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Dr. C.KAMESWARA RAO,          
Senior DGM & Head, Intellectual Property Management & Standards Group,          
 Corporate R&D, Bharat Heavy Electricals Limited, Hyderabad           

             Invention and radical innovation can never be other than a cost from the point of view of Indian industry’s accounting procedures.  In to-day’s complex technologies, money is only made by those firms that can develop them into commercial products through subsequent incremental changes even going to the extent of  copying other’s technology and ideas without proper licences or even cooperation or consent. There is now persuasive evidence that progress in any field of technology is made most rapidly when several firms are competing to capture a share of a new market, and to widen the scope of application of an invention, through making such incremental  improvements along different and competitive “trajectories.”

            The recognized comparative failure of Indian firms to commercialize inventive and R&D efforts is partly explained by this. No firm can exploit more than a single trajectory of incremental change properly. Proprietary rights can prevent firms which could exploit other trajectories from doing so, thus also depriving the originator of competitive pressure to move along the learning curve as fast as possible. Eventually, products from foreign firms which incorporate more incremental improvements, gain an advantage in the market.

            A useful contribution towards solving this problem would be the effective  utilisation of the clause on compulsory licencing of intellectual property, consistent with Articles 7, 8(1), and 8(2) (though Article 31 should also be noted) of the Agreement on Trade related Aspects of Intellectual Property Rights (TRIPS), subject to the condition of maintaining, and if possible improving incentives to invent and innovate.

            It has been proposed with support from empirical study made in this paper on patenting status of Machine Tool Industry in India that this could be achieved by changing from time to money as the measure of any grant of intellectual property. The proper measure of any economic privilege, in fact, can only be money. No doubt at the time when intellectual property originated, any measure other than time was out of the question, since accounting techniques were undeveloped.
            But to persist with such a poor measure as time to-day is simply to ignore all the achievements of accountancy since, which are now capable of providing the measurement required. Many of the problems of intellectual property rights, especially in new fields such as biotechnology and information processing, are actually caused by having to use time as the very crude measure of a patent, copyright or other grant.

           The empirical research underlying this proposal shows how incentives to invent could be maintained or even enhanced by the use of capital payments for licences, instead of royalties. If both these objectives of this proposal could be achieved, there would be considerable benefits in terms of S&T policy of India.  Eventhough, this is clearly a long-term project, it is worth investigating further.


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