IPR In IndiaInnovation and Competitiveness in India’s context

Dr Amit KapoorPresident and CEO, India Council on Competitiveness

Honorary Chairman, Institute for Competitiveness

Is there any link between Innovation and competitiveness?

20 25 30 35 40 45 50 55 60 65 702.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00

3.84

4.08

3.04

3.79

4.01

5.085.16

4.53 4.48

3.72

4.36

5.18

3.803.77

4.15

4.344.37

3.213.09

3.89

3.66

5.24

4.60

4.89

4.234.42

3.67

4.134.31

4.53

5.29

3.824.01

3.60

4.71

3.60

5.50

5.08

3.53

4.22

5.49

3.71

4.044.10

2.79

3.653.82

5.46

4.28

4.71

4.21

4.57

4.03

4.984.95

4.42

3.98

5.47

4.254.42

3.93

4.96

4.51

3.73

4.50

3.683.73

4.51

5.17

3.413.25

5.16

3.43

4.454.52

4.27

4.03

3.83

4.234.21

3.24

3.963.81

5.45

5.20

3.82

3.44

5.35

4.46

3.42

4.43

3.59

4.244.40

4.48 4.54

5.24

4.304.374.27

5.06

3.703.90 3.91

5.65

4.15 4.224.35

4.55

4.19

3.55

5.41

5.70

3.93

3.57

4.66

3.953.96

4.46

3.56

4.14

5.33 5.415.54

4.04

3.32

4.23

3.86

3.54

f(x) = 0.0520559406635344 x + 2.29194675173707R² = 0.798777795369209

Competitiveness And Innovation Scores for Countries

Global Innovation Scores according to the Global Competitiveness Report 2014 on a scale of 1-100

Glo

bal C

ompe

titive

ness

Inde

x Sc

ores

on

a sc

ale

of 1

-7 a

ccor

ding

to

Glo

bal C

ompe

titive

ness

Rep

ort

201

4-15

Links between Competitiveness and Innovation

0 5 10 15 20 25 30 35 40100

1000

10000

100000

1000000

1047065

434096

121819 9295180561

458214342942937

21811

1838917326

162961580815508

1469210370

9876

75526942

60155719 4265

40533438

2570 2491

16981586

1568

1216955

Patents Granted by USPTO (Foreign Country of Origin)

CAGR Growth rate of Patents granted from 2003-2013

Tota

l Num

ber o

f Pat

ents

file

d in

201

3 on

a lo

g sc

ale

Patents Granted by the USPTO

1000 10000 100000 1000000 100000001

10

100

1000

10000

844

1

6746

25

890

23

645

287

4035

115

1167

257

111

2540

11

6

2

18

44

10778

4

1212

12

478

50

441

f(x) = 0.00149778512504157 x − 137.523769039565R² = 0.760365849529645

Patent and GDP Data for States

GDP of the state in Rs Crore in 2012-13 on a logrithmic scale

Num

ber o

f pat

ent fi

led

in 2

012-

13 o

n a

logr

ithm

ic sc

ale

Categorization of States as per the SCR 2014

Source: Institute for Competitiveness

City-State Economies

North Eastern Economies

Innovation Driven Economies (Per capita GDP Above 1500 USD)

Transition Economies (Per capita GDP 1300 to 1500 USD)

Investment Driven Economies (Per capita GDP 900 to 1300 USD)

Evolving / Changeover Economies (Per capita GDP 700 to 900 USD)

Factor Driven Economies (Per capita GDP less than 700 USD)

Are there any trends observed in IPR activity in India?

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Filed 12613 17466 24505 28940 35218 36812 34287 39400 43197 43674

Examined 10709 14813 11569 14119 11751 10296 6069 11208 11031 12268

Granted 2469 1911 4320 7539 15261 16061 6168 7500 4381 4126

2500

7500

12500

17500

22500

27500

32500

37500

42500

47500

1261

3 1746

6

2450

5 2894

0

3521

8

3681

2

3428

7 3940

0 4319

7

4367

4

1070

9 1481

3

1156

9

1411

9

1175

1

1029

6

6069

1120

8

1103

1

1226

8

2469

1911 43

20

7539

1526

1

1606

1

6168 75

00

4381

4126

f(x) = 3344.09696969697 x + 13218.6666666667R² = 0.916841925347474

Total Number of Patents

Trends in Patents as per CGPDTM

Andhra Pradesh; 414; 7%

Assam; 16; 0%

Bihar; 21; 0%

Chhattis-garh; 15; 0%

Delhi; 812; 13%

Gujarat; 286; 5%Haryana; 123; 2%Himachal

Pradesh; 15; 0%

Jharkhand; 85; 1%

Karnataka; 814; 13%

Kerala; 123; 2%Madhya Pradesh; 50; 1%

Maharashtra; 1936; 32%Punjab; 44;

1%

Rajasthan; 36; 1%

Uttar Pradesh; 161; 3%

Uttarak-hand; 25;

0%

West Ben-gal; 303; 5%

Chandigarh ; 33; 1%

Others; 728; 12%

Ordinary Patent Applications by Indians, State Wise in 2007-08 (Total -6040, 17.15% )

Trends in Patents as per CGPDTM

Andhra Pradesh; 844; 9%

Assam; 67; 1%

Bihar; 46; 0%Delhi; 890; 9%

Gujarat; 645; 7%

Haryana; 287; 3%

Himachal Pradesh; 40; 0%

Jharkhand; 115; 1%

Karnataka; 1167; 12%

Kerala; 257; 3%Madhya Pradesh; 111; 1%Maharashtra; 2540; 26%

Odisha; 44; 0%

Punjab; 107; 1%

Rajasthan; 78; 1%

Tamil Nadu; 1212; 12%

Uttar Pradesh; 478; 5%

Uttarakhand; 50; 1%

West Bengal; 441; 4%

Others; 492; 5%

Ordinary Patent Applications by Indians, State Wise in 2012-13 (Total-9911, 22.69%)

Trends in Patents as per CGPDTM

USA ; 8606; 36%

Germany ; 2441; 10%

Japan ; 1806; 8%Switzerland ;

1327; 6%

Netherlands ; 1293; 5%

France ; 1224; 5%

Sweden ; 1001; 4%

United Kingdom ; 990; 4%

Republic of Korea ; 698;

3%

Italy ; 519; 2%

Finland ; 499; 2%

Canada ; 416; 2%

Australia ; 404; 2%

Belgium ; 352; 1%

Israel ; 339; 1%

Denmark ; 302; 1%

Republic of China ; 263;

1%

Spain ; 155; 1%Austria ; 157; 1%

Norway ; 108; 0% Others; 991; 4%

PCT National Phase Applications 2007-08

Trends in International Patents as per CGPDTM

USA ; 8745; 31%

Germany ; 3364; 12%

Japan ; 4939; 17%

Switzerland ; 1380; 5%

Netherlands ; 1148; 4%

France ; 1390; 5%

Sweden ; 885; 3%

United King-dom ; 991; 3%

Republic of Korea ; 584;

2%

Italy ; 534; 2%

Finland ; 321; 1%

Canada ; 438; 2%

Australia ; 325; 1%

Belgium ; 321; 1%

Israel ; 285; 1%

Denmark ; 335; 1%

Republic of China ; 957;

3%

Spain ; 203; 1%

Austria ; 252; 1% Norway ; 136; 0% Others; 902; 3%

PCT National Phase Applications 2012-13

Trends in International Patents as per CGPDTM

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Filed 92251 78996 85699 103419 123514 130172 141943 179317 183588 194216

Examined 89958 72091 77500 85185 63605 105219 25875 205065 116263 202385

Registered 39762 45015 184325 10936 100857 102257 67490 115472 51735 44361

25000

75000

125000

175000

225000

9225

1

7899

6

8569

9 1034

19 1235

14

1301

72

1419

43

1793

17

1835

88

1942

16

8995

8

7209

1

7750

0

8518

5

6360

5

1052

19

2587

5

2050

65

1162

63

2023

85

3976

2

4501

5

1843

25

1093

6

1008

57

1022

57

6749

0

1154

72

5173

5

4436

1

f(x) = 13576.6606060606 x + 56639.8666666667R² = 0.933475743789885

Total Number of Trade Marks

Trends in Trademarks as per CGPDTM

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Filed 3357 4017 4949 5521 6402 6557 6092 7589 8373 8337

Examined 3228 4017 4719 4976 6183 6446 6266 6277 6511 6776

Granted 2547 3728 4175 4250 4928 4772 6025 9206 6590 7252

500

1500

2500

3500

4500

5500

6500

7500

8500

950033

57 4017

4949 55

21

6402

6557

6092

7589

8373

8337

3228

4017

4719 49

76

6183 64

46

6266

6277 65

11 6776

2547

3728 41

75

4250 49

28

4772

6025

9206

6590 72

52

f(x) = 547.757575757576 x + 3106.73333333333R² = 0.944519437696896

Total Number of Designs

Trends in Designs as per CGPDTM

2008-09 2009-10 2010-11 2011-12 2012-13

Filed 44 40 27 148 24

Examined 21 46 32 37 30

Registered 45 14 29 23 21

10

30

50

70

90

110

130

150

44 40

27

148

2421

46

32 3730

45

14

2923 21

f(x) = 6.8 x + 36.2R² = 0.0431053769856068

Total Number of GI's

Trends in GI’s as per CGPDTM

IP Regime in India

• The Patents Act, 1970 and Patent Amendments 1999, 2002 and 2005

• The Trademarks Act, 1999 and the Trademarks Rules 2002

• The Indian Copyrights Act, 1957

• The Design Act, 2000 and Rules 2001

• The Geographical Indications of Goods (Registration & Protection) Act, 1999 and

2002

IP Regime in India

Who administers the IP laws in India?

Ministry of Commerce and IndustryDepartment of Industrial Policy and Promotion

Office of the Controller General of Patents Designs and Trademarks

The Geographical

Indication Registry at Chennai

The Patent office (including

Design) at Kolkata, Delhi, Mumbai and

Chennai

The Trademark Registry at

Kolkata, Delhi, Mumbai,

Chennai and Ahmedabad

Patent Information System at Nagpur

Rajiv Gandhi National

Institute of Intellectual

Property Management at

Nagpur

Office Structure of IPR under DIPP

Analytical Tools: IPR and innovation in India

• Porter’s Diamond Model

• Porter’s Five forces Model

• Value Chain Analysis

Context for Firm Strategy and

Rivalry

Related and Supporting Industries

Demand Conditions

Local rules and incentives that encourage investment and productivity are decreased:• Lower salaries due to low end work• Lower capital investments as mutinational companies

want adequate standards • Lesser incentive to innovate as knowledge is not

adequately protected • Competition between companies becomes more

distorted as a there level playing field is not present • Companies reduce spending on R and D as a they

expects others to invest while they reap the benifits

Sophisticated and demanding local customers and needs e.g.,

• Strict quality, safety, and environmental standards are not met as IPR laws are weaker.

• Greater Imports as companies not able to meet sophisticated demand

• Government procurement of advanced technology as no laws in place

Distortion in access to high quality business inputs especially in • Information • Scientific and technological

infrastructure• ‘Intellectual’ capital is not being

recognized• In case of no protection this may

result in companies’ having no incentive to innovate

Factor Conditions

• IPR rules if they are not adequately present or clear • Distort incentives to share knowledge • Adverse impact on innovation at the related and

supporting industry level• It also results in a reduced network effect in clusters as

different firms in clusters are adamant in sharing their business knowhow

The Diamond as applied to India

Threat of Substitute Products:• Low• People still like the convenience and social

status of owning a vehicle. • There is tussle between private vehicles and

using public modes of transportation. • It will take a lot of time before India starts

using integrated mobility platforms

Bargaining Power of Suppliers:Medium-high. • Large number of suppliers for

various API Inputs .• Suppliers are mostly chemical

units. • Clusters in the west and

south particularly around Gujarat and Maharashtra and Telangana and Andhra Pradesh.

• Medium- High• Buyers have rising

disposable incomes due to growth of the economy

• Buyers have a range of segments and players to choose from

• Doctors act as significant influencers for Buyers

Threat of New Entrants:Low• Technology and capital Intensive business• Pharmaceutical drugs are a necessity • Huge marketing, sales, branding and

regulation prevents new players from coming in.

• Know how of Indian conditions is a must for entry into the business

Rivalry amongst Existing Firms:High• Tough Competition (>35 players) among

existing players to capture market. • For generics the basis of competition is cost

rather than innovation and R&D.• Value is driven by relationship with doctors as

well as the fact that the drug is branded or generic

• Disruptive innovation is observed in certain select cases.

Bargaining Power of Buyers:

Porter’s 5 forces

Compound

Generation and

Screening

Lead Optimiz

ation and

Development

Drug Candid

ate

Precedented Target

Generics

Target Existing

Drug Concep

t to Emulat

e

Target Existing

Drug Concept

to Emulate

New Concept Target

Drug Discovery and Development Clinical Trials

Pre Clinical testing

Phase I and

Phase II Clinical Trials

Phase III and Phase

IV Clinical Trials

Phase III and Phase

IV Clinical Trials

Bio Equival

ence Testing

High Yield

Chemistry

Drug Intermediates

and Active Ingredi

ents

Drug Produ

ct

Manufacturing

Target Biologic

al Pathwa

y

IP Value chain of MNC’s versus that of an Indian Player

Source: Michael. E. Porter and Authors Analysis

InboundLogistics

(e.g. Incoming Material Storage, Data Collection,

Service, Customer Access)

OutboundLogistics

(e.g. Order Processing,

Warehousing, Report Preparation)

After-Sales Service

(e.g. Installation, Customer Support,

Complaint Resolution, Repair)

M

a

r

g

i

n

Primary Activities

Firm Infrastructure(e.g. Financing, Planning, Investor Relations)

Procurement(e.g. Components, Machinery, Advertising, Services)`

Human Resource Management(e.g. Recruiting, Training, Compensation System)

Value

What buyers are willing to pay

• Relationship with universities (-)• Ethical Research Practices (-)• Product Safety (+/-)• Conservation of Raw Materials (-)• Recycling (+/-)

• Financial Reporting Practices (+/-)• Governance Practices (+/-)• Transparency(-)• Use of Lobbying (-)

• Education and Job Training (+/-)• Safe Working Conditions (-)• Diversity and Discrimination (+/-)• Healthcare and Other Benefits (+/-)• Compensation Policies (-)

• Procurement Practices (e.g., Bribery, child labour,) (+/-)

• Use of Particular Inputs (+)• Utilization of Natural

Resources (+/-)

• Transportation impacts (e.g., emissions, congestions) (+/-)

• Emissions and waste (-)• Biodiversity and ecological impacts (-)

Energy and water use (+/-)• Worker safety and labor relations (+/-) • Hazardous Materials (+/-)

• Packaging use and Disposal (+/-)

• Marketing and advertising (e.g., truthful advertising) (+/-)

• Pricing Practices (+/-)• Consumer Information (+/-)• Privacy (+)

• Disposal of Obsolete Products (+/-)

• Handling of Consumables (-)

• Consumer Privacy (+/-)

SupportActivities Technology Development

(e.g. Product Design, Testing, Process Design, Material Research, Market Research)

This is where most patent producing multinationals focus

Operations

(e.g. Assembly, Component

Fabrication, Branch Operations)

Marketing& Sales

(e.g. Sales Force, Promotion,

Advertising, Proposal Writing, Web site)

This is where most Indian Generic Manufacturers focus

Value chain of a generic player and Impact on Society

Recent changes in the IPR Regime

• US Trade Representative’s (USTR)’s special 301 Report came out in April 2014 pointing to an Out-of-Cycle

Review.

• PM Modi’s first five-day visit to US started on September 27th, 2014 after which joint statement is issued

to ‘establish an annual high-level Intellectual Property (IP) Working Group with appropriate decision-

making and technical-level meetings as part of the Trade Policy Forum.’

• The Out-of-Cycle Review initiated by US on 14th October 2014.

• Department of Indian Policy and Promotion (DIPP) on 22nd October constituted an IPR Think Tank

(comprising of one chairperson and five other members) to draft the National Intellectual Property Rights

Policy

Steps for removing impediments

• Improvement in present IP regime

• Establishment of a special IP Court

• More research on linkages between better IP regime and greater innovation

• State level policy for improving Innovation

• Protection of Trade Secrets

• Dispute resolution through bilateral talks

Thank You