If recent news reports are to be taken as in indication of what India has in store for Intellectual Property Rights, then the Intellectual Property sector of the Company is about to be taken over by a storm. It has been reported that an Intellectual Property Exchange may be established in India, where individuals, inventors, large corporations, small businesses, entrepreneurs in India as well as around the world will be able to sell, purchase, license or cross license intellectual property.
The exchange is reported to be established and developed under the guidance of the Ministry of Science and Technology through the National Research Development Corporation (hereinafter referred to as the NRDC). Though no official announcement has been made regarding the same, it has been reported that an in-principle agreement has been arrived at in the Ministry of Science and Technology regarding the setting up of the Intellectual Property Exchange.
Make no mistake, India is on the developmental speedway when it comes to Intellectual Property. As per the Annual Reports released by the Office of the Controller General of Patents, Designs, Trademarks and Geographical Indications, the Country saw an estimated 30% increase in filing of intellectual property applications, with the number rising from 2,62,638 applications filed in the year of 2014-15, to 3,41,086 applications filed in the year 2015-16. The trend of applications filed for registration of intellectual property in India since 2011-12 to 2015-16, taken directly from the Annual Report as mentioned above is given below:
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(Source: Pg. 05, Annual Reports released by the Office of the Controller General of Patents, Designs, Trademarks and Geographical Indications, 2015-16)
The Managing Director of the NRDC, Mr. H. Purushotham was reported to have being said that the NRDC is in the process of collecting data and setting up the exchange in the next 8-9 months. He was also reported to have said that the NRDC has already begun collecting necessary data and information on patents filed worldwide covering multiple technologies, but primarily focusing on Agriculture and allied sectors.
It is reported that the main reason for setting up the Intellectual Property Exchange was to help patents in India reach their full potential with respect to commercialization, especially the patents which do not get a platform to be sold on.
To grasp a better understanding of the implications of an IP Exchange being set-up in India, it is pertinent to understand how an IP Exchange typically functions. An IP Exchange provides a marketplace to facilitate sale, licensing and cross licensing transactions of intellectual property between two parties in a speedy, cost-efficient and streamlined manner.
Theoretically, the IP Exchange would facilitate transactions between inventors and large corporations by providing a market place which is not only legally sound, but also has certain rules that shall govern the sale, purchase and/or hedging of intellectual property rights. If done correctly, an IP Exchange may just as well be the next best thing to happen our country, creating jobs, ensuring optimum market growth and in turn resulting in economic development of not only the parties involved but the entire country as well. An IP Exchange would provide a speedy, efficient and cost effective process for licensing of Intellectual Property, and theoretically, it shall provide an alternative to tedious paperwork, litigation and save both time and money for both the inventor and the corporation/purchaser. Another aspect of establishing an IP Exchange would be the benefits it would present to inventors who do not have a means to showcase their invention, research laboratories as well as universities. These inventors/institutions do not show up on the radar generally unless an invention is groundbreaking, and contribute to one of the largest sources of patent registrations in our country. This fact can be supported by the Annual Report from the Controller General’s office for the year 2015-16, which describes the top 5 patentees in India as follows:
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(Source: Pg. 07, Annual Reports released by the Office of the Controller General of Patents, Designs, Trademarks and Geographical Indications, 2015-16)
Ideally, the setting up of such an IP Exchange in our country will not only bolster the market and create job opportunities, but it should also increase the competition in the market. Usually, competition in the marketplace between sellers usually leads to benefit of the public at large, but the same cannot be assuredly said for the IP Exchange.
In fact, all the above advantages that have been detailed above are merely theoretical. In due time, it is possible that reality would enter the frame and render some of the above advantages moot. There are many factors which ruin the idealistic scenario that has been painted above.
An aspect of the IP Exchange which might prove somewhat problematic is who would have the power to decide and regulate the price of an intellectual property right being sold in the IP Exchange? Will it be determined by the Licensee/Creator/Inventor who is selling his intellectual property, and if so, what is to stop the Licensee/Creator/Inventor from fluctuating the price to whatever he/she deems fit while selling the rights to different parties?
If the fluctuation of prices are to be determined by the market value, the principle of demand and supply, will a private agency be appointed to set the base prices or will the NRDC itself be overlooking this aspect? What safeguards will be put in place to ensure there are no market crashes or artificial price rigging? If the IP Exchange is to function in a manner analogous to the share market, then the base price would anyhow be decided by the inventor/creator if the intellectual property, and in view thereof, will there be guidelines as to how the price is determined?
There might as well arise a situation where one Licensee has paid more than another Licensee for the same rights, and in such a case, where can the Licensee go for redressal of their grievances? Will there be a separate redressal agency set up solely for the purpose of governing the IP Exchange? Or will the parties subject to such a transaction have to approach the Competition Commission claiming anti-competitive practices are being undertaken? Which judicial authority shall have the jurisdiction with regard to disputes arising out of such transactions?
It does not inspire much confidence that despite having signed a contract, there are so many variables present, making the entire transaction vulnerable to a protracted litigation battle, thereby defeating the very purpose of the IP Exchange being set up. It is evident that there is absolutely no legislative foundation to facilitate the start of an IP Exchange. Whether the legislation is introduced at a later point of time to streamline the process of building an IP Exchange is still yet to be seen.
However, one thing is certain, there is a lot of groundwork that needs to be covered with regard to the establishment of an IP Exchange before it can be deemed feasible in any manner. But if the same is done in a diligent and timely manner, it can be assured that the advantages and benefits that would be offered by an IP Exchange may potentially outweigh the disadvantages, ensuring that every inventor/creator receives the recognition, exposure and incentive that they deserve. In fact, if done right, it can safely be assumed that the IP Exchange would be considered as an incentive for such creators/inventors to use this funding to further their research and development and thereby come up with new, better inventions/intellectual property.