India’s IP regime is going through a tumultuous period with the abolition of the IP appellate board earlier this year, the emergence of new technologies, and challenges associated with covid-19 vaccines. We brought together a panel of top experts to assess the IP ecosystem in a discussion moderated by Mithun Varkey. Here are the highlights
The covid-19 pandemic has had a profound impact on all our lives, and on businesses too. The mass adoption of online tools – for work, shopping and pleasure – is fundamentally reshaping the contours of commerce. IP rights and questions around vaccines and licensing are now daily conversations, and the rise of new-technology battlegrounds, such as the internet of things and AI (artificial intelligence), create fresh IP challenges.
Innovation is at the heart of any IP rights practice, and there is no doubt that India is firmly on the innovation highway. The country rose two notches in the World Intellectual Property Organisation’s (WIPO) 2021 Global Innovation Index, to 46th out of 132 economies. Among lower to middle income countries, it shares the record for having beaten expectations for its level of development for 11 straight years.
India has had quite a momentous year from both the regulatory and judicial perspectives, the most headline-grabbing of all being the abolition of the IP Appellate Board (IPAB).
There have also been recent judicial actions that have expanded India’s IP jurisprudence – dynamic injunctions by the Delhi High Court late last year; and the anti-anti-suit injunctions in the Xiaomi-Interdigital case. Against this background, we assembled our virtual roundtable – an exciting mix of general and IP counsel from some of the biggest Indian and multinational companies.
The full video of the IBLJ virtual roundtable
Our host was Abhai Pandey, a partner at LexOrbis. His guests: Eros Digital General Counsel Bishwarup Chakrabarti; Debolina Partap, Wockhardt senior vice president of legal, and group GC; Faiz ur Rahman, head of IP and associate vice president, Infosys; Samsung R&D Institute India’s head of IP and innovation, Ramachandran Lakshminarayanan; and Siemens India associate vice president and head of IPR, Pranay Prabhugaunker.
Abhai Pandey: It has been a very strange but interesting time for the past 15-20 months. It’s been difficult for us to hold meetings, which used to be a regular part of our routines. So, India Business Law Journal took the initiative so that we can meet and discuss developments.
Technology is playing a major role in our lives, both on the personal as well as professional fronts. We are seeing the emergence of new technologies, and related IP challenges around that. There are two parts to the technology challenges: The changes we have seen at the institutional levels, such as digitisation of paperwork and filings, and the holding of proceedings over videoconferences. Similarly, in pharmaceuticals and healthcare there’s a paradigm shift: The focus of most of the industry, the state and institutions, have turned to public health, and much work has been happening around the vaccines to deal with covid-19.
There are also changes in the legal and institutional frameworks within the IP space, one of the most prominent being the abolition of the IPAB. We used to have a three-tier system for dispute resolution of IP cases: the IP Office where things get resolved; an appellate board, which had both original and appellate side jurisdiction; and direct jurisdiction through the courts. Now that tier two has been abolished, so there’s a direct relation from the IP offices to the court. We hope that’s going to be good, particularly when the courts have taken initiatives such as Delhi High Court’s new IP division.
Five judges from the original side of Delhi High Court have been designated as an IP division. Probably the time has come to see all major advanced jurisdictions having a specialised IP court. The discussion should also start on where technical experts can be brought in, or at least the services of a panel of experts can be taken, on the question of facts.
Another thing that we can talk about today is mediation within IP disputes, which has successfully closed much litigation before it is taken up for trial. That’s another good development.
IBLJ: The IPAB abolishment has been the year’s biggest development. What are the panel’s views on this and on India’s IP trends?
Debolina Partap: I see [the abolition] as a disaster because I really don’t know how the courts are going to cope with the nuances in an IP case; whether all our courts are equipped? I would say, no. Delhi High Court, yes, it has been very equipped with IP-knowledgeable judges and even counsel. The Bombay High Court, yes, but of late we see Mumbai becoming more generic in terms of the judiciary as well as the counsel. Those specialised IP counsel we don’t find anymore.
What is welcome is the amendment to the Commercial Courts Act, which talks about mediation in IP. If more and more cases are going for mediation, then that does help. In pharma and healthcare, mediation and expert determination are really helpful, just because of the complexities of the issues involved.
Definitely in contractual matters, where there are disputes, and you have the court as the jurisdiction, mediation and expert determination have helped a lot. You have avoided huge costs for long litigations. A patent litigation could cost, if it’s a huge cross-border case, anything between USD5 million and USD50 million.
In terms of the innovation part in pharma and healthcare, the pandemic has seen the blessing of the vaccines. But a vaccine comes, besides its glamour, with a lot of challenges from an IP, as well as a legal, perspective.
You have the American and European countries who are pro-R&D, pro-protection and pro-innovation, and they feel if they part with it, it will discourage the innovation and the R&D.
On the other hand, countries like China, Russia, India, Brazil … are for vaccine waivers.
For the pharma and healthcare sector, what comes before business is life. If you are not able to save lives, if there is not enough accessibility and affordability, then what are we achieving?
Lakshminarayanan Ramachandran: In the beginning of this year … one of the top WIPO officials said that no other country has launched as many IP reforms in the past 10 years as India has. India has been leading in the number of reforms that we have published in the IP field. And 2015 onwards, you must have seen the number of patent filings have accelerated. What is really worrying is the utilisation of the IPAB so far. It has been abolished and my personal view is it should get reinstated.
Many times, examiners just reject the patent application. We used to think there’s always an appellate board. Now, there is no other way – we’ve to wait and get into expensive litigation.
Going all the way to court is not practically feasible because we [Samsung R&D Institute India] file 350 patent applications in a year. Imagine, if three or four applications get rejected every time you go to the court … it’s going to be complex for us.
Faiz Rahman: The IPAB is an issue, but I think this is going to compound a deeper issue. I used to be part of the IP office some 15 years back and we used to receive 40,000-odd applications a year. As a country, we used to get much less than what the rest of the large economies get and, 15 years later, we are still at some 60,000-odd applications a year.
If you translate that into terms of percentage growth, it is less than 2% CAGR [compound average growth rate]. Perhaps we are the only country in the world where the economic growth has not been supported by the patent filing growth or innovation because patents are the biggest indicator of innovation.
But let’s scratch the surface and see what has happened in the past 15 years, why our patent filing growth rate has been so tepid. Despite producing lots of very innovative companies and attracting a lot of investments, there are gaps in our system. When I say that, I’m referring to the need to relook at issues like the foreign filing licence. We need to look at issues like section 8 requirements of form 3 [which covers disclosure of overseas patent applications]. We need to look at how we are dealing with the electronic document exchange programme, which creates a lot of hassle for Indian companies.
And let me say that if you look at the patent law and the procedures … it is putting Indian innovation at a disadvantage. I know that coming from an Indian company and the kind of innovations we do. So, for example, we have innovators based in both India and the US. We have a situation where we have to take a foreign filing licence. If we don’t get that, there’s [the risk of] a two-year imprisonment [in India]. Then you have issues like, how do you exchange your parity documents, which adds a lot of procedural burden. Thankfully now we have some electronic document exchange arrangements at the patent office, but that is very recent.
Other countries also have many lacunas. The European system is pretty archaic in many ways – and very unethical in many ways. The US patent system is equally inefficient in many ways. But that shouldn’t stop us from innovating.
Pranay Prabhugaunker: The KPIs [key performance indicators] such as how many patents are registered, granted, what the government did and so on and so forth, are not important when it comes to the company that wants to protect its IP and invest in R&D.
Coming from an MNC, when we make a strategy for filing an IP or protecting our IP, it all depends on where our customers are, where our competitors are, where we would like to invest our money.
India is certainly on the radar. The question that pops up … why is India not doing anything in terms of IP protection? Unfortunately, there is no answer to this. There have been developments, but I think most of these developments have been a clear eyewash focusing on the US patent watchdog, and for the reports that the US trade and commerce institutes make, and to say that the IP system has improved. But has it improved for the ease of protection, for faster protection, in the favour of applicants? The answer is, clearly not.
The fundamental question foreign companies ask is: why so many restrictions, even to get a simple protection in India? We don’t have clear answers to all the questions that even one form creates. It wastes a lot of time and effort to clarify those. People simply drop the ball and say, we don’t want IP in India.
Bishwarup Chakrabarti: We want to go back to the basic premise of why the IPAB was set up, and what has changed. The only reason why the IPAB probably came about is the fact that most courts were not equipped to deal with specialised topics such as patents, trademarks and copyright.
I think it was logical – low hanging fruit to set up a tribunal that had specialised members who understood the subject way better and way faster than some of the high court judges. Given that kind of a premise, what has changed in 2021, whereby we take a step back and say that we don’t need specialised tribunals anymore?
There must have been something. The rationale of taking a specialised tribunal that deals with specialised cases … has been taken away.
Now, how do you substitute it? You come back with an IP division of a particular court. You see, certain courts are better equipped because they have judges who understand IP a little better.
Rather than trying to solve the problem, now they come up with another division and call it by a different name, but essentially we have the same wine in a different bottle.
In the media and entertainment space, I think the pandemic has created its own ecosystem, which is very different. It certainly got a fillip because everybody who was stuck at home had nothing else to do other than watch movies and web series. And we had a slew of OTT [over the top] platforms which have come about, but the moment you have an overdose of anything, every regulator, every government, steps in and tries to regulate it.
We actually had a cocktail of a delegated legislation and IT rules, which look to regulate social media intermediaries like the Facebooks and WhatsApps of the world, as well as, look at online platforms where they come back against the Netflixes, Amazons and Eros Nows, basically saying that you need to be regulated.
We have a whole slew of legislation that specifically looks at content meant to be consumed on the big screen. And as a result, you have economic rights of authors, you have economic rights of various other people which kind of tie into that kind of an ecosystem.
Again, all of that goes for a toss when a movie does not release in the theatre, but on an OTT platform for the first time. And then suddenly all our legislation came crashing down because nobody thought of that scenario.
IBLJ: What have been your experiences with regard to managing change, and how is legislation keeping up with it?
Partap: I think where we have had most challenges … in the healthcare system was in hospitals and medical institutions because suddenly none of the hospitals in India were equipped to face the covid challenge.
First, the treatment of covid patients. Second, what would be the regulations that would apply for sanitising the hospital? What would be the regulations applied for the treatment of the patients? Everything was empirical, and it was hands-on. Today we had a set of problems. We solved it. We had sort of standard operating procedures (SOPs).
Now those SOPs obviously are proprietary in nature. We consolidated that, we moved ahead. Patients, doctors, healthcare providers, medical personnel, everybody was on their feet. They did not know what to do because it was so new. The treatment processes were new. Every day the government came out with new regulations for compliance.
Today, we do have proper regulation under the Epidemics Act and Disaster Management Act. How are things to be treated? There are covid protocols, covid compliance for the authorities, for healthcare and also for the public at large. We are on our toes, on a daily basis and 24/7.
So, tackling counterfeits, being on your feet, using AI, getting hold of counterfeit management service providers. It was really challenging. I don’t know how much of a role the government played. But I think the great thing I have seen as far as Indians are concerned, and Indian lawyers are concerned – we can manage anything at any time.
Lakshminarayanan: I also would like to bring some views regarding startups. I was taking analytics of patent filings since 2001. So, from 2005 onwards there was a surge in patent filings, probably because product patents were introduced at the time. The same thing happened in 2015, when I saw there was a sudden surge from 40,000, there were 95,000, and then there was a mild drop.
That was a reaction to policies. Probably I would say it could be because of the “Make in India”, “Startup India”and “Digital India” policies since 2015.
In every multinational company, there is a make-versus-buy strategy. That means what is possible they will make in-house. What is not possible, but quickly required for the market, they will try to partner with the external ecosystem.
There are big teams operating in every company to find where these startups are located. It looks like in India a large number of startups are available. India is one of the top three destinations where startup growth is very high.
Usually when a company prepares a road map, the patent information is checked, which means the insights from patents made available, insights from technology is also made available. And then standard bodies, standardisation, where the operators are tending to make changes that are also understood, and then where the market is moving, what new products are going to be available in the market.
When we look at all these studies, what was really lacking were patent insights relating to startups. Three years ago, when we did a patent study, we could not find even a single startup name in the results from India. I just did it again last week. I found around 350 companies, mostly unknown companies. I assumed that they are startups.
A small change in our Indian patent administration will give these startups high visibility. There are two reasons they need to get visibility. One is the realisation of the IP value that they’ve created. Once big companies come to know that startups have valuable IP, they can be commercialised.
Another one is for investment in startups. Once the startups become visible, startups have opportunities to grow. When startups have an opportunity to grow, a lot of in-house IP jobs can be created. Currently, startups cannot afford to appoint IP professionals in-house, but by making them visible and making them richer, to even concentrate on IP, definitely IP capacity building can happen in India. Once IP capacity building happens, naturally we can export IP.
One way that I can think of that startups can gain visibility is to categorise companies that are classified as startups … and then the patent office can make this data available so that foreign companies can quickly find out the existence of these startups.
Pandey: The speed of reform is not catching up with the requirements. The number of examiners in the past five or six years [has increased], promotions given to the controllers so that the decisions can be taken. Examination report: … just about two years back it used to take six to seven years, now we have reduced it to two years.
IBLJ: What are the practical challenges that you have faced in patent filing?
Prabhugaunker: There has been improvement in backlog clearance and capacity building of the examiner, and so on. These are helping us to get faster grants for sure in India. But the fundamental challenges remain.
Why do we require a hand signature? If an inventor is in Europe and another is in the US, and others are in China, I have to run around to get it. Are our examiners capable enough to examine these applications? Companies like Samsung, Siemens, we have engineers, we have technical expertise, we can train those examiners.
Lakshminarayanan: We are in a better situation than we were three years ago, when we were thinking that most of our inventions were not patentable in India. That was the perspective. A lot of guidelines and changes. Software means not patentable.
But … we have been able to sail through the challenges and get more of a success rate with the Indian Patent Office, because 100% of our inventions are computer-implemented.
Then comes our surprise. Two years ago, we were seven years behind – applications filed seven years ago were coming up. Just recently when I looked, we were examining 2019 applications – just two years behind.
Although there is intellectual property available in India, there is no trust with some of the foreign companies operating here. If we are able to change that perspective by properly administering all the IP policies and laws, then India will see even greater heights.
Rahman: The times we are in demand that we deal a very different treatment to software patents and computer-implemented inventions.
The law as it stands, the procedures as they stand, the scope, etc., everything needs to be reimagined … otherwise we are barking up the wrong tree. We may keep fixing things notionally. The KPIs may look good, the patent may start getting granted. I’ve seen patents where somebody jokingly mentioned 4G or 5G in the title, in an application that was filed in 2007, and that got granted – when even 2G was not in play.
I would really be celebrating when we really reimagine how computer-implemented inventions are looked at with a complete rejig. I agree that nowhere in the world has this happened, but like I keep saying, nothing stops us from leading and innovating.
IBLJ: I want to tackle the dispute resolution aspect as well. What are the trends in IP dispute resolution?
Chakrabarti: If you want to use time as a bit of a yardstick, when it comes to injunctive relief in India, it probably is broken up into three pieces.
One is with regard to the event, which is basically an injunction right at the event, and just before the event happens. That’s always been the timing with which most people have approached courts… And to add to it, what has happened is at the back-end we’ve had two ends of the pole where we’ve had reasonable apprehension, like quia timet injunctions. What has also happened is we’ve had something like a post-facto injunction, where the event has happened. All that you’re trying to do is to protect against further infringement.
Courts have moved away from the first two in certain cases and, especially in the media and entertainment space, where you would get a lot of big-ticket litigation being filed just when a film or web series is to be released.
Partap: There is another side to pharma and healthcare, which is a very big side in terms of dispute resolution, which is not IP that is actually registered. These are more IP arrangements, so it could be between a licensor and a licensee.
When I’m speaking of a licensing deal, or if I’m speaking of a technology transfer deal, this applies to devices also. Or if I’m speaking of an IP arrangement contract. In such contracts, earlier, the old school had a lot of stress on courts, and not arbitration. We have moved towards dispute resolution, but dispute resolution cross-border … the cost is an issue. And therefore, nowadays we do it in two layers. We try to first settle it in mediation, which is very cost effective, everybody’s happy and our budgets are in place.
IBLJ: We will take closing comments from all the panellists.
Chakrabarti: At some point in time, we had the theme of educating the educator. As long as the educated believe it’s a collaborative process instead of just thinking of it as just an outreach and a checklist to be ticked. If that can be done, I think it can work out for the whole system.
Rahman: Fully reimagine the patent system for software or computer-implemented inventions.
Lakshminarayanan: What we should see as India, as a whole country, we should now bet on innovation. This is the right opportunity to innovate. If you’re able to see high-quality IP created from India … that would be the best we can imagine in the next four to five years.
Prabhugaunker: Innovation is very important, and it needs to be respected, it needs to be protected. And we need a solid framework in these current times.
Partap: I think that while framing a national IPR policy, the government should just not have a committee, but should have grassroots committees at various levels, so that the real thought processes of different stakeholders are taken into account.
Pandey: A national IPR policy cannot be made in a room somewhere [in central government offices]. It needs to take care of ground-level stakeholders. A new IPR policy, backed by industry, for more quality innovation, which creates value for the organisations and for the country, is something that needs to be looked at.