IMR Special Issue on Innovation, Intellectual Property and Competition in India
Towards Indian innovation recipes and long run economic growth
“In the 17th century nearly all Europe experienced revolts of the workpeople against the ribbon-loom, a machine for weaving ribbons and trimmings, called in Germany Bandmühle, Schnurmühle, and Mühlenstuhl. These machines were invented in Germany. Abbé Lancellotti, in a work that appeared in Venice in 1636, but which was written in 1579, says as follows: ‘Anthony Müller of Danzig saw about 50 years ago in that town, a very ingenious machine, which weaves 4 to 6 pieces at once. But the Mayor being apprehensive that this invention might throw a large number of workmen on the streets, caused the inventor to be secretly strangled or drowned.’ In Leyden, this machine was not used till 1629; there the riots of the ribbon-weavers at length compelled the Town Council to prohibit it.” – Das Kapital, Marx (1867) quoted in Saint-Paul, G. (2008). Innovation and Inequality: how does technical progress affect workers? Princeton University Press.
While times have moved on from the 1600s and the above situation, much of the socio-economic antecedents and consequences of innovation still remains the same. From Amazon’s Alexa or Google Home, to Tesla’s intelligent trucks, Uber’s ride-hailing services and driverless cars and for that matter Da Vinci robots transforming surgery, the 21st century marches on furiously with new innovations changing our modern lives. But as it does so, it is also critiqued by skeptics across economies wondering what sort of a distributional impact it might engender.
Extant research now documents that innovation is key to economic growth (Romer 1986, 1990, 1994), yet empirical work has shown that inventive and innovative activity is unevenly distributed around the world, its institutional environment facing heterogeneous ecosystems globally, and its effects and antecedents varying dramatically between rich and poor nations. For India, where a fifth of the world’s population resides and where the fertility rate as per recent statistics is 2.4 births per woman, what will be required from innovation and how might it impact social and economic outcomes going forward in the next few decades? We try to address this question in this special issue, using an interdisciplinary lens from our guest contributors.
Teece et al. examine the nature of competition economics that might impact innovative activity and industry evolution of India’s mobile economy towards which entrepreneurial and industrial activity is converging (be that for example in the financial or the healthcare sector). Using the setting of recent orders of the Indian Competition Commission (Competition Commission of India or CCI) that contend that Ericsson's practice of charging royalties calculated as a percentage of the selling price of the licensee's consumer products (cellular handsets) incorporating Ericsson's patented technology is “prima facie discriminatory”, Teece et al argue that any “discrimination” involved is not “discrimination” across different licensees, but instead across differently-priced products. They also point out that the CCI’s orders challenge the widespread practice (in both the cellular industry and many other industries) of using percentage-based royalties, even for standards-related patents that the patent holder has made a commitment to licensing on fair, reasonable and non-discriminatory (FRAND) terms. Finally, they highlight that no other country's competition authorities have adopted a similar position to the one taken by the CCI, even though they have been studying the issue for a number of years.
Teece et al highlight a few important issues. First, public policy in India in relation to innovation policy and the economy often fails to appreciate the intermingling of direct policy measures like intellectual property and indirect policy measures like that of competition laws. Harmonisation of these direct and indirect policy measures is important to spur innovation in the economy. Second, in its judgment for the Ericsson case, CCI seems to have taken a position that is novel even on the global barometer of policies in this particular industry context. This is not surprising. India’s out of the box policy thinking is now a precedent for even intellectual property laws post 2005 in the pharmaceutical industry for example, especially for other peer economies, a phenomenon that some scholars have termed as policy thinking “engineered in India” (Kapczynski 2013). Importantly though, it implies direct effects on outcomes for innovation not just in India or in particular sectors, but also indirect effects for countries and sectors that are looking at India’s regulatory stance in the innovation policy realm with a keen eye. Hence, the impact of such measures on global innovation activity not just in phones but maybe in other sectors and their welfare consequences cannot be underestimated.
Gupta complements Teece et al. in the context of the world’s second largest mobile market, India, which is an important and attractive market for the key global firms in the wireless communications industry, as the author argues, “both to supply and sell products, as well as to set up local manufacturing plants and design centres”. This article comes at a time when India is redesigning its policies related to Standard Setting Organisations and intellectual property enforcement and also examining FRAND licensing issues, and this is being watched keenly by the international inventive and innovator community. Gupta argues that with the government’s initiatives on “Make in India” and “Design in India,” it is imperative that the adopted policies are attractive both to implementers and inventors of new technologies, so that local investment in R&D and manufacturing is lucrative, for the nation to climb in the value chain towards long-term innovation.
Mazumdar Shaw in a different sectoral context documents the role of affordable innovation to tackle India’s healthcare challenges. Drawing on a rich set of practitioner case studies in the context of the industry, the author points to the multiple challenges to innovation in Indian healthcare, including that of many regulations, low risk appetite, stagnant R&D spending, poor access to capital, and shortfall of scientific talent. Outlining approaches to address these challenges, the author here hopes that the marvels of science will be leveraged to drive India forward as an ideas economy.
Bhat complements the above scholarly and practitioner perspectives with his thoughts on the evolving jurisprudence related to innovation and intellectual property law in India. Starting with a historical documentation of Indian process patent laws fashioned after the German intellectual property regime and adopted by other countries (like Austria, Brazil, Czechoslovakia, Holland, Hungary, Japan, Mexico, Norway, Poland and the U.S.S.R), the author fascinatingly draws on his rich legal expertise with various case studies over the years around India’s intellectual property arbitrations that have finally shaped Indian intellectual property (IP) jurisprudence today. In addition, Bhat also discusses copyright laws and moral rights, the former’s intersection with designs and trademarks and provides recommendations on remedies and damages in IP infringement cases going forward. An overarching theme in his article seems to be that of social welfare when he mentions that “courts in India do not treat the protection of IP rights as absolute and such rights can be made subservient to the larger public interest.”
The above articles complement the round table also covering the role of gender in Indian innovation and inventive activity where we have thoughts from various leading women innovators and scientists locally whose inputs in the discussion are moderated by noted economic historian of innovation, Zorina Khan. This round table along with the book reviews on grassroots innovation in India and the role of the broken ladder in Indian innovation offers a holistic flavour to this special issue on innovation, intellectual property and competition.
To summarise, these articles are just a snapshot of the evolving landscape around innovation policy and the Indian economy over the last few years. The authors deliberate on its antecedents and consequences across industries, pointing to policy externalities beyond just the borders of India, creating global welfare ramifications coming from the country as a source of innovation and ideas for the world. These may or may not lead to combinatorial explosions, to quote World Bank Chief Economist Paul Romer but as he also argues elsewhere, hopefully will lead to better recipes for cooking and drive long run Indian economic growth.
Chirantan Chatterjee,
Guest Editor,
Special Issue on Innovation,
Intellectual Property and Competition in India.
Indian School of Business, Mohali, Punjab,
India.
Email: chirantan.chatterjee@iimb.ac.in
Phone: +91-172-4591800
References
Marx, K. (1867). Das kapital: Kritik der politischen ökonomie. Verlag von Otto Meisner, 181.
Kapczynski, A. (2013). Engineered in India—patent law 2.0. New England Journal of Medicine, 369(6), 497-499.
Romer, P. M. (1994). The origins of endogenous growth. The Journal of Economic Perspectives, 8(1), 3-22.
Romer, P. M. (1990). Endogenous technological change. Journal of Political Economy, 98(5, Part 2), S71-S102.
Romer, P. M. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94(5), 1002-1037.
Saint-Paul, G. (2008). Innovation and inequality: how does technical progress affect workers? Princeton University Press.
