Intellectual Property rights and

Innovation
 ➢Meaning of IPRs
➢Basics of different types of IPRs
▪ Patents
▪ Industrial designs
▪ Trademarks
▪ Geographical Indications
The organization ▪ Copyrights
➢Internationalization of IPRs
➢History of Patent Rights (Special Focus on India)
➢The Role of IPRs in Innovation Systems
▪ Economic rationale behind providing these rights
▪ Empirical findings
 Intellectual Property refers to creations of the mind:
Inventions, literary and artistic works, and symbols, names, images
and designs used in commerce.

IPRs: These cover bundle of legal instruments each of these are

Concept of IPRs different in scope, duration and with different purpose and
different effects.

Common Element: These instruments delineate exclusive rights to

innovators over the use of his or her creation for a certain period.
Thus, IPRs owner can disclose their creation without the fear of loss
of control over their use and thus help in the dissemination of new
creations.

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Types of IPRs
 Patent is an exclusive right granted for an
invention, which is a product or a process that
provides a new way of doing something, or offers a
new technical solution to a problem. In order to be
patentable, the invention must be:
Patents ▪ New
▪ Involve an Inventive Step
▪ Industrial Application

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 Patents in India
➢Novelty
▪ An invention is considered as new if it is not anticipated by prior publication, prior use or prior
public knowledge in India or elsewhere. Claimed before in any specification in India.
➢Non-obviousness or Inventive step
▪ Involves technical advance as compared to the existing knowledge that makes the invention
not obvious to a person skilled in the art.
➢Industrial Capability
▪ "Invention" means a new product or process involving an inventive step and capable of
industrial application.

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 Patents Cont.…
Patent protection means that the invention cannot be commercially made, used, distributed or
sold without the patent owner's consent. Further, Protection is provided for 20 years.
Patent is a statutory right to the inventor or the applicant by the government for his invention
which is either a new process or product.

Key Features: Rights of Patent Holder:

▪ Limited period 1. A patent owner has the right to decide
▪ Need for sufficient disclosure to the who may - or may not - use the
patent offices patented invention.
▪ Territorial right 2. May give permission to, or license, other
parties to use the invention on mutually
▪ Negative right agreed terms.
3. May also sell the right to the invention
Note: Once a patent expires, the protection ends, and to someone.
an invention enters the public domain. 7
 Patents in India: Inventions not Patentable
(Select few)
▪ Frivolous or anything obviously contrary to well established natural law.
▪ Contrary public order or morality serious prejudice to human, animal or plant life or
health or to the environment.
▪ Discovery of a scientific principle or the formulation of an abstract theory or discovery
of any living thing or non-living substances occurring in nature.
▪ A method of agriculture or horticulture.
▪ The mere arrangement or re-arrangement or duplication of known devices each
functioning independently of one another in a known way.
▪ Any process for the medicinal, surgical, curative, prophylactic, diagnostic, therapeutic or
other treatment of animals to render them free of disease or to increase their
economic value or that of their products.
▪ A mathematical or business method or a computer program per se or algorithms.
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 An ordinary patent:
▪ An application for patent filed in the Patent
Office without any reference to any other
application under process in the office is called
an ordinary application.
Types of patents A patent of addition:
granted in India ▪ Improvement or modification of the invention.
A patent of convention:
▪ Convention application refers to a patent
application filed in accordance with the terms of
an international patent treaty like the Patent
Cooperation Treaty.
 A patent has lived its full term

Cessation or expiry The patentee has failed to pay the

renewal fee
of the patent
The validity of the patent has been
successfully challenged by an
opponent by filling an opposition
either with the patent office or with
the courts

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 Steps of filling and grant of patent

In 19th month, the

Examiner check the Application is kept
File an application for application is published
formal requirements secret for a period of 18
patent and pay the in the official journal.
before accepting the month from the date of
required fees. (made available on
application and the fee. filling.
website weekly)

Whether the claimed

Whether the invention
Examiner undertakes invention is not
meets the criterion of
examination. prohibited for grant of
patentability.
patent.

Source: www.ipindia.nic.in
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 First examination report containing list of objections is
issued with in 6 months from the date of filing of request.

Cont.… Applicants gets 12 months time to meet the objections.

If objection are met, patent is issued by the controller-

within a period of one moth and published in official
journal.

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Filling of application:
 Fee structure:

▪ Different rates for e-filling and physical filling.

▪ Vary from Natural person, Startup, Others.
▪ Amount vary from ₹1600- ₹ 8000.
▪ For each sheet of specification (beyond 30) and claims (beyond 10).
▪ Fee payments at different stages; request for examination, early examination,
publication, withdrawal etc.
▪ Renewal Fee:
• To be paid with in 3+6 month from date of recording in the register no fee in the 1st
and 2nd year.
• Patent lapses if renewal fee is not paid within the prescribed period.

Source: http://www.ipindia.nic.in/writereaddata/Portal/IPOFormUpload/1_11_1/Fees.pdf
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 An industrial design is the ornamental or aesthetic
aspect of an article. The design may consist of
three-dimensional features, such as the shape or
surface of an article, or of two-dimensional
features, such as patterns, lines or color.
Industrial Designs Industrial designs are applied to a wide variety of
products of industry and handicraft, these include:
• Technical and Medical Instruments; Watches.
• Jewelry; Luxury Items.
• Housewares and Electrical Appliances; Vehicles
• Architectural Structures; Textile Designs.

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 An industrial design is primarily of an aesthetic nature and does
not protect any technical features of the article to which it is
applied.

Purely artistic design that cannot be applied to any utilitarian

objects are excluded.

Industrial Designs An industrial design must be new or original to get protection.

Generally, "new" means that no identical or very similar design is
Cont… known to have existed before.

The duration of protection available is 10 years.

Owner of an industrial design - the person or entity that has

registered the design - is assured an exclusive right against
unauthorized copying or imitation of the design by third parties.
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 Any sign, or any combination of signs,
capable of distinguishing the goods or
services of one undertaking from those
of other undertakings constitutes a
trademark.

Trademarks
Such signs includes letters, numerals,
figurative elements and combinations
of colors. They may consist of drawings,
symbols, three- dimensional signs such
as the shape and packaging of goods,
audible signs such as music or vocal
sounds, fragrances, or colors used as
distinguishing features.
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 Trademarks Cont…

Trademarks: Collective Marks: Certificate Marks:

These are given for compliance
These are owned by an with defined standard, but are
Identifies the
Association, whose not confined to any
commercial source
Members use them to membership. They may be
of goods or granted to anyone who can
identify themselves with a
services. certify that the products
level of quality and other
involved meet certain
requirements set by the established standards. The
association e.g., a nursing internationally accepted “ISO
association 9000” quality standards are an
example of such widely
recognized certification.
 ▪ It is a sign used on goods that have a specific
geographical origin and possess qualities or a
reputation that are due to that place of origin.
Geographical ▪ These specific qualities of a product are due to:
• Specific local geographical factors such as climate
Indications and soil.
• Human factors present at the place of origin of the
products such as certain manufacturing techniques
or a traditional production method.
▪ Most commonly, it consists of the name of the
place of origin of the goods.

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 ▪ Geographical indications are used for a wide variety of
products. For example:
• Tuscany for olive oil produced in a specific area of
Italy.
Geographical • Roquefort for cheese produced in France.

Indications Cont… • Swiss Watches.

• Darjeeling Tea.

• Nilgiri Tea.

• Champagne.

Motivation:
Geographical indications are understood by consumer to denote the origin and the quality of products. Many
of them have acquired valuable reputation over a period of time. If not adequately protected, these products
can be misrepresented by dishonest commercial operators.
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 Geographical Indications Cont…

Action Geographical Indication Trademark

It helps consumer to… ...identify that a product is produced ..distinguish products of one
in a certain place and has certain commercial undertaking from that of
characteristics that are due to that another commercial undertaking.
place of production.

It can be used by… ..all producers who make their ..a single producer (who owns that
products in the place designated by a trademark).
geographical indication and whose
products share typical qualities.

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 ▪ Copyright is a legal term describing rights given to
creators for their literary and artistic works.
▪ Copyright protection extends only to expressions,
and not to ideas, procedures, methods of operation
or mathematical concepts as such.
Copyright and ▪ The kinds of works covered by copyright include:
Literary Works Such as Novels, Poems, Plays, Reference
Related Rights •
Works, Newspapers and Computer Programs
• Databases
• Films, Musical Compositions, and Choreography
• Artistic Works such as Paintings, Drawings, Photographs
and Sculpture
• Architecture
• Advertisements, Maps and Technical Drawings

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 Copyright and Related Rights Cont…
Economic Rights
The original creators of works hold the ▪ Many creative works protected by copyright
exclusive right to use or authorize others to use require mass distribution, communication and
the work on agreed terms. The creator of a financial investment for their dissemination
work can prohibit or authorize:
(for example, publications, sound recordings
▪ its reproduction in various forms, such as
printed publication or sound recording; and films).
▪ its public performance, as in a play or ▪ Thus, creators often sell the rights to their
musical work; works to individuals or companies best able to
▪ recordings of it, for example, in the form market the works in return for payment.
of compact discs, cassettes or videotapes;
▪ its broadcasting, by radio, cable or ▪ These payments are often made dependent on
satellite; the actual use of the work, and are then
▪ its translation into other languages, or its referred to as royalties.
adaptation, such as a novel into a
screenplay.
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 Copyright and Related Rights Cont.…

Moral Rights Related to Copyright

Copyright protection also These rights are grew up around copyrighted works,
includes moral rights, which and provide similar, although often more limited and
involve the right to claim of shorter duration, rights to:
authorship of a work, and the
▪ Performing artists (such as actors and
right to oppose changes to it
musicians) in their performances;
that could harm the creator's
reputation. ▪ Producers of sound recordings (for example,
cassette recordings and compact discs) in their
recordings;
▪ Broadcasting organizations in their radio and
television programs.
Note: Copyright itself does not depend on official procedures. A created work is considered protected by
copyright as soon as it exists.
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Inside this Refrigerator is a World of Intellectual Property

ꝺ The aesthetics elements- design of the drawers, the shelves, the

style and appearance of the temperature control- are protected as
industrial designs.
ꝺ The branded food products each carry a trademark or geographical
indication, assuring the consumer of a particular quality.
ꝺ Their special packaging (canned, vacuum-packed, key - opened
container) can be both patented as well as in many cases examples
of industrial designs.
ꝺ The mechanical elements of the refrigerator- the part and process
that keep food cold- are patented inventions.
ꝺ Even the refrigerator’s operating manual as an original written text
is protected by copyrights.

Source: WIPO (2007) 25

Historical Account
To highlight:

Development of domestic legal system and institutions

Need for international collaboration for legal protection

Development of international institutions to support IPRs

Historical Account
The oldest examples of grants of exclusive rights date to 14th century

The first patent code issued by the Venetian Senate in 1474 that laid the foundation for
modern patent laws

Statute of Monopolies 1623: Act of the Parliament of England, the first statutory expression
of English patent law
Served as Model for British Colonies in North America
14 years duration that is twice the time required to train an apprentice
Historical Account
The patent system had spread widely to other European nations and America during the 17th-
19th centuries. Case of Switzerland and Germany (Kaufer 1989)

International coordination of the patent system (Paris Convention 1883, WIPO, PCT, EPO etc.)

Local anti-patent movements during the 19th century

TRIPS agreement

Almost worldwide adoption of the patent system and tremendous increase in international
patenting
 Internationalization of IPRs

The need for international 1883 marked the birth

of the Paris Convention
protection of IP became evident for the Protection of
when foreign exhibitors refused to Industrial Property.
attend the International Exhibition
of Inventions in Vienna in 1873 1886 Berne Convention
because they were afraid that their for the Protection of
ideas would be stolen and exploited Literary and Artistic
Works came into force.
commercially in other countries.

National Treatment

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 Internationalization of IPRs

Increase in the Trade of Knowledge Goods.

Changes in the 20th Century International Trade
Increase in the Trade of Counterfeited Goods.

Advances in Increased Emerging Emerging

Technology International Markets Products,
Trade attractive to
Strategic Development of NIC’s copy
World Intellectual Property Rights Organization
(WIPO)

IPRs became part of international WIPO became a specialized agency

agreements with Paris Convention of United Nations (UN) in 1974 to
(1883) for industrial property and administer IPRs related matters
Berne Convention (1886) that recognized by member states of UN.
protects literary and artistic works.

1967 Currently

1883 1974

WIPO was preceded by the International

Bureau to carry out administrative work WIPO is the global forum for IP
for Paris and Berne. WIPO came into services policy, information and
existence after 1967 Stockholm WIPO cooperation and have 193
Convention. member states.
 A policy forum to shape balanced international IP rules for a
1 changing world

Global services to protect IP across borders and to resolve

2 disputes

What WIPO 3
Technical infrastructure to connect IP systems and share
knowledge
Does?
Cooperation and capacity-building programs to enable all
4 countries to use IP for economic, social and cultural
development

5 A world reference source for IP information

Source: WIPO (2015)

 ➢ National Treatment
➢ Minimum Standard of Protection
▪ Definitions
Scope/Coverage
TRIPs Agreement ▪

▪ Duration
▪ Exclusions
▪ Other Provisions
➢ Enforcement Issues

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 TRIPs Covers 7 types of IPs
▪ Copyrights
▪ Trademarks
▪ Patents
TRIPs Agreement ▪ Geographical Indications
▪ Industrial Design
▪ Integrated Circuits
▪ Trade Secrets
Enforcement Issues
 History of Patent Act in India
➢1856: India got the Act for protection of invention based on British
law of1852.
➢1872: Patents and Design Act: An authority call Controller General of
Patent appointed.
➢1959: Justice Ayyangar’s report came.
➢1967: Patent Act bill introduced in parliament Indian Patent Act was
passed by the parliament in the year 1970 and came into force on
April 20, 1972.
➢ First amendment happened in 1994 to include Exclusive Marketing
Rights (EMR’s) ; In 1999 amendment passed by the parliament; 2002
amendment.
➢Amendment enforced from 1-1-2005 where product patent were
introduced in pharmaceutical sector
 Patent applications in India: A broad picture
Patent Applications (1900-2021)

35000 • The figure shows the

applications filed in a particular
30000
year that were granted.
25000 • It reveals that the total average
applications that were granted
20000
between 1900-1920 is 293 per
15000
year which increased to 952 for
the period 1921-1940.
10000
• The overall trend, however,
5000 hides variations during the
different phases.
0
1965
1967
1969
1971
1973
1947
1949
1951
1953
1955
1957
1959
1961
1963

1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
Source: inPASS which is Patent Search Services of IPO
 Patent applications in India: Magnifying look
Patent Applications (1947-1994)
5000

4500

4000

3500

3000

2500

2000

1500

1000

500

Source: inPASS which is Patent Search Services of IPO

 Patent application in India: Magnifying look
Patent Applications (1995-2021)
35000

30000

25000

20000

15000

10000

5000

0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

-5000

Source: inPASS which is Patent Search Services of IPO

 Specific of Patenting Trend in India
APPLICATIONS FILED BY RESIDENTS AND NON–RESIDENTS THROUGH VARIOUS ROUTES FOR LAST 10 YEARS

35000
28965

28832
28435

28248

27230
27078

26966
26492

26404
26057
30000

24326
25000

20843
17005
20000

15550
13219
13066
12071
15000 10941
9911
8921

10000
4280

4184

3911
3704

3675

3649

3637
3610

3565
3382
3174

3156
2777
2290
2084
1915
5000

1461
1228
1144
1031

0
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21

Residents Ordinary Convention National Phase Applications under PCT

Source: Annual Report, Indian Patent Office, Various Issues.

 Specific of Patenting Trend in India
• Historically non-resident patents have been high.
• Non-residents applications are still a large portion of the applications filed as
evident from figure.
• As the domestic patent filing has surpassed the number of patents filed by non-
Indians at the Indian Patent office in last quarter (Q4) of 2021-2022, during last 11
years. (Sanyal and Arora 2022, p. 5).
• Within the patents applied for by the residents, the top patentees include
companies like Microsoft, Qualcomm, Huawei, Samsung, Ericsson, and GE.
Economic Rationale for Patent Protection and
Empirical Evidence
Economic Rationale for Patent Protection
• Market Failures in the ‘Market for Technologies’
❖Public Goods (e.g., knowledge)
• Non-excludability
• Non-rivalry

• Public good: Nonexclusive and nonrival good: the marginal cost of provision to an additional
consumer is zero and people cannot be excluded from consuming it.
Nonrival good: Good for which the marginal cost of its provision to an additional consumer is
zero. Is the good rival in consumption? That is, does one person’s consumption reduce anther’s
ability to use it

Nonexclusive good : Good that people cannot be excluded from consuming, so that it is difficult
or impossible to charge for its use. Is the good excludable? That is, can people be prevented
from using it?
Economic Rationale for Patent Protection

• Under-investment in the absence of protection

• Let take a case of drug development

• Once a new drug is introduced in the market P=MC; i.e., zero economic profit

• Then how to recoup the investment made in R&D?

Tradeoff
Patents and Monopoly
Do patents really create monopiles?
• Patents do not restrict access to information
• Patents are territorial
• Alternative means of appropriability:
• First mover advantage
• Reputation
• Brand loyalty
• Entry barriers
• Trade secrecy
 Why and Cost

• Incentive for innovation • High pricing

• Investment • Patent race
• Commercialization • Limited diffusion
• Risk-taking • Distortion of the direction of
inventions

Balancing Act:
Absence of IPR ➔ may result in underinvestment in Innovation
Presence of IPR ➔ may result in overinvestment in innovation
Source: Park (2016)
Bryan and Williams 2021
 Empirical Evidence

Alternative mechanisms

• Secrecy
• Lead time
• Production cost reduction
• Superior Marketing
• Country wide variations
 Empirical Evidence
Sector Specificity

• Pharmaceutical and chemical

• Low imitation to innovation cost ratio
• Critique of one size fit all approach

Conditioned on level of economic development

Strategic use of patents by firms

Challenges of empirical research