India: Contribution Of IP In Growth Of FDI’s In India

India has become one of the sought after destinations for the investment in recent years due to the growing economy. As per reports, the Indian GDP is still growing at a rate of 6.5 percent in 2011-12 even after the recent slump in the economic growth. Being one of the biggest consumer markets in the world, it is always on the radar of investors and one of the sought after investment hub.

A new and growing brand is always looking for the market wherein its product has demand and India being a consumer market is always the best place to promote a new product. Many brands have established themselves in Indian market and are gaining out of it. Even with all these advantages, Indian markets also have certain challenges in terms of intellectual property rights which are required to be taken care of before entering the market.

Strong IP Regime Helps The Growth Of FDI In India:

A strong Intellectual Property rights regime would certainly lead to good market conditions for inviting FDI in India. The report 'India: International Outlier on IP' by the US chamber of Commerce said if India strengthens its intellectual property regime and increases its score on GIPC (Global Intellectual Property Centre) IP Index by 14.9 per cent, it can reach the level of FDI similar to Brazil, Russia and China. It has also been observed in the report that "India has been less able to attract FDI than its BRIC (Brazil, Russia, China) peers since the 1980s. Also in regards to FDI, India is noticeably weaker than other emerging economies, which started off at similarly low levels of investment and had similar IP rights environments to India's in the 1980s,"

A strong IP regime would certainly include realistic protection to intellectual property rights together with a mechanism for the enforcement of rights in case of misuse of the same. IP assets account for more than one-third of the net value of corporations in the United States and Europe, making protection of valuable IP critical for many would-be investing companies. In India the intellectual property like patents, trademark, copyright, design, geographical indication, plant variety, semiconductor and integrated circuits layout design have protection. Indian does not provide specific protection to trade secrets and also do not have a proper law for the data protection. These two are governed by the trademark law and information technology law and hence there is a requirement of specific law for these two as well in order to create a healthy environment wherein a creator of intellectual property right would feel comfortable to invest further. The current legislation on the IP laws should also be kept similar to the international standards in order to compete with other economies.

Challenges Regarding Intellectual Property Rights:

Trademark infringement/passing-off:

In this electronic age, the brands have acquired altogether a different meaning. Now a brand famous in one country can easily be recognizable in a country wherein the products of the brand have not yet marketed. This feature of modern market has led to the problem of infringement and passing-off of the brands which are known across the world but have not entered a particular market. Local merchant for taking advantages of the established reputation of the international brand, start manufacturing their own products under the same brand. Hence in order to curb this problem international brands can take action against the local merchants under the provision of trademark law wherein trans-border reputation has been recognized as one of the ingredients for taking action against infringement and passing-off.

Indian collaborat or treating the brand as its own:

One of the most common problems faced by the foreign collaborators in India is regarding the misuse of the brands by the Indian counterpart in the collaborations. More often than not in case of collaboration between a foreign corporation and an Indian corporation is regarding the dispute related to brand use. After a period of time Indian party to the collaboration starts claiming the brand of the foreign collaborator as their own even though it is clearly mentioned in the Act that the use made by the licensee of a trademark would always be counted as use of the licensor. Hence it is required by the foreign investor to always be aware of the misuse of its brand and should take timely action against any misuse by collaborator or any third party.

Compulsory licensing:

The recent grant of compulsory licensing to the generic pharmaceutical Natco Pharma has created a lot of wrong publicity to Indian IP environment even though Indian Patent Office had its own reasons to provide the same. As Patent is provided for a limited period of time of 20 years and out of these 20 years only few years are fruitful years for a patent to make money. An environment wherein the investor has the fear of loosing its patent due to compulsory licensing would certainly not improve the FDI in India. There are certain other challenges which an investor would face in India like counterfeiting, piracy, and data theft etc for which there is a need for a strong IP regime. A strong IP regime would help in gaining the confidence of foreign investors for inviting the FDI's.

The Relationship Between FDI And Economic Growth:

The FDI influx is an influential factor for economic growth. With the recent move by the Indian Government to relax the norm FDI norms will help the revival of the economy which was growing at the positive rate during the period of 2005-2010.

FDI involves not only the purchase of capital assets, including mergers and acquisitions, joint ventures, buying property, and investing in plants and equipment, but, perhaps more important to developing countries, FDI can include the transfer of managerial expertise, technological skills, and access to the investing company's global network1. Technology transfers from developed to developing nations are one of the most important forces behind economic development2. Experts argue that FDI is "the most important channel through which advanced technology is transferred to developing countries3."

In a communication to the World Trade Organization (WTO), the Organization for Economic Cooperation and Development (OECD) noted:

Direct investment by MNEs [multinational enterprises] has the potential rapidly to restructure industries at a regional or global level and to transform host economies into prodigious exporters of manufactured goods or services to the world market. In so doing, FDI can serve to integrate national markets into the world economy far more effectively than could have been achieved by traditional trade flows alone. As with private sector investment more generally, the benefits from FDI are enhanced in an environment characterized by an open trade and investment regime, an active competition policy, macroeconomic stability and privatization and deregulation. In this environment, FDI can play a key role in improving the capacity of the host country to respond to the opportunities offered by global economic integration, a goal increasingly recognized as one of the key aims of any development strategy4.

The move to allow 100% FDI in telecommunication sector and changes in the preposition of FDI in other sectors is a positive step for inviting the investors to invest in India although for the same, the policies regarding the grant and safeguard of intellectual property rights should also need to be parallel with international standards.

Footnote

1. Mikhaelle Schiappacasse, Intellectual Property Rights in China: Technology Transfers and Economic Development,note 14, at 174.

2. Schiappacasse, supra note 14, at 167.

3. Press Release, WTO, Trade and Foreign Direct Investment (Oct. 9, 1996), available at http://www. wto.org/english/news_e/pres96_e/pr057_e.htm.

4. WTO Working Group on the Relationship Between Trade and Investment, Foreign Direct Investment and Economic Development, WT/WGTI/W/26, at 4 (Mar. 23, 1998).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions