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Friday, October 30, 2015

Proposal for expedited examination of Patent application

DIPP issued notification inviting comments on several amendments to patent law. One of the proposed change relates to expeditious processing of patent application when:

  • the applicant in the international application designated Indian Patent office as International Searching Authority.
  • the applicant, assignee or licensee already starting manufacturing the invention in India or
  • undertakes to commence manufacturing in India within 2 years from the date of grant of aptent.

Read for Details

Thursday, October 29, 2015

India attracts USD 24 billion as R&D investment in 2015 from North America and Europe based MNCs

Asia becomes the top region for corporate R&D spend, according to the 2015 Global Innovation 1000 Study, from Strategy&, PwC’s Strategy Consulting Business. 
Report highlights:

  •  In 2015, R&D spending by the Global Innovation 1000 increased 5.1% to $680 billion.
  • Globalization increasingly becomes the norm , 94% of firms conduct R&D beyond just their home country,
  •  Asia has become the top destination for corporate R&D spend in 2015, accounting for 35% of total in-region R&D, including both domestic and imported R&D. This places Asia ahead of North America and Europe, who dropped to third, in a complete reversal from 2007 when Europe was the previous leader.
  • The U.S. remains the largest spender of in-country corporate R&D, with in-country (domestic & imported) R&D spend at $145 billion in 2015, up 34% since 2007. Imported R&D spend to the U.S., mostly coming from Europe, in 2015 is $53 billion, up 23% from 2007. Exported R&D spend in 2015 is $121 billion, up 51% from 2007, predominantly going to Asia where previously in 2007 it was going to Europe.
  • The three largest industries for R&D Spend in 2015 are computing and electronics (C&E), healthcare and auto. In particular, healthcare is on track to pass C&E as the largest industry by R&D spend by 2019.
  • The largest spenders by region have remained the same, but where they spend their R&D has changed . In 2015, almost half of all R&D spend came from North American companies, but only about a third of all R&D was actually done in North America. 
  • R&D ( domestic and MNCs) in China increased by 120% (2007 to 2015) to $billion surpassing Japan's R&D spending of $50 billion. India's R&D spend at $28 Billion is higher than Southkorea $ 13 Billion, and Taiwan's $ 6 Billion.
  • China’s imports of R&D from multinationals headquartered in other countries were $44 billion in 2015. The U.S. led in exports of R&D to China in 2015, accounting for 39 percent of inflow, followed by Japan (20 percent) and Germany (10 percent). Survey respondents cited proximity to a high-growth market as the top reason for moving R&D to China (71 percent), followed by proximity to key manufacturing sites (59 percent), proximity to key suppliers (54 percent), and lower development costs (53 percent). 
  • Total corporate R&D conducted in India increased 115 percent between 2007 and 2015, to $28 billion. The growth was powered by R&D spending from other countries, which grew 116 percent. India, not surprisingly, is the largest global destination for software R&D. Multinationals that have moved R&D to India cite a variety of reasons for the move, and cost is often not the most important. “Our tech center in India gives us an around-the-clock capability to accelerate development work due to the time difference with the U.S'.  “The highest priority was access to technical talent that was in close proximity to regional customers. The fact that some of the labor is lower-cost was nice to have, but not a primary driver".
  • USA based MNCs spent 43% of their R&D budget at home, another 15% in India, 15% in China, 9% in UK.

Tuesday, October 27, 2015

Royalty Payments by Maruti- importance of stage in Technology Life Cycle

IiAS has brought out a  report on royalty payments by Maruti, IiAS examined Maruti’s royalty payouts in the context of revenues, margins, and research and development (R&D) spends, and concludes that Maruti’s royalty payouts are extortive.Maruti has been paying royalty to Suzuki for its car manufacturing technology since inception. Over the past five years (2010-11 to 2014-15), Maruti’s aggregate payout towards royalty was Rs.118.7 bn while the 5-year profit before tax (PBT) aggregated Rs. 167.7 bn (Table 1). In 2014-15 alone, royalty expenses aggregated 36% of profit before tax and royalty. While royalty to Suzuki per car sold is Rs 21,414/- Maruti's R&D per car produced is only Rs 3600./-This argument of royalty extortion was countered by Financial Express. The paper defended the high royalties on several grounds, primarily the company’s tremendous performance vis-a-vis peers and second capital appreciation and dividends that the stock returned to investors.
Looking beyond shareholders benefits
We have no comments on what is good or bad for majority shareholders or minority shareholders. From a national perspective, we need to ask the question- how does market leader in automobiles behave in China? Do they still pay royalties for petrol/ diesel powered cars? The Chinese planned for the future, invested heavily in batter technology, acquired startups where required and based on the strength in Battery technology, they negotiate as grown ups.  A case in point is all-electric Denza car in China  produced by BYD Auto in a joint venture with Daimler.

Patents and Royalty payments are indicators of technology diffusion. Market leaders are also expected to invest in technology generation. What is required to wean away cash rich market leaders like Maruti from their old parents? 

Thursday, October 22, 2015

Technology Tipping Points 2015

World Economic Forum report concludes several technologies are nearing tipping point. In March 2015, the Global Agenda Council on the Future of Software & Society launched the Technological Tipping Points survey. Based on the council’s discussions over previous months, the survey asked respondents for their views on 21 “tipping points” – moments when specific technological shifts hit mainstream society. Aiming to provide a snapshot of expectations from a community of over 800 executives and experts from the information and communications technology sector, the survey asked respondents for their perception of when these tipping points would occur, offering date ranges from “it has already happened” to “20+ years”. The option of “never” was also available. A total of 816 responses were received. Predictions:

2018-Storage for All 
2021-Robot and Services
2022-The Internet of and for Things,  Wearable Internet,  3D Printing and manufacturing.
2023 -Implantable Technologies, Big Data for Decisions, Vision as the New Interface,  Our Digital Presence
2024 -Ubiquitous Computing, 3D Printing and Human Health, The Connected Home 
2025 -3D Printing and Consumer Products, AI and White-Collar Jobs, The Sharing Economy
2026 -Driverless Cars,  AI and Decision- Making ,  Smart Cities
2027-Bitcoin and the Blockchain Manufacturing,

From Indian perspective hype on Smart Cities is interesting. The tipping point defined as the first city with more than 50,000 inhabitants and no traffic lights is expected by 2026. These smart cities will manage their energy, material flows, logistics and traffic. Progressive cities, such as Singapore and Barcelona, are already implementing many new data-driven services, including intelligent parking solutions, smart trash collection and intelligent lighting. Smart cities are continuously extending their network of sensor technology and working on their data platforms, which will be the core for connecting the different technology projects and adding future services based on data analytics and predictive modelling.  The city of Santander in northern Spain has 20,000 sensors connecting buildings, infrastructure, transport, networks and utilities. The city offers a physical space for experimentation and validation of functions, such as interaction and management protocols, device technologies, and support services such as discovery, identity management and security. 

Thursday, October 01, 2015

Guyed Transmission Towers- Indian Innovation journey in Valley of Death

Young Rajiv Gandhi, during his visit abroad noticed that transmission lines there were erected in a different way carried by helicopters. His comments were noticed and one public sector undertaking TSL (Triveni Structurals Limited) Naini ventured to develop the guyed transmission towers in India. Their proposal for development of various types of 400KV and 765KV self supporting and guyed type transmission line towers was approved by DSIR under PATSER in 1997. TSL successfully designed , fabricated towers and type tested at SERC, Chennai.
Then began the journey thru the Valley of Death. Several meetings were held with Power Grid Corporation for a pilot demo in 5 km and every meeting ended with `Yes, But'. The public sector undertaking TSL turned sick, researcher Tripathi retired and I closed the file with audit remarks about wasteful expenditure.
Today, the news report that this innovation will land up in J&K, for the transmission line of Sterlite by supplier Burns & McDonnel. While I am happy to see adoption of this innovation in India, cannot forget the image of dejected researcher Tripathiji.     

Utility Patents- Australia abolishes them and India wants to enact law.

There are many experts who argue that Indian SMEs would be more innovative, if Utility patents are awarded in India.  As per news reports the draft under consideration advocates Utility patents saying that   “This will help identify the actual, potential and untapped areas of creativity and innovation and facilitate preparation of focused strategy to channelize efforts and financial resources where they are needed,” Utility patents or protection of grassroots innovation have been an established system in many other countries, including developed economies as they form a key part of the scientific and economic development.”  
In this background reasons for Australia abolishing Utility Patents called `Innovation Patent' need to be examined in depth. When introducing utility patents/ petty patents in Australia, similar assumptions were made.
1.4 Objectives of the innovation patent system The need for a utility model to promote, protect and disclose lower level inventions in Australia has been extensively investigated several times over the last 40 years. In the early 1970s, the Designs Law Review Committee (the Franki Committee) found that there was a ‘gap’ for functional inventions that were not sufficiently inventive to gain patent protection and were not protectable under the designs system.33 Their recommended solution to this ‘gap’ was the establishment of a ‘petty patent’ system and an amendment to the designs system to allow for the protection of ‘functional designs’. Subsequently, the Government amended the Patents Act 1990 (Patents Act) in 2000 to establish the innovation patent system. Subsection 7(4) of the amended Patents Act defined an ‘innovative step’ as follows: For the purposes of this Act, an invention is to be taken to involve an innovative step when compared with the prior art base unless the invention would, to a person skilled in the relevant art, in the light of the common general knowledge as it existed in the patent area before the priority date of the relevant claim, only vary from the kinds of information set out in subsection (5) in ways that make no substantial contribution to the working of the invention.

A key finding in this research paper is that Australian SMEs are less likely to use the patent system after filing an innovation patent than a company that has not previously filed an innovation patent. This suggests that innovative activity is not being stimulated among these groups by the innovation patent system.

According to the research paper:

The great majority of Australian SMEs and private inventors appear to gain little benefit from the system… Only 23 SMEs have become moderate users of the innovation patent system … The average SME or private inventor files once and never again (74%), does not receive any enforceable right (83%) and lets their patent expire early because they see its value at less than the $110-$220 cost of renewal (78%). (page 2)

Other evidence in the research paper indicates that the costs and benefits of the innovation patent system do not accrue evenly across the users of the system. While 94% of innovation patent applications are made by private inventors or SMEs and they incur 95% of the regulatory costs of the system, larger firms who are already well served by the standard patent system tend to reap a disproportionate share of the benefits.

The report estimates that the private value of innovation patents is of a similar magnitude to the regulatory costs incurred (in the low tens of millions of dollars per annum). ACIP agrees with the finding in the report that the private gains from innovation patents are likely to be offset by the uncertainty costs to consumers and producers. In view of the newly available evidence, ACIP considers that, taking into account the overall costs and benefits of the system, it is likely to result in a net cost to society.