Proposed patent Bill is flawed, say experts

Listen to Professor Shamnad Basheer of the National University of Juridical Sciences talk about the Bayh Dole bill and its implications for Indian industry

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The proposed Protection and Utilisation of Public Funded Intellectual Property (IP) Bill—sometimes referred to by its detractors as India’s Bayh-Dole Act, which was co-sponsored by then US senators Birch Bayh and Bob Dole—will allow government laboratories and universities to protect and own inventions and discoveries, in anticipation that this will boost commercial applications of their research. It also provides for sharing revenue on such inventions with the scientists involved.

“The Bill really does not cater appropriately to public interest concerns in a meaningful way. It ought to have normative statements favouring the creation of innovations that serve the public good," says Shamnad Basheer, a patent law expert and the human resource development ministry-appointed new IP faculty at the National University of Juridical Sciences, Kolkata.

The Bill was presented by the ministry of science and technology in the Rajya Sabha in January, before a draft was made available for public scrutiny.

The Bayh-Dole Act in the US also allowed federally funded scientific institutions and universities ownership rights to the intellectual property on their inventions and transfer those rights to industries. Until then, such rights rested with the federal government, making technology transfer to industry difficult.

The Indian Bill is currently with a parliamentary committee, and is expected to go through with a few changes, said a senior official at the ministry of science and technology. Such committees are constituted to study Bills that have already been cleared by the cabinet.

The Bill also lacks safeguards to ensure that exclusive licensing of publicly funded technologies does not create a market monopoly for private players.

According to the National Knowledge Commission, which originally recommended such a law, the Bill will help unlock the value of the country’s publicly funded research outputs. About 75% of Indian research and development activities are funded by the state, according to data from the ministry of science and technology.

Critics say the revenue model is already being followed by almost all government institutions and universities, including the Council of Scientific and Industrial Research (CSIR), the largest research organization in the country.

Another major sticking point with the legislation in its current form is its relevance to India. Critics point out that the Bayh-Dole Act was passed when publicly funded scientific institutions in the US had no intellectual property rights over their discoveries.

Basheer said India does not have that problem as scientists and institutions automatically get such rights.

Under the “Indian Patents Act, IP rights are with the scientists automatically, unless the institution signs an employment agreement stating that rights vest with the organization," he said. Almost all government labs and scientific institutions have mandatory employment agreements. Still, the Indian Bill is “a laudable initiative to regulate and support commercialization of publicly funded research for the first time," Basheer said.

Joshua D. Sarnoff of the Washington College of Law said he’s not sure whether a Bayh-Dole-type law would help India as the current situation does not demand such a legislation.

“The context of the Bill in the US in 1980 was different as the ownership of all IP rights that came out of publicly funded research were owned by the government," he said. “These organizations and the industry found it a stumbling block for technology licensing."

In India, he said, it will be important for the government to specify clear guidelines on issues and conditions in which the state should retain rights, what is expected of private ownership and the situation in which the government may intervene to correct licensing and monopoly practices.

M.K. Bhan, secretary, department of biotechnology, and one of the key proponents of the Bill, said the new law would be of tremendous benefit to the country as it will help the flow of technologies discovered under publicly funded schemes to the industry for development and commercialization.

“We have to look at the whole scenario of publicly funded scientific bodies, including small, medium and large institutions and universities, which do not exactly protect their inventions, and face difficulties in transferring them to industry for commercial use," he said.

A senior scientist at the Institute of Genomics and Integrative Biology, one of the laboratories under CSIR, says the Bill in its current form does not address the actual issues that block technology transfer, such as the lack of applicability of research at the industrial level, absence of an active technology transfer mechanism within the organization, lack of funds for taking forward primary inventions to a transferable level, and institutional attitudes that limit research to just publishing in journals.

“CSIR has been following the same system even without legislation of this kind. However, it has so far licensed only a very small number of technologies compared with its 4,700 patents," she pointed out. She declined to be identified.

Bhan conceded that the Bill does not address these issues but added that it will hopefully evolve to cover this later. “But it will definitely speed up the process, which otherwise takes years together," he said.

Several multinational and domestic firms, especially in chemicals, pharmaceuticals, and information technology, have been looking at India as an emerging research hub, with its scientific pool and low cost.

Overseas firms such as Microsoft Corp., General Electric Co., Procter and Gamble Plc, GlaxoSmithKline Plc, Sanofi Aventis SA, Merck KgaA, Pfizer Inc., and domestic ones such as Reliance Industries Ltd, Hindustan Unilever Ltd, Tata Motors Ltd, Larsen and Toubro Ltd, Cipla Ltd, Dr Reddy’s Laboratories Ltd, and Ranbaxy Laboratories Ltd, among others, have had research collaborations with universities and labs and are exploring technology licensing opportunities at leading government institutions and universities.

Tapan Ray, director general, Organisation of Pharmaceutical Producers of India, an industry body that represents foreign drug firms operating in India, said, “The core concept of the Bill encourages innovation and ensures protection of patents and other forms of IP rights of the government-funded R&D outcomes, where the owner of the intellectual property will be the government grant recipient or the government."

“Public-funded research in India has not been effectively translated into applications by industry and hence, there is a need to think about streamlining IPR for public-funded research," said Amit Shovon Ray, professor of economics at the Centre for International Trade and Development, School of International Studies, at the Jawaharlal Nehru University (JNU), New Delhi.

“However, Bayh-Dole is perhaps not the appropriate example to emulate in India because ownership and protection of R&D is definitely not the real remedy to make government labs and universities self-sustainable. Rather, the spurt in university patenting may cost the technology transfer organizations more than they earn from them," said Ray of JNU.

Also, unlike the US government’s restrictions on exclusive licensing, research institutions in India do not have overriding restrictions on licensing terms at this point, said Premnath Venugopalan, a senior scientist at the National Chemical Laboratory, Pune. “Furthermore, while the US had a well-established culture of IP creation and exploitation by the 1970s, we are still at an early stage, with a relatively small number of inventions reported every year," he said.

Shashwat Purohit, an IP expert and consultant to the United Nations’ World Intellectual Property Organization, said technology offices in most US universities (with a few exceptions) are more of a liability rather than a source of revenue. “As a matter of fact, AUTM (Association of University Technology Managers) in the US takes a position that its objective is to provide taxpayers access to the technology that is being developed in the university or laboratory which is public-funded and not to bring in profit or become self-sustainable," he said.

Thus, ownership and protection of research through the Bayh-Dole type of legislation cannot be said to be a real remedy to make government labs and universities self-sustainable until there is absorptive capacity in domestic industry, as well as availability of seed capital for start-ups, he added.

“Since the traditional university system is moulded in a bureaucratic pattern and there is no evolution of a professional private university system on the horizon, (the new law) in a sense, is like putting the cart before the horse," said V.C. Vivekanandan, professor of law, and dean at the Indian Institute of Technology, Kharagpur. He added that an impact study is required if the goal is to stimulate innovation and self-reliance on technological preparedness as the legislation could affect even well-to-do networks such as the IITs and CSIR/DSIR (department of scientific and industrial research) systems.

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