Stronger IP measures will be a boon for Indian start-ups

More than twenty years ago, as part of the formation of the World Trade Organization (WTO), the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was developed to set a minimum standard for each WTO member nation's intellectual property (IP) rules. These IP measures form a critical part of any country's infrastructure for domestic innovation. However, at the behest of India and like-minded members, implementation of the TRIPS commitments has been waived for most nations since its inception. This leaves those countries, India included, lagging far behind the most innovative economies.

TRIPS is an important starting point, but it is far from representing an international best practice when it comes to implementing an IP framework that nurtures domestic innovation and fosters national competitiveness in the global marketplace. Today, many nations have enacted so-called "TRIPS-plus" measures that help to provide additional legal certainty regarding the rights provided to holders of patents, copyrights, and trademarks. Such measures typically inject an enhanced degree of transparency and due process into a country's IP system. One example is patent linkage provisions that require regulatory agencies to notify a patent holder when another business requests approval to market a generic version of a product that remains under patent. Patent linkage and similar mechanisms enhance the rule of law for innovative industries, streamlining due process and reducing the prevalence of expensive litigation which otherwise increases the costs of innovative products, such as life-saving medicines.

Transparency and predictability in the application of IP laws is critical to a healthy innovation economy, but not sufficient to drive innovative output. To stimulate innovation in the home market and attract foreign investment in innovative sectors, a country's IP system should achieve three things: First, it should establish adequate incentives under law for would-be innovators to invest in long-term, high-risk research and development spending; second, it should provide sufficient enforcement capabilities and resources to serve as a deterrent against infringement so that such incentives are not undermined by illicit trade; and, third, it should be backed by a vocal and consistent political commitment from policymakers and political leaders to minimise fears that the rules will change in an arbitrary or capricious manner.

This formula has been implemented in Europe, Japan, the United States, and other countries, and its success has helped catalyse solutions to shared global challenges in every facet of human life from energy to health, and technology to entertainment. Countries which recluse themselves from even the most basic IP standards – such as those in the TRIPS Agreement – effectively deny their domestic innovators the critical infrastructure for the consistent commercialisation of their own discoveries and creations, and create a de-facto monopoly on innovation for more ambitious nations.

Intellectual property works to stimulate innovation by transforming intangible discoveries and creations into an asset class for businesses and entrepreneurs at every level, from the start-up, to the small business, to the multinational company. When adequately established in statute and appropriately enforced, these assets hold value, enabling innovative businesses to access financing. This forms an indispensable link in the chain that connects innovative discoveries and creative activity to the widespread availability of products and services. For start-ups, which Prime Minister Modi has prioritised so highly for India's future economic growth and competitiveness, this means access to venture capital, angel investing, and "crowd-sourcing." For an established small or medium-sized business, a registered intellectual property right is collateral to secure a bank loan. For publicly traded companies, the value of IP assets are as closely tracked as any other form of capital and reported to shareholders; when weak or ambiguous IP laws create legal uncertainty around IP assets, the value of the company is diminished and its access to the capital necessary for continued research and development of new innovative products is likewise diminished.

At the WTO over the last two decades, India has often led efforts not only to avoid implementing its own basic TRIPS commitments, but also to weaken the standard of IP laws applied globally. Such efforts, nominally intended to reduce the cost to the end-users of innovative products, are plainly counterproductive to the human rights and development needs they purport to address because they have the effect of reducing global innovative output.

Research by the Global Intellectual Property Center at the US Chamber of Commerce clearly demonstrates a strong, positive relationship between strengthened IP rights and innovative output, along with a host of other socio-economic benefits, among them increased research and development spending, job creation in knowledge-intensive industries, start-up access to financing, and consumer access to innovative products.

Since the plain language of TRIPS provides more than adequate flexibility for countries to meet human health and other urgent access needs, there is no basis on which to waive the basic commitments to which they agreed on WTO accession. Far from a barrier to either access to innovative products, or a hurdle to development, the evolution of a meaningful IP framework is a critical step in the development of an innovative economy. Prime Minister Modi and his administration have articulated a clear commitment to an innovative future for India. Yet the legal framework in place is still the legacy of an old way of thinking. In coming weeks, the government of India is expected to release a new National IPR Policy, which is likely to set the course for Indian IP policy for the foreseeable future. For the sake of more than one billion innovation-minded Indian people, and for the rest of the world that stands to benefit from their inventions, creations, and discoveries, let's hope it's a policy that prioritises IP-led innovation.

The writer is executive director, International IP, GIPC