Better IP protection would help encourage investment

By Gayatri Roy and Reshma Vaidya, Luthra & Luthra Law Offices

Intellectual property (IP) is a powerful tool in shaping a country’s economic growth. For global companies, a strong and effective IP legal regime facilitates technology transfers, local research and development, production, exports, etc., thereby impacting decisions to invest, particularly when there is a choice of other strong markets with more effective IP regimes.

Gayatri Roy
Gayatri Roy

The changing framework of IP laws in India has noticeably impacted the pattern of foreign direct investment (FDI) inflows in some sectors and certain decisions seem to have resulted in a negative perception. The International IP Index released by the US Chamber of Commerce’s Global Intellectual Property Center in 2014 ranks India last in terms of its IP standards and level of protection. A report issued in 2014 by the Europe India Chamber of Commerce and the European Business and Technology Centre also discussed concerns. The report noted that while India may be an opportunity hard to ignore, a more robust IP regime would enhance investor confidence.

While India has several advantages to make it a favoured destination for FDI, changes in its IP regime could contribute vastly in boosting investor confidence and the success of “Make in India” campaign.

In the current competitive business environment, trade secrets contribute significantly to the profitability of a business. Given their commercial value, there is a pressing need to have a well-defined and concrete legal framework for their protection in India. Explicit rules to maintain the secrecy of confidential information that a party may produce or be required to produce before a court or a regulatory authority, and remedies for the breach of such rules may alleviate concerns that businesses often have. Such rules would also render more effective an action for breach of confidence.

An additional area of focus could be fast-track civil action where the subject matter of the dispute is a breach of confidence by an employee or ex-employee. This could provide viable civil enforcement options and encourage compliance with confidentiality obligations. Criminal actions against employees or ex-employees could be made available in very limited cases and enforced speedily where available.

Protection against reliance by subsequent applicants on undisclosed test data submitted to regulatory authorities for grant of approvals could also be considered, subject to adequate limitations in the public interest and to guard against the abuse of rights. India has for years been under pressure on the issue of data exclusivity from significant sources of FDI into India such as the US and EU.

Simplifying the process of examination of a geographic indication, particularly where the indication has received home country registration, is another change which would bolster the country’s image as facilitating protection to IP. The process of opposition would continue to be available to third parties in the event of a conflict.

Reshma Vaidya
Reshma Vaidya

A large part of India’s jurisprudence on IP law has arisen from interlocutory proceedings. Ex parte and temporary injunctive relief have assumed a life of their own. All stakeholders could benefit from a shift in focus to expedited trial and final judgment, proof of right and its violation, development of jurisprudence on damages in contested cases, and restitution where a complainant enjoying interim orders ultimately fails. Some IP cases settle at the trial stage, another incentive to focus on trial.

Counterfeiting and piracy continue to be of concern in India. Giving priority to efficient enforcement of the criminal law coupled with public awareness would contribute significantly as deterrence. The creation of specialized IP cells by law enforcement agencies, increased allocation of resources, regular training, coordination and exchange of information across agencies, practice guidelines and manuals, periodic audits and review are some initiatives that would enhance the efficiency of the law enforcement agencies.

Introducing fast-track courts for expeditious disposal of pending criminal proceedings in relation to counterfeiting and piracy is also desirable. A centralized body to review initiatives across the country could provide tools for future action and assist in spreading public awareness on a pan-India basis. Publication of periodic reports by the centralized body would provide potential investors with data on trends and risks, on both an all-India and regional basis.

India’s IP offices play a critical role in the creation and protection of IP rights. Institutional capacity building and standardized implementation across offices (and officers) through practice and examination guidelines, simplification of procedures and documentation for post registration recordal of changes, prescribing time limits for disposal of such requests, extensions of time where the failure to comply with timelines was inadvertent, transparency in operation and overall responsiveness would signal the country’s commitment to stimulate creation and strengthen protection of IP in India.

Luthra & Luthra Law Offices is a full-service law firm with offices in Delhi, Mumbai and Bangalore. Gayatri Roy is a partner and Reshma Vaidya is a senior associate at the firm. This article is intended for general informational purposes only and is not a substitute for legal advice.

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