted. Firstly, the direct approach mode, whereby the direct contact with the targeted company is made. Secondly approach through intermediary organizations like research institutes, technology development societies, universities, chambers of commerce etc Thirdly through the Information and communication technology, which is highly developed. Digital brochures and in form of CD-ROM or web pages on net could be used to disseminate information. Fourthly set up an IPR cell consisting of techno, legal experts and consultants to address and advise the targeted companies. Fifthly the industry can also be addressed by conducting regular seminars, workshops where experts in the field could extend their expertise. It is also recommended that a combination of the above modes of approach be adopted for a sustained, continuous awareness program.
  2. Improvethe general IPR infrastructure. This could include facility which provides information through free database and user friendly utility models of the record of applications that have been applied for, that are pending, that are registered with the various IPR registering authorities in the Country. Universities, research institutes and Chambers of commerce can house such facility. Information could be provided on a formal fee being charged.
  3. Assist in constant review and renewal of strategies. This is an important aspect in the light of the world going through fundamental change due to the rapid strides of development in information technology. The Indian industry needs to realize that corporate development and IRP are related in many ways. These include the development of intellectual capital of an enterprise, making intellectual property and innovation strategy as part of the business strategy, develop IPR as basis of business success. The industry must invest , financially and intellectually in product development and innovation. Firms also need to develop strategies in order to maximize their own R&D yield.
  4. Protection of the inventions and innovations: Protection of an inventions is must if the entity wants to commercially exploit the innovation. Protection of invention gives the owners exclusive rights and the inventor precludes others from taking advantage of the protected intellectual property. The strategy of protections encompasses filing of the appropriate applications before the concerned authority, diligently following the status through stages of opposition to the granting of the right. It is clear that strong system of IP protection is necessary to foster innovation. The growth of International trade and investment has also had the corresponding effect in the raise of International IP protection.
  5. Exploitation of inventions and innovations: This is the stage where all the hard work of having invention, innovations, getting the rights pays off. Its stage where the inventions is exploited by the owner commercially. This the stage of practical demonstration intellectual capitalism. The Owner with the right has the commercial benefit in enabling monopoly to be maintained in the particular area. The right can be leased out by the owner for a period for a price, some times assigned to another person for a price etc., Some time the IPR, be it patents, copyrights or patents, become bargaining chips in high stakes world of Corporate mergers, acquisitions and deal makings. Another emerging strategy is the use of IP’s as a mechanism to negotiate licenses or alliances with competitors. The prospect of delving exclusive profits from IP has stimulated innovations, technology change and economic growth.
  6. Setting up of legal and technical assistance cells: The Government and the consortiums like the Chambers of Commerce, Industry Chambers should set up cells that are assistance by technical and legal experts. These cells apart from providing such service can also be involved in conducting symposiums, seminars, lectures, work shops more so with the view of enabling the industry to understand the concept of protection and also the exploitation of the IP at a later stage. These entities can also provide facility of having a database of the records of existing IP for the industry. The cells can also lend a helping hand to the units who seek legal opinions, or seek to file applications with the registrar.

Conclusion:

This article has discussed the role of intellectual property strategy and the innovation policy as part of nexus for India’s road to intellectual capitalism. There is no doubt that the Industry has realized that IPR as an intangible asset and it has become a very important source of revenue and competitiveness. Sectors like Pharma, Bulk drugs, chemicals and machinery have realized the consequence of not going in for IP rights. Strengthening of IPR should be considered as an important issue to supplement the innovation policy. The Indian law makers have passed a number of related legislations and amended old acts in an attempt of international harmonization. All these changes is part of new approach which emphasizes the incentives for Industry, firms, Government and individuals. Its finally for the Industry to make intelligent use of the available resources and also invest in research and development. To take on international competition and for the success of the business, the industry should evolve a strong innovative strategy and IP policy and portfolio based on the topography of the IP worlds or the geography of the industry world wide. An exercise which needs to undertaken seriously if Indian needs to place itself in the select club of intellectual capitalist.

Ram Kumar

(The author is a practicing Lawyer in the field of Intellectual Property Rights, Pharma Branding, Corporate Law and Information technology)