At The Gate of India, Mumbai
The following is a report for the Asia Practice Group on my participation in IPR conferences in India in January 2007. A delegation was organized by George Washington University Law School, which was described as a high powered delegation of American, Japanese and European judges, Senior Patent Attorneys, professors and Legal Counsel of leading corporations. The delegation has visited India for four consecutive years, addressing seminars in Mumbai, Bangalore and the coastal state of Goa. The visit was jointly organized by CII (The Confederation of Indian Industry), George Washington University and the US India Business Council. This visit was in conjunction with the "Partnership Summit 2007," which is a widely publicized annual international business conference in India, with events mentioned in IP360. The events took place January 15-20, 2007. The GWU delegation consisted of about forty people.
The conferences were an opportunity for the delegation to get to know each other and to meet with Indian industry group representatives, particularly of CII, as well as Indian Government and U.S. Government officials. This was also an opportunity to observe and assess the status of IP protection in India and the physical infrastructure, particularly in Bangalore.
IPR and international legal issues impact India, Indian companies and American multinational companies. I participated in the International Conference on IPR and played a small role through a presentation on the challenges and opportunities for practitioners dealing with nanotechnology as an example of new or "disruptive" technology impacting economy and commerce. I sat on an international panel discussing pharmaceuticals and biotechnology IPR issues. I have the following comments which may be useful in TTC's practice development.
Outsourcing in IT is a hot topic, but in the legal field it is widely discussed and seems to make some limited sense, namely in technical searching and document analysis projects. The past experiences have been spotty at best. There is often a lack of confidence in and oversight of the service provider. In my personal observations, the relevant talent pool in India is actually pretty thin, even in IT, where there are supposedly currently 120,000 IT workers, and supposedly 200,000 technical graduates annually.
However, there are very, very few technically-competent patent attorneys and patent drafters in India. More Indian IP lawyers are in the U.S.A. The drafting of patent applications in India for filing in the US has often been an unsatisfactory experience. Some predict that Indians desiring quality work will "outsource" their technical patent work to the US, even though it is relatively expensive. (Income is currently less than 20% of US income for comparably-trained personnel. The vast majority of people don't participate in the growing economic machinery, living on less than $2.00 per day.) Charles Kulas last year reported outsourcing success after initial disasters. Others report persistent problems, even significant failures. (I have discussed with the GWU delegation the possibility of my conducting on-site training in patent drafting, perhaps in connection with one of the new Indian IPR graduate schools working with GWU. We shall see where that leads.) However, it would probably generally be agreed that outsourcing to India will have a relatively short life (no more than 15 years), as demand exceeding qualified supply drives up wages so that they are comparable with the rest of the world. Currently, engineers start at $10,000 per year (compared to $80,000 in the U.S.), with salaries for competent engineering talent increasing far more rapidly than the growth rate (7%) and inflation rate (which doubled in the last year to around 7.5% per year).
The IPR legal infrastructure in India is in general dismal but improving rapidly. Not long ago, a nearly comprehensive IPR Law was enacted in India, and there is an initiative to make India a qualified WIPO Searching Authority. However, reports of personal experiences and observation revealed major problems. There are at least three independent patent offices. They cannot track the filings of patent applications among themselves. They do not communicate with each other. There is no comprehensive list of pending applications or issued patents. Document management has been observed to be in chaos. Internally developed IT management procedures are not working or are not used effectively. Paper file organization is haphazard at best.
U.S. Government-based offers to help organize the India Patent Office(s) and train patent examiners have been welcomed but have not yet been scheduled by the Indian authorities. To complicate matters further, Indian law calls for disposition of patent applications within one year of the issuance of an examiner's first office action, and second office actions are often delayed until the 11th month, thus forcing abandonment or effectively death by appeal. Appeals processes may last a decade at the present rate.
The Indian Judiciary System is equally inefficient. There are no specialized patent courts, but there are a couple of courts of general jurisdiction that hear infringement/validity issues. Delegates to the Conference reported on progress in promoting efficiency. However, personal interviews with practitioners revealed another story. Courts claim to be so overburdened that they routinely grant continuances on all matters, so the courts are actually clogged with continuance hearings. In one case that is purportedly still pending after 25 years, the plaintiff, the defendant and counsel for both sides are dead, and still the court will not dismiss the case.
Nevertheless, operations are reported to have improved dramatically since 2005, both in the courts and in some patent offices. U.S. delegates and India-based technology clients reported that practitioners are overburdened, lack technology skills and are sometimes quite disorganized. This suggests that caution is to be exercised in the choice and use of foreign associates in India charged with filing and prosecuting patents and also in employing litigation counsel.
The physical infrastructure, particularly in Bangalore, appears to be a hopeless disaster. Once a small resort town and military base, Bangalore is a mess, with road, power, sanitation, and water systems clearly below standards considered tolerable. Intel and HP super-buildings are nearly inaccessible. The major industrial park on the outskirts of the present city, where GE's largest R&D lab has been located for the past seven years, is an island within a sea of poverty. It takes nearly 3 hours to cross Bangalore, even outside of commute hours. The current airport, nearly downtown, is woefully inadequate and antiquated, although a new one to be two hours' drive from downtown is said to be planned. The roads are so crowded with rickshaws, taxis, trucks and buses waiting for unfinished construction projects, that they are at a constant standstill. The air is eternal grunge. The water is not potable. The power is so unreliable, that GE has its own power plant for its research park. There is a huge housing shortage, so much so that armed guards stand over open land that is ripe for development.
Corruption and inefficiencies are rampant at all levels. The headline story while in Bangalore alleged that the outgoing development minister is trying to push through an expanded industrial development parcel adjacent land he purchased while serving in the government. Offers by the resident industrial companies, acting as a group, to develop roads, have been brushed off by the central government on grounds that road development is a state function. The debt on government spending is running at 10% of GDP. So nothing is done. The suspicion is that infrastructure is too ripe a source of graft to turn over to efficient private development.
There is little confidence in the bureaucracy. However, democracy works, and journalists have been vetting incidents of corruption and incompetence, often provoking government officials' resignations. Unfortunately, partisan politics can bring down government officials who show initiative and produce results.
Nevertheless, the official unemployment rate is purportedly only 6%, maybe less. (The figures are unreliable, as there unemployment only counts for people who were once employed and there is no effective way to take a census.) But evidently Mumbai is better than five years ago, thanks to the elimination of a large section of slums and the construction of a few overpasses. Smoke and smog are pervasive during the 6-month-long dry season, since fields and garbage are simply burned. Still there is an inherent optimism among the educated population, and Americans and Indians share many values, including a strong work ethic and a high degree of integrity.
Despite the appearance of hopelessness, the pundits predict that India will eventually be the world's third largest economy and most populous country in about forty years, ahead of China. The growth vector is higher than that of China, and the infrastructure, although decrepit, could be transformed by high levels of capital investment by the government, something on the order of a quarter of the GDP.
India is clearly not to be ignored by the legal community or business clients, particularly in the pharmaceutical and IT industries. It is a place to watch closely, both as a source of associate or original patent work and trademark work, analogous to our Far East practice. It will be a fertile market for litigation someday. Local counsel, who are the only persons allowed to practice before the courts in India, need to be trained and have experience to do it well. Right now, there are few people of technical and legal competence.
Clearly, trademark registration work for clients contemplating the huge India consumer market should be pursued at an early stage. The size of the consumer market cannot be ignored.
Patent protection in India is illusory in the short term. Few multinationals, even those doing research in India, seek patents in India right now. GE has filed over 600 patent applications in the last seven years out of their plastics, IT and materials science Research Center, prepared by 30 locally trained IP prosecutors, but no applications have yet been filed in India. Their reasoning was the tax and bookwork implications on deriving revenue within the context of a complex and often opaque legal filing system.
Filing of patent and particularly trademark applications in India should begin now to prepare for a rapidly changing business environment, since future trends indicate improved examination and enforcement. The current state is that the practicalities of dealing with the courts militate against filing, unless enforcement is contemplated for critical matters. Few, if any, clients need patents in India in the near term, but long term, clients should start weighing the patent enforcement issues against local copycats. Watch filings of GE, IBM and Lilly closely to test the wind direction and speed of change.
Tort based trade secret protection has not been tested in Indian courts, and no uniform trade secret law exists. Common law is applied, which, if ever litigated upon, could be found inadequate.
It is conceivable that the developing economic rivalry between India and China will exceed anything else in Asia within a generation. Already Indian software drives a lot of the electronic hardware coming out of China. As one multinational businessman said, the Indian and Chinese markets are so large that they cannot be ignored.
So get your shots and be prepared to avoid the water, the ice cubes, the unpasteurized milk and ice cream, and green leafy vegetables.