India-U.S. relations: Intellectual property rights

With Hillary Schaub

Intellectual property is critical to the sustained growth of the economy.

In the United States, according to a Commerce
Department study, nearly 40 million American jobs are supported by intellectual property-intensive industries. They account for over $5 trillion, or 34.8 percent of gross domestic product. Throughout his two terms, President Barack Obama has taken significant steps to improve intellectual property (IP) by issuing executive orders and recommendations. In 2011, the president signed the Leahy-Smith America Invents Act (AIA), which was designed to help make the U.S. patent system more efficient and reliable. Additionally, Obama established two intellectual property enforcement advisory committees designed to improve IP enforcement efforts. In 2013, he issued five executive actions and seven legislative recommendations designed to protect innovators from frivolous litigation and ensure the highest-quality patents. In his 2014 State of the Union address, Obama called for Congress to pass a patent reform bill that would allow U.S. businesses to focus on innovation, not needless litigation.

The government of India is a signatory on several international trade agreements and has taken steps towards strengthening IP by enacting legislation that protects intellectual property rights. India has made positive statements on the need to introduce a stronger IP environment and has undertaken IP reforms especially in the pharmaceutical industry. Despite these promising actions, India has remained at the bottom of the Global Intellectual Property Center (GIPC) index rankings, which measures performance on IP protection and enforcement. India lags behind other nations in formal patent filings. It averages around 9,500 filings per year, compared to 269,000 in the United States. Unlike in the United States, there is insufficient economic encouragement of intellectual property in India and few incentives to innovate. The GIPC cites other major causes for concern like the troubling history and current practices of using compulsory licensing for commercial and non-emergency situations, the challenging enforcement environment, and high levels of physical and online piracy in India. The joint efforts of the United States and India on IP are encouraging, but there is plenty of room for improvement.

There are three recommendations we make to narrow differences on intellectual property rights between the United States and India:

• IP is an international issue, so it is critical to continue to keep the dialogue open between the United States and India through summits, forums, and task forces. There have been positive steps taken by Obama and Indian Prime Minister Narendra Modi, but progress needs to extend past the terms of individual leaders.
• Developing and enforcing domestic legislation for intellectual property protection is key. The GIPC recommends that India address online piracy and goods counterfeiting. It also suggests stronger IP enforcement through civil remedies and criminal penalties.
• To create a welcoming environment for innovators and encourage them to develop new products for the marketplace, the governments should encourage patenting so that Indian innovators could reap the financial awards resulting from their creativity.

This memo is part of the Brookings India publication, India-U.S Relations in Transition. The views are those of the author(s). Brookings India does not hold any institutional views.