Hello, Innovation Nation
The next life-saving medical treatment, the next groundbreaking technology, the next fashion icon, the next hit book, song and movie: all could be made in India.
India is atop a breaking wave. It’s at the cusp of a transformation. With bold leadership and constructive policy, India has the potential to become a leader among innovative economies, driven by knowledge, science, technology and creativity.
The first step toward harnessing this potential is to nurture the roots of innovation by investing in a strong intellectual property (IP) system. The US Chamber of Commerce released its 2017 International IP Index earlier this week. The index reveals the relationship between a strong IP system and a host of socioeconomic benefits.
Countries with stronger IP systems are more likely to have more robust business environments and greater access to venture capital, foreign direct investment and high-value jobs. Citizens reap the benefits of more clinical research, experience greater industrial growth and gain access to more licensed music outlets and other creative content. The bottom line is that strong IP systems deliver the legal certainty that enable risk and stimulate an innovative economy.
Unfortunately, the 2017 index rankings reveal that India continues to lag behind the rest of the world in IP protection, coming in at 43rd place out of 45 countries. Of a total of 35 points calculated using 35 indicators of a strong IP system, India scores a meagre 8.75, earning a failing grade of just 25%. It lags significantly behind the median index score, 15.39, and the average score of India’s neighbours, 17.64.
However, the index is more than a grading system. It’s a policy roadmap that India can use to improve its IP en- vironment and, in turn, spur innovation and economic growth. But it must start by addressing the issues at hand.
The Indian government purports to understand the value of a strong IP system. The inauguration of PM Narendra Modi came with the promise of tangible change, and the introduction of a new National Intellectual Property Rights (IPR) policy pledged positive steps toward an improved IP standard.
But despite the announcement of a string of high-level pro-IP initiatives, none has been accompanied by concrete legislative progress.
Worse, the government has recently taken steps that weaken India’s own businesses and discourage foreign businesses. For example, a Delhi High Court judgement endorsed the blatant copyright infringement rampant at the University of Delhi. In the interest of commercial gain, the university continues to provide a photocopied master-copy of course textbooks for students to photocopy themselves in the university library.
Creators in India’s own Bollywood understand the damage caused by this decision. Bollywood loses almost $3 billion each year due to India’s inadequate infrastructure to fight online piracy and camcording. These costs extend to other industry sectors, as well.
India has increased tariffs and duties on information technology, new investment restrictions in certain sectors, and burdensome local-testing requirements that jeopardise proprietary information for telecommunications and information technology equipment.
The National IPR policy recognises a number of gaps in India’s IP system. However, it dismisses the need for more extensive legislation reform. It provided no reforms to mitigate the challenges and uncertainties rights holders face protecting their patents, no proposals to modernise outdated copyright laws, and no suggestions for appropriate sector-specific IP protections, such as regulatory data protections for submitted biopharmaceutical test data. It’s time for India to enact these meaningful legislative reforms.
In addition to strengthening its copyright laws, some of the most substantial reforms India can make are related to its patent system. Specifically, Indian lawmakers should consider modifying Section 3(d) of the Indian Patent Act.
This Act continues to create an additional obstacle for innovators seeking life sciences patent protection. This obstacle places India out of step with international norms and is inconsistent with the minimum standards required by the WTO’s Trade-Related Aspects of Intellectual Property Rights pact.
Additionally, to help foster the growth of innovative digital technology, India’s legal framework should preserve the patentability of all forms of technology, including software.
And across all industries, meaningful trade secrets protection will help bolster legal certainty for innovators and investors in India. In many cases, if confidential business information is stolen, the innovator has no avenue for relief.
No other economy stands to gain more from strengthening the Indian IP system than India itself. A system that embraces robust IP protection will incentivise innovators to continue developing the next groundbreaking technologies and will place India on the path to becoming one of the world’s leading knowledge-based economies. Corporate short-termism has been the subject of ongoing debate among leaders in business, government and academia for more than 30 years, with much of the discussion focusing on whether it destroys value. Recent surveys of Csuite executives that we have conducted suggest that pressure to deliver strong shortterm results has increased in the last five years and, as a result, many executives believe their companies are using excessively short-time horizons in their strategic planning.
However, evidence that shorttermism genuinely detracts from corporate performance and economic growth has remained scarce, which does not correspond to any single quantifiable metric and is a confluence of many complex factors.… This discussion document aims to provide a fact base for this ongoing debate through a systematic measurement of long- and short-termism at the company level.
Using a data set of 615 largecap and mid-cap US publicly listed companies from 2001 to 2015, we have created a fivefactor Corporate Horizon Index. The index is based on patterns of investment, growth, earnings quality and earnings management of the listed companies. It enables us to separate long-term companies from others as well as compare their relative performance, after controlling for factors such as industry characteristics and company size.
Our findings show that the companies that we have classified as ‘long term’ outperform their shorter-term peers on a range of key economic and financial metrics.
The writer is executive vice-president, US Chamber of Commerce’s Global Intellectual Property Center From “Measuring the Economic Impact of Short-Termism”
With the IP switch turned on