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GS Paper: GS3-12.Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth

  • Intellectual Property Rights in India

    What are IPRs?

    Intellectual Property Rights (IPRs) are legal rights, which result from intellectual invention, innovation and discovery in the industrial, scientific, literary and artistic fields. These rights entitle an individual or group to the moral and economic rights of creators in their creation.

     

    Types:

    Patent- It is a set of exclusive rights granted by a sovereign state to an inventor for a limited period of time in exchange for detailed public disclosure of an invention.

    Copyright- It is a legal right created by the law of a country that grants the creator of an original work exclusive rights for its use and distribution. It includes literary & artistic works such as novels, poems, plays, films, musical works, drawing, painting, photography, sculpture, architectural designs

    Trademark- It is a recognizable sign, design, or expression which identifies products or services of a particular source from those of others. Trademarks used to identify services are usually called service marks.

    Industrial design right- It is an intellectual property right that protects the visual design of objects that are not purely utilitarian. An industrial design consists of the creation of a shape, configuration or composition of pattern or color, or combination of pattern and color in three-dimensional form containing aesthetic value. An industrial design can be a two- or three-dimensional pattern used to produce a product, industrial commodity or handicraft.

    Trade secret- It is a formula, practice, process, design, instrument, pattern, commercial method, or compilation of information which is not generally known or reasonably ascertainable by others, and by which a business can obtain an economic advantage over competitors or customers

    Geographical Indication (GI)- It is a name or sign used on certain products which corresponds to a specific geographical location or origin (e.g. a town, region, or country). The use of a geographical indication may act as a certification that the product possesses certain qualities, is made according to traditional methods, or enjoys a certain reputation, due to its geographical origin. A recent example is of Indian variety of Basmati rice getting GI tag.

    From above points, it is clear that IPR is a very sensitive issue in terms of businesses different kinds and international relations as well.

    IPRs in pharmaceutical sector:

    Some sectors are very sensitive in terms of IPRs like pharmaceuticals. Let’s explore briefly into IPR issues in pharmaceutical sector.

    We hear of two kinds of drugs- generic and brand name drugs:

    Generic drugs are those whose patent has expired or does not exist and which can be produced by any registered manufacturer without need of taking permission from any authority and also without any payment of royalty.

    Brand name drugs are those which are patented and cannot be produced without the consent of the patent holder. A royalty is to be paid for production of these drugs.

    But what happens if a company holds patent of an essential drug and there is an emergency in which the drug needs to be provided at low cost for vast populace? In this case, Compulsory Licensing comes to the rescue.

    What is Compulsory Licensing?

    • A compulsory license provides that the owner of a patent or copyright licenses the use of their rights against a payment. This payment is either set by law or determined through some form of arbitration
    • In essence, under a compulsory license, an individual or company seeking to use another’s intellectual property can do so without seeking the rights holder’s consent, and pays the rights holder a set fee for the license
    • This is an exception to the general rule under intellectual property laws that the intellectual property owner enjoys exclusive rights that it may license – or decline to license – to others

    Does there have to be an emergency?

    Not necessarily. This is a common misunderstanding. The TRIPS Agreement does not specifically list the reasons that might be used to justify compulsory licensing. However, the Doha Declaration on TRIPS and Public Health confirms that countries are free to determine the grounds for granting compulsory licences.

    In March 2012, India granted its first compulsory license ever. The license was granted to Indian generic drug manufacturer Natco Pharma Ltd for Sorafenib tosylate, a cancer drug patented by Bayer.

    Here, first thing first, What is TRIPS?

    • TRIPS is an international agreement administered by the World Trade Organization (WTO), which sets down minimum standards for many forms of intellectual property (IP) regulations as applied to the nationals of other WTO Members
    • It was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in 1994
    • TRIPS requires WTO members to provide copyright rights, covering content producers including performers, producers of sound recordings and broadcasting organizations, geographical indications, including appellations of origin, industrial designs, integrated circuit layout-designs, patents, new plant varieties, trademarks, trade dress, and undisclosed or confidential information
    • The agreement also specifies enforcement procedures, remedies, and dispute resolution procedures

    Now, back to the topic…

    India is a huge market for generic drugs and hence it is very obvious that there must emerge issues out of patents for pharmaceuticals.

    One such case came up in 1998- Novartis v. Union of India & Others

    It was a landmark decision by a two-judge bench of the Supreme Court, on the issue of whether Novartis could patent Glivec in India. It was the culmination of a seven-year-long litigation fought by Novartis. The Supreme Court upheld the Indian patent office’s rejection of the patent application.

    Ground of rejection?

    Novartis claimed patent for he changed form of Glivec on the basis of the increased bio-availability in the body of the patient by making changes in chemical composition of its original anti-cancer drug Imatinib Mesylate. This changed form of the drug could not withstand the ‘enhanced therapeutic efficacy’ test enshrined under Section 3(d) of Indian Patents Act and therefore it was rejected.

    Recently, Gilead got patent for its Hepatitis C drug Solvadi. An application for the same patent was first rejected in January 2015 as lacking inventiveness and novelty. The decision, however, is seen as a major blow to the access to drug movement

    Now let’s turn towards the latest developments in the IPRs in India.

    New IPR Policy

    Govt of India recently released a new National Intellectual Property Rights (IPR) Policy which is in compliance with WTO’s agreement on TRIPS

    Why a new policy?

    • Global drug brands led by US companies have been pushing for changes to India’s intellectual property rules for quite some time now. They have often complained about India’s price controls and marketing restrictions
    • Also, an IPR policy is important for the government to formulate incentives in the form of tax concessions to encourage research and development (R&D)
    • It is also critical to strengthen the Make In India, Startup and Digital India schemes
    • The IPR policy comes at a time when India and other emerging countries faces fresh challenges from the developed world and mega regional trade agreements such as the Trans-Pacific Partnership (TPP)

    Seven objectives:

    1. IPR Awareness: To create public awareness about the economic, social and cultural benefits of IPRs among all sections of society
    2. Generation of IPRs: To stimulate the generation of IPRs
    3. Legal and Legislative Framework: To have strong and effective IPR laws, which balance the interests of rights owners with larger public interest
    4. Administration and Management: To modernize and strengthen service-oriented IPR administration
    5. Commercialization of IPRs: Get value for IPRs through commercialization
    6. Enforcement and Adjudication: To strengthen the enforcement and adjudicatory mechanisms for combating IPR infringements
    7. Human Capital Development: To strengthen and expand human resources, institutions and capacities for teaching, training, research and skill building in IPRs

    Highlights:

    • The new policy calls for providing financial support to the less empowered groups of IP owners or creators such as farmers, weavers and artisans through financial institutions like rural banks or co-operative banks offering IP-friendly loans
    • The work done by various ministries and departments will be monitored by the Department of Industrial Policy & Promotion (DIPP), which will be the nodal department to coordinate, guide and oversee implementation and future development of IPRs in India
    • The policy, with a tagline of Creative India: Innovative India, also calls for updating various intellectual property laws, including the Indian Cinematography Act, to remove anomalies and inconsistencies in consultation with stakeholders
    • For supporting financial aspects of IPR commercialisation, it asks for financial support to develop IP assets through links with financial institutions, including banks, VC funds, angel funds and crowd-funding mechanisms
    • To achieve the objective of strengthening enforcement and adjudicatory mechanisms to combat IPR infringements, it called for taking actions against attempts to treat generic drugs as spurious or counterfeit and undertake stringent measures to curb manufacture and sale of misbranded, adulterated and spurious drugs
    • The policy will be reviewed after every five years to keep pace with further developments in the sector

    International angle:

    Last month, the US Trade Representative kept India, China and Russia on its “Priority Watch List” for inadequate improvement in IPR protection. However, brushing aside concerns of the US on India’s IPR regime, the government said its intellectual property rights laws are legal-equitable and WTO-compliant. Thus, the government has not yielded to pressure from the United States to amend India’s patent laws.

    Benefits:

    • The new policy will try to safeguard the interests of rights owners with the wider public interest, while combating infringements of intellectual property rights
    • By 2017, the window for trademark registration will be brought down to one month. This will help in clearing over 237,000 pending applications in India’s four patent offices
    • It also seeks to promote R&D through tax benefits available under various laws and simplification of procedures for availing of direct and indirect tax benefits
    • Unlike earlier where copyright was accorded to only books and publications, the recast regime will cover films, music and industrial drawings
    • A host of laws will also be streamlined — on semi-conductors, designs, geographical indications, trademarks and patents
    • The policy also puts a premium on enhancing access to healthcare, food security and environmental protection
    • Policy will provide both domestic and foreign investors a stable IPR framework in the country
    • This will promote a holistic and conducive ecosystem to catalyse the full potential of intellectual property for India’s growth and socio-cultural development while protecting public interest
    • It is expected to lay the future roadmap for intellectual property in India, besides putting in place an institutional mechanism for implementation, monitoring and review
    • The idea is to incorporate global best practices in the Indian context and adapt to the same

    Challenges:

    • According to the policy, India will retain the right to issue so-called compulsory licenses to its drug firms, under “emergency” conditions
    • Also, the government has indicated that there is no urgent need to change patent laws that are already fully World Trade Organization-compliant. So India has resisted pressure from the US and other Western countries to amend its patent laws
    • The policy also specifically does not open up Section 3(d) of the Patents Act, which sets the standard for what is considered an invention in India, for reinterpretation

     

    Published with inputs from Swapnil

     

  • Electronic System Design and Manufacturing Sector – M-SIPS, National Policy on Electronics, etc.

  • Textile Sector – Cotton, Jute, Wool, Silk, Handloom, etc.

  • e-Commerce: The New Boom

    The recent changes in e-commerce sector

     

    DIPP recently notified a new FDI policy for e-commerce and certain other rules <What exactly e-commerce is? Answer in comments>

    What are the rules?

    1. 100% foreign direct investment is permitted in the marketplace model of e-commerce
    2. FDI is not permitted in inventory based model of e-commerce

    Additional to these rules for FDI, the other rules are:

    1. An e-commerce entity may provide logistic, warehousing , order fulfilment, call centre, payment collection and other services
    2. An e-commerce entity will not permit more than 25% of the total sales should not be done by one vendor or its group companies
    3. The seller shall be responsible for post sales, warranty and guarantee of goods sold by it
    4. The e-commerce entity will not directly or indirectly affect the sale price of goods or services while maintaining a level playing field

    What does it mean?

    Now let’s analyse its impacts on various stakeholders, one-by-one

    #1. E-Commerce Players

     

    • Price determination- This is a grey area with unclear rules. One interpretation could be that Govt will determine the price and not the market. This could upset the markets
    • Clearly defining the models- This is a positive development. The marketplace and inventory based models are now concretely and clearly defined by law
    • Group companies- Group companies (Flipkart- WS Retail, Amazon- Cloudtail) are created to work around the e-retail rule which doesn’t allow FDI in B2C multi-brand retail

    The companies will now have to figure out a new way to scale down sales through their group companies

    • Discounts- The rule in itself is notvery clear as it doesn’t explictly spell out the terms ‘deep discounting’ or ‘discount’

    Example- Amazon uses the term ‘promotional funding’ to describe its discounting model, and as is clear, technically doesn’t affect the actual price of the product

    Even though the note says the rules are effective immediately, discounting has continued as is. It shows that that this is still a grey area

    • Inventory based models- This model, which is effectively under multi brand retail, remains out of the FDI route

    #2. The Consumer

    • E-commerce companies have brought in deep competition in the retail sector by way of offering discounts
    • How are the discounts funded? Part of this is funded through a cash burn, and part through operating efficiencies over the brick and mortar setup <What is cash burn? Answer in comments>
    • Restraints on discounts, if workout in real, consumers will lose a lot of power in terms of price and choice

    #3. Brick and Mortar Players

     

    • Effects on brick and mortar retailers will depend on how the restraints on discount work out
    • Footfalls in Brick & Mortar retail had dropped dramatically, and the pricing change may now draw consumers back
    • However, e-commerce companies and strong retailer lobbies will obviously work to keep their dominance

     

    Conclusion:

    • Overall, the move is in the right direction, but it lacks strength and complete clarity on various issues (such as pricing, discounting)
    • The grey area in pricing is very open to interpretation, especially on the point of determining the right price, and could be an anti-market move
    • Retail sectr still remains affected by a lot of interest groups and a solid policy change to actually reform retail remains

    After this, you can read this story for more insights- Disrupting the disruptors (The Hindu)

  • Corporate Social Responsibility: Issues & Development

  • Pharma Sector – Drug Pricing, NPPA, FDC, Generics, etc.

  • Make in India: Challenges & Prospects

  • Start-up Ecosystem In India

    START-UP India Launch by Prime Minister Modi on 16th January, 2016, aimed at celebrating the entrepreneurship spirit of country’s youth and has been attended by CEOs and founders of top startups (over 1500) from across the country. Let’s see this in brief!

    <In Part I, we have taken a glance on Simplification and Handholding of Start up Plan, rest part will be covered in Part II of this series>

    What is Start up India programme and its mandates?

    • Startup India is a flagship initiative, intended to build a strong ecosystem for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities.
    • In order to meet the objectives of the initiative, Government of India is announcing this Action Plan that addresses all aspects of the Startup ecosystem.

    How can this Action Plan help accelerate the Startup movement?

    • It is spread across movement from digital/ technology sector to a wide array of sectors including agriculture, manufacturing, social sector, healthcare, education, etc.
    • From existing tier 1 cities to tier 2 and tier 3 cities including semi-urban and rural areas.

    The Action Plan is divided across the following areas:

    • Simplification and Handholding
    • Funding Support and Incentives
    • Industry-Academia Partnership and Incubation

    What is the exact definition of a Startup ?

    • Startup means an entity, incorporated or registered in India not prior to 5 years, with annual turnover not exceeding INR 25 crore in any preceding financial year.
    • Provided that such entity is not formed by splitting up, or reconstruction, of a business already in existence.

    What will be the Action plan for Simplification and Handholding task?

    #Compliance Regime based on Self-Certification

    • To reduce the regulatory burden on Startups thereby allowing them to focus on their core business and keep compliance cost low.
    • Startups shall be allowed to self-certify compliance (through the Startup mobile app) with 9 labour and environment laws (refer below).
    • In case of the labour laws, no inspections will be conducted for a period of 3 years.
    • In case of environment laws, Startups which fall under the ‘white category’ (as defined by the Central Pollution Control Board (CPCB)) would be able to self-certify compliance and only random checks would be carried out in such cases. [Can you think of question on white category in Prelims?]

    #Startup India Hub

    To create a single point of contact for the entire Startup ecosystem and enable knowledge exchange and access to funding.

    How will “Startup India Hub” be a key stakeholder in this vibrant ecosystem?

    • Work in a hub and spoke model and collaborate with Central & State governments, Indian and foreign VCs, angel networks, banks, incubators, legal partners, consultants, universities and R&D institutions.
    • To all young Indians who have the courage to enter an environment of risk, the Startup India Hub will be their friend, mentor and guide to hold their hand and walk with them through this journey.

    #Legal Support and Fast-tracking Patent Examination at Lower Costs

    • To promote awareness and adoption of IPRs by Startups and facilitate them in protecting and commercializing the IPRs.
    • By providing access to high quality Intellectual Property services and resources, including fast-track examination of patent applications and rebate in fees.
    • The scheme for Startup Intellectual Property Protection (SIPP) shall facilitate filing of Patents, Trademarks and Designs by innovative Startups.

    Various measures being taken in this regard include:

    #1. Fast-tracking of Startup patent applications:

    Patent application of Startups shall be fast-tracked for examination and disposal, so that they can realize the value of their IPRs at the earliest possible.

    #2. Panel of facilitators to assist in filing of IP applications:

    Facilitators will be responsible for providing general advisory on different IPRs as also information on protecting and promoting IPRs in other countries.

    #3. Rebate on filing of application:

    Startups shall be provided an 80% rebate in filing of patents vis-a-vis other companies. This will help them pare costs in the crucial formative years.

    #Relaxed Norms of Public Procurement for Startups

    • At present, effective April 1, 2015 Central Government, State Government and PSUs have to mandatorily procure at least 20% from the Micro Small and Medium Enterprise (MSME).
    • In order to promote Startups, Government shall exempt Startups (in the manufacturing sector) from the criteria of “prior experience/ turnover” without any relaxation in quality standards or technical parameters.

    #Faster Exit for Startups

    • To make it easier for Startups to wind up operations.
    • The Insolvency and Bankruptcy Bill 2015 (“IBB”), tabled in the Lok Sabha in December 2015 has provisions for the fast track and / or voluntary closure of businesses.
    • In terms of the IBB, Startups with simple debt structures or those meeting such criteria as may be specified may be wound up within a period of 90 days from making of an application for winding up on a fast track basis.

    Let us know what do you think on this question?

    #Q. How will start ups create an ecosystem that can flourish with ‘Digital India’ initiative? Discuss with examples.

     

    Published with inputs from Arun

  • Telecom and Postal Sector – Spectrum Allocation, Call Drops, Predatory Pricing, etc

  • GI(Geographical Indicator) Tags

    GI status is an indication that identifies goods as produced from a particular area, which has special quality or reputation attributable to its geographical origin.

    India, as a member of the World Trade Organization (WTO), enacted the Geographical Indications of Goods (Registration and Protection) Act, 1999 has come into force with effect from 15 September 2003

    The GI tag ensures that none other than those registered as authorised users (or at least those residing inside the geographic territory) are allowed to use the popular product name.

    In India, a GI’s registry operates in Chennai in accordance with the provisions of the Geographical Indications of Goods (Registration and Protection) Act 1999, which came into effect in September 2003.

    India has 236 GI products registered so far and over 270 more products have applied for the label. Let’s take a look at 10 such geographical indicators in India.

    To follow up with latest developments on GI tags –