What is The Importance Of Investing In India's Patent Ecosystem And Why Is It Urgent?
Part 1
A Trariti Consulting Group Study by Swapnil Roy
Indian Market Overview
Any system of intellectual property protection has two core economic objectives. Knowledge creation and Business innovation are crucial to create a knowledge economy. Protecting the knowledge and innovation by drafting and constituting rules to provide exclusive rights to use and sell novel technologies, goods and services would be one core objective.
Another objective is to promote the widespread dissemination of new knowledge by encouraging or requiring rights holders to place their inventions and ideas on the market. Intellectual Property Regime is the key to the creation of a knowledge economy and nurturing the start-up ecosystem, technological innovation and scientific research.
India Position In Terms Of Patenting
There has been a gradual increase in the filing and granting of patents in India. Further, the number of patents application is increasingly coming from Indian residents rather than MNCs. The share of Indian residents in total applications has more than doubled in the last decade. It is important to note that these improvements of the last few years are largely due to the process reforms1 undertaken in the last 5 years.
Global Market Overview
In 2020, the National Intellectual Property Administration of China received nearly 1.5 million patent applications, which is 2.5 times more than the amount received by the United States Patent and Trademark Office with 597,172 applications.
The top five offices, including Japan Patent Office, Korean Intellectual Property Office, and European Patent Office, accounted for 85.1 percent of the global patent applications, marking a 7.7 percentage point increase from their combined share in 2010. China's contribution to this growth was significant, with its share increasing from 19.6 percent in 2010 to 45.7 percent in 2020.
Interestingly, the proportion of non-resident applications varied significantly across these offices. For example, in 2020, only one in ten applications received in China was from non-residents, while the share for European Patent Office and US was 54.8 percent and 54.9 percent, respectively.
Summary of Patent Application Process
India's patenting activity is smaller than global leaders, and the time taken for processing patent applications is much higher, with an average time of just under 5 years and up to 9 years in some categories like biotech due to manpower shortage. The application is published within 18 months of filing, and the time for the first office action has reduced drastically from 18 months in 2020 to 4.8 months now, which is the fastest globally.
However, there are still major delays in final disposal, with an average time of 58 months. In comparison, China and the US take only 20-21 months to dispose of an application, while the other IP-5 offices (European Patent Office, Japan, and South Korea) take 15-25.4 months.
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According to the annual report of the World Intellectual Property Organization (WIPO), India has one of the highest rates of withdrawn patent applications, which is attributed to delays in the process. In 2018, about 66 percent of patent applications were withdrawn in India. However, this figure decreased to 54 percent in 2019 and 38 percent in 2020 due to simplification of processes and reduction in processing time. Nevertheless, India still has a significantly higher withdrawal rate than its global counterparts such as the US, Japan, Korea, and China.
Issues In The Patenting System
Manpower Shortage
The major reason for delays is the lack of sufficient manpower in patent office. Though some additional workforce was added in the patent office in the last few years especially at the examiner level, it is very small when compared with China, US etc.
With the addition of more personnel at the examiner level, there was a significant decrease in the time it took for the first office action, as well as a reduction in the number of pending applications at that stage. However, the shortage of staff at the controller level resulted in a backlog of applications being shifted from the first examination level to the subsequent stage
. As of the end of March 2022, there are around 164,000 applications awaiting approval at the controller level despite already having undergone preliminary examination, which is a substantial increase from the 40,000 applications in March 2017.