It is perhaps only a coincidence that when India is in the process of modifying its 1970 Patent Act to make the same " TRIPS – compliant", the latest UNDP Human Development Report 2001 is published classifying her in the Technology Achievement Index at 63 with a score 0.201 (compare that of Thailand at 0.337 and of Mozambique at 0.066) and listed among the 26 "dynamic adapters" including South Africa, China, Brazil and Iran. To quote S.Swaminathan from his article " The lowdown on Indian technology status" in The Hindu dated July 25,2001,

"Leapfrogging in the next 20 years in technology is more easily verbalized than strategised. Damning as the HDR pronouncement on India’s technology status is, there is no getting away from the prodigious reality that in an increasingly globalized millieu, technology cannot be allowed to remain the ‘merchandise property’ of the rich countries. But then do the developing countries have the sagacity and political will to stop the Intellectual Property juggernaut already set in motion by the WTO ? " 
 
 

Always dependent on repeated import of technology the foreign know-how gave only an " assisted take-off ", but the ability of " independent flight " was never achieved or in other words , to take a specific example , "the construction and operation of steel plants has not (even now !) automatically generated the ability to design and build new plants", to quote from Dr Bhabha. Now that even the freedom for "dynamic adaptation " will be restricted through the TRIPS , our industries will have to face added challenges , as is elaborated below.

Ever since the birth of the modern scientific-technological age, there has been debates as to what is the motive power for wealth creation and rapid industrial and economic growth. Francis Bacon, who lived around 150 years before the Industrial Revolution, advanced his " linear " model as below:

Government funded ---> pure science ---> applied science --> economic

Academic research or technology growth.

Adam Smith, who lived through the years of the IR, suggested an alternative model as below:

Pre-existing technology --> new technology --> wealth.

Academic science

with the new technology in turn or synergetically generating new academic science. Whereas the former was fully accepted as a dictum by the erstwhile socialist countries , the capitalist economies accepted both models with varying levels of joint participation with the industries , with bulk of the public funded R&D tuned essentially to the strategic and long-gestation futuristic programs.

The above policies were reflected also in their approaches to the crucial issue of protection of Intellectual Property Rights right from the beginning with James Watt’s Double Acting Steam Engine itself becoming one of the pioneer candidates for patenting. The capitalist countries enacted IPR laws matching with the needs of the time, with Great Britain becoming naturally the pioneer and subsequently the United States incorporating the same as part of its constitution itself.

The erstwhile socialist countries headed by the Soviet Union never had any worthwhile patent law at all ( Peoples Republic of China has enacted a TRIPS compliant patent law only in 1995). In other words, IPR ‘s and their efficient protection have always continued as an integral part of capitalist development, whereas this aspect was obviously not so in the erstwhile socialist economies.
 

ON THE BASICS OF IPR PROTECTION.

To quote from the celebrated UK Swan Committee,

" The theory upon which the patent system is based is that the oppurtunity of acquiring exclusive rights in an invention stimulates technical progress in four ways: first, that it encourages research and invention; second, that it induces the inventor to disclose his discoveries instead of keeping it as a trade secret; third, that it offers a reward for the expenses of developing inventions to the stage at which they are commercially practicable; and, fourth, that it provides an inducement to invest capital in new lines of production which might not be profitable if many competing producers embark on them simultaneously. Manufacturers would not be prepared to develop and produce important machinery if others could get the result of their work with impunity ".

All the same it is understood that the patent monopoly ( granted for a limited period) is used only for the purpose for which it is granted. They are not created in the interest of the inventor per se but in the interest of the national economy in which the patentee plays a constructive role as an inventor bringing out new products for use and benefit of the society. Hence the reason that "The rules and regulations of the patent systems are not governed by civil or common law but by political economy ", as emphasized by the UK Patent Law expert Michel in Principal National Patent Systems.

"In the American tradition, intellectual property law is largely motivated by utilitarian concerns. It is not designed to give property rights solely as a reward for hard work or to provide creators with a dependable annuity for their children, though it may in fact produce those results in some cases. It is about setting up conditions under which creators can and will produce new works….Setting the proper level of intellectual property protection requires a complex balancing act…..If the level of protection is low, negative effects follow. Prospective authors turn to other careers. Drug companies decrease investment in R&D….If IP rights are set too high, future creators will be deprived of the raw materials they use to create new works. For example, could Bill Gates have created MS-DOS if BASIC and CP/M had been proprietary systems protected by an expansive IP regime ? It is just as dangerous to produce a system with too much IP protection as one with too little". 

Hence the reason again that any IPR Law must match with the contemporary political economy (scientific-technology base included) of the country , failing which the resultant law will do only serious damage to national growth.

Edith Penrose in his penetrating study entitled ‘ The Economics of the International Patent System’ says : " When a country grants patents the price paid to the foreigner is clearly one of the costs of granting the patents and just as clearly must restrict the use of the invention to those who can pay the price. From the point of view of producers, this cost is simply the royalty payment made to foreign firms…From the point of view of the economy as a whole it is a tax paid to a foreign firm and requires a transfer of real income from one country to another…Any country must lose if it grants monopoly privileges in the domestic market which neither improve nor cheapen the goods available, develop its own production capacity nor obtain for its producers at least equivalent privileges in other markets. No amount of talk about the ‘ economic unity of the world’ can hide the fact that some countries with little export trade in industrial goods and few, if any, inventions for sale have nothing to gain from granting patents on inventions worked and patented abroad except the avoidance of unpleasant foreign retaliation in other directions. In this category are agricultural countries and countries striving to industrialize but exporting primarily raw material…Most countries have little if anything to gain economically from granting patents to foreign firms; and they do so partly because of pressures of vested interests and partly because the ideals of ‘ international co-operation’, ‘non-discrimination’ and similar laudable sentiments have been influential in shaping the thoughts of lawyers and statesmen". 
 
 

QUOTING FROM JUSTICE RAJAGOPAL AYYANGAR'S REPORT

" On suppression and Non-working of Patents" with special reference to the dye and chemical industry , Floyd Vaughan said: " It is a contravention of our patent law and an injustice to the American manufacturer to allow a foreigner to take out a patent in this country merely for the purpose of reserving United States as a market for his patented product which is manufactured abroad exclusively. It means the exclusion of all the would-be inventors and competitors from the industry covered by the patent and at the same time the building-up of the industry in other countries, all to the detriment of the United States" (American. Economic Review , Dec 1919).

In other words, adds Ayyangar, " these patents are therefore taken not in the interests of the economy of the country granting the patent or with a view to manufacture there but with the main objective of protecting an export market from competition from rival manufacturers particularly those in other parts of the world".

Accordingly he recommended the following crucial clauses.

• For chemical substances ( which also included metallic alloys, ceramics, semiconductors, etc also) product patents cannot be accepted , only processes. 
• Food articles and drugs are provided with "licenses of rights" , for others only " compulsory licensing" as required by the government. 
• Patent validity subject to local manufacture. 
• Special powers for government’s use. 
• Items under Atomic Energy Act,1962 non-patentable as required by the DAE. So also plants and micro-organisms.
• Appellate authority to the High Court as was the case at that time in UK, USA, Australia, etc. 

Just like the Indian companies in the drugs sector, the so-called " free riding" (a description used by American industry and IPR experts) strategy in IPRs have been used by many countries in strengthening their S&T – industrial base, the prominent examples being Korea, Taiwan, Singapore, Brazil, Argentina, etc. While initially the MNCs utilized the situation to their advantage through their advanced technologies and the locally available cheap labour , the NICs ( Japan also included in this category) with their highly educated and hardworking labour force and supported by an appropriate policy perspective, as indicated earlier, learned slowly and steadily how to manufacture the items themselves and to export them back to the OECD countries at lesser costs , specifically in semiconductor and related items ( in terms of IPR " free riding" ). The Korean attitude was summarized by its Ambassador to US Kyun Won Kim in 1987 as follows:

"Koreans have not viewed intellectual discoveries or inventions as the private property of their discoverer or inventors. New ideas or technologies were ‘public goods’ for everyone to share freely" ( quoted from "The Patent Wars " , Fred Warshofsky,1994 ). "
 
 

How India had managed its negotiations has now been brought out as a semi-authoritative document by Ms Jayashree Watal, who was a TRIPS negotiator for India during 1989-90 and a Director of the Indian Ministry of Commerce. While it is not possible to go into details in this paper , a careful reading of the chapter on " The TRIPS Negotiating Process " leaves one with the uncomfortable feeling that the tenor of Indian approach was highly inadequate. Whereas Mexico had submitted an official document, in absence of any such mention in the book , one is tempted to believe that it was n’t even there from India !

The WTO conditionalities are briefly summarized as below:

As part of its obligations to WTO , India has passed its First Amendment,1999 , introducing the EMR provision for drugs. So also the Bill on Protection of Plant Varieties & Breeders Rights Bill. The new Bill amending the 1970 Act wholesale is currently before parliament. Once this is also passed , the New IPR Regime will be heralded full-scale officially.
A critical analysis of these Bills would reveal the following.
 

a. All the special provisions of the 1970 Act , incorporated therein essentially based the very valid recommendations of the celebrated Rajagopal Ayyangar committee have been almost summarily altered in one go to make them " TRIPS compliant" .

a.Strength: Vast S&T and Industrial Infrastructure.

b.Weakness: Growth based on "others' shoulders" permitted through the 1970 Act - Vast Technology Gap, not easy to cope with under the New Regime.

c.Oppurtunities: Great for state-of-art R&D /T&D 

d.Threats: Immediate future very favorable for essentially MNC's, but very tough and challenging for Indian sector, emanating from huge technology gaps in almost all fields for original IPR -consistent contributions ( be they materials, processing technologies, equipments,electronic/control systems, software or GM crops ).

The SWOT analysis, according to me , is alarming. Can we re-orient ourselves so quickly as required through an administrative order in the form of a new TRIPS- compliant patent law , I seriously wonder. Or is it that in the TRIPS negotiations , when we were pressurized to bend, we prostrated instead ? If my concerns are proved wrong, I will be the happiest Indian !