Patenting Jugaad

Dr. Rajendra Prasad
25 August 2011

Introduction

Last year on Independence Day, the Economic Times¹ published an article wherein it was mentioned that as per one survey, 81% of Indian businessmen attributed 'Jugaad' as the key reason for their success. Jugaad is a colloquial Hindi word that literally means 'innovative fix, most often which is somewhat an unconventional solution to a vexatious issue. The term 'Jugaad' and the concept it denotes is not only in common use in India (even in non-Hindi speaking areas) but is also being increasingly recognized all over the world as an acceptable form of frugal engineering pioneered in India, usually signifying the creativity of the Indian people to make existing things work or to create new things with meagre resources.

Some years ago, enterprising street mechanics in Punjab mounted a diesel irrigation pump on a steel frame with wheels, creating a vehicle they dubbed as 'Jugaad'. Such ultra-cheap modes of transport defy vehicular regulations and are not registrable but fulfill an existing demand. Many variants of such vehicles dot the rural landscape in India and elsewhere. Such innovations do not require high investments in conventional R&D: these simply need creativity and imagination of ordinary people. Over time, 'Jugaad' has come to mean 'grassroots innovations' pioneered by National Innovation Foundation (NIF)² in India that maintains a repository of more than a hundred thousand such innovations that have been devised mostly by uneducated rural folks and school drop outs.

Many companies in the corporate sector and in small and medium enterprises in India take strong interest in adopting 'Jugaad' as a practice to reduce R & D and development costs. It helps them find quick-fix solutions and maintain a leadership position in the market with their products and processes even if these do not have strong inventive contents and therefore lack patentability.

Grassroots Innovations vis-a-vis Intellectual Property Provisions

The grassroots innovations or the modern day jugaad (creative improvisation) based on individual ingenuity crave for intellectual property protection much the same way as regular science based inventions to gain from their commercialisation. However, since their science and engineering base is often not strong enough to provide adequate inventive content the grant of regular patents for these generally remains as a pipedream. Further, the nature of these improvisations is applicable for small localised markets and for shorter periods, their patenting process also needs to be swift albeit for shorter terms.

Admittedly, NIF has filed 182 patents in India and seven in US and one PCT application for the grassroots innovations from its repository. Of these, 33 patents have been granted in India and four in US. Obviously, these hand-picked cases are seemingly patent-worthy but myriads other are not distinctive to enable them to be granted protection under existing patent laws. More specifically, Indian Patent Act now rendered TRIPS complaint as per international norm is simply not suited to provide any protection to such grassroots innovations or technical improvisations that we fondly call as 'Jugaad'.

The question now is, if there is anyway, we can provide protection to such technical improvisations through any easier way?

New Petty Patents Bill

Yes, the stimulus to such Indian innovations is on the anvil through the provisions of petty patents. A new bill for making provisions for protection of petty patents such as these is understandably under active consideration of the Government of India currently following the comments solicited on a discussion paper on the subject. When implemented as an Act, most of the above mentioned technical improvisations would qualify for grant of patent protection under the new law on 'Petty Patents'. 'Petty' literally means 'trivial' or of 'little importance'. Nonetheless, the technical improvisations that we are referring to as 'Jugaad' are no less important for our economic growth since the survival and growth of our manufacturing in the SME sector is believed to be largely dependent on these.

The idea of bringing the new 'Petty Patents' or 'Utility Model' Act to life in India is certainly not a new or unique. The DIPP's discussion paper³ of 13 May 2011 referred to above itself gives details of scores of countries who have promulgated such laws. Thus, similar Acts with minor differences as per local situation are already in vogue in many countries and are variously known as utility model patents (not to be confused with utility patents of US!), utility solution, utility certificate, simple patent, innovation patent, short-term patents etc. all of which represent incremental inventions falling short of the scope of protection of patents. Most jurisdictions grant these patents after little or no examination. Substantive examination of whether the patent claims are actually valid may occur during litigation. Germany was perhaps the first country to bring in such a law as far back as 1891 where it is referred to as 'gebrauchsmuster' and is said to be popular to the extent that 85% of all patent applications are for this form of patent.

There seems to be a widespread support⁴ for introducing the two-tier patent system in India for sub-patentable innovations as per the comments and feedback received from general public, patent consultants and attorneys, concerned government department, industry and industrial associations both from India as well as from abroad. Among the government departments that have favored the proposal include Ministry of Micro, Small and Medium Enterprises, Ministry of Heavy Industry and Public Enterprises, Ministry of Chemicals and Fertilizers, Department of Biotechnology, Department of Science and Technology and Defense Research and Development Organization. Among the industry associations, CII and FICCI as well as COSIA are in favour of enacting the new law and expand the scope of protection to second-tier innovations. Well known patent attorneys are also in favour of bringing in the new law which they believe would spur innovation in India. The reason for such a strong support in favour of the proposal is apparently due to the fact that despite increasing number of patent applications under the current patent law, the applications from the domestic applicants tends to be no more than 20% of all applications. Thus majority of applications with reasonably high level of inventiveness above the current threshold is from abroad and not from the domestic players who are either keen to exploit the Indian market or checkmate the Indian competition, if any. Thus, most respondents strongly feel that the new lower level patent protection would be beneficial for the SME sector in India.

The consolidated view point of all major stake holders in India encompass the following:

A separate law for 'utility model' or 'petty patent' registration be enacted.

The term of protection may be between 5-10 years with a grace period of no more than 6 months. The patent registration may take 30 days or no more than 6 months and could as well be on-line

The scope of protection should definitely cover mechanical engineering, electronics, electrical and optical devices. The opinion on whether biotechnology, pharmaceuticals and chemicals should be covered under the new law is somewhat divided; many have explicitly suggested for their exclusion maintaining that the provisions of standard Indian Patent need not be diluted whereas others feel that some portions of traditional Indian medicines e.g., new compositions, medical instrumentations etc. should be covered. There is also some support for covering non-patentable items in Indian Patent Act under the new law, viz., agricultural and business methods and computer software

Relative novelty and industrial applicability should only be sufficient conditions for consideration of protection without any regard to 'inventive step'

Relevance for Developing Countries

It is widely believed that for enhancing economic growth in developing countries, it is important to promote inventions and technological innovations which mandate adequate protection to IPRs. Multi-lateral negotiations under World Trade Organization led by such beliefs have already brought patent laws in most countries as TRIPS compliant. However, to what extent the globally harmonised IPRs and more particularly the patents in their standard form benefit developing countries remains a major concern. A recent study⁵ of UNCTAD focuses on this very subject and has probed in the substantive features with empirical analysis of the utility model system as prevalent in many countries, i.e., Germany, Japan, Korea, China, Taiwan and Malaysia to draw policy implications for developing countries.

This study justifies lowering the thresholds of protection in order to extend protection to minor or incremental innovations, especially in those developing countries where SME sector is not extensively knowledge based and yet plays an important role in productivity growth and incremental innovation. As per its conclusion, introducing a utility system could potentially stimulate further innovation as follows:

Less knowledge-based industries would be able to seek protection for innovations not meeting inventiveness requirement for a standard patent.

High-knowledge industries like the semiconductors, ICT-related products and computer peripherals would be able to protect lower-end innovations with a more economical alternative to patents.

The report also suggests certain essential features of an ideal utility model for a developing country for sustainable development. Accordingly, it is suggested that the subject matter of protection under the utility model law should mirror the exclusions under the patent law. In addition, excluding some other types of invention as dictated by public policy such as chemicals or pharmaceuticals or biological material or substances or processes may also be considered. Non-examination system, at least for the first period of registration is suggested to be one of the key ingredients of the utility model system.

The Paris Convention for the protection of Industrial Property, of which India has been a member since 1998 provides for national treatment of utility model applications and a right of priority for the purpose of filing of applications in other member countries within a specified grace period. It also permits filing a utility model application in country by virtue of a right of priority based on the filing of a patent application and vice versa. The Patent Cooperation Treaty (PCT) entered into force in 1978 of which India has been a member since 1998 also permits filing of utility model applications through the national phase utilizing the priority dates and flexibilities applicable to patents.

The agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) that entered into force in 1995 and of which India has been a member since 1995 does not specifically mention utility models. Nonetheless, the member countries are free to adopt the utility model system as an additional IP protection mechanism as long as it does not contravenes the provisions of standard patent law in accordance with TRIPS. A comparison of special features of 'utility model' laws as implemented in various countries throughout the global is provided in an interesting paper available on the internet⁶ .

The View from Behind

Notwithstanding a widespread favourable response to the proposal for a new bill on 'utility model' patent law for India, there are several voices of dissent and caution. It has been advised that much deeper analysis of the impact of such patent laws with lower inventiveness threshold in other countries should be carefully carried out before drawing any conclusion. The opinion received from Japanese Intellectual Property Association is clearly against a 'utility model' law for India based on the fact that it is no longer a preferred option for protection of innovations in Japan. It also cautions that a utility model system without examination would cause uncontrolled proliferation of low-level technologies eventually defeating the very purpose for which it is being promulgated. A brief review of the history of Japanese utility model law, however, is quite educative and one can quickly learn if and how a new 'utility model' law is desirable and when.

The first utility model law in Japan was enacted in 1905 essentially to foster technological innovations of small and medium sized enterprises. The utility model system as devised was rapid and easier, and well suited for SMEs. This was well received till about 1980 when it began to be less attractive on account of no significant cost differentials and increasing delays. By then, in fact, many large companies also started filing utility model applications in significant numbers. In response, the Japanese government revised the utility model law to allow accelerated registration without examination and limiting the term of protection to six years. Nonetheless, utility model system steadily lost its popularity over time with significant drop in applications; approximately 191,000 (1980) to 77,000 (1993) to 8,000 (2003). One view on this historical drop in applications of utility model system in Japan is that it does not presently serve any important role in incremental innovations given the technological competitiveness of its companies including that in the SME sector. Such an argument is generally advanced for USA also, which perhaps is the only country without a utility model system.

The erstwhile Australian petty patents system that had a term lasting for six years is also known to have received a very poor response. The same was abolished in 2001 and replaced with a new system known as 'Innovation Patents' that has the term of eight years from the filing date.

A quick word on the performance of Chinese utility model system is in order which is often viewed as very valuable and popular. It is quick and costs about 40% less as compared to regular patent and is certainly without examination. Despite its huge popularity, it is not without its own problems. With increasing number of applications without examination is leading to large number of re-examination and invalidation requests. Consequently, a Re-examination Board also now exists which is stated to handle as many as 40% of all cases approved under the utility model system.

Conclusion

With overwhelming favourable response to the consultation paper of the Government of India, there is no doubt that the work on preparing the draft legislation is the next logical stage. It is learnt that the task has already been initiated with the proviso that the details would be thrashed out after further broad based consultations. It is perhaps too early to predict as to the overall scope of the new law with respect to the subject matter. There is no doubt, however, that exciting opportunities lay ahead for SMEs and those who are churning out 'jugaads'. It can be hoped that the law makers are well aware of the challenges and the problems likely to be confronted and their possible solutions.

References