Thursday, February 28, 2008

Patent Scorecard; India loses out [India]

If the number of patent applications filed under the World Intellectual Property Organisation’s (WIPO) Patent Cooperation Treaty (PCT) is any indication, India appears to be a laggard among the knowledge- and innovation-driven economies. That the country is way behind developed nations like the US and Japan in seeking patent safeguards for inventions, is understandable. What is more noteworthy is that it compares poorly even with a much smaller economy like South Korea, as also the much bigger China. The data put out by WIPO show that only 686 patent applications were filed from India in 2007, against 7,061 from Korea and 5,456 from China. And while the rate of patent filings is growing steadily elsewhere, it is on the slide in India. The number of applications in 2007, as a result, was the second-smallest in the last five years.

However, single-number comparisons of complex processes can be deceptive. So it is worth pointing out that any comparison based merely on the number of patent applications could be misleading, and other relevant factors also need to be taken into the reckoning. A comparison of India with China must be weighted for the fact that the sectors that drive economic growth are different in the two countries. While software and services predominate as Indian growth engines, Chinese growth is coming in substantial measure from new, mass-scale manufacturing activities. In the Indian software sector, research and development (R&D) activity is controlled largely by the big global companies, with headquarters elsewhere, and they treat India as an offshore R&D hub to make use of its low-cost, scientific and engineering talent pool. The patents filed on the basis of such work will mostly be done in the company’s country of origin, so it will not show up in India’s number. Also, there is little scope for patenting when it comes to software services. And where the life-science and pharmaceutical industry is concerned, investments in in-house R&D are a recent phenomenon. As this trend picks up, one should expect patent filings to increase.

That said, the importance of patenting has come slowly to Indian companies. This could be because of a slow awakening to globalisation, and because India is a signatory to a large number of global pacts and protocols that provide automatic intellectual property protection to innovations in different fields in all the member countries. China, on the other hand, has not been as open to embracing knowledge protection obligations through such treaties. In any case, the Chinese track record in respecting intellectual property has been dismal and many global companies have suffered on this account. Though India’s record in this respect may also not be perfect, it has taken two key steps through the amendment of the Patent Act in 2005 to align it with the international agreement on trade-related intellectual property rights (Trips), and the enactment of a law on sui generis plant variety and farmers’ rights protection. Nevertheless, even after considering these factors, the truth is that India does not score very well on the R&D front. The positive change is that, even in manufacturing industries like automobiles, Indian companies now show signs of doing serious R&D work.

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