WTO TRIPS Council (November 2012): Intervention of India on Intellectual Property and Innovation

On 7 November 2012, India delivered the following intervention under agenda item M, "Intellectual Property and Innovation".

We thank the delegations of Brazil and the United States for tabling an agenda item on "Intellectual Property and Innovation" which we understand is a standalone item.

We note the word “innovation” appears just once in the TRIPS Agreement, in Article 7, which states that intellectual property rights “should contribute to the promotion of technological innovation and on the transfer of and dissemination of technology,” and not for the sake of innovation itself, but “to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.” Thus the TRIPS Agreement makes it very clear that the purpose of the IP system is not solely to protect the commercial interests of the IP holder but it is one of the many tools available to the Society to achieve technological development, its social and economic welfare and innovation.

The relationship between innovation and intellectual property rights is rather complex. The TRIPS Agreement does not define what innovation means, but leaves it open to every country for appropriate interpretation, depending on the public interest it would like to achieve with IP. Empirical evidence on the role of intellectual property protection in promoting innovation and growth remains inconclusive. Diverging views persist on the impact of intellectual property rights on development prospects. Some point out that protection of IP can bring benefits to developing countries by creating the incentive structure necessary for knowledge generation and diffusion, technology transfer and private investment flows. Others stress that IP, especially some of its elements, such as the patenting regime, will adversely affect the pursuit of sustainable development strategies by: raising the prices of essential drugs to levels that are too high for the poor to afford; limiting the availability of educational materials for developing country school and university students; legitimising the piracy of traditional knowledge; and undermining the self-reliance of resource-poor farmers.

The question therefore remains whether higher level of IP protection can provide innovation? A key question is how to frame a patent regime in a country where the innovation path is centered on minor/incremental technical changes. One view is that if the patent threshold is kept very low then minor innovations may encourage companies to seek patents and thus develop the existing technologies. On the other hand it is proved that such a patent regime gets mostly manipulated by bigger companies, who have the financial and technical capacity to exploit the patent system and not by small and medium enterprises prevailing in the developing countries. The domestic companies in developing countries, deterred by the high litigation cost, would therefore prefer to remain out of the patent system.

The second question is whether the thousands of patents granted for example in the field of pharmaceuticals in many developed and developing countries, mean real innovation? In fact the irony is that during the last two decades, despite the TRIPS Agreement and advances in research tools, the number of real innovations in pharmaceuticals i.e. new chemical entities have dramatically fallen while the number of patents has dramatically increased. The increased numbers of patents are unfortunately granted for simple changes in chemistry and new formulations of existing products so that the generic products, which can provide affordable access to the quality products, are out of the market. Further in developing countries very few patents are granted to the domestic companies meaning thereby that the national IP regime is geared not for promoting domestic innovation but to protect the IPRs of the bigger companies in some of the developed countries. Thus, the IP system for example in the pharma industry fails to fulfil the interests of the society to provide quality drugs, to develop new drugs to treat the diseases of the poor or to provide access to medicines at an affordable cost, thus defeating the basic purpose of the TRIPS Agreement.

Similarly the Society has gained tremendously through innovation in internet technologies, mobile telephony etc. These sectors could develop in a sequential manner not through the IP system but through open architecture, joint development and cross licensing. I doubt if we would have reached this stage of development in these technologies if every patent holder would have prevented others from using his patent for the duration of patents. Further many other sectors important to the society including the defence sector, aviation sector, fashion industry etc succeeded not by protecting the core interests of the inventor but by using the flexibilities in IP regimes.

In order to resolve the tensions between innovation and access and the need to accommodate sequential innovation, governments can choose to use various flexibilities in the TRIPS agreement. In addition to the flexibility of withholding protection entirely for some areas of innovation, governments also have the option of compulsory licensing on reasonable terms. For example, the European Union provides for mandatory compulsory cross licensing of both patents and sui generis plant variety protection for cases involving follow-on innovations involving new plant characteristics,” where the new innovation represents “significant technological progress of considerable economic interest.” In both Europe and the United States, there are a number of cases where governments intervene in licensing decisions involving patents on computer and mobile computing technologies, in order to ensure that licensing terms are available on fair, reasonable, and non-discriminatory terms (FRAND).

In order to ensure that patents on stem cell technologies did not block follow-on innovation, both the United States and the European Union have considered a number of strategies to reduce the negative impact of patents on innovation. These include decisions to deny patents or limit patent claims, or to require licensing of patents developed with government funds.

Let me conclude by saying that we cannot draw a direct correlation between IP and innovation. In fact the technological progress even in the developed world has been achieved through government interventions like compulsory licenses, cross licensing, government funding etc, and through competition policy but not through the IP system alone, that secures the investments of the inventors. It is unfortunate that some of the developed countries would like to use the IP to perpetuate their hold on these innovations and block development by others. It is therefore essential that the flexibilities provided by the TRIPS Agreement need to be used by the developing countries if they want their societies to benefit from innovations.