A parliamentary committee, namely the Department Related Parliamentary Standing Committee on Commerce, recenlty presented a comprehensive report on ‘Review of the Intellectual Property Rights Regime in India’ (Report No. 161), to the Rajya Sabha on July 23, 2021.

The Report, which is an exhaustive one running over 150 pages, inter alia suggests a major revamp of the Intellectual Property Rights (IPR) landscape in India while taking note of the reduced number of IP filings in the country in 2019 as compared to its foreign counterparts.

The Report emphasizes inter alia on the need for IPR awareness in the country, amendments in the IPR laws, active involvement of the State Governments, specific legislation to deal with the menace of counterfeiting and piracy etc. The said Committee, comprising of over 30 members, from the Rajya Sabha as well as the Lok Sabha as well as members of the Secretariat, vide its Report has provided valuable insight regarding the IPR Regime of India.

The Report has noted that at the time of the adoption of the National IPR policy in May 2016, it was suggested to the Committee that after 5 years of its implementation, a review and evaluation of the IPR Policy would be necessary in order to evaluate the progress achieved in strengthening the IPR regime.

In this regard, the Committee has noted that a review of the IPR Policy should be undertaken and a reassessment is imperative in the wake of new and emerging trends in spheres of innovation and research which requires concrete mechanisms IPRs.

Herein, we present a compendium of some of the significant changes suggested by the Parliamentary Standing Committee of Commerce on the IPR regime in India:

KEY HIGHLIGHTS OF REPORT ON IPR REGIME IN INDIA

Need for studies regarding economic impact of IPRs on India's GDP etc.: The Committee has noted that other countries and agencies have conducted in-depth studies to analyse the economic impact of IPR. For example, WIPO studied the copyright industries of 45 countries and concluded that the said industry contributes about 2 to 10 per cent to GDP and 5.34 per cent to national employment creation. Thus, India needs to undertake such studies too.

Innovation and Creativity: The Committee, while laying emphasis on innovation and creativity, focuses on the need to establish a robust and an effective Intellectual Property Rights regime in India that encourages and incentivizes innovation and creativity along with securing collective interest of the society. The Report aptly recognizes the power of innovation leveraged by IPR during the ongoing Covid-19 pandemic, particularly in the medical and health sector.

State Government involvement in formulating IPR policy: State governments should be encouraged and assisted in formulating IPR policy as the State government’s involvement would help in strengthening IPR Regime in the country.

IPR in increasing FDI of countries: The Committee notes the significance of IPRs in increasing Foreign Direct Investment (FDI) of countries, mainly of the developing nations, wherein a 1 per cent improvement in the protection of trademark, patent and copyright increases FDI by 3.8, 2.8 and 6.8 per cent respectively.

Less IP Filings in India: The Committee expressed concern and distress while taking note of the fact that only 24,936 patents were granted in India which is considerably low as compared to 3,54,430 and 4,52,804 patents granted in the US and China respectively. Upon making enquiries about the said state of affairs, the Committee was informed by the Department that the reasons for lower number of patent applications is low expenditure on the overall Research and Development (R&D) in India along with lesser participation by the business community of India in R&D activities and also in promoting innovation. The Committee noted that India spends a mere 0.7 per cent of its GDP on R&D which is lesser than the other countries such as, China (2.1%), Brazil (1.3%), Russia (1.1%), and South Africa (0.8%).

The Report has also provided comparative charts of IP filings in India, China and the USA. The data shows that India lags behind the said competing countries when it comes to IP filings. Snapshots of the said comparative data as provided in the Report are provided below:

The Committee recommends that the government provide incentives to private businesses and companies for undertaking R&D activities which would be a proactive step in augmenting research capabilities of the country.

Interestingly, the Committee also recommends the formation of an exclusive apex-level Institution for IPR Development, which would enable a multi-disciplinary approach in analysing and harnessing the full potential of IPRs for economic and social growth.

Labelling products with Patent Pending: The Committee is of the view that labelling of products with ‘patent pending’ would acknowledge their credibility and authenticity, hence yielding marketing benefits to the patentees. As an example, the Committee has noted that the said provision is already provided for the Patent Laws of the USA.

Regarding the absence of such a provision in the current regime, the Department had informed the Committee that India lacks IP awareness and allowing the status of ‘patent pending’ may invoke a fear psychosis which may have an adverse effect on the innovation ecosystem of the country.

Regarding the advantages of having such labelling, the Committee noted that such marking would serve as a notice in notifying potential infringers that they may be liable for damages, seizure, and injunction once a patent is granted. Thus, such labelling would avoid unnecessary infringements.

IPR Awareness among MSMEs and small businesses: The Committee takes note that due to lack of appreciation amongst MSMEs about the significance of IPRs as a major business tool for furthering innovation and competition which would generate more profits and revenue, the filing of IPRs by MSMEs is quite low in the country. The Committee recommends that a holistic approach should be taken by the Department for disseminating awareness amongst MSMEs, small businessmen, traditional artisans and craftsmen located in remote areas and providing them insights about creation, ownership and protection of their IPRs. In this context, the Committed also noted the alarming statistic that a major share of 64 per cent of the patents filed in India are by non-resident or foreign entities whereas the patents filed by domestic entities occupies a portion of only 36 per cent.

The Committee recommends that NGOs associated with craftsmen, artisans and those working in hilly and tribal areas may be engaged in spreading awareness about IPR to the target group. Necessary tool kits for promoting IPR may be provided to facilitate them in training.

Increasing IP Awareness in India: In this regard, the Committee has recommended the following steps:

• Establishment of IPR Facilitation Centers in Tier-I, Tier-II and remote regions of the country;

• Organization of programmes and workshops (especially for MSMEs, small tradesmen, local artisans), which cover, inter alia, knowledge about identification of novelty in their products and protection of such novelties as IPRs;

• Registration of IPRs of MSMEs in foreign countries, wherein they have the potential to expand their business. This is also imperative to make MSMEs globally competitive.

• Introduction of IP curriculum in schools, colleges, management schools and organizing trainings and workshops regarding the same.

Creation of IP Fund and Fostering IP Culture- The Committee recommends the Department that a provision of IP funds should be created in the country which would help in supporting initiatives specifically for instilling IP culture in the remotest parts of India including tribal belts, hilly and border states, North East Region.

Counterfeiting and Piracy: The Committee acknowledges that IP crimes including counterfeiting and piracy are the rising threats to IPRs which should be regulated and deftly handled by taking appropriate measures.

The Committee has recommended to the Department to stress upon capacity building of enforcement agencies on IP laws including strengthening of IPR cells in State police forces. The Committee has also recommended the establishment of a Central Coordination Body on IP Enforcement for undertaking coordinative efforts by involving various Ministries, Departments, and governmental agencies in enforcement and adjudication of IP laws to check IP crimes in the country.

Pertinently, the Committee has also recommended to determine a method or process to estimate the revenue losses being incurred due to counterfeiting and piracy.

AI and IPR: The Committee notes that the relevance and utility of cutting edge technologies such as Artificial Intelligence (AI) and machine learning would increase manifold in the present world especially in the times of Covid-19 pandemic wherein digital applications are playing a crucial role in responding to the crisis.

In this regard, the Committee has noted that the current provisions of the Indian Patent Act, 1970, do not allow patenting of, inter alia, mathematical or a business method or a computer programme or algorithms run by Artificial Intelligence. Thus, there is a need to review the relevant legal provisions. Therefore, the Committee has recommended that a separate category of rights for AI and AI-related inventions and solutions should be created for their protection as IPRs. The Committee has further recommended that the approach in linking the mathematical methods or algorithms to a tangible technical device or a practical application should be adopted in India for facilitating their patents as being done in the EU and the US.

Reconsider abolition of IPAB: The Committee desires that the abolition of IPAB under the Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 should be reconsidered in wake of its pivotal role in the adjudication of IPR appeals and cases. The overall scrapping of IPAB, which efficiently had been dealing with proceedings involving complex IPR issues, may create a void in appellate resolution of cases leading to their shift to Commercial or High Courts thereby increasing pendency of cases.

Thus, in a complete 180 degree turn to the Central Government's recent move, the Committee has recommended that the IPAB should be re-established, rather than being abolished and should be empowered and strengthened with more structural autonomy, infrastructural and administrative reforms, as well as ensuring timely appointment of officials and experienced manpower. The Committee has noted with distress, that the abolition was done without any Judicial Impact Assessment, or active consultations with stakeholders.

PPH with other nations: The Committee recommends the Department to explore opportunities in establishing PPH with other nations as well, which would be highly advantageous to India in expediting and processing of patent applications. The Committee has also noted that PPH as a significant patent tool should be encouraged with nations in times of pandemic wherein the Covid-19 outbreak has led to rise in filing of innovations to grant them as patents in areas of vaccines, pharmaceuticals and medical devices.

In this regard, it is pertinent to note that as on date, India has a PPH with Japan only, and consequently the Committee has recommended conducting an impact assessment of the Japan PPH model.

Proposed Amendments to Patent Regime: The Committee suggests amendments in the Patent Act, 1970 like provision of a safeguard mechanism against the arbitrary exercise of power by the Controller in declining patents and amendment of Section 104 of the Act to promote establishing of alternative dispute resolution mechanism in India Protection against Ever-greening, etc.

The Committee has further recommending the incorporation of a check and balance mechanism in the Act, which would ensure granting of patents to socially useful inventions or innovations.

Interestingly, the Committee has also recommended an exploration of the feasibility of granting patents to non-living substances occurring in nature under the Act and its subsequent impact on public interest.

Further, in a move which may significantly impact the process of prosecution of patent applications in India, the Committee has noted that the timeline of 4 years to file an examination report by the patent applicant is too extensive and recommends the Department to shorten it to a reasonable time frame to avoid any unnecessary delay in examination and grants of patents.

Another such recommendation is regarding the stringency of abandoning of patents, without allowing hearing or petition. In this regard, the Committee has recommended that certain flexibility should be incorporated in the Act to make room for allowance of minor errors and lapses to prevent outright rejection of patents being filed. Hence, a revised petition with penalty or fee may be permitted under the Act for minor or bona fide mistakes that had been committed in the filed patents.

Further, the Committee has also suggested the establishment of alternative dispute resolution mechanism in India such as arbitration, mediation, etc. for ensuring speedy justice to patentees in IPR litigations.

It is also noteworthy that the Committee has made a very specific recommendation in light of the Covid-19 crisis vis-à-vis compulsory licensing (CL), that while one must be very careful while looking at CL applications, a CL may be considered in case of production of medicines and vaccines for the treatment of Covid-19 since the pandemic has led to a national health emergency in India. Generic production in large quantities without any obligation of patents would help in removal of supply constraints in availability of affordable drugs, medicines and vaccines at times of high case load and death toll due to Covid-19. In view of this, the Committee has floated the prospect of temporarily wavering patents rights and issuing Compulsory Licensing to tackle the inadequacy in availability and accessibility of Covid-19 vaccines and drugs.

Proposed Amendments to Trade Mark Regime: To simplify and speed up the procedures for trademark filing and registration, the Report suggests a major overhaul of the Act like:

• Curtail the time period of filing opposition against a trademark application from 4 to 2 months during which the application is in public.

• Take steps in modernization of trademark offices and workplaces by undertaking digitalization of work processes and facilitating e-services for speedy redressal of work.

• Section 115(4) of Trademark Act: The Committee recommends the Department that the cumbersome procedures as regards to search and seizure operations in trademark infringements under Section 115 of the Act should be streamlined and simplified for improving and expediting investigations. It recommends that depending on the size and ongoing commercial activity of the district, one or more well-trained police officer specialized in tackling IP crimes should be deployed in place of a high ranking officer. The officers being appointed should have an added responsibility of enforcing IP laws in their respective jurisdiction.

• The Committee further recommends that a monitoring mechanism should be put in place to ascertain the reasons of delay in pursuing opinion from the Registrar along with a reasonable timeframe of 48 hours to render the opinion in a time bound manner.

Proposed Amendments to Copyright Regime: The Committee has noted with distress the rising number of cases of clashes between educational institutions and copyright holders. In this regard, the Committee has recommended the facilitation of a fair and equitable ecosystem of literary culture in the country by bringing in necessary changes in Section 51(1) of the Act such as permitting reprographic works in Government owned educational institutions and storing it in libraries for their easy access to students as well as stipulating limitations to unrestricted commercial grants to copy books and literary works and storage of copied works in digital formats.

The Committee has also shed some light on the state of affairs regarding Over The Top (OTT) content and copyright concerns. In this regard, the Committee has recommended Amendment to Section 31D of the Act, for incorporating ‘internet or digital broadcasters’ under statutory license in wake of the rise in digital or OTT platforms with manifold increase in music as well as movie apps and its significant contribution to economy.

Apart from the aforesaid broad aspects of the IPR regime in India, the Committee has suggested adoption of a holistic approach for fulfilment and realization IPR goals in India. It is noteworthy that the Committee has in its 153-page long Report recommended several changes in comparison to prevailing IPR laws in the developed nations like the USA. The Committee has also provided valuable insight and recommendations regarding a wide variety of IP related topics, such as IPR in Agriculture, and Traditional Knowledge.

India in the past few years has experienced a paradigm shift in IPR filings and administration. However, this carefully studied and rather exhaustive Report suggests that India is still lagging behind and has accordingly recommended various steps to bridge the gap.

The Report has been presently presented to the Rajya Sabha and laid on the table of Lok Sabha on July 23, 2021.

The authors are Lucy Rana and Shilpi Sharan. Lucy Rana is a Partner and Shilpi Saran is a Senior Associate at SS Rana & Co.

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