gPatents.com

Continuing Problems with India's Patent System

C.H. Unnikrishnan reports on livemint.com that India's patent system continues to suffer from legal ambiguity, too few examiners, and piles of complaints.  India's current patent law, passed in 2005, was supposed to bring the Indian system into line with World Trade Organization standards.  The law did make some improvements, but almost immediately spawned litigation as companies tested its boundaries. 

Brain League IP Services of Bangalore has compiled data relating to 18,461 complaints to the Comptroller General of Patents, Designs and Trademarks in 2007.  C.H. Unnikrishnan, author of the livemint.com article, ponts out four areas of ambiguity in the 2005 law:
- Patentability of modified drug formulations
- Importation of drugs manufactured in least developed countries
- Compulsory licensing
- Time limits in post-grant opposition rules

Of course, all patent legal systems suffer from ambiguities.  The U.S. system, for example, continues to wrestle with the limits to patenting software and business methods. 

Unnikrishnan also suggests limited numbers of examiners at India's four patent offices (New Delhi, Mumbai, Kolkata and Chennai) as a partial explanation for the large number of complaints.     

See also: "Is India's Patent Infrastructure in Trouble?"

Open Innovation Network's Open Source Protection Strategy

Open Innovation Network (OIN) is an intellectual property company that was formed to use patents to promote open source users, such as users of Linux.  Members of the network includ companies like Sony, IBM, NEC and redhat.  The idea is to assemble a portfolio of important patents and make them available to collaborative communities. 

Acording to a recent WSJ post, OIN is planning to encourage programmers to publish inventions.  By publishing inventions, programmers advance the publicly available state of the art by which new patent applications are judged.  The world's patent offices will rely on the publications in an effort to force patent applicants to cancel or at least narrow their patent claims.  As a result, the published inventions will make it difficult for other companies to obtain broad patent claims covering similar inventions.

The WSJ also noted that IEEE is planning to "team up with a unit of Dolby Laboratories Inc. to encourage companies to pool their patents covering specific technologies and license them as a group."  The pooled patents are expected to make licensing easier and less expensive.

These are market responses to a patent system that provides strong patent protection and makes patents easy to obtain.  A strong system provides an incentive to litigate.  Together with the proliferation of patents, the incentive to litigate has also motivated the "patent troll" business strategy.  Patent troll companies aggregate patents for the purpose of enforcing them, rather than using them to protect an investment in developing and selling products.  By pooling patents, OIN and others hope to keep patents out of the hands of patent trolls.  Keith Bergelt, OIN's CEO told the WSJ that OIN has already pooled 132 patents.

Global Patent Crowding

Growing numbers of patent applications in China, South Korea and the United States have contributed to a surge in the number of worldwide patent applications.  The total number of applications filed per year has reached 1.76 million, and the total number of patents in force has grown to around 6.1 million.

This trend supports the concerns we raised in iProperty, that the development of sophisticated innovation capabilities in innovation hotspots around the globe would fuel growth in the number of potentially enforceable patents.  Many of the new patent applications originate in China, South Korea and elsewhere.  These patent applications make their way back into the world's developed nations via the Patent Cooperation Treaty's (PCT) international patent filing procedures.  The tables are beginning to turn on developed economies, who have made use of these PCT provisions to protect their innovations in developed economies for years. 

Companies that make their living by developing innovative products cannot afford to ignore these trends. It is important for companies to invest sufficient resources in understanding the patent landscapes in which they operate.  A failure in this regard can be costly, as patents can be used to shut down expensive factories, stop product shipments, and extract damages payments for infringing activities.

CED's 2008 Globalization Conference - IP Panel

I attended the Globalization 2008 Conference in Research Triangle Park, NC this week.  The conference was sponsored by the Council for Entrepeneurial Development, and included an IP panel discussion featuring:

• Marshall Phelps, Corporate Vice President and Deputy General Counsel, Intellectual Property, Microsoft Corp.
• Chris Price, Ph.D., President & CEO of LaamScience Inc., and my co-author on iProperty: Profiting from Ideas in an Age of Global Innovation
• Arti Rai, Professor of Law, Duke University
• Bob Sutor, Ph.D., Vice President of Open Source and Standards, IBM Corp.

Marshall Phelps emphasized the IP risks in a digitally connected global economy with reference to General Motors' lawsuit against China's Chery Automobile Co.  Chery sounds a lot like Chevy, and the Chery was allegedly developed based on database files stolen from GM's South Korean affiliate Daewoo.  As Chris and I pointed out in iProperty, trade secrets can walk out the door of a company more easily now than ever before.  Tiny, high volume, memory devices are widely available, a single email can result in a devastating loss of proprietary material. 

Phelps, who was formerly IBM's chief patent counsel and helped IBM forge paths into China and India, also confirmed that while China's IP system looks good on paper, it is still not up to speed when it comes to enforcement.  However, he pointed out that the Olympics are teaching China some important lessons.  In the past, the Chinese government has complained that it does not have the ability to enforce IP laws across the country, now that it gets a royalty on T-shirts with the Olympic logo, it capabililty to keep counterfeited T-shirts off the street has undergone remarkable improvement.  I don't know whether the profit sharing arrangement was suggested by the International Olympic Committee or required by the Chinese government, but I have to say that it is a stroke of genius.  What better way to motivate government to protect the Olympic Committee's IP than to align the interests of the Committee and the government!

Bob Sutor emphasized a growing problem in China with respect to standards.  Increasingly, he said, the world has two sets of standards: global standards and China standards.  Apparently, the Chinese are resentful of global standards that result in royalty requirements for Chinese companies.  Rather than play the game with everyone else, they do what they have always done, take their stuff and go home. 

Phelps pointed out the importance that the Chinese have placed on the standards issue by comparing the intellectual property offices of the Chinese government with the standards offices, the former looking like the typical communist government offices with barely a light bulb hanging from the ceiling, the latter being a palatial office tower with marble, columns, four-story atrium and the like.  The reason is that the Chinese plan to make standards into a growth business, according to Sutor, they will charge foreign companies to use the Chinese standards and they will fine them if they don't use the standards.

There was general agreement that with the age old advice that IP enforcement in China requires a Chinese partner.  Apparently, the enforcers are much more willing to take action when a Chinese company is also suffering from the IP infringement.

Several speakers expressed the hope for a global system that would eliminate much of the confusion and cost of the present multinational system.  While several regions with traditionally strong protection have been working in this direction, a truly global system is not in sight.

Chris Price, who is a serial entrepreneur, emphasized that today's companies are stuck with today's system.  He pointed out that it is key for senior managers to devote a similar amount of time to IP strategy as they devote to other aspects of their business.  IP is a tool that must be strategically wielded, otherwise it is inevitable that costs will overrun, the IP portfolio will be misaligned, and important areas of opportunity will be overlooked.

Sri Lanka Tightens Enforcement of Biopiracy Restrictions

Following reports that an academic researcher attempted to export plant genes, Sri Lanka is cracking down on biopiracy. The samples were purportedly gene samples from seaweed collected from Arugambay and Kirinda.

Sri Lanka's Minsiter of the Environment,Champika Ranawaka, emphasized in an article in The Sunday Times Online that “Bio-piracy has been taking place in the country for many years. Since plants are quarantined, those who are involved in bio-piracy take gene extracts in capsules masqueraded as lipsticks or perfumes, though a small quantity of ten millilitres is allowed.”

Exportation of plants for research requires the approval of Sri Lanka's Forest Conservator General, Sarath Fernando.  Fernando noted in the same article that “The professor who was nabbed recently had obtained no permission to either conduct a research or make a sample. It is a violation of the law.”

The stated purpose of the restriction is to "preserve Sri Lanka’s exclusive patent rights over endemic flora and fauna." According to Mr. Fernando, when samples are sent overseas, there should be an agreement regarding intellectual property rights for medicinal drugs developed using the Sri Lankan plants.  The Sunday Times article did not detail the allocation of intellectual property rights that the Sri Lankan government would expect from such a deal.  Nor did the article clarify whether the deal was between the government and the foreign entity or the discoverer and the foreign entity.

A statement by an unnamed official illustrated a common misconception about patents, stating that “Plant chromosomes sent abroad are used in the production of medicinal drugs and later patent rights are claimed on plants which are sometimes rare and endemic to Sri Lanka.” While it is possible to patent modified plants or substances extracted from plants, patent law does not permit the patenting of native plants in their native environment.