Placing India, China and six other countries on its ‘priority watch list’ for weak intellectual property (IP) protection, the US on Tuesday said that New Delhi remains one of the world’s most challenging major economies in terms of the protection and enforcement of IP rights, according to the United States Trade Representative’s (USTR) Special 301 Report released on Tuesday.
The USTR report stated that over the past year, India has remained inconsistent in its progress on IP protection and enforcement, even as it has worked to strengthen its IP regime, including by raising public awareness about the importance of IP. “There continues to be a lack of progress on many long-standing IP concerns raised in prior Special 301 Reports. India remains one of the world’s most challenging major economies with respect to protection and enforcement of IP,” the report said.
Experts have flagged that foreign companies cornering a large share of patents in the Indian market could increase the country’s technology dependency and imports from the US. New ’s R&D spending remains lower than that of leading economies, which are also the biggest sources of in India. While neighbouring China spends 2.43 per cent of its GDP on R&D, the figure stands at 4.93 per cent for South Korea, 1.21 per cent for Thailand, 2.21 per cent for the European Union, and 3.46 per cent for the United States.
Patents to foreigners up
The continued US push to liberalise the Indian patent regime comes even as patent grants to foreigners have surged past those to domestic applicants. Patents granted to non-resident individuals and entities stood at 74.46 per cent in 2022 — among the highest shares in any major economy globally. World Intellectual Property Organization (WIPO) data show that the comparable figure for manufacturing powerhouse China was just 12.87 per cent.
While foreign calls for stronger patent protection are gaining momentum, India’s spending on research and development as a percentage of GDP has stagnated over the years. R&D spending is now below the 0.83 per cent of GDP recorded in 2008, the highest in the past two decades. The comparable figure slipped to 0.65 per cent in 2022, according to World Bank data — much lower than the global average of 2.62 per cent.
Weak trade secret protection
Companies also continue to face uncertainty due to insufficient legal means to protect trade secrets in India, the USTR said, adding that “currently no civil or criminal laws in India specifically address the protection of trade secrets”.
“Criminal penalties are not expressly available for trade secret misappropriation in India, and civil remedies reportedly are difficult to obtain and do not have a deterrent-level effect,” the report said.
“One particular issue highlighted by stakeholders is the requirement for companies to disclose their source code for telecom equipment undergoing required certification and security testing at designated Indian facilities. The United States encourages India to continue working toward providing adequate and effective protection of trade secrets,” the report added.
Access to technologies
Despite India’s justification of limiting IP protections as a means of promoting access to technologies, it maintains high customs duties on IP-intensive products such as information and communications technology (ICT) products, solar energy equipment, medical devices, pharmaceuticals, and capital goods, the report said.
“Stakeholders also continue to raise concerns as to whether India has an effective system for protecting against the unfair commercial use and unauthorised disclosure of undisclosed test or other data generated to obtain marketing approval for pharmaceutical and agricultural chemical products,” the USTR said.
Pharma restriction
In the pharmaceutical sector, the United States continues to monitor the restriction on patent-eligible subject matter under Section 3(d) of the Indian Patents Act and its impact.
“Pharmaceutical stakeholders also express concerns as to whether India has an effective mechanism for the early resolution of potential pharmaceutical patent disputes. In particular, India does not have a system to provide notice to a patent holder or to allow for a patent holder to be notified prior to the marketing of a follow-on product, which limits transparency.”
