If the EMR grant for the
anticancer drug Glivec (making the import, manufacture and
supply becoming the exclusive monopoly of Novartis) was the
first TRIPS dictated shock for the nation, the steadily
increasing flow of PCT (Patent Cooperation Treaty) mediated
filing of patents in India by agencies from abroad could
certainly pose ever greater challenges for future application
oriented/industrial R&D in the country, be it even the strategic
sector simultaneously subject to also supply restrictions under
different shades of the Embargo Regimes. And in absence of
adequate and timely response from all concerned, it could also
lead our ‘technology hungry’ industrial units to a "Technology
Trap", akin to the much discussed Debt Trap.
Taking examples from the
strategic sector, a recent case in point is a PCT application by
General Electric Co. for "A Fail-safe actuating system for
aircraft turbine engine axis symmetric vectoring exhaust
nozzle". Filed in US under PCT in 1996 with India also as a
possible destination and the patent grant obtained from USPTO as
US 5,740,988 in 1998, the case has come up in 2004 (!) before
the Indian patent office for processing under 1854/CAL/96.
Unless the concerned Indian R&D personnel are able to
effectively oppose the same on sound techno-legal premises to
get it nullified, it will be granted in India as well. Once that
happens, the R&D claims covered under its scope including ‘what
are obvious to experts’ will not be available for Indian use. In
the specific case, the problem is even more serious in that
while such items are under ‘embargo’, our patent law is quite
inadequate to handle the patent monopoly issue for possible
‘indigenisation’ even if so required except under the general
provisions of ‘anti-competitive practice’. In other words,
things at the Indian patents office being as inefficient and
slow as they are( even after nearly a decade of WTO/TRIPS
entry), perusals of GOI gazettes are in reality ineffectual to
conduct any meaningful Patents Audit integral and so essential
under the New IPR Regime with meaningful R&D ‘of possible
industrial use’.
The seriousness of the PCT
Problem has now become quite obvious to all serious researchers
in the field, thanks to the lately established easy access of
the extremely user friendly WIPO website (http://pctgazette.wipo.int).
A quick look into the data base indicates that the number of PCT
applications during 1997-date for some of the relevant items
used as ‘key words’ for search are as below:
- Strategic Items: Nuclear
Fuel 223, Uranium 140, Pu 40, Launch vehicle 42 and satellite
2836, a few of them from China also.
- Civilian Items: Calcined
clay 91, portland cement 382, alumina 7500, steel making 97, "modelling"
1600, control instrumentation 29, voltage transformer 297,
petroleum refining 156, and so on.
Among both of them, a number
of applications have included India also as a possible
destination. In other words, it is absolutely essential that
adequate expertise in Intellectual Property Rights Management is
built up on a top priority basis by all R&D groups, thereby
enabling themselves to make their work totally IPR-compatible.
It is in this
connection that one would like to have a re-look at the recent
publications in Economic and Political Weekly on the Total
Factor Productivity aspects of the Indian industries (EPW Jan
31,2004). Whereas pre-liberalisation years are often and even
fashionably described as the stagnancy period, the above studies
show "Evidence from these six studies using different
methodolgies and different data sets do not support the
hypothesis relating to an increase in productivity/efficiency in
Indian industries consequent upon economic liberalization...The
main gainers have been the MNEs and their affiliates which have
better access to technology and other intangible assests",
as summarised by the Team Leader N S Siddharthan (emphasis
added). In other words, the Indian companies were unable to
upgrade themselves also through inadequate access for
acquisition of new technologies during the period of study.
Though it is well realized that ‘technology and other
intangible assets’ thus constitute a significant component of
TFP, very few have attempted to study this vital correlation
even semi-quantitatively. It is in this context that the results
of the Finish economist-technology policy researcher Dr Petri
Niininen of VTT Group for Technology Policy, Finland, are very
rewarding. To quote him from his study of eleven Finish
manufacturing industries in 1975-1993 (Finish Economic Papers,
Vol 13 No.1 Spring 2000),
"The purpose of this empirical study was to analyze the part
of the output growth which cannot be attributed to traditional
inputs, labour and capital. This is the definition of total
factor productivity which is consistent with the theoretical
frame work of the new growth theory. We broke down the TFP rate
of growth into seven components. The estimated shares of the
components are as follows. First, industrial R&D accounts on
average for 9% of the TFP rate of growth…The effect of exogenous
demand covers nearly one third of the TFP. This leaves the
disembodied technical change component an average share of of
about 26%. The mark-up and factor price components had a
negligible effect. The share of the total R&D is one fourth of
the residual technical change and the R&D components. These
figures are in line with Denison’s (1985) notion of R&D
representing around 20% of techinical progress".
According to Dr Niininin, "Product market conditions combined
with technology push are the most important factors for
companies in Finland to innovate, We could see that
market-related issues are very important and customers’ demands
help initiate projects. Market niche recognition, customer
feedback and collaboration, consumer knowledge and
commercialization are highly critical factors on technology and
marketing innovations, according to the Sfinno survey of 1000
companies and nearly 1500 innovations between 1984-1998", as
part of of a program of the VTT Group currently evaluating the
results of a Tekes-financed study ‘Industrial innovation in
Finland’. To repeat, markets give the pull, but only
technology can give the push.
It is in such a context that one has to re-visit the the
cardinal issue of how promotion of indigenous in-house
industrial R&D was never a serious policy factor inthe frame
work of the decades long GOI/RBI approved guidelines for import
of technology. Without naming the specific examples, one sees
that GOI/RBI has invariably been approving T/T agreements though
with very crucial and far reaching conditionalities. Typical
conditionalities are, for example,
- All patents in support of the transferred technology
will be licensed to the licensee for use only during the
licensing period.
- Any improvements during the licensing period will
normally be the property of the technology provider.
- Guarantee conditions and also use of the label ‘produced
under collaboration with …" will be subject to the condition
that products are manufactured and supplied exactly as per
T/T specifications and also to specified territorial limits.
In other words, in-house R&D and steady increase in one’s
ability for ‘autonomous working’, to use the description of
Ashok Desai, was never a requirement of the GOI/RBI approved T/T
frame work. To put it differently, import of technology never
became an inevitable strategy for an "assisted take off", to
quote late Homi Bhabha, but it got steadily dwindled to one of
‘diminishing returns’ unless the same unit repeatedly upgraded
its technology by continued import and that too again under
similar conditionalities. In other words, our Industrial Policy
has been and continues to be a total failure in this aspect,
even under the New Economic Regime ! It is indeed heartening
that in spite of such serious "in-house R&D dis-incentives", a
few units like SAIL, TISCO, BHEL, IPCL,etc. have been spending a
good percentage of their corporate funds for in-house R&D, the
experiences of which perhaps requiring a careful analysis and
study.
To conclude, PCT-mediated IPR Globalisation has ushed in an
era of significant ‘patent monopoly’ for advanced countries,
with native counterparts hardly yet in a position to match.
Under liberalized policies with FDI permissible in almost all
sectors, technology import will become increasingly difficult
for Indian companies. Unless the policy planners and corporate
captains see the twin dangers in time, the Indian industry may
well go in the forseeable future into a "Technology Trap".
