India has great business and economic potential, but it cannot be capitalized upon until the policies in place encourage investment. The government has started moving on a path leading towards the increased enforcement and promotion of strong IP rights, but the proper execution of these initiatives will be critical to their long-term success.

By Patrick Kilbride

Time and again the Bharatiya Janata Party-led government has emphasized that intellectual property (IP) and innovation are among the top national priorities. IP-related issues were an integral part of the agenda during the recent visit of India’s Prime Minister Narendra Modi to the US, and it is a well-known fact that IP is imperative for the continuous growth of business and economy of any country.

Now, with the recent focus on IP by the government, industry is particularly interested to see whether India is taking concrete steps to strengthen their IP protections, or if the issues are just confined to ministerial meetings and foreign visits.

Current IP Scenario

In recent years, industry has become discouraged by India’s IP environment, and US authorities have called IP issues a major roadblock in bilateral relations. Specifically, weak IP laws are holding back three major sectors – pharmaceutical, technology, and entertainment.

One example is the recent patent revocation of Roche’s osteoporosis drug, Boniva, which occurred after a post-grant opposition filed by Cipla. This is concerning, and indicates momentum within the bureaucracy to continue to disregard fundamental patent rights.

Another example of the impact of a weak IP environment comes from the IT and entertainment industries.

Over the last 10 years, the entertainment industry has claimed that pervasive copyright infringement has resulted in a significant decline in earnings for conventional record labels. Meanwhile, the Business Software Alliance (BSA) said in a report that India’s piracy level stood at 60 percent, with the country’s recorded installation of US $2.9 billion worth of unlicensed software in 2013. Companies cannot be expected to contribute to the country’s growth if they face serious upfront issues that have such a direct impact on revenue.

In order to send a signal to investors that India is ready to get serious about intellectual property protection, political leadership is needed. Companies need assurances that their IP will be protected. The continued use of patent revocations and denials may cause investors to lose confidence in the Indian market, despite the country having huge technological, technical and creative potential.

The US Chamber of Commerce’s Global Intellectual Property Center (GIPC) recently released the third edition of the International IP Index, entitled UP: Unlimited Potential, which speaks to some of these IP concerns.

The GIPC Index maps the IP environment in 30 countries based on factors indicative of a strong IP environment. In the 2015 GIPC Index, India ranked 29 out of the featured 30 countries.

According to the report, India’s overall score has improved from previous editions with a score of 7.23, while the US which tops the list has a score of 28.53.

While this represents an improvement from the previous two editions – where India ranked last – industry has yet to see concrete improvements to India’s overall IP system.

“India’s patentability requirements remain outside established international best practices; there is a lack of specific IP rights for the life sciences sector,” the report said, adding that a challenging enforcement environment, with corresponding high levels of physical and online piracy, persists in India.

Corrective Measures

The GIPC Index also reveals how a strong IP system is directly proportionate to creating more jobs, providing better growth opportunities, and pumping more capital into the economy.

To capitalize on the many benefits which IP provides, India can introduce appropriate legislation, support policies, and encourage legal decisions that embrace – rather than inhibit – innovation and intellectual property. While the United States has been encouraged by the recent attention to IP in India, business wants to see action that goes beyond the rhetoric.

Such actions could include:

•A refutation of the use of compulsory licenses as a commercial tool. The continued threat of compulsory licenses (CLs) send a chilling signal to global innovators that the market is not safe for their IP. A repudiation of the use of CLs would do much to increase investor’s confidence in India.

•Implementing legislative changes to bring India’s patentability standards in line with international best practices. Section 3(d) of the Indian Patent Act introduced an additional step – “enhanced efficacy” – for patentability, which is inconsistent with India’s obligations under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. The continued use of this additional step to evaluate patentability limits an innovative company’s ability to further improve an existing medicine, which often times enhances its life saving potential.

•Strengthening existing administrative and judicial frameworks to improve the execution and enforcement of India’s IP laws. Steps taken to reduce the patent backlog and provide a fair, transparent dispute resolution mechanism would significantly strengthen India’s overall IP system.

The government’s commitment to enhance cooperation and exchange information with the US on IP-related issues under the US-India Trade Policy Forum is one such positive step. Meanwhile, the formation of a six-member IPR Think Tank by the Department of Industrial Policy & Promotion is another initiative in the same direction.

India has great business and economic potential, but it cannot be capitalized upon until the policies in place encourage investment. The government has started moving on a path leading towards the increased enforcement and promotion of strong IP rights, but the proper execution of these initiatives will be critical to their long-term success.

What Needs to be Done

In India, too often innovation is approached as jugaad and focuses on reverse engineering. Yet, for India to effectively encourage companies to ‘Make in India,’ India must adopt both a mindset and policies which promote home-grown innovation, and which is underpinned by strong IP protections. The creation of an infrastructure and environment that encourages innovation will radically change India’s economic and creative ecosystem. The ongoing engagement between the US and India should lead India to adopt tangible policy changes, allowing intellectual property to flourish and enabling investors and innovators to commit to India’s market for the long term.

We also hope the government uses the bilateral dialogue to initiate concrete steps for streamlining the existing process and to provide essential administrative and judicial tools for fair, transparent resolution of disputes with respect to issues like compulsory licensing and patentability. The introduction of such policies will be a win for both the India and the United States and would make it clear that India is a truly innovation-driven country, as well as a favourable destination for investment of all kinds.

The author is executive director, international intellectual property, at the US Chambers of Commerce’s Global Intellectual Property Center