Towards a positive IP mindset

On December 19, 2014, the department of industrial policy and promotion released the first draft of its highly anticipated National Intellectual Property Rights Policy, put together by a special think tank consisting of some of India’s most experienced thinkers on intellectual property rights

At the very beginning, the authors argue that creative and innovative India is “the motto which will inspire India to take a lead in various fields of human accomplishments”. In doing so the report explicitly recognises the importance and value of IPR in nurturing India’s national ambitions.

Such a philosophy should be taken very seriously, not least given the fraught relationship India has with its own IP system. For many years India has been a vocal critic of IPR, and has strongly resisted attempts to improve and strengthen these rights, both internationally and domestically.

Indeed, some of the fiercest opponents of the IP system in India tend to describe it as a rent-seeking machine that transfers wealth from Indian users to foreign innovators at a premium price.

More often than not if one was to address the subject of IPR in India, one would have to do so in a negative context. Such a negative mind-set has also allowed India to counter the protection of IPR with unprecedented measures that seek to “balance” and control the power deriving from the protection of these rights. Notable examples included the use of compulsory licenses in medicines and the creation of barriers (thresholds) for patentability that go well beyond recognised international norms.

Yet, we may be seeing the blossoming of a different, less suspicious approach. This approach may be rooted in three mega trends: more accurately measuring the protection of IPR, understating their positive long-term economic impact, and harnessing these rights for domestic economic growth.

Today, we are able to accurately quantify and measure the level of intellectual property protection in different countries, and as a result to identify national gaps and outliers. For example, the US chamber’s Global Intellectual Property Centre recently released the third edition of the International Intellectual Property Index which measures the extent to which the rights of innovators and creators are being protected by different countries. The index measures the availability and actual enforcement of IPR across different sectors and all major rights including, but not limited to, patents, copyrights and trademarks.

Although this year India has actually improved its score to 7.23 out of a maximum score of 30 points, this is still the second weakest environment of all the 30 countries surveyed.

Mapping countries’ intellectual property environments also allows us to understand their long-term impact, including in the fields of foreign direct investment (FDI), technology transfer, and economic activity. The evidence suggests that countries with well-established, robust national IP environments also reap significant economic benefits. Recent studies by the European and US patent offices on the economic contribution of IP intensive industries in the EU and US showed that these industries produced between 35-39 per cent of EU-wide and American GDP.

The benefits of IP are in no way limited only to mature markets. By improving their IP environment, emerging economies are likely to benefit significantly from FDI, greater technology transfer flows and economic growth. OECD modelling, for example, suggests that on average for every 1 per cent increase in the strength of its IP protection a country may expect a 2.8 per cent increase in its FDI inflows. That may also be the reason why India is becoming more mindful of the fact that exploitation of its intellectual property is a huge untapped economic resource.

Despite the richness and ubiquity of Indian culture and creative products, — highlighted by the Bollywood film industry — the economic contribution of the creative sector is limited. For instance, estimates suggest that film piracy may have reduced the value of the Indian film industry by up to 50 per cent.

Combined, these mega trends create a new window of opportunity in which it is possible to think of a new direction in Indian policy on IPR. The election of Narendra Modi, and the recent announcement that India will seek to reform its national intellectual property environment, may provide a real platform for change.

For the first time it may be possible to establish a more positive mind-set towards intellectual property rights in India and truly unleash the creativity and ingenuity of this great nation.

The writer is a professor of IP, innovation and entrepreneurship at the University of Maastricht

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