India: Association Of Patent And Innovation

Last Updated: 27 March 2019
Article by Vartika Srivastava

Innovation is a critical component in improving individual and institutional performance. Real innovation is not easy to come by. Innovation is more radical and transformational than improvement. Innovation is content-oriented, whereas improvement is process-oriented. One of the significant products of innovation is globalization. The inspiration for innovation usually stems from a combination of three factors: an urgent and pressing need to bring about a change; how people perceive and pursue that change till the end; and a congenial environment to accomplish that change. Innovation is always driven by self-induced passion, a pressure of compelling circumstances and undying perseverance for achievement. Such factors play a vital role in the economic and industrial growth of an individual and his organization. The pace of such progress is directly proportional to the efforts made towards research and development, which acts as a reliable measure of innovative capacity. With the same thought in mind, active innovation resulted in flourishing of numerous start-ups around the globe.

Coming to the relationship between innovation and patents, it can be said that they go hand in hand. One can even say that start-ups are a direct result of enhanced innovation. This is because of the fact that massive research and development can result in innovation is different aspects of the industry, be it the mechanical, electrical, electronics, communication, pharma industries and so on. Therefore, various organizations moving towards a goal of promoting and contributing to their respective fields focus on taking care of their assets. The same is applicable for start-ups, as real innovation is not easily achieved. Innovation can be said to be a blend of self-induced passion, continuous and progressive hard work, determination to attain the apex. All these ingredients summed up together also require topping in form protection of the outcome so obtained. Here, comes in the picture the strong tool of protection of innovation that is the "Patents". Taking this into account following simple formula can be deduced with respect to the enormous success of startups, Start-ups + patents = jobs and economic growth!

Over the last 50 years, economists have found that patents continue to foster innovation that means they induce people to invent because of the prospect of profiting from those inventions. In 2008, a study by the Organization for Economic Co-operation and Development (OECD) found that "stronger levels of patent protection are positively and significantly associated with inflows of high-tech product and expenditures on R&D." Consider one of the biggest job-creating new industries of the last 60 years: semiconductors (consumer electronics), PCs, software, biotech, mobile telephony, and Internet e-commerce were all launched and grew strong on the basis of patented inventions created by start-up businesses. As the CEO of Juno Therapeutics, Hans Bishop, and ARCH Venture Partners co-founder Bob Nelson wrote in Forbes: "Let us be clear: investments in the biotech industry are based entirely on patents. Without strong patents, we cannot raise money to find cures for disease."

Interestingly, the evidence also shows that rather than hindering knowledge sharing, patents actually promote it and improve the allocation of resources by encouraging rapid experimentation and efficient along with the transfer of knowledge across firms." But this is not a new phenomenon, e.g., Elias E. Reis, one of the inventors 19th century reported that when he read about an 1886 patent issued to Elihu Thomson for a new method of electric welding, "there immediately opened up to my mind a field of new applications to which I saw I could apply my system of producing heat in large quantities." Even, Thomas Edison was known to frequent the patent office in order to study other inventors' patents and hopefully spark ideas of his own. Thus, only need is to identify the inner power that exists in every individual or individuals working in an organization. Once this is done, it becomes easier to take steps forward to reach out for the ultimate goal.

In India as well, the research ecosystem presents a significant opportunity for multinational corporations across the world due to its intellectual capital available in the country. Also the masses of Indian engineers working across the globe highlight the highly trained manpower available at competitive costs. Moreover, the recent developments in the Indian IPR system and various national policies, National IPR Policy, Start-up India Initiative, Make in India to name a few, launched by the Government to promote innovation across the country in itself an evidence of increased innovative approach. Consequently, several MNCs have shifted or are shifting their research and development (R&D) base to India. These R&D bases either develop products to serve the local market or help the parent company overseas deliver a new innovative generation of products faster to the markets across the world.

Now, imagine a world with no patent system to guarantee inventors property rights to their discoveries. In such a world, the inventors would have every incentive to be secretive and guard jealously their discoveries from competitors because those discoveries could, of course, be copied with impunity. This is the world of trade secrets and not innovation. Whereas in the real world, e.g. look at the smartphone industry to see the truth. No one would believe that global smartphone use would have experienced such extraordinarily rapid growth under a trade secret regime. It is impossible and only a strong patent system enabling the licensing and cross-licensing of proprietary technology across very disparate industries such as telephony, electronics, computing, and software could have produced the hugely successful smartphone industry that we enjoy today.

Indeed, it turns out that the patent system is one of the most effective tools for knowledge-sharing and technology transfer ever devised. In fact, most of the businesses across the world actually rely upon the information disclosed in patents to keep up with technology advances and direct their own R&D efforts. However, it cannot be theoretically proved that the patent system by itself causes higher rates of innovation and economic growth because of the external factors viz. the dynamism of markets, the efficacy of legal and governmental institutions, the availability of capital, and the role of countless other factors that are far too complex and interdependent to isolate causation to patents alone. But by the same token, one also cannot prove that free-market capitalism isolated from all the legal, educational, economic, governmental and cultural institutions that surround it in any country-causes more economic growth than a government-run socialist economy. The same is true of the patent system: on balance and over the long term, patents are strongly correlated with increased innovation, knowledge sharing, and economic growth.

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.

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