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COVER STORY The CEO's Guide to The New Patents Regime Barely 15 months from now, India Inc. will enter the global patents system. It may change your product portfolio, force your processes to be reworked-and transform your cost structures. Are you prepared? By Rukmini Parthasarathy
It was wrong. The terms of the relationship, while not legally inaccurate, were misleading. Misleading, that is, under the new globalised patents regime that business will have to operate in-which could be ushered in as early as 2000. Merely 15 months from now. Devil of demigod, Patent Man is here to enforce India Inc.'s tryst with intellectual destiny. The options are clear: wake up, now, and take pro-active action so that India's companies can, finally, begin to participate in what is going to be the biggest market of the future: the market for knowledge. Or else, wait for the string by which the Damocles' Sword hangs to be severed. As the name suggests, IPRs are the rights granted to persons over the creations of their minds. The right-holder is granted a monopoly on the use of his creation for a limited time-frame. In that period, IPRs can be used, sold, licensed-even abandoned-just like any other more tangible asset. Actually, intellectual property is an omnibus term. Usually, IPRs are divided into 2 broad streams. Copyrights and related rights relate to literary, musical, artistic, photographic, and audio-visual works while industrial property rights deal with patents, industrial designs, trademarks, and appellations of origin. Although there are various international conventions on each of these rights, the agreement on Trade-Related Intellectual Property Rights (TRIPS)-which is part of the World Trade Organisation (WTO) agreements ratified and signed by India in 1994-yokes together all these rights under one multilateral forum. The trips agreement prescribes minimum standards of protection for 7 forms of intellectual property:
In the first 6 of these 7 genres, Indian laws meet these minimum standards. But in the 7th-Patents-our laws differ sharply from the WTO requirements in many cases. The gulf: the trips agreement requires patent protection to be extended to inventions-be they products or processes-in every field of technology. The Indian Patents Act, 1970, however, does not allow product patents for food, medicines, drugs, and chemicals. It has been this divergence in coverage that has generated the maximum controversy, the maximum delay, and, of course, the maximum breathing space-which is now about to end. Not only do our patent laws differ markedly from those abroad, international covenants that provide for the movement of IPRs across national boundaries had not been signed. Enforcement of the laws that exist is lax, largely due to a lingering suspicion that violation does not constitute a serious crime. Worse, punishment for such violation is rarely swift or substantial. Finally, that will change. The trips agreement itself did allow for some delay as member-nations were granted a transition period to make the necessary changes. For IPRs other than patents, developing countries were given time until 2000 to introduce protection norms. For patents, the deadline was extended to 2005; in the interim, legislation has to be passed. Specifically, in lieu of providing product patents, developing countries like India must accept applications for product patents. This mailbox arrangement-so named since these applications will go into a black box that will be opened up in 2005-will determine the right of priority when full-fledged product patents are granted. Interim protection is provided to the applicant through the grant of Exclusive Marketing Rights (EMRs) for a period of 5 years, with the clock starting to tick from the year 2000. So far, unlike other developing countries, attempts to set up even these transitional arrangements have foundered. Administrative arrangements to accept product patent applications were made, but the Patents Bill, 1995-which was supposed to make Indian patent laws WTO-compatible-lapsed after running into a storm of protest in Parliament. That placed the Government Of India (GOI) in the somewhat-peculiar position of accepting product patent applications that were not backed by the force of law. Three years later, that same legal ambiguity remains as the Bill is yet to be reintroduced. Time is, however, running out. Following a complaint from the US, the WTO's Dispute Resolution Forum ruled against India for failing to extend adequate patent protection for pharma and agro-chemicals. India appealed against the ruling and has, subsequently, lost the appeal. To further stave off the day of reckoning, the GOI requested arbitration-which pushed back the deadline to April, 1999. But legal avenues for further postponement are virtually exhausted. Points out Bibek Debroy, 43, Director, Rajiv Gandhi Institute for Contemporary Studies: ''If we continue to stall, the only options left will be economic sanctions-or exit from the WTO.''
That may explain why a reluctant government has, finally, been prodded into action. The Atal Bihari Vajpayee Administration has cleared a revised Patents Bill, which will be introduced in the Winter Session of Parliament. Based on the recommendations of the four-man expert committee appointed by Union Industry Minister Sikander Bakht in April, 1998, the draft Bill will recognise product patents from 2000, thus doing away with the need for interim arrangements like EMRs. Almost simultaneously, the GOI decided to accede to the Paris Convention for the protection of Intellectual Property and, by extension, the Patent Cooperation Treaty (PCT). The Paris Convention-which dates back to 1883 and includes over 147 member-countries-provides for international protection and promotion of industrial property rights. Member-countries can also sign subsidiary treaties such as the PCT, which permits inventors to file a single application for patent protection in a number of countries. At present, Indian inventors have to file separate claims in different countries simultaneously, multiplying costs. True, the long-overdue legislative amendments will mark only the beginning of an overhaul. Major systemic and attitudinal changes will be required on the part of patent administrators and enforcers. For, the notion that knowledge should be viewed as commercial property, and not as a public good, will require nothing less than a mindshift. Cautions G.V. Ramakrishna, 67, Chairman, Disinvestment Commission: ''We are accustomed to the notion that knowledge is free. Our whole orientation has to change from one that stresses intellectual attainment to one that protects intellectual property.'' But change it will. So, business must make that shift too. ''Low patent awareness and concern-indeed, outright apathy-have also contributed towards keeping patent-related activity at a negligible level,'' says patent attorney Prabuddha Ganguli, 50, who is a Manager (Corporate Planning) at the Rs 8,528.30-crore Hindustan Lever. Misperceptions abound, including the belief that patents are only relevant for innovations in hi-tech areas. To the contrary, patents can be an integral part of the growth-cycle of any product, however mundane. The $10.06-billion Gillette's Sensor razor, for instance, is protected by 17 patents. Continued lack of awareness is, therefore, going to prove increasingly costly. Not just because the laws have to change and, indeed, will change in the next 8 months, but because as the process of liberalisation throws open hitherto-closed markets, intellectual property protection may well be the only form of protection that will still be available to industry. BT presents the CEO's guide to the new marketplace for your most valuable asset in the new millennium: intellectual property.
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India Inc.'s inappropriate relationship with
Intellectual Property Rights (IPRs) is about to be terminated. 
