Insight: Intellectual property rights in India

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Trademark protection in India is considered good by US authorities, and could be raised to international standards with the passage of a new trademark bill that codifies existing court decisions on the use and protection of foreign trademarks, including service marks.


Intellectual property rights in India

As was the case with China, India too showed signs of resistance to quick enforcement of international intellectual property right (IPR) protection laws as demanded by the developed countries, particularly the US. China could get away on grounds that it is not a member of the World Trade Organisation (WTO), but India was required to comply. Under the terms of the WTO, India is required to implement WTO-standard IPR protection laws by 2005. It must be acknowledged that there has been remarkable progress in IPR protection the field of software and cinema products.

India's general argument was that it does acknowledge in principle the case for strict IPR protection, but this can be done only in phases suited by its own ground reality. The reality is that absence of international IPR protection for some decades  has spawned employment for millions, so an overnight clampdown on IPR violators would foment social unrest.

However, under pressure from its own domestic industry and the United States, India strengthened its copyright law in May 1994, placing it at par with international practice. The new law, which entered into force in May, 1995, fully reflects the provisions of the Berne Convention on copyrights, to which India is a party. Based on its improved copyright protection, India's designation as a "priority foreign country" under the United States' Special­301 list was revoked and India was placed on the "priority watch list." Copyright enforcement is also rapidly improving.

Classification of copyright infringements as "cognisable offenses" expands police search and seizure authority. While the formation of appellate boards under the new legislation should speed prosecution, local attorneys indicate that some technical flaws in the laws, which require administrative approval prior to police action, need to be corrected.

Trademark protection is considered good by the US authorities, and could be raised to international standards with the passage of a new trademark bill that codifies existing court decisions on the use and protection of foreign trademarks, including service marks. The bill was first introduced in 1995 but failed to win parliamentary approval. Passage of the trademark bill is expected in 1998. Enforcement of trademark owner rights had been weak in the past, but is steadily improving as the courts and police respond to domestic concerns about the high cost of piracy to Indian rights' holders.

India's patent protection is weak and has especially adverse effects on international pharmaceutical and chemical firms. Estimated annual losses to the US pharmaceutical industry due to piracy are $450 million, but Indian authorities have a different point of view. India's patent act prohibits product patents for any invention intended for use or capable of being used as a food, medicine, or drug or relating to substances prepared or produced by chemical processes. Consequently, many drugs invented by foreign companies are widely reproduced.

Processes for making drugs are patentable, but the patent term is limited to the shorter of five years from the grant of patent or seven years from the filing date of the patent application. Product patents in other areas are granted for 14 years from the date of filing. However, as a signatory to the Uruguay Round of GATT, including its provisions on Trade­Related Intellectual Property Rights (TRIPS), India must introduce a comprehensive system of product patents no later than 2005.

The Indian government has formed an advisory committee to recommend changes in the 1970 Indian Patents Act. A temporary ordinance for patent protection implementing the "mailbox" provisions of the WTO TRIPS agreement and providing for exclusive marketing rights was issued in December 1994. However, the ordinance lapsed and the parliament has yet to pass a new patent bill implementing the provisions of the ordinance. In July 1996, the U.S. initiated WTO dispute settlement procedures over India's failure to implement its TRIPS obligations. The final panel report on this case was issued in August 1997, and ruled that India had failed to meet its obligations under the TRIPS agreement.

Indian officials have pledged to introduce another bill in parliament which, if passed, will put India in compliance with its TRIPS obligations.

The bottomline is that India considers itself a responsible member of the WTO which suggests that international class IPR protection should be in place by 2005. Besides, given India's determination to emerge as a power in the global software industry, it is most likely that all IPR protection laws will be instituted and enforced by 2005. Note that Bill Gates, the chief executive officer of Microsoft Corporation, has distinguished India as a most promising base for software development. If such an IPR-conscious business leader like Gates is of this opinion, one can only conclude that India's IPR scene is no deterrent to foreign companies.

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