An intellectual property regime must boost innovation

T wo weeks ago, the Economic Advisory Council to the Prime Minister released a report on the current status of India’s intellectual property (IP) regime. It noted a marked increase in the number of patents filed in the country over the past decade (from only 39,400 patents filed in 2010-11 to as many as 66,440 in 2021-22). There has also been a steady increase in patents filed by Indian residents, accounting for nearly 44% of all patents filed last year. All this has resulted in India rising from 81st in the Global Innovation Index in 2016 to 46th last year.

The report credits this improvement to a series of reforms that have been carried out over the years. This includes measures such as progressive simplification of procedures, electronic delivery of certificates and expedited examination for certain categories of applicants.

But despite this, India still lags far behind countries that set the global benchmarks in innovation. The total number of patents filed in India last year was less than 5% of those filed in China and 10% of those filed in the US. India also lags in patents granted, with just under 27,000 in 2020 compared to 530,000 obtained in China and 350,000 in the US. What’s worst, perhaps, is the time taken to process a patent application: 58 months on average in India as compared to 20 months in China and 23 in the US.

The report argues that the primary reason for these shortcomings is the fact that our patent office is poorly staffed. In comparison with China, which has 13,704 examiners and controllers, and the US which has 8132, India employs just 860 people in its patent office. Given these low numbers, it is no wonder patents take so long to be processed and we lag so far behind our peers in patents granted.

The report has recommended the addition of 2,000 more staff at India’s patent office over the next two years to address this. Hopefully, this will help dispose of the backlog of applications and free the office up to accept fresh applications in greater numbers. It is hoped that, over the long term, this will give reluctant inventors the confidence to re-engage with the Indian patent system by filing for patents in greater numbers.

In addition, the report has also recommended a number of procedural reforms to improve the efficiency of the patent application process. It has suggested the introduction of fixed timelines at various stages in the patent process, to eliminate some of the delays that currently dog the system. It has recommended the elimination of onerous compliance obligations, such as the requirement to submit information on the prosecution of foreign patent applications even though this information can be easily accessed from the PCT portal. Finally, the report recommends the introduction of utility model patents for minor innovations that allows for a less stringent process, albeit with a shorter term of protection. If introduced, utility model patents will be particularly relevant for innovations emerging from projects under the country’s Atal Innovation Mission.

It is not clear when these recommendations will be implemented, or whether they will, once implemented, actually result in improvements in India’s performance on global innovation rankings. As important as it is to improve procedural efficiency, it is just as important to ensure that patent holders can easily enforce their patents once granted. That has more to do with the effectiveness of our judicial system and enforcement machinery than with patent-office efficiency.

But even if we restrict ourselves to substantive reform, as good as the recommendations of the EAC-PM are, I believe we can go further.

Patents were designed to offer inventors a monopoly over their inventions for a limited duration so that they had time to recover their investments in research and development (R&D) and make some profit to boot. But our patent system was designed before the age of digital innovation and the duration of this monopoly was set at a generous 20 years. While this period of time might have made sense for more traditional inventions, it is disproportionately long in the digital context.

Modern technologies evolve rapidly, often in a matter of months. Digital businesses have no choice but to innovate at a pace dictated by this time scale, or else risk being rendered irrelevant by their competition. In the digital context, 20 years of patent protection makes little sense. Rather than encouraging digital inventors to innovate, patent protection over a period of 20 years just encourages them to rest on their laurels—relying on legal protection to stay ahead in the market instead of pushing themselves to invent new ways to remain competitive.

If we really want to incentivize innovation, we need to reduce the period of protection for inventions in sectors where innovation can and does take place at a faster pace. Since the true purpose of the patent regime is to encourage innovation, it is more important to ensure that inventors keep coming up with new ideas than it is to afford them the opportunity to recover their investments in R&D.

We should consider a patent regime that offers different periods of protection based on the nature of the innovation sought to be protected. Drugs and pharmaceuticals, for example, could continue to enjoy 20 years of protection, while patents for digital innovation could be limited to 5 years or less, based on the rate at which technology evolves.

Rather than our current one-size-fits-all approach, perhaps the time has come for something more bespoke.

Rahul Matthan is a partner at Trilegal and also has a podcast by the name Ex Machina. His Twitter handle is @matthan