Hello, Innovation Na­tion

The Economic Times - - The Edit Page - Mark El­liot

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

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