Simplifying surgery: Ribbel's R.K. Kanoria filed patent for a new surgical scalpel design

Ribbel's buyers asked the firm to patent its new surgical scalpel design to pre-empt copycats

On December 13, 2003, Clutch Auto, a small manufacturer of auto components in Delhi, faced a peculiar, but happy, situation. On that day, there were pending buy orders for 2,10,616 of its shares on the Bombay Stock Exchange, but no share was being offered for sale. The result: the stock quickly soared to a 52-week high of Rs 21.80. A penny stock catching the market wave? Hardly. Just the previous day, a pink daily had published news of Clutch Auto receiving its first US patent for a new clutch system that requires less foot pressure to operate, which in turn reduces driver fatigue-a major cause of road accidents in the US. Suddenly, an automotive industry minnow with Rs 25 crore in annual sales had better prospects of breaking into the $1-billion (Rs 4,600 crore) original equipment market (OEM) for clutch systems.

Not too long ago, the story would have read very differently. Either a company like Clutch Auto wouldn't have bothered filing for a patent or investors would have merely yawned at the news. Obviously now though, patent-protected innovations like Clutch Auto's are being recognised for what they are: a cheque waiting to be encashed. But how pervasive is the patent culture? What are the industries that are more patent-friendly? Who are the top patentees in the country? How many patents from India are being filed in the US? Or what technologies are these patents trying to protect?

Until recently, all these questions would have drawn a blank, simply because there is no consolidated database that readily answers these questions. Of course, you could have obtained some numbers from the Indian Patent Office, but that would not give you any idea of how many applications for patent are being filed from India in the US. Besides, the Indian Patent Office takes 18 months or more to publish a patent for opposition after it is filed, and six to seven years to grant a patent. So, any data is bound to be dated. While BT can do little about the patent granting procedures, it has done its bit to bring you the first ever survey of patent trends in the country. Conducted in association with Evalueserve, a New York-based IP research firm, the survey is a maiden attempt at piecing together India's patent story. What did we discover? Nothing less than a thriller in the making.

Here are some numbers from the BT-Evalueserve Research survey: In 1997, Indian companies and/or Indian inventors filed a mere 183 patents at the US patent office. Two years later, the number had jumped to 285, and in 2001-the latest year for which final numbers are available-it soared to 883. Assuming a modest 40 per cent rate of growth in patent filing, one could expect 1,200 patent applications from India for 2002 and a whopping 1,700 for 2003 (See The World of Indian Patents). As for the patent applications received in India, the numbers-according to Delhi-based patent lawyer Pravin Anand-have shot up to about 15,000 from 4,000 or so up until 1995. Another indication that the patent market is busier than ever is the surge in the number of patent agents: 147 in 1992 and 514 this year. Says Anand, who has helped file more than 10,000 patents in India and elsewhere: "Now there is no field where IP (intellectual property) is not involved. People who think IP see IP in every step."

What are the industries that are on a patent overdrive? While traditionally it used to be chemicals, the new aggressors are electrical and electronics, and pharma (there is some amount of overlap between chemicals and pharma). That's hardly surprising. Two of the biggest growth stories in the past decade have been it and pharmaceuticals. Besides, the two have been the most affected by changes in India's own patent regime. While the country has had a Patent Act since 1970, it only recognised process, and not product, patent in food, drugs, pharma and agro-chemicals. But after India signed the trips agreement in 1994, the rules of the game started changing. And a third amendment to the Act was tabled in the just-concluded winter session of Parliament, paving the way for a product patent regime starting 2005.

Flexing muscles: Facilities such as this Mohali lab give Ranbaxy an edge in its race for patents

For the past few years, pharma companies have been using patents to muscle into foreign majors' markets

While pharmaceutical companies made the most of the process patent regime by reverse engineering a new process for an existing drug, the software industry faced a slightly different situation. Unlike in the US, India's Patent Act does not cover software, leaving it to seek protection under the copyright laws. Nevertheless, software, being an industry where a lot of IP gets created, has been a key driver of the intellectual property movement in India. Says Prabhu Goel, Chairman, iPolicy Networks, a networking security start-up that has 20-odd patents pending in the us patent office: "To be successful in the marketplace, you have to make sure that you are protected."

For the past few years, pharma companies have been using patents to muscle their way onto the turf of foreign majors. This usually involves developing a new manufacturing process or a new drug delivery system to launch generic versions of blockbuster drugs where the patent has expired (a patent is valid for 20 years). The most recent example is Ranbaxy's challenge of Pfizer's anti-cholesterol drug Lipitor, which has raked in $8 billion (Rs 36,800 crore) in revenues. The decision in this case may take three to four years to come. Although litigation costs in such a case can be as high as $2 million (Rs 9.2 crore), companies like Ranbaxy don't shy away from it, simply because if they win, their generic drugs can fetch much more. Says Raghu Cidambi, Head (Corporate IP), Dr. Reddy's Labs: "Patents are top of the mind for discovery-driven companies like ours and Ranbaxy."

It's not just private sector companies that are piling onto the patent bandwagon. Even once-sleepy government labs are turning patent savvy (See Storm In A Beaker, page 154). And right at the forefront, ahead of even Dr. Reddy's and Ranbaxy, is the Council of Scientific and Industrial Research. Ever since R.A. Mashelkar took over as its Director General in 1995, he has brought in a strong patent culture. These days CSIR scientists are forbidden from publishing a research paper without actively considering filing for a patent first. In doing that Mashelkar has corrected a problem that had long plagued India's scientific community: technology developed in the country would get patented by somebody else abroad. Courtesy Mashelkar, CSIR has more than 600 patents filed for under its belt. Says he: "It is important to find a way from Saraswati (read knowledge) to Lakshmi (wealth)."

Guess what? Doing that isn't all that hard. Why? Because patents are not so much a product of deep science as good business. Most patents are granted for inventions that are simple, incremental and that help in improving a technology or a business model. For an invention to be patentable, it must be new, non-obvious and useful, and nothing more. One example of a simple invention is the popular Post-it(tm), a product of skunkworks at the Minnesota Mining & Manufacturing (3M) Corporation. This invention was conceived when a 3M employee wanted something that would help mark the pages of his hymnbook. The Post-it(tm) design and its uses prompted 3M to think innovatively and patent numerous applications, including one for software applications that had a user interface identical to Post-it(tm).

Turning self-reliant: Clutch Auto's V.K. Mehta turned to in-house R&D for innovation when MNCs set stiff conditions

A Rs 4.5-crore loan, two British consultants and ambition helped Clutch Auto jumpstart its research

SpinBrush is another example that demonstrates the patentability of simple inventions. It is an electric toothbrush made by Procter & Gamble (P&G), but was invented by four entrepreneurs from Cleveland, USA, who patented it. Later, they sold the patents and its technology to P&G for a whopping sum of $475 million (Rs 2,185 crore). Patents are also granted for simple improvements or a modification of a known technology or an invention. For example, there are more than 400 patents for different kinds of paper clip, which was invented way back in 1867. Evalueserve estimates that just the licensing value of these 400 paper clip patents is over $80 million (Rs 368 crore).

India, because of the limited R&D budgets that most companies have to work with, happens to be a natural breeding ground for simple and incremental research. Just ask R.K. Kanoria of Ribbel International, a Rs 5-crore surgical instruments company located out of Old Delhi's congested Daryaganj. In April 2003, Ribbel filed for a US patent for a new design of surgical scalpels. The innovation increases the safety features of the scalpel and reduces several health hazards that doctors and nurses are exposed to in the operating theatre. Says Kanoria: "Our innovation is based on the feedback from our buyers. They told us to patent the innovation so that we could prevent others from copying our design."

For Clutch Auto, the motivation was the changing rules of the technology game. About four years ago, the company tried striking a joint venture with multinational clutch-makers like Valeo and Sachs Mannesmann. But they put forward stiff conditions-a minimum ownership of 51 per cent, no bank borrowings, no public ownership, and disbanding of the current product line. "It was too high a price to pay for their technology," says V.K. Mehta, the company's Managing Director.

So Mehta decided to turn to his own R&D for developing new products. He hired two British consultants, arranged for a Rs 4.5-crore soft loan from the Department of Science and Technology and aimed big. When Clutch had the innovation in place, its team sifted through 11,000 patents filed since 1926 on clutch cover assembly, just to make sure no patent was being infringed. The patent was filed in February 2001 and it was granted in September this year. Mehta has four more innovative products in the pipeline, patents for which have already been filed over the last four months.

If more Mehtas and Kanorias think IP, you may just have a country that makes up for its patents tardiness with a vengeance.

-reporting by Sahad P.V.