ACKNOWLEDGEMENT

The salvation of euphoria that accompanies the successful completion of task

would be in complete without the mention of people who made it possible.

So, with immense gratitude, we acknowledge all those whose guidance and

encouragement served as a beacon light and helped in completing this project

successfully.

First of all we would like to thank Dr .KavitaMathadwithout whose

guidance this project would not have been a reality.and the institute for

providing us this opportunity to widen our ambit of knowledge of world

economy and various concepts of “Patents and International Trade ”

through this project work.

As an individual we would also like to thank all members who were part of

our project directly or indirectly, without their help and co-operation the

completion of this project would not have been possible.

GROUP - 6

Contents

Introduction.................................................................................................................................................................3

Objectives:-..................................................................................................................................................................3

Global Intellectual property scenario..........................................................................................................................4

Delineating patents under various types.....................................................................................................................5

Companies utilizing the IP System to develop business or Increase Economic Activity...............................................7

Comparison of Company’s Data among major Industry Fields....................................................................................7

PHARMACEUTICAL SECTOR:..................................................................................................................7

BIOTECHNOLOGY SECTOR.....................................................................................................................8

INFORMATION TECHNOLOGY SECTOR:.................................................................................................8

Analysis (Summary of industrial data)...................................................................................................9

Impact of licensing, technology transfer, nanotechnology, R&D, innovations & Patent on international trade.......10

BAJAJ AUTO LTD. Vs. T.V.S. MOTOR COMPANY LTD. - A CASE STUDY. ”....................................................................13

FACTS OF THE CASE.............................................................................................................................13

Conclusion:-...............................................................................................................................................................14

IntroductionThe term patent usually refers to a right granted to anyone who invents or discovers any new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement

thereof.The procedure for granting patents, the requirements placed on the patentee, and the extent of the exclusive rights vary widely between countries according to national laws and international agreements. Typically, however, a patent application must include one or moreclaims defining the invention which must be new, non-obvious, and useful or industrially applicable. In many countries, certain subject areas are excluded from patents, such as business methods and mental acts. The exclusive right granted to a patentee in most countries is the right to prevent others from making, using, selling, or distributing the patented invention without permission

This report provides background on intellectual property rights (IPR) and discusses the role of international trade policy in enhancing IPR protection and enforcement abroad. IPR are legal rights granted by governments to encourage innovation and creative output by ensuring that creators reap the benefits of their inventions or works and they may take the form of patents, trade secrets, copyrights, trademarks, or geographical indications. Global industries that rely on IPR contribute significantly to economic growth, employment, and trade .Counterfeiting and piracy in other countries may result in the loss of billions ofdollars of revenue for many firms as well as the loss of jobs. Responsibility for developing IPR policy, engaging in IPR-related international negotiations, and enforcing IPR laws cuts across several different Government agencies.

Objectives:-The main objectives of our study are:

1. Global Intellectual property scenario 2. Delineating patents under various types, i.e.

Entity-wise (Indian organizations, foreign R&D centres in India, resident individuals). Proprietary protections (utility, design, plant patents) Organization-wise (industry, research organizations, specialized institutions, etc.) Industrial sector-wise, category-wise (process/ product), etc.

3. Companies utilizing the IP System to develop business or Increase Economic Activity

4. Impact of licensing, technology transfer, nanotechnology, R&D, innovations &patent on international trade.

5. International Conflict over the Commodification of Life (BAJAJ AUTO LTD. Vs. T.V.S. MOTOR COMPANY LTD. - A CASE STUDY)

Global Intellectual propertyscenarioDue to globalization of trade the number of patent applications filed worldwide is increasing day by day

Patent grants by patent office: top 20 offices, 2007

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The patent office of the United States of America, which consistently issued the highest number of patents since 1998, was overtaken in 2007 by the patent office of Japan. The patent office of China replaced the European Patent Office as the fourth largest office in terms of issuing grants. The five largest patent offices (the patent offices of Japan, the United States of America, the Republic of Korea, China and the European Patent Office) accounted for 74.4% of total patent grants. This is similar to their total patent filings share

Of the top 20 patent offices, the patent offices of Canada (23.9%), Australia (19.2%), China (17.6%) and Japan (16.7%) had the largest increase in the number of patent grants during 2006 and 2007. The patent offices of France, Germany, the United Kingdom and the European Patent Office had a considerable decrease in the number of patent grants.

Delineating patents under various types

Entity-wise (Indian organizations, foreign R&D centres in India, resident individuals). Proprietary protections (utility, design, plant patents) Organization-wise (industry, research organizations, specialized institutions, etc.) Industrial sector-wise, category-wise (process/ product), etc.

Indian patenting activity in international and domestic patent system was commissioned by the Office of the Principal Scientific Advisor to the Government of India (PSA office) to the National Institute of Science, Technology and Development Studies (NISTADS), New Delhi. Significant growth in patents granted to Indian organizations and foreign entities in India was observed during the period 1990–2002. During this period 669 patents were granted to Indian organizations and 273 patents to foreign organizations in India. Almost 50% of patents granted to Indian organizations in the USPTO had the US as the ‘priority country’ (country of first filing). This indicated the technological competitiveness of Indian firms.Foreign R&D centres in India accounted for 26% (273 patents) of the total patents from India granted in the US during the period 1990–2002. Patenting is possible in three categories in the US: utility patents (protecting functional characteristics), design patents (protecting ornamental features) and plant patents (protecting plant varieties). Patenting from India was mainly in utility patents. There were 16 plant patents granted to Indian organizations and individuals; India was among the few countries that were granted plant patents. A major drawback of Indian patenting activity was the insignificant number of design patents that were granted (24 design patents in all). Process patents (50% of total patents) dominated patenting activity of Indian entities, whereas product patents (61% of total patents) dominated patenting by foreign R&D centres in India in the USPTO.Indian firms/organizations were granted product patents in pharmaceuticals (153 product patents that included 73 involving both product and process protection in pharmaceuticals). This provides a positive indication of India’s preparedness in the current scenario (Patents Amendment Act 2005), where product patents in pharmaceuticals are allowed.

The main activities of Indian entities were in ‘Pharmaceuticals’ and ‘Chemical’ sectors, whereas foreign organizations had majority of patents in ‘Office Machinery and Computers’, ‘Electronics’ and ‘Electrical Equipment’ Indian organizations were granted patents in ‘Biotechnology’ (53 patents), indicating innovativeness of Indian firms in this high-technology area. Indian firms/organizations were creating patent portfolios in medicinal preparations and compounds targeting diseases (diabetes, cancer, etc.), herbal formulations, catalysts and polypeptides. On the other hand, patent portfolios were created by foreign R&D centres in India in the technological domains of switching devices, digital data-processing and VLSI. Lack of patenting by Indian firms in these high technology areas is a matter that requires urgent attention.A common aspect of patenting in both the IPO and USPTO was the involvement of onlya few Indian organizations in patenting activity and highly skewed patenting across the organizations. Eight Indian organizations accounted for approx. 80% of patents in the USPTO, whereas 20 organizations accounted for approx. 60% of patents in the IPO.

Another common feature of Indian patenting in both the patent offices was that only a few patents emerged as a result of joint collaborations. Only 38 out of 669 patents by Indian entities were a result of joint collaboration in the USPTO, whereas 35 out of 4848 patents were collaborative in the IPO. Joint patents are important as they bring complementary skills of the organizations involved and thus have better chances of commercial appropriation.

A positive feature of patenting in the IPO was the involvement of Indian universities in the patenting process. Twenty-one universities were involved in the patenting process in the IPO in comparison to only

seven universities in the USPTO Similar to patenting in the USPTO, ‘Pharmaceuticals’ and ‘Chemicals’ were the major areas of patenting by Indian organizations in the IPO. However, a larger number of technological areas were addressed in the IPO. In the IPO along with ‘Basic Chemicals’ (which was mainly addressed in the USPTO), patents were also granted in sub-sectors such as consumer detergents/ soaps, pesticides/agrochemicals. Further, patents also addressed other sectors such as ‘Machinery’, ‘Basic Metals’ and ‘Food and Beverages’ in the IPO. Foreigners patenting in India were found to be increasingly using the PCT route and ‘Mailbox’ provision to file patents in the IPO after 1999. Foreigners were filing patents mainly in Machinery, Chemical, and Pharmaceutical sectors in the IPO.

Significant rise in patenting activity, building-up key portfolios, leading to other tangible and intangible benefits were some important outcomes. Indian organizations were found to be increasingly using the PCT route to file international patents. The involvement of Indian organizations in patenting activity in the USPTO had increased during the period 2003–04. Ninety-five organizations were involved in patenting activity during this two-year period, with 63 new organizations involved in patenting for the first time. Eleven universities had also contributed to the patenting activity in the USPTO during this period. Twenty four patents were the result of joint collaboration.The US followed by Japan were the two main players involved in patenting activity in the USPTO. ‘Electronic Equipment’, ‘Office Machinery and Computers’, ‘Machinery’ and ‘Instruments’ were the major areas of patenting activity in the USPTO. South Korea, Brazil and China had no plant patents. Design patents were a prominent feature of patenting activity in China.

Companies utilizing the IP System to develop business or Increase

Economic Activity

Comparison of Company’s Data among major Industry Fields

In order to analyze the effect of Intellectual Property system on economic development, three industrial sectors i.e. Pharmaceutical, Biotechnology and IT Sector are taken .

PHARMACEUTICAL SECTOR:

The Indian Pharmaceutical Industry today is in the front rank of India’s science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. A highly organized sector, the Indian Pharma Industry is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent annually

Ranbaxy .

Reddy’s Laboratories

BIOTECHNOLOGY SECTOR

India being on the ‘threshold of biotech revolution’ has 280 biotech and 180 bio suppliers contributing to the total biotech market worth US $100 billion. The country has a global market worth $91 billion and there is scope for cheap R&D through bio-partnering and co-developing technologies mainly with Chinese and American companies. Already the world pharma companies are seeking India to set their research and development centers here. Moreover, to facilitate foreign investment, capital and government policies are being revised.

Biocon

INFORMATION TECHNOLOGY SECTOR:

The computer software and services industry of India has been recognizedglobally in view of its substantial size in global market and the wide spectrum oftechnologies responded by it. Industry as well as the Government is making allefforts to retain this situation of leadership and operate in a manner conducive torespect the Intellectual Property Rights of others and make effort to create one's ownIntellectual Properties. With US$50 billion export target by year 2008 and currentlyreaching size of US$ 16.7 billion production in year 2004-05.India is a hub of patent filing ideas for the IT based U.S. companies. Indianunits of Cisco Systems, Intel, IBM, Texas Instruments, GE have filed 1,000 patentapplications with the US Patent Office and Texas Instruments has 225 US patents6awarded to its Indian operation. Opportunities for the Indian IT industry in thecoming days are going to emerge primarily from the fields of embedded systems,chip design and incorporating software in non-Computing devices.Impact of licensing, technology transfer, nanotechnology, R&D, innovations & Patent on international trade.

Wipro

Analysis (Summary of industrial data)

Impact of licensing, technology transfer, nanotechnology,

R&D, innovations & Patent on international trade.

One of the advantages of the universal patent regime is that private venture capital firms become willing to invest in technology based start-up companies; technical knowledge flows more readily from university laboratories to the market place and local firms become willing to devote substantial resources to internal research. Available evidence shows that patents are important for chemicals and particularly for pharmaceuticals basically because of the huge R&D costs incurred by the firms. Also, the purpose of the patent is to provide a form of protection for the technological advances and thereby reward the innovator not only for the innovation but also for the development of an invention up to the point at which it is technologically feasible and marketable.

The higher cost of the R&D proves to be an effective entry barrier for new firms and hence only firms with large flow of funds become responsible for industrial inventive activity. In developing countries, only a few firms have sophisticated R&D facilities and others benefit mainly from the spillovers of the resultant R&D. But, in order to move on to the higher echelon, firms need to invest in R&D. More often small firms shy away from investing in R&D because; financial risk is too high as there are more possibilities of failure than success.

For instance, cost of developing one new drug in the US increased from $54 million in 1970 to $231 million in 1990. Recent studies indicate that 1 out of 5000 compounds synthesized during applied research eventually reaches the market. Other estimates indicate that of 100 drugs that enter the clinical testing phase I, about 70 complete phases I, 33 complete phases II, and 25-30 clear phase III. Only two-thirds of the drugs that enter phase III is ultimately marketed.

According to a US FDA report 84 per cent of new drugs placed on the market by large US firms during the period 1981-88 had little or no potential therapeutic gain over existing drug therapies. Similarly in a study of 775 New Chemical Entities introduced in to the world during the period 1975-89, only 95 were rated to be truly innovative.

Because of these reasons and due to the protected policy regime, the R&D investment in India has been very low and started picking up only in the early ‘90s .Of the Rs.1, 800 Crores spent on R&D in 1998, 35 per cent belongs to the public and joint sector and that of the private sector is about 65 per cent. In spite of the growing investment in R&D, R&D as percentage of sales ratio stagnates around 2 per cent. Further of the 1261 Department of Science and Technology recognised R&D units, 256 have spent more than Rs. 1 Crore every year. 350 have spent between Rs.25 lakhs and Rs. 1 Crore and the remaining below Rs. 25 lakhs . This indicates that most of the R&D investment was perhaps directed towards process improvements and adapting the technology to local conditions thus resulting in technology spillovers rather than in new product developments.

For instance, the UK multinational Glaxo was faced with several local competitors on the first day when its subsidiary marketed its proprietary drug Ranitidine in India , because the competitors enabled by the weaker patent regime were ready with the indigenous version of Ranitidine.

The more recent case of adapting the technology developed elsewhere to local conditions enabled by the process patent regime is the case of Viagra introduced by Pfizer. A patent for this drug was granted by the US patent office to Pfizer in 1993. The company spent about 13 years and several millions of dollars to develop the drug. Apparently what took Pfizer 13 years and millions of dollars in R&D to perfect, the Indian firms have managed to do in weeks, for a fraction of costs. Of the 30 raw materials used in this drug, 26 are available locally. Utilising the information that was available on the Internet, US patent records and industry literature some of the Indian firms started their work on

the indigenous version of Viagra, which was available in the market within weeks of Pfizer formally launching the product.

Absence of stronger protection in the chemical and pharmaceutical sector in developing countries like India is cited as one of the reasons that holds back foreign investment especially from countries like the US, Japan and Germany . However, with the change in scenario, domestic companies, which had invested in biotechnology, were finding the lack of protection as a problem to commercialise their innovations, because in DNA recombinant technologies, novelty is the product. The process of discovery is complicated, but once the product is obtained, its propagation can be achieved in many ways.

There has been an apprehension that in the wake of globalisation the focus of research in the LDCs could change and the major R&D firms may be more involved in drug discovery that addresses the global diseases and neglect the research that is more relevant for the LDCs.

In this context AmitSen Gupta, of the National Working Group on Patent Laws, adds: “I think for me it’s frightening that ten or twelve people today are deciding what are the kind of drugs that need to be researched because clearly those drugs are being researched not because of the health needs but based on how much profits they can bring in. That’s why you have research money going into drugs for baldness or Viagra but the last drug for tuberculosis was 30 years back. When you deny people cars or washing machines they don’t die, when you deny people drugs they die and they die in millions.

It is possible to get access to patent information from the patent office of any of the countries and develop a new product based on the information obtained in the patent application form thanks to the rapid development of information technology.

A sizeable level of technology currently available is due to `spill overs’ or developing an alternative process that is very close to the existing one. This is the reason why the actual technology in a patent is often kept as a trade secret and which leads to entering in to a separate licensing agreement with the innovator for the transfer of that technology.

With transition into the new regime many Indian companies are mobilizing their resources war chest with an increase in their R&D budget. Government of India (GOI) encouraged the R&D in pharmaceutical companies by extending 10 year tax holiday to this sector. Besides, planning commission earmarked $34 million towards drug industry R&D promotion fund for the tenth plan.

Fear of competition also dissuades the transfer of technology or demands a high royalty for the transfer, but huge royalties may have a negative impact on the expenditure on R&D. In the case of India, though in the pre’70s era, the technology transfer by the big TNCs did not support the indigenous technological abilities, yet in the post ‘70s, a large number of small and medium size firms have also been transferring their drug technologies to India, thus encouraging an atmosphere of competition in technology transfer.

India has encountered difficulties in getting access to technology for a component known as HFC 134 A, which is considered the best available replacement for certain chlorofluorocarbons. Patents and trade secrets cover this technology, and the companies that possess them are unwilling to transfer it without majority control over the ownership of the Indian company.

Presently, nanotechnology is mostly confined to research and development efforts taking place in laboratories around the world. The nanotechnology products created are made using nanotechnology-enabled materials like carbon nanotubes, nanoparticles of a substance or made by using nanotechnology processes like nanopatterning. This is an endeavour to make better products known as nanoproducts at lower cost as well as a higher volume of production.

In summary, nanotechnology or nanotech can be defined as the study of the controlling of matter on a molecular scale concerning structures of sizes measured in nanometres and includes the development of materials or devices within that size. Like any other new technology, the harmful implications are

also unfathomable although it has great potential in creating new materials and may be useful in applications encompassing medicine, electronics and energy production.

However, the negative implications of nanotechnology have been sidelined at the moment with governments and other agencies keen on boosting, aiding and promoting nanotechnology on a larger scale.

Unfortunately, the licensing instrument is underutilized by SMEs. For the bigger part, this is because licensors are afraid of uncertainties about the protection of their intellectual property, including trade secrets. On the other hand, licensees are reluctant to accept the often severe restrictions that come with license agreements. These in turn are the result of licensors being overcautious to protect their interests. The vicious circle is completed.

The licensing of patented technologies can provide financial rewards to inventors while encouraging the dissemination and use of inventions by others. Licensing guidelines or model contracts are self-regulatory solutions to some of the perceived problems associated with the patenting.

Transfer of technology can be a remedy against the problems that proliferation of production and trade has brought along. But then again, a lot of work has to be done to make the licensing of know how and trade secrets more accessible for those who need it most.

The relative position of a country or region in the international market is increasingly determined by its rate of creation and dissemination of technology, which together enable the increases in competitiveness necessary for carving out a stronger position in the world market. Latin America has used industrial and trade policies to change the profile of its production structure and to create comparative advantages in new sectors. The changes brought about in the structure of industry in some countries, in technologically more sophisticated sectors, have been quickly reflected in higher exports. The obtaining of this result is associated with development of the region's technology capability and the transfer of technology from more developed countries. It is noteworthy that the countries with the best export performance in terms of products with a high technology content are those with high levels of R&D activities. However, it should also be noted that these indexes are modest compared with those of the developed countries.

BAJAJ AUTO LTD. Vs. T.V.S. MOTOR COMPANY LTD. - A CASE STUDY .   ” INTRODUCTION.The case involves the issues of patent infringement by the defendant and the damages for the same. The case, also, touches upon the controversy regarding justification of the threats issued by the defendant of the same case. The case was filed before the Madras High Court in 2007.According to Bajaj auto ltd, they seek the remedy of permanent injunction under section 108 of the Patents Act, 1970 for prohibiting TVSfrom using the technology or invention described in the patents of the plaintiffs; and preventing them from marketing, selling offering for sale or exporting 2/3 wheelers (including the proposed 125cc TVS FLAME motorcycle) that contain the disputed internal combustion engine or product that infringe the patent

FACTS OF THE CASE. The facts of the case go through the various stages:

a) Bajaj’s patent:According to the Bajaj Auto Limited,it was granted Indian Patent No. 195904 in respect of a patent application titled “An Improved Internal combustion engine working on four stroke principle” with a priority date of 16th July 2002. The patent was granted on 7th July, 2005.

Features of the invention are:1. Small displacement engine as reflected by a cylinder bore diameter between 45 mm and 70 mm.2. Combustion of lean air fuel mixtures;3. Using a pair of spark plugs to ignite the air fuel mixture at a predetermined instant.

b) What was the Patent all about?In the patent, the invention by the applicants called “DTS-i Technology" was relating to the use of twin spark plugs for efficient combustion of lean air fuel mixture in small bore ranging from 45 mm to 70 mm internal combustion engine working on 4 stroke principle.

c) TVS launches FLAME- M/s. TVS Motor Company Limited announced to launch motor bikes of 125-CC on 14 th December 2007 under the trade mark 'FLAME'. The motorcycle was powered with a lean burn internal combustion engine of bore size 54.5 mm with a twin spark plug configuration, which according to the Bajaj Auto Ltd., infringes its patent. Therefore, before the launch of motor bikes, Bajaj have brought the suit before the court to protect their intellectual property.

d) TVS files suit under section 105 and 106 of the Patents Act, 1970:In October, 2007, TVS also filed the suit before the Madras High Court alleging that the statement made by Bajaj constituted a groundless threat.

e) Launch of the disputed bike:As opposed to the expectations of Bajaj, TVS later in the month of December of 2007 launched the bikes without making any change into that.

f) Decision of the courtMadras High Court held that Bajaj had not succeeded in providing enough evidence to support the case of infringement in respect of its patented twin spark technology. The court also observed that the operation of the invention as claimed by the Bajaj appears to be plug centric and that of TVS was valve centric, After considering the pleadings and various facts of the caseTVS was entitled to sell its motorcycle ‘Flame, .

Conclusion

Recommendations for strengthening the patenting activity in the countries :-

Some of the recommendations were as follows:-(i) Patent data (of applications filed and granted) in the IPO by resident and non-resident inventors should be computerized and made available on-line.

(ii) In the US, apart from utility patents, patenting is possible in the design and plant category. Software related inventions (and mathematical algorithms in general) are also patentable in the US. The patent office and other agencies that are involved in creating patent awareness should highlight the various types and scope of patenting available in different countries for proprietary protections.

(iii) Foreign-owned patents (patents invented in India but assigned to foreign institutions, mainly MNCs) have demonstrated substantial activity in the areas of ‘Computer and Communications’ and ‘Electronics’. Lack of patenting activity by Indian organizations in these areas should be addressed.

(iv) There were only a few patents as a result of joint collaboration between different organizations. Major scientific agencies like CSIR, DST, DBT, etc. Have initiated a number of network programmes for joint technology development involving research laboratories, universities and industries. These programmes are steps in the right direction. Other organizations should replicate these efforts.

(v) Organizations should evolve their own IPR policy. This policy should be able to guide an organization in IPR creation, management and deriving economic benefits and other returns. Policy should be designed keeping in view the mandate and mission of the organization. CSIR’s intellectual property policy, strategy and implementation plan can provide necessary directions, particularly to other scientific agencies.

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