SAFEGUARDING SAFEGUARDING INNOVATIONINNOVATION

SAFEGUARDING SAFEGUARDING INNOVATIONINNOVATION

A presentation by

D.C. GabrielK & S Partners

3636thth National Convention on Company National Convention on Company SecretariesSecretaries

77thth November 2008 November 2008

INVENTION is a conception of a new idea

INNOVATION is application/adoption of

the idea, e.g.; it is a process that moves

ideas into the marketplace

-incremental,

-radical, and

-revolutionary changes in thinking,

products, processes, or

organizations………..

Identifying & Evaluating Unique Ideas

Assigning,JVs/ Licencing/

Business partners

Turning them into useful/income generating products

INNOVATION PROTOCOL

Exploitation

Identifying unique ideas

Creating conducive atmosphere for

“IDENTIFICATION/CREATION”.

•Motivating employees to contribute a value creation.

•Rewarding Inventive employees and other contributors for their ideas through incentives/bonuses (Nokia)

•Discussions/Lunch with Senior officials/CEO (ABB)

•Showcasing the inventor/invention e.g. IPR certificates in the canteen (Ericsson)

• Is it new?

• Is it useful?

• Is it workable?

• Research & Development

• Can it be developed in-house

• Technology mapping/ Freedom to Operate

• Will IPR be of any use, and if so, what

types of IPR?

• Assets from IPR (Royalty/ mortgage/

transfer of right)

• Market analysis and manufacturing

capacity

Evaluating unique ideas

An organization needs to implement the IPR strategy in projects and in core processes, to promote IPR culture.

IPR – A BUSINESS ASSETIPR – A BUSINESS ASSET

• Intellectual property – a Intellectual property – a business assetbusiness asset

• IPR like real estate: must IPR like real estate: must be created/developed, be created/developed, defined, protected, value defined, protected, value assigned, used to realize assigned, used to realize valuevalue

THE IPR CYCLE

Creation

Protection Exploitation

FORMS OF IPRs

IPR

Trademarks or

Brands

Copyright

Trade Secrets

Patents

Designs

SemiconductorIC Act

Plant Varieties

Act

GI Act

GI Protection

• GEOGRAPHICAL INDICATION– is a collective right as opposed to a trademark

which is a private right– identifies a product as originating in a country

or a region thereof – whose quality, reputation or other

characteristic is attributable to its geographical origin

• EG: CHAMPAGNE, SCOTCH whisky, DARJEELING tea, HAVANA cigars, (product name indicates the origin)

• FENI, BASMATI (product is traditionally associated with a particular region)

EXAMPLES OF INDIAN GIs

– Pashmina Shawls– Kashmir Carpets– Basmati Rice– Darjeeling Tea– Assam Tea– Nilgiri Tea– Bengal Cotton

Sarees– Shambhalpuri

Sarees

– Feni– Chanderi Silk– Coorg coffee– Mysore Silk– Malabar Pepper– Kancheepuram

Sarees– Kerala Coir products – Kerala Cardamom

ECONOMIC IMPLICATIONS OF GIs

• PROTECTION OF GIs IMPORTANT:– Promotes products having certain characteristics

of considerable benefit to the rural economy– Ensures the supply chain integrity – Facilitates distribution and sale of GI products –

especially relevant to developing countries whose markets are in industrialized countries.

– Improves the income of farmers and retains the rural population in less favored remote areas

– Protects consumers against acts of unfair competition by ensuring correct labeling information

– Acts as a vehicle for producers to compete on quality rather than quantity

ECONOMIC IMPLICATIONS OF GIs

• Studies in Europe have shown enhanced economic benefits for origin guaranteed products:

– French GI cheeses: a premium of 2 Euro– Italian Toscano oil : a premium of 20%– French Poulet de Bresse : a premium of 4%– Producers of milk for ‘Comte’(Gruyère de

Comté ) cheese: a premium of 10%

DARJEELING TEA- An Illustration

DARJEELING

What is DARJEELING TEA?

• Regulations : points to note– Darjeeling tea defined to mean 100%

Darjeeling tea•Grown in the 87 gardens specified in the GI registration

•Processed and manufactured in a factory located in the defined region of Darjeeling

•When tasted by expert tea tasters to have distinctive and naturally occurring organoleptic characteristics of taste, aroma and mouth feel

Darjeeling Tea- Supply Chain

• All the 87 gardens registered with the Tea Board.

• Prior approval of the Board for planting tea seeds or extension of cultivation area.

• All garden invoices with details of great quantity and chest numbers sent to the Board.

• All warehouses for Darjeeling Tea registered with the Board.

• All exporters and buyers of Darjeeling Tea registered with the Board.

• All consignments of Darjeeling Tea for export authenticated by issue of certificates of origin.

THUS ENSURING ALL DARJEELING TEA EXPORTED IS 100% CERTIFIED DARJEELING TEA.

Design” means features of Shape, Configuration, Pattern or Ornament

“applied to an article by any industrial process or means, whether manual, mechanical or chemical (separate or combined), which in the finished article appeals to and is adjudged solely by the eye;

but does not include any mode or principle of construction or anything which is in substance a mere mechanical device and does not include any trademark or property mark

INDUSTRIAL DESIGN

THE INDIAN DESIGNS ACT, 2000 Must be new or original (novel) - Not

previously published in India. Not previously published in tangible form or used or in any other way prior to the date of filing in India.

Must relate to features, shape, configuration, pattern or ornamentation.

Must be applied by an industrial process. Finished article judged solely by eye. To be integral with the article itself. Term period 15 years

EXAMPLES

• A tinted glass design

• Novel designs on tiles,

carpet, textiles, furnishing curtains, wall papers

• Head of tooth brush

• Structural design of the porcelain jar

WHAT IS PATENT ?WHAT IS PATENT ? • Bristol Myers Appln Bristol Myers Appln ::

““. . . . In essence, the law of patents is about stopping people from using . . In essence, the law of patents is about stopping people from using patented things…rights of a patentee are infringed by anyone who makes patented things…rights of a patentee are infringed by anyone who makes or supplies that substance commercially for use by others even though he or supplies that substance commercially for use by others even though he does not know that it is that substance he is making or supplying…”does not know that it is that substance he is making or supplying…”

Steers vs Rogers:Steers vs Rogers:““......the truth is that letters patent do not give the patentee any right to use the the truth is that letters patent do not give the patentee any right to use the

patent… what the letters patent confers is the right to exclude others from patent… what the letters patent confers is the right to exclude others from exploiting or using the particular invention”exploiting or using the particular invention”

WHAT IS PATENT ?WHAT IS PATENT ?

• Patent : a limited monopoly rights granted Patent : a limited monopoly rights granted for the disclosure of the inventionfor the disclosure of the invention

• Extent of monopoly limited to a specific Extent of monopoly limited to a specific territory territory

• Patentee has the exclusive right to use, Patentee has the exclusive right to use, make manufacture, import, sell, license the make manufacture, import, sell, license the product/processproduct/process

• First to fileFirst to file• The term is 20 yearsThe term is 20 years• To be renewed- every yearTo be renewed- every year

SAKICHI TOYODA’S WEAVING MACHINE - 1929

What does this have to do with what is now a world class Japanese Company!!

SAKICHI TOYODA’S STORY

Granted Patents

on Automatic Weaving Machine

Earned Huge royalty in

1929

Founded “TOYOTA

motor Company”

WHAT IS A PATENT?

PROBLEMSOLUTION

INVENTION

- novelty

- non-obvious

- industrial application

- local laws

PATENTABLE

Not patentable :

• Frivolous invention

• Invention against the public order and morality

• Mere discovery of naturally occurring substances

• Mere admixture

• New use of known substance

• New property of known substance

• Combination of known devices working independently

• Agricultural & horticultural methods

• Plants and animals in whole or any part thereof

• Essentially biological processes

Not patentable :

• Method of treatment of humans/animals

• A mathematical method or business method

• a computer program per se or algorithms

• A literary, dramatic, musical or artistic work

• A mere scheme or rule

• A presentation of information

• Topography of integrated circuits

• Traditional knowledge

• Any invention related to atomic energy

Walter Hunt, of New York, received a patent #6,281 for the safety pin on April 10, 1849. Walter Hunt in 1834 built America's first sewing machine, which used the first eye-pointed needle. Hunt did not patented his invention because he thought it would put hand sewers out of work.

Nearly 20 years later, Elias Howe reinvented and patented an eye-pointed needle sewing machine.

Turmeric Patent

U.S. Patent No. 5,401,504 was granted to Das et al.

Related to wound healing property of turmeric

Is commonly known in India : grant of patent outraged Indians

This patent was challenged by way of re-examination at USPTO by

CSIR

All claims eventually cancelled

Prior Art for Turmeric in Urdu

Prior Art - English Translation

…Revocation of “turmeric” patent...

• 32 prior art citations finally cited

• Patent and all its claims revoked by USPTO

Prior Art English Translation

Revocation of Turmeric Patent

Revocation of Turmeric Patent

Excise duty waiver on patented productsAll goods falling under the Schedule to the Central Excise Tariff

1985 are exempt from the excise duty for a period of 3 years from

the date of commencement of commercial production provided:

• such goods are manufactured by a wholly owned Indian company

• such goods are designed and developed by such Indian company

• the goods so designed are patented in any two countries outside

India

Before commencing commercial production must obtain a

certificate from the Department of Scientific and Industrial

Research for claiming the benefit.

Innovations related incentives

Exemption from Drug Price Control Order

Bulk drugs produced based on indigenous R&D are exempt from drug price control for a period of 5 years from the date of commencement of commercial production provided that they are produced from the basic stage by a process of manufacture developed by the unit through its own R&D efforts.

If it has not been produced elsewhere, the period is 10 yrs

Weighted tax deduction on R&D expenditure

Weighted tax deduction @ 150% on R&D expenditure is available to companies engaged in the business of biotechnology, or the business of manufacture or production of drugs, pharmaceuticals, electronic equipment, computers, telecommunication equipment, chemicals and manufacture of aircraft and helicopters. The expenditure on scientific research in relation to drugs and pharmaceuticals, shall include expenditure incurred on clinical trials of drugs, obtaining approval from the regulatory authority under any Central, State or provincial Act and the filing of a patent application in India.

Accelerated depreciation allowance

Depreciation allowance at a higher rate is available in respect of plant and machinery installed for manufacturing goods based on indigenous technology developed in recognized in house R&D units, Government R&D institutions, national laboratories and Scientific and Industrial Organizations (SIRO). The present rate of depreciation for plant and machinery is 40% as against 25% for other plants and machinery.

Income tax relief on R&D expenditure

Under Section 35(1)(i) of the Income Tax Act 1961, the revenue expenditure on scientific research, by recognized R&D units, on activities related to the business of the company is allowed full deduction. Under Section 35(1)(iv) expenses of a capital nature could be deducted totally from the income of the year in which the expenses have been incurred

Tax deduction for sponsoring research

Section 35(2AA) of the IT Act 1961 provides for a weighted tax deduction of 125% for expenses on sponsoring research programmes at National laboratories functioning under ICAR, CSIR, ICMR, DRDO, Department of Biotechnology, Department of Atomic Energy, Department f Electronics; IIT and universities.

• Secure current technological and market position;

• Ensure freedom to operate for the future;

•Restrict development of competitors in identified areas;

• Conquer new markets (industry sectors, countries);

• Build up portfolio for ‘swaps’ with competitors;

• Increase or create revenue streams from IPRs,e.g. licensing

deals;

• Communicate value to owners, funding institutions,

investors, employees;

• Convert ‘know-how’ into formal assets: ensure critical and

proprietary know-how does not leave the company.

•Unwanted IPRs to be eliminated

POINTS TO PONDER

• Filing applications in the required jurisdictions at the

earliest

• Conduct a search before initiating your R&D

• NDA with key employee

• Employee-Employer agreement: Specific clause for the

ownership of generated IPRs?

• Competitors: Is there a risk of infringing their IPR?

• Technology partners: Sharing mode for generated IPRs,

exclusion of pre-existing know-how?

• Funding partners: Issue of ownership?

• PUBLISH & PERISH

• PATENT, PUBLISH & PROSPER

POINTS TO PONDER-2

THANK YOU