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BOOSTING INNOVATIVE CLIMATE IN INDIA VIA UTILITY MODEL REGIME

This guest post is authored by Mr. Sajid Sheikh, Assistant Professor (Law), and Mr. Adithya Anil Variath, Research Assistant at the DPIIT-IPR Chair, both at Maharashtra National Law University Mumbai.


Image Credits: Shutterstock



1. INTRODUCTION


The Indian economy has often been criticised for missed opportunities and late realisations. One such late realisation which can become an example of a missed opportunity is the failure of the Indian legal system to tap the economic potential of innovations. To understand how India offers a micro solution to macro problems, one needs to Google the words ‘frugal innovation’, a majority of the links relate to Indian innovations. Indians are natural leaders in frugal innovations, considering India’s path-breaking leadership in solving local problems which find no global solutions.


The frugal models are also referred to as ‘bottom of pyramid innovations’ or ‘below the radar innovations’ and are often considered as quick-fix solutions. These types of innovations seldom have long-term scalability or sustainability and are majorly emergent innovations. This is popularly known as the ‘jugaad system’, i.e., developing quick fix but workable solutions from limited resources. These models of innovations are utility models.


Jugaad, which is nothing but an ‘impoverished solution’ has now become an indispensable part of the Indian lifestyle. The four main characteristics of utility models are good quality, marketable scalability, affordable price and accessibility. Some good examples of utility innovations or jugaad are ‘Onion Seed Transplanter or ‘Gas Stove Switch. Under the IP framework, a utility model system is a type of intellectual property protection that protects ‘minor inventions’ through a system similar to the patent system. The concept has origins in the ongoing international debate of whether minor improvements of existing products, even if they fail to fulfil the patentability requirements under the traditional normative structure of IP regimes, but have the potential to play an important role in a domestic innovation system, should get a distinct form of protection based on its utility.


Utility models are also called “small patents” or “innovation patents” or “second-tier protection”, and protects minor inventions by offering an exclusive right to the right-holder to prevent others from commercially using the protected invention. The utility projections are usually granted for a short period. So, “utility models” are a “short-term registered right granted for inventions that lack the level of inventive step that is mandated under the patent law.”


2. DEMAND TO HAVE A UTILITY SYSTEM: A COMPARATIVE ANALYSIS


In growing economies, utility models developed primarily as a response to the rising needs of domestic innovators like Micro, Small and Medium Enterprises (MSMEs). The framework of utility model systems is structured in a way that requires compliance with fewer requirements as compared to the regular patenting procedure. This liberalised model of the requirement of “inventiveness” has made the utility model a simpler procedure with a shorter term of protection.


Though the debate of utility models has found wide acknowledgement in recent times, the concept can be traced to statutes that existed even 150 years ago, like the United Kingdom’s Utility Designs Act of 1843. As per WIPO, there are around 80 countries with legislation offering utility protection models. These countries include developed economies like China, Australia, Germany, France, and developing economies like Albania, Angola, Argentina, Austria, Azerbaijan, Belarus, Ecuador, Estonia, Ethiopia, Uzbekistan, etc. However, there is no common global acceptance and consensus on the constituents of the “utility model”. In different national systems, utility models are termed under different categories, like in Australia as “innovation patent”, in Malaysia as “utility innovation”, in France as “utility certificate”, and in Belgium as “short term patent”.


In China, the 1984 patent law regulates the grant of invention patents, utility models and industrial designs. The European Commission in 1997, suggested legal arrangements for creating Community Utility Models. However, there is no specific international treaty obligation or treaty that makes it imperative for the nation-states to have a system for the protection of utility models in their national regime. For example, Paris Convention has a mention of Utility Models whereas the TRIPS Agreement is silent on Utility Model. Despite it, many countries have offered protection to minor and incremental innovations to meet the demands of their domestic markets.


India’s informal economy often receives attention from the international community because of its growing character, sheer size and impact on the global economy. An International Labour Organization (ILO) report shows that in India, around 80.9 per cent of employment is in the informal sector. They account for about two-thirds of the country’s GDP. MSMEs also play a pivotal role in the growth of the Indian economy. This sector contributes 8 per cent of India’s GDP and employs about 60 million individuals through 26 million enterprises. Although largely unregulated, ‘India unincorporated’ has shown immense potential in terms of economic productivity and value capital.


Innovations in the informal sectors in developing countries find their inspiration not in research and development, but in finding local solutions to global problems. These utility model innovations are usually imitation, traditional knowledge, improvisation and adaptation of the existing inventions. However, these innovations have the huge economic potential to solve complex problems. Indian legal system has left this whole sector unregulated and it has made this large marketable sector impotent. The responsibility is on developing countries to legitimize these second-tier patents for technical inventions which do not typically fulfil the stringent patentability standards.


The Draft National IPR Policy had provisions on Utility Model, but the National IPR Policy, 2016 failed to accommodate this in its final report. However, the Government of India has in the past attempted to take into account stakeholders’ views on introducing Utility Model. In May 2011, the Department for Promotion of Industries and Internal Trade (DPIIT) under the Ministry of Commerce and Industry floated a ‘Discussion Paper on Utility Model’ inviting suggestions from the stakeholders on whether utility patents should be incorporated into India’s IPR regime.


Industry experts advocate that “the suitability of the utility model system to India, particularly to encourage MSMEs, start-ups and small innovators to strengthen IP creation.” The counter-narrative against introducing utility models in India is that lowering the standards of innovation from patent law may threaten the patent environment. However, these fears have no legitimate justification because many of the developed and developing nations have economized the potential of utility models. On the other hand, the Utility Model system fosters research activities, creativity and innovations among small inventors/SMEs with high technological value.


Utility models usually become part of the national system by formulation of a sui generis system or by incorporating flexibilities under their existing patent regime. One of the structural impediments is the question of interoperability between patents and utility models. For a stable system of IP law to protect the functionality of industrial applications, patent applications should be capable of being converted into utility models and vice versa. However, there would not be dual protection.


3. CONCLUSION


The Utility Model system is an effective remedy to protect frugal intellectual capital with a low inventive step threshold. The way forward is to consider the following two essential features in the Utility Model Framework: “a clear demarcation of the scope of Utility protection” and “non-examination process for the first term of protection”. Additionally, the subject matter of the protection should also be clearly defined. There is a need to think of a legal framework that promotes interoperability between patents and utility models. There is an inherent need to translate slogans of boosting innovative climate into policy-making. One positive step in this regard is to formulate novel legislation to protect utility models, as it exists in many other developing countries.