WTO TRIPS Council (June 2014) – India’s intervention on Intellectual Property and Innovation: Innovation Incubators

On Wednesday, 11 June 2014, India delivered a statement at the WTO TRIPS Council on”Intellectual Property and Innovation: Innovation Incubators”; Chinese Taipei (WTO speak for Taiwan) and the United States proposed this agenda item.

We thank the delegations of the United States and Chinese Taipei for tabling an agenda item on “Intellectual Property and Innovation: Innovation Incubators ” which we understand is a standalone item.

Chair, let me just recall our intervention when the agenda item on IP and Innovation was first introduced in the TRIPS Council. Our statement is still relevant when we are discussing the Innovation Incubators under the broad theme of IP and Innovation. In that meeting India pointed out that the word “innovation” appeared just once in the TRIPS Agreement, in Article 7 which states that intellectual property rights “should contribute to the promotion of technological innovation and on the transfer of and dissemination of technology,” and not for the sake of innovation itself, but “to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.”

Thus the TRIPS Agreement makes it very clear that the purpose of the IP system is not solely to protect the commercial interests of the IP holder but it is one of the many tools available to the Society to achieve technological development, its social and economic welfare and innovation. Further there is no direct correlation between IP and innovation and the countries have to define the path depending on their level of socio economic development.

Even today, the view that IP does not necessarily have a positive effect on economic development is still predominant among economists. For instance, based on an analysis of historical studies, Bessen and Meurer (2008) concluded that ‘.nations with patent systems were no more innovative than nations without patent systems. Similarly, nations with longer patent terms were no more innovative than nations with shorter patent terms’. According to Boldrin and Levine, ‘[I]ndeed, historical evidence provides little or no support that innovative monopoly is an effective method of increasing innovation.’ It is not only economists who have this view; it is shared by a growing sector of business actors. For instance, the Computers and Communications Industry Association (CCIA), whose members include Google and Microsoft, says in its Mission statement, ‘Innovation – how to foster it, protect it, and benefit from it – requires us to understand the dynamic process that has worked to get us to where we are. We do not think it is an accident that innovation has flourished in a society that values an open, competitive economic marketplace, nor where original independent and free speech are enshrined in law. Therefore, our commitment to vigorous competition, freedom of expression, and openness is a natural product of the understanding of what has helped our industry thrive, and what it needs to continue to do so.’

Further, The World Health Organisation (WHO)’s Consultative Expert Working Group on Research and Development: Financing and Coordination also recommended open approaches to research and development (R&D) and innovation. It found that there is insufficient R&D for diseases that prevail in developing countries and endorsed the adoption of a binding convention that guarantees the results of R&D will be public goods i.e. not subject to appropriation but free for use, to generate medicines needed particularly in developing countries. They also recommended prizes as incentives to innovation, in particular milestone prizes.

Chair, since we are discussing about the innovation, let me also refer to the book written by Anna Lee Saxenian: Regional Advantage: Culture and Competition in Silicon Valley and Route 128. The book is a comparative study of the two biggest electronics and ICT innovation centres in the US viz the Silicon Valley and Route 128 corridor in Massachusetts and explains the reasons for the success of the Silicon Valley and failure of 128 route. The results of the analysis are relevant to the discussion of this agenda item to counter the point being made by the proponents that high level of IP is good for development and innovation. The two innovation clusters commenced together in the 50s with heavy investment from the government and without any market competition. Both developed around the Universities of Stanford and MIT respectively so that the local industry could develop on account of its proximity to these centres of excellence. Both focussed on similar areas of technology. Behind the reason for the success of the Silicon Valley the author gives different reasons. The Silicon valley evolved a culture of interdependence between the firms with the Venture capitalists acting as hubs to ensure synergy between different businesses and services. The Route 128 on the other hand had a culture of independence of the firms with vertical integration. While there was collaboration, openness and informal exchange of information and knowledge between these firms in Silicon Valley, the culture in Route 128 was of closure and secrecy. High job mobility in Silicon Valley that spread new knowledge: moving to another firm was not seen as being unfaithful but as a common thing. New companies made to develop projects that were not possible in other companies: employees that exited to create startups were not badly considered but instead their previous employer could start to be client or supplier of the new firm . On the other hand in Route 128 people stayed in the same firm for 20 years or more and employees were seen as traitors if they exited to start their own company. Thus innovation cannot be promoted through the culture of secrecy propounded by the IP regime but through open collaborative models, free exchange of information etc.

Chair, there is no doubt that the innovation incubators promote the development of new technologies. But their success depends on several factors like infrastructure, resources, level of education, quality of universities and their linkages with industry , quality of manpower etc. We are afraid that by looking at innovation through the narrow prism of IP, we would not only undermine the spirit of innovation amongst the people but would create barriers in providing affordable, low cost and appropriate technologies to the developing countries. Further the IP centric model would discourage basic research needed in varied fields of science and would block access to affordable medicines to the millions of poor, hamper the efforts of the developing countries to address environmental issues etc.

India strongly believes in innovation and has setup several such incubators in the Universities and Premier technical institutes to promote low cost innovation. The Cluster Innovation Centres, India Innovation Fund, One MP, One Idea etc. under National Innovation Council have been successful in providing innovation to the small and medium industries in different areas. These ideas and centres, based on open source models, have been successful in providing low cost solutions to the industries, farmers, entrepreneurs etc. Even the private companies like Microsoft have set up several such innovation centres to tap the IT skills of the students in India.

Let me therefore conclude by saying that there is not direct linkage between IP and innovation. While innovation incubators can deliver depending on individual capacities of the countries, it would be too simplistic to say that IP focussed model can promote innovation incubators.