Intellectual Property and Innovation in the Developing World: India and China

A Thesis Submitted in Partial Fulfilment of the

Requirements of the Renée Crown University Honors Program at

Syracuse University

Tanushri Majumdar

Candidate for Bachelor of Arts

and Renée Crown University Honors

Spring 2020

Honors Thesis in International Relations

Thesis Advisor: _______________________

Dimitar D. Gueorguiev

Assistant Professor of Political Science

Thesis Reader: _______________________

Francine D’Amico

Teaching Professor of International Relations

Honors Director: _______________________

Dr. Danielle Smith, Director

Renée Crown Honors Program

Abstract

There are many conceptions of intellectual property rights (IPR) and their impact of economic growth. This paper analyzes the impact of international treaties on the exercise of IPR in developing countries and the impact of greater IPR usage on innovation. I use India and China as case studies and analyze trends in their international treaty obligations, IP filing numbers, and innovation statistics. I also study these trends within the IT and pharmaceutical sectors of both countries. I argue that IPR utility and innovation do not have a positive relationship, i.e. greater exercise of IPR in developing countries does not necessarily lead to more innovation. The theoretical perspective I employ is neoliberal institutionalism to effectively examine how international institutions lead to policy coordination in the IPR realm and the resultant impacts of this coordination on domestic markets. I use mixed methods like case studies and time trends using data from multiple sources including international treaties, IP filing and grant data, market structure and share, IP legislations, and innovation statistics. The project questions the present understanding of the IPR regime and its interaction with innovation and attempts to contextualize the relevance of existing norms on the subject specifically in the case of India and China, at the national and sectoral level.

Executive Summary

Intellectual property rights (IPR) are the rights afforded to creations of the mind –

intangible assets. They have for long been a contested issue at the international stage.

Developed countries hail them as a prerequisite for innovation and economic growth, stating

that without the ability to protect one’s creative inventions there is no incentive to innovate at

all. Conversely, developing countries view intellectual property rights as a hindrance to the

provision of public goods like life-saving drugs. They argue that these rights allow developed

countries with vast means of research and development to monopolize inventions and prevent

developing countries from utilizing such inventions to develop their economies. They also

argue that this allows foreign developed countries to capture developing domestic markets

and set unreasonable prices for their protected goods.

In the current globalized world, more and more countries are becoming economically

and politically integrated into the international system of rights and obligations. This means

that there is a global shift towards standardization of norms in all areas, including in the

realm of intellectual property rights. In the following project, I attempt to analyze how this

integration into the international IPR regime through treaty obligations has led to a greater

exercise of these rights in developing countries – specifically India and China. I have also

studied how this rise in the utilization of IPR has impacted innovation in these countries and

whether there is a causal, assistive, disruptive or just irrelevant relationship between

increased IPR and innovation, specifically in the case of developing countries.

My first chapter provides a background into the area of IPR in modern times. It also

creates an understanding of how the topic has been examined by scholars previously, and

how I have attempted to conceptualize my project. The research design, case selection, time

frame, and theoretical perspective have been outlined in the second chapter. The third chapter

delves into the analysis of trends of treaty commitments, IPR development, and innovation

indices in the case countries to establish patterns and relationships between these three

variables. Chapter 4 takes the findings of Chapter 3 and applies them to a sector specific

approach, examining the role of IPR in the development of and innovation in the IT and

pharmaceutical sectors in India and China.

To analyze the relationship between international treaty commitments and

development of IPR, and the development of IPR and innovation, I have used qualitative and

quantitative methods. I use the qualitative method of case study to examine trends in the

individual countries and then use indices and time trend plots to gauge the relationships

between the variables. To study international commitments, I use IP treaty obligations. For

IPR utility figures I use IP filing data from the World Intellectual Property Organization

(WIPO), and to study innovation I use the Global Innovation Index. For the sectoral analysis,

I conducted in-depth case studies of the IPR legislations, market structures, and patent

volumes within the case sectors to look for relationships. I employ neoliberal institutionalism

as a lens to guide my research as I study the impact of international institutions in policy

coordination and the resultant impacts on domestic markets.

My research brought forth some key trends. I found a positive relationship between

rising international commitments in the IPR realm and IP filings in both my case countries,

which indicates that the shift in both countries to comply with international IPR standards has

led to greater IP filing activity. In terms of innovation, India displayed no significant

relationship between greater IPR utilization and innovation statistics, i.e., more IP filing did

not translate into greater innovation in the region. For China, there seemed to be a positive

relationship between the two variables. The sectoral analysis complicated these findings and

indicated a range of other factors. For both, the IT and pharmaceutical industries, I found that

market structure, product mix, and foreign involvement played a far greater role in the

sector’s development and ingenuity than the use of IPR. In fact, in some cases for both

sectors, tighter internationally compliant IPR legislation were seen to hinder the growth of

domestic producers in the sectors, instead of spurring innovation.

This project is significant because it attempts to complicate and question the existing

framework and understanding of IPR. IPR has conventionally been viewed as a positive

system of protection that fosters competition and invention. However, my research shows that

at a sectoral level, IPR is not as relevant as market structure, product mix, and government

involvement for promoting innovation and the development of domestic industries. I argue

that the current IPR framework does create competition, but perhaps not fair competition. It

enables developed countries to exercise their intellectual property in developing countries but

does not necessarily lead to domestic industry growth and innovation in the developing

countries. Questioning the current framework opens up opportunity to analyze and criticize

an institution and thus, improve it.

Contents

Acknowledgements...................................................................................................................8

Chapter 1. Introduction...........................................................................................................9

Chapter 2. Theoretical Perspective and Methodology........................................................14

Chapter 3. International Commitments, IPR, and Innovation: National Perspective....21

CASE STUDIES..................................................................................................................21

FINDINGS AND ANALYSIS.............................................................................................31

a. International IPR Commitments and IPR Utility Trends.........................................31

b. IPR Utility & Level of Innovation Trends...............................................................33

Chapter 4. International Commitments, IPR, and Innovation: Sectoral Analysis..........36

IT INDUSTRY.....................................................................................................................40

a. Sector Overview......................................................................................................41

b. Innovation and Patenting in the IT Industry............................................................43

PHARMACEUTICAL INDUSTRY....................................................................................54

a. Sector Overview.......................................................................................................54

b. Innovation and Patenting in the Pharmaceutical Industry........................................58

Conclusion...............................................................................................................................68

References...............................................................................................................................71

Appendix.................................................................................................................................76

List of FiguresFigure 1. International IPR Treaty Obligations - INDIA.......................................................19

Figure 2. Economic & Political Integration into International System – INDIA..................20

Figure 3. IP Filings - INDIA..................................................................................................21

Figure 4. Level of Innovation - INDIA..................................................................................22

Figure 5. International Treaty Obligations - CHINA............................................................24

Figure 6. Economic & Political Integration into International System – CHINA.................25

Figure 7. IP Filings - CHINA................................................................................................26

Figure 8. Level of Innovation - CHINA................................................................................27

Figure 9. International Pressure - IPR Utility: Scatter Plot for India....................................29

Figure 10. International Pressure - IPR Utility: Scatter Plot for China.................................30

Figure 11. IPR Intensity – Innovation: Scatter Plot for India................................................31

Figure 12. IPR Intensity - Innovation: Scatter Plot for China...............................................32

Figure 13. Total Patent Applications and Grants for China from 1980-2018, WIPO...........36

Figure 14. Total Patent Applications and Grants for India from 1980-2018, WIPO............37

Figure 15. Total Triadic Patent Family Patent Grants for India & China (1985-2015), OECD.............................................................................................................................38

Figure 16. India IT Industry: Total patent grants (1980-2018), WIPO.................................43

Figure 17. Triadic Patent Family IT Industry Patent Grants: India (1999-2015)..................43

Figure 18. India IT Industry Total Patent Grants vs. Innovative Patent Grants (1999-2015), WIPO & OECD..................................................................................................44

Figure 19. China IT Industry: Total Patent Grants (1980-2018)...........................................49

Figure 20. Triadic Patent Family IT Industry Patent Grants: China (1999-2015).................49

Figure 21. China IT Industry Total Patent Grants vs. Innovative Patent Grants (1999-2015), WIPO & OECD..................................................................................................50

Figure 22. IT Industry Triadic Family Patent Grants, India and China (1999-2015)............51

Figure 23. Pharmaceutical Industry Total Patent Grants: India (1980-2018), WIPO...........57

Figure 24. Pharmaceutical Industry Triadic Family Patent Grants: India (1999-2015)........58

Figure 25. India Pharmaceutical & Related Industry Total Patent Grants vs. Innovative Patent Grants (1999-2015), WIPO & OECD......................................................58

Figure 26. China Pharmaceutical & Related Industry Total Patent (1980-2018), WIPO.....63

Figure 27. Pharmaceutical Industry Triadic Family Patent Grants: China (1999-2015).......64

Figure 28. China Pharmaceutical & Related Industry Total Patent Grants vs. Innovative Patent Grants (1999-2015), WIPO & OECD......................................................64

Acknowledgements

First, I want to thank Dimitar D. Gueorguiev for his time, support, and guidance, as not just my professor and thesis advisor, but also a mentor. You have helped me formulate, rethink, and better my ideas, taught me to question my existing understanding and think critically about issues. You have also helped me redirect and restart whenever I became overwhelmed, burnt out or confused. You have been a calming presence throughout this project and it would not be what it is without your encouragement, critique, and support. Thank you for taking the time to meet with me so many times, reading my countless drafts, and being my mentor since my sophomore year.

Second, I would like to thank Dr. Francine D’Amico for being my mentor, professor, and thesis reader. Your interest in my topic and encouragement throughout the writing process has been paramount. I am grateful for all the brainstorming sessions in your office and you have made me a better researcher, writer, and scholar. Thank you for all your time, feedback, and guidance this past year.

Third, I want to thank my parents, Soma Dutta and Abhijeet Majumdar, both of whom have been avid readers and critics of all my projects throughout university and told me to do and be better whenever I slacked.

I also want to thank the staff in the International Relations Department and the Honors Programme for all their support and guidance these four years of college. I would specifically like to thank Dr. Terrell Northrup for sparking my IR interest in my first ever IR course in college, Ms. Amy Kennedy and Ms. Angela Allen for all their advice, guidance, and encouragement. I would also like to thank Naomi Shanguhyia, Karen Hall and Dr. Danielle T. Smith, for their unending support throughout these years.

Finally, I want to thank my IRP 495 Distinction Capstone Class, specifically my fellow student and good friend, Gwendolyn Burke, who helped me stay motivated throughout this process, read multiple drafts, and stayed up with me through our frenzied capstone writing sessions where this project was conceptualized and developed.

I could not have done this without your support. Thank you all.

Chapter 1. Introduction

Intellectual property rights (IPR) have long been a contested issue creating a divide

between the developed Global North and developing Global South. Since the establishment

of the World Intellectual Property Organization (WIPO) in 1967 and the creation of the

Trade-Related Aspects of Intellectual Property Rights (TRIPS) in the World Trade

Organization (WTO) in 1995, intellectual property rights, defined as “rights given to persons

over the creations of their minds” (WTOa n.d.) have been at the forefront of trade and

innovation. This project examines the interaction between pressure from international IP-

related treaty commitments, growth of intellectual property rights in a country and

innovation, and aims to establish what role international commitments have on expansion of

IPR, and IPR development has on innovation, in the developing world.

Intellectual property rights, as currently understood, were institutionalized through

two key international organizations: WIPO and the WTO. WIPO, established through the

WIPO Convention in 1967, is an autonomous, self-funding agency of the United Nations and

consists of 192 member states. It functions as a policy forum to formulate international

Intellectual Property (IP) legislation, as a service provider for IP filing and dispute resolution,

and as a capacity building program to facilitate the integration of IP within economic, social,

and cultural development. WIPO also administers key IP treaties, which include IP Protection

treaties that establish internationally agreed upon basic standards of IP protection, Global

Protection System treaties that provide international filing and registration services that ease

the labor and cost burden of IP protection, and Classification treaties which index, organize

and standardize information regarding inventions, trademarks and designs at the international

level (WIPOa n.d.). The WTO, founded in 1995, provides legal ground rules for the trade of

goods, services and intellectual property, and works to reduce the barriers to trade worldwide.

The Trade-Related Aspects of Intellectual Property Rights (TRIPS) is the primary IPR

agreement of the WTO and plays a critical role in outlining IPR rules concerning

international trade, resolving trade disputes and assisting countries to align their domestic

legislations to comply with international IPR standards (WTOb n.d.). The aforementioned

organizations form the foundational understanding of the application of IPR internationally.

However, different states at different stages of development regard IPR in different

ways. Developed states view it as a prerequisite for economic growth, and protection of

intellectual property has historically been seen as a driver of innovation and the growth of

research and development. Alternatively, developing states view it as a hindrance to the

provision of public goods. Low and middle income economies of the developing world

prioritize provision of public goods and services over protection of private intellectual

property, at times choosing to imitate rather than to innovate. Nonetheless, in the last decade,

some of these nations traversed this threshold between imitation and innovation while

simultaneously raising IPR protections. What causes this shift? At what stage of

development do intellectual property rights start to matter in the developing world and

how do these rights impact innovation systems in these countries? This project examines

how international IPR treaty commitments lead to greater exercise of IPR and whether this

rise of exercise of IPRs in the developing world truly leads to greater innovation.

Many empirical studies conducted on the subject of IPR in the developing world

implicitly assume that the North innovates and the South imitates. Most argue that intellectual

property rights develop through greater economic integration of the North and South and a

consequent rise in innovation and technology occurs through technology transfer through FDI

and/or imitation from the North to South. Some argue that IPR protection is a prerequisite for

the North to participate in the Southern economies and are thus crucial to innovation (Diwan

and Rodrik 1991). Others argue that rising protection of IPRs will initially lead to innovation

initially but in the long run, are unlikely to greatly benefit the innovation systems or welfare

in the South (Helpman 1993, Lai 1998) Diwan and Rodrik (1991) looked at the motivations

for the North to innovate and argued that even though the North and South have different

technology needs, without a baseline of IPR protections in the South, countries in the North

are not incentivized to develop technologies needed by the South, even though there may be a

demand for these in developing countries (Diwan and Rodrik 1991). Helpman (1993)

discussed the effect of tighter IPR on the rate of innovation and welfare. He conducted a

welfare evaluation of the impact of tighter IPR with regard to (a) terms of trade, (b)

production composition (c) available products, and (d) temporal allocation of consumption.

Looking at exogenous and endogenous rates of innovation, he concluded that when IPR laws

are enacted, despite an initial uptick in innovation, tighter IPR does not greatly benefit the

global South that relies on imitation (Helpman 1993). Lai (1998) postulated that the

strengthening of IPR in the South increases innovation if product transfer from North to

South is through foreign direct investment (FDI) channels, but reduces the rate of innovation

if product transfer is through imitation (Edwin and Lai 1998). The Global North is

incentivized by stronger IPR protections to innovate for the Global South and further profit

from licensing rents from the South rather than losing from imitation of northern technology

in the South (Yang and Maskus 2001). These theories assume that innovation in the South

can only arise from FDI or product imitation, not from endogenous processes like legislation

and business sophistication. These articles only focus on how IPR protection impacts

innovation and production with regards to a transfer of capacities from the Global North to

the Global South, how protection of IPR in developing world enables foreign companies to

better exercise their intellectual property and thus, create channels of knowledge transfer.

However, they do not adequately address how stricter IPR protections affect domestic

sectors in their economic capacity and innovation.

In an alternative perspective, Chen (2005) argued that in the absence of pressures

from the North, a developing country may still intrinsically want to protect IPR to boost the

domestic economy. At an optimal level of IPR, developing countries will find a balance

between imitating northern advancement and innovating domestically (Chen and Puttitanun

2005). Hwang (2016) studied the correlation between stronger IPR and income, arguing that

as they grow, developing countries shift from imitation to innovation, and stronger IPR and

economic development interact on a U-shaped curve; that is, IPR protection systems go down

and then rise as income of the developing country rises (Hwang, Wu and Yu 2016).

Theoretical papers on IPR and the developing South rely on the assumption that Southern

economies cannot innovate endogenously but rather depend on exogenous sources like

technology transfer, international pressure, and imitation (Diwan and Rodrik 1991, Helpman

1993, Edwin and Lai 1998, Yang and Maskus 2001). This thesis, however, posits that in

the case of developing nations, stronger IPR protections do not necessarily lead to

innovation: they enable technology transfer through greater FDI, however this doesn’t

translate into domestic companies achieving parity with international standards of

production. This is because the technology is primarily protected and controlled by

Northern companies and their patents.

This thesis investigates the effect of pressure from international treaty commitments

on IPR utility and standardization and the consequent effect of this IPR utility on domestic

innovation. I hypothesize that an increase in pressure leads to a rise in IPR utility; however,

increased IPR utility does not necessarily translate into greater innovation for developing

countries. I test this in the context of two developing countries – India and the People’s

Republic of China by studying treaty obligation, IPR filings and grants, and innovation

indices. I then apply the findings to compare and contrast economic growth, IPR

standardization and innovation in two key sectors of India and China – the Information

Technology (IT) Industry and the Pharmaceutical Industry. Chapter 2 provides an overview

of the research methodology, theory and case selection for the project. Chapter 3 provides a

national-level analysis of my hypotheses to study the depth of the relationships between (a)

international pressure and IPR and (b) IPR and innovation. Chapter 4 delves into sectoral

analysis of the hypotheses and study the IT industry and pharmaceutical industry in India and

China to understand the sectoral composition and how international and domestic IPR

legislation has spurred or deterred growth in these sectors.

Chapter 2. Theoretical Perspective and Methodology

This research examines two hypotheses concerning international pressure, IPR, and

innovation at the national and sectoral level in India and China. First, that a rise in pressure

from international treaty commitments leads to a rise in IPR utility (filing activity for patents,

trademarks, and industrial designs) and second, that a rise in IPR utility leads to a rise in

innovation. In the first hypothesis, the independent variable is International Commitments

and the dependent variable is IPR Utility. In the second hypothesis, the independent variable

is IPR Utility and the dependent variable is Innovation. For my first variable, International

Commitment, I hypothesize that greater pressure from international commitments in the form

of greater economic and political integration into the international system through

international institutions leads to an increase in compliance to international IPR protection

standards and thus a rise in IPR. To operationalize international pressure, I focus on two

types of treaty obligations which are IP Treaty Obligations and IP – related Treaty

Obligations. IP Treaty Obligations include international treaties under WIPO and WTO that

directly relate to aspects like patents, trademarks, and classification like the TRIPS

Agreement, the Berne Convention and the Paris Convention. IP – related Treaty Obligations

include international and regional treaties that contain IPR clauses but are not directly related

to aspects of IPR. These contain three types of treaties (a) IP – Related Multilateral Treaties,

(b) IP – related Bilateral Treaties, and (c) Regional Economic Treaties. A full list of all

treaties can be found in the Appendix.

For my second variable, IPR Utility, I hypothesize that with a rise in international

commitments, intellectual property rights exercised also rise. And with this rise in IPR utility,

innovation in the nation will also rise due to a greater incentive arising from the ability to

protect one’s inventions. To operationalize IPR utility, I use the number of IP filings from the

WIPO statistical database from the selected case country profiles. These include three types

of IPs: patents, trademarks, and industrial designs. Patents are exclusive rights granted to an

individual for an invention that provides a new way of doing something or a new technical

solution to a problem (WIPOb n.d.). Trademarks are signs used to distinguish goods and

services provided by one firm from another (WIPOc n.d.). Industrial Designs are the

ornamental or aesthetic aspects of a product (WIPOd n.d.).

For my final variable, Innovation, I hypothesize that a rise in IPR leads to a rise in

innovation. To operationalize innovation, I use the Global Innovation Index (GII) which is

published yearly by Cornell University’s SC Johnson College of Business, European Institute

of Business Administration (INSEAD) and WIPO. This index scores and ranks economies

based on their performance on innovation. The GII gathers data from multiple sources, across

7 key sub-variables to compute an Innovation Input Sub-Index Score, Innovation Output Sub-

Index Score, and overall Global Innovation Index Score (INSEADa 2019). The 7 sub

variables are organized under two main categories: the Input Innovation Sub-Index and

Output Innovation Sub-Index. Input Innovation Sub-Index consists of (a) Institutions which

includes Political Environment, Regulatory Environment, Business Environment, (b) Human

Capital and Research which includes Education, Tertiary education, Research and

Development (R&D), (c) Infrastructure which includes Information and Communications

Technology (ICTs), General Infrastructure, Ecological Sustainability, (d) Market

Sophistication which includes Credit, Investment, Trade, Competition, and Market Scale, and

(e) Business Sophistication which includes Knowledge Workers, Innovation Linkages,

Knowledge Absorption. The Output Innovation Sub-Index consists of (a) Knowledge and

Technology Output which includes Knowledge Creation, Knowledge Impact, and Knowledge

Diffusion, and (b) Creative Output which includes Intangible Assets, Creative Goods and

Services, and Online Creativity. The researchers modify the metrics used to operationalize

these 7 variables on an annual basis, depending on availability of data, addition of new data

points, and means to optimize the index. Each score reflects the economy’s performance

based on that year’s conceptual framework, data coverage and sampling and therefore may

not be a fully accurate representation to make year-to-year inferences. However, inferences

can still be made about the general trend of innovation within the time frame. Then, moving

from a national to sectoral lens, I qualitatively study the IT and Pharmaceutical Industry in

both India and China to gauge whether there was a rise in patent volume in these sectors

arising from rising IPR protections and if this has actually translated into a rise in innovation.

I study the sectoral compositions, market shares, and patent legislations in India and China to

examine whether greater IPR protection does indeed lead to a rise in innovation.

To demonstrate the relationship between these variables, I have chosen India and

China as cases. Both India and China currently fall in the Middle Income Category in the

World Bank Income Classification. India falls in the lower middle income category (Gross

National Income per capita $1026-$3995). China falls in the upper middle income category

(Gross National Income per capita &3996-$12,375) (World Bank 2019). India made the

transition from lower income category to lower middle income category in 2007. China made

the transition from lower middle income to middle income category in 2010 (World Bank

1980-2019). Both countries have also remained in the “developing country” classification of

the United Nations in the time frame of this research which is 2009 to 2019 (United Nations

2009-2019). Thus, they can represent developing nations from the range of lower middle

income to upper middle income categories. India gained independence from British

colonization in 1947 and China became a nation state in 1949. Both are large countries in

Asia with immense production capacities and capital and labor investment. From 1990s

onwards, both countries have increasingly integrated themselves into the international system

of cooperation, and demonstrate characteristics of both imitation and innovation economies at

the same time (Pallister 2011). In fact, according to INSEAD, both countries are now

innovation leaders in their respective regions of Central and Southern Asia and South East

Asia and Oceania (INSEADa 2019). Both have similar population sizes but different cultures,

institutions, and governing styles. Both countries also have a variety of sub-ethnicities and

cultures. They rank within the top 50 (China – 39, India – 41) in a 2016 Asian Development

Bank (ADB) Globalization Index Ranking (Huh and Park 2019) indicating a high level of

integration into the international economic framework. Therefore, trends in the variables

across both countries could indicate a pattern that could be extrapolated and applied to

economies of similar sizes and development.

The time frame chosen is 1995 to the present for international commitments, and 2011

to present for innovation. The time frame for international commitments is thus chosen

because the WTO, which serves as the main body for economic integration in the world, was

founded in 1995. Therefore, treaty obligations that have been counted include all treaties to

which the countries are currently party. Any treaties that were observed prior to 1995 but

aren’t anymore have been excluded from the analysis. For innovation, consistent data from

the GII is only available from 2007 onwards; however, 2007-2010 have been excluded from

analysis because of missing data and/or inconsistent metrics. IP filing data has been collected

from the WIPO database and pre-2009 data has been excluded due to large number of

missing values. 2009 has also been set as the starting point of the analysis to control for

variability before and after the 2008 Financial Crisis. The time frame chosen for the sectoral

analysis has been from 1981-2018, as 1981 is the earliest comprehensive patent data available

for India and China in the WIPO database.

Data collection and analysis has been conducted using mixed methods. For qualitative

research, I use an instrumental case study of India and China to gain an understanding about

the impact of international commitments on IPR utility and the resultant effect on innovation

and use it to chart a trend across the two nations. In instrumental studies, researchers analyze

a single case to illustrate an issue (Lune and Berg 2012). I choose two countries for my

research to study patterns in both countries and ascertain any similarities or differences for

these cases. I look at the state of IP treaty obligations, innovation indices, and IP filing data

across the time frame for both countries for my preliminary research. I also study clustering

of implementation measures of domestic legislations of both countries over the time to see if

there are any simultaneous upticks in domestic and international legislation.

For quantitative research, building on my preliminary findings, I create additive

indices to quantify international commitments and innovation. For international

commitments, I ascribe a value of +1 to IP Treaty Obligations (directly relevant to IPR

protection) and a value of +0.5 to IP related Treaty Obligations (not directly relevant to IPR

protection but contain IPR clauses). This index utilizes cumulative data to measure the

number of treaties/commitments a country is part of and experiencing “pressure” from, in a

particular year. The IP Treaty Obligations have been assigned a value of +1 for any level of

involvement, that is, signature, ratification, accession and/or implementation have all been

assigned a value of +1 in the additive index. When countries moved from signature to

ratification, ratification to implementation, or accession to implementation, they have been

removed and re-added if and when the shift occurred to address the problem of double

counting. In the measurement of the IP related Treaty Obligations, all the treaties have been

fully implemented. Thus, the treaties have been coded as +1 in the year they were

implemented. This information is presented in the coding table in the Appendix. For IPR

utility, I combine the number of patent, trademark, and industrial design filings within each

country for each year of analysis (Appendix). For innovation, I combine the GII Index Score,

the Innovation Input Sub-Index Score, and the Innovation Output Sub-Index Score to achieve

a composite score out of 300 for each country for each year of analysis (Appendix). After

creating the additive index, I create time trend plots for international commitments and IPR

utility, and IPR utility and innovation for both India and China to establish if there is a

positive relationship between the variables and how they trend over time. There are certain

limitations regarding this method of analysis. Because this is time series data, the analysis has

not been controlled for intervening variables like level of development, changes in Gross

Domestic Product (GDP), changes in metrics, changes in administration, level of foreign

direct investment (FDI), level of economic incentivizing. These variables could be addressed

and controlled for in future research. This model differs from previous models (Hwang, Wu

and Yu 2016) because it studies the impact of both external variables on IPR utility, and

impact of IPR utility on innovation.

The sectoral analysis has been conducted using qualitative methods. First, a sectoral

overview has been provided to understand the growth, market share, and composition of the

sectors within the study. Then, patent volume has been studied to understand whether greater

IPR protections has led to greater patent filing and grants. And finally, domestic IPR

legislation has been studied with regards to the development of the sector to assess whether

the rise in patent volume is a true indicator of innovative capacity in the sector.

The theoretical framework for this research is guided by a neoliberal institutionalist

perspective. Traditional liberalism views states as important actors but emphasizes the role of

other actors in the international system like Intergovernmental Organizations (IGOs), Non-

governmental Organizations (NGOs), and Multinational Corporations (MNCs). Liberal

theory regards the international system as a confluence of conflict and cooperation between

states and international institutions, which occurs within a framework of international laws

and institutions to facilitate cooperation. For neoliberal institutionalists, this cooperation

arises not just from establishing cooperative institutions, but also from greater interactions

between the actors (Mingst, Karns and Lyon 2017). This theory orients my research as I am

attempting to understand pressure exerted by international institutions like WIPO and WTO

through treaties, and the resultant cooperation through policy coordination in intellectual

property rights.

I chose this theoretical perspective over realism because it allows me to attribute

significance to international actors and institutions that legislate and regulate IPR issues. In a

globalized world with economic interconnectedness, a standardization of IPR laws and

compliance of domestic legislation to these international standards is necessary for trade to

flourish. This research also does not utilize the constructivist perspective, which studies how

shared beliefs, rules, norms, organizations, and cultural practices inform the actions of states

and other actors (Mingst, Karns and Lyon 2017) because IPR are implemented not through

diffusion of norms and beliefs but through institutional action, whether domestic or

international. Another possible theoretical perspective that would provide an insightful

framework for the chosen cases would be post-colonialism. Both these countries have faced

varying degrees of imperialism and are relatively “new” nations gaining independence and

statehood in the decade from 1940 to 1950. Both countries have also had significant

protectionist economic tendencies, only becoming more integrated in the free-market

economy at the turn of the century. However, this research uses a neoliberal institutionalist

framework because the base argument is that greater interaction between states leads to

cooperation and domestic and international compliance to a standardized legal framework,

i.e. IPR protection (Gilbert and Tompkins 1996)1. This perspective allows me to study the

impact of this standardization on domestic legislation and sectoral innovation and efficiency.

1 Not a naïve teleological sequence, which supersedes colonialism, post-colonialism is, rather, an engagement with, and contestation of, colonialism's discourses, power structures, and social hierarchies.... A theory of post-colonialism must, then, respond to more than the merely chronological construction of post-independence, and to more than just the discursive experience of imperialism.”

Chapter 3. International Commitments, IPR, and Innovation: National Perspective

CASE STUDIES

India

For the purpose of the analysis, the independent variable, International Commitments

was measured using International IP Treaty Obligations and IP-related Treaty Obligations.

The former has been displayed in Figure 1. International IP Treaty Obligations have

consistently risen for India, from just six IP treaties in 1995 to 17 treaties observed in 2019.

Two significant treaties signed and implemented in 1998 are the Paris Convention, the first

all-encompassing international IPR treaty covering industrial property, and the Patent

Cooperation Treaty, which allows for filing an “international” patent for protection in

multiple countries simultaneously. In 2019, India signed three classification treaties,

indicating a domestic motivation to implement stronger IPR. These are the Nice Agreement

(pertaining to trade and service marks), Locarno Agreement (pertaining to industrial designs),

and Vienna Agreement (pertaining to marks that consist of figurative elements). Figure 1

displays a consistent rise in pressure from international commitments due to greater

integration of the nation into the international standardized IPR protection regime.

Figure 1. International IPR Treaty Obligations - INDIA

Figure 2 displays pressure experienced by India from IP-related Treaty Obligations.

This figure also shows a similar trend rising from one bilateral treaty relating to IPR in 1995

to 32 in 2019. Regional Economic Treaties become a source of international pressure starting

from 2004 with the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic

Cooperation (BIMSTEC), an international organization of 7 member states that focuses on

multiple areas of cooperation like trade, investment, energy, public health, and poverty

alleviation. These treaty obligations cover IPR in a wide variety of issue areas like laws of the

sea, bio-safety and biodiversity, plant protection, climate change, cultural expressions, and

bilateral free trade agreements with ASEAN, Chile, Sri Lanka, and Singapore. Figure 2

displays a consistent rise in IPR obligations resulting from pressure to standardize from 1995

to 2019 due to greater legal, political, and economic integration of India into the international

system, which implies that as countries grow more integrated, they feel more pressure to exist

in an internationally acceptable standard.

Figure 2. Economic & Political Integration into International System – INDIA

Figure 3. IP Filings - INDIA

The variable IPR Utility was studied by studying IP filings and changes in domestic

laws regarding IPR (Figure 3). IP filings show a consistent rise, with more and more patents,

trademarks, and industrial designs being filed in each category. For the ease of data

presentation in Figure 3, the number of trademarks has been scaled down by 100x due to the

extremely high numbers of trademarks filed in the period between 2009 and 2019. Despite

this change in scale, the rise in filings is evident from the data displayed. The data shows an

intensification of IPR protection in India during the period of 2009-2018, with the steadiest

rise in patent filings. This may be indicative of a rise in innovative activity in the region.

In regards to the variable Innovation, India’s innovative capacity displays a consistent

but gradual rise (Figure 4). In 2012 and 2013, the Innovation Output Index Score was higher

than the Innovation Input Index Score. However, this low Innovation Input Index Score does

not imply an absence of innovation; in fact, according to INSEAD, this is a common trend in

middle-income economies because their institutions are not equipped to support input-

innovative capacity like high income economies, but their productive labor force bolsters

output-innovative capacity (INSEADb 2011, 48). In 2012, India ranked second overall, and

first in lower middle-income countries, in terms of innovation efficiency, which is a ratio of

output score to input score (INSEADc 2012, 22). This metric is designed to be neutral to

countries’ stage of development. At this stage, India’s low input score can largely be

attributed to its low abilities in human capital and research, infrastructure, and business

sophistication (INSEADc 2012, 32). However, it’s business friendly ICT, communication,

and creative output sectors drive its higher innovation score in the output index (INSEADb

2011, 31). From 2014 onwards, India’s input score rose rapidly and its output score rose far

more gradually. This rapid rise in input score can be attributed to an increase in innovation

quality from better higher education institutions, new telecom and IT policies, and emphasis

on R&D (INSEADd 2014-2018). As of 2019, India has also developed significant science

and technology clusters, with Bengaluru, Mumbai, and New Delhi featuring in global top 100

clusters (INSEADa 2019, xx). Throughout the time period analyzed, India is the innovative

leader in its region – Central and South Asia, outperforming all other economies (INSEADe

2011-2019).

Figure 4. Level of Innovation - INDIA

The scatter plot in Table 1 organizes national legislation regarding patents,

trademarks, patents, and industrial designs as well as the implementation measures to enforce

these legislations into clusters cross five decades. Comparing the domestic law clusters and

the previously displayed IP treaty obligations suggests that the gradual rise in the IP

international treaties in the 2000s and 2010s is also reflected in clustering of implementation

measures in domestic legislation in the 2000s and 2010s. This co-occurrence suggests an

impact of international commitments on domestic policy regarding IPR.

Table 1. IP Legislation – Implementing Measures

China

The independent variable of International Commitments for China has been measured

using International IPR Treaty Obligations and IP-related Treaty Obligations. The former has

been displayed in Figure 5.

Figure 5. International Treaty Obligations - CHINA

International IP Treaty Obligations have consistently risen for China, rising from

eleven IP treaties being observed in 1995 to 19 treaties being observed in 2019. Two

significant treaties ratified and implemented by China in 1996 are the Strasbourg Agreement

(pertaining to classification of technologies to approximately 70,000 internationally

standardized subdivisions) and Locarno Agreement (pertaining to industrial designs)

respectively. In 2007, China signed the Singapore Treaty on the Laws of Trademarks, ratified

the Amendment to the TRIPS Agreement, and implemented the WIPO Copyright Treaty and

the WIPO Performances and Phonographs Treaty. Figure 5 shows no additional treaties

signed, implemented, or ratified post 2012. However, the figure displays an overall rise in

pressure from international commitments from 1995 to 2019 due to greater integration of the

nation into the international standardized IPR protection regime.

Figure 6. Economic & Political Integration into International System – CHINA

Figure 6 displays International Commitments observed by China from IP-related

Treaty Obligations which also show a similar trend rising from one bilateral treaty relating to

IPR in 1995 to 29 treaties with IPR related clauses in 2019. The highest rise in IP-related

treaties is driven by multilateral and bilateral treaties that contain IPR clauses. The figure

shows a dramatic rise in IPR related treaties in the 2000s which slows down to a more

gradual but still positive rise in the 2010s. These treaty obligations cover IPR in a variety of

issue areas such as bio-safety and biodiversity, climate change, cultural expressions,

biodiversity, and disability rights, as well as many bilateral free trade agreements with

ASEAN, Chile, Sri Lanka, Singapore. This figure displays a rise in pressure from

international commitments for China from 1995 to 2019 due to greater legal, political, and

economic integration of the nation into the international system, demonstrating support for

my first hypothesis.

Figure 7. IP Filings - CHINA

The variable, IPR Utility was studied using IP filing data and changes in domestic

laws regarding IPR. IP filings also show a consistent rise, with more and more patents,

trademarks, and industrial designs being filed in each category. For the ease of data

presentation in Figure 7, number of trademarks in the period between 2009 and 2019 has

been scaled down by 100x due to the extremely high numbers of trademarks filed. The data

exemplifies an intensification of IPR protection in China during the period of 2009-2018,

especially in patent and trademark filing, indicating an upsurge of innovative activity.

With regard to the variable Innovation, China’s innovative capacity displays a small

but consistent rise, as displayed in Figure 8. In comparison to India, China’s innovation

numbers show a steeper rise. From 2011-2014, the Innovation Output Index Score is higher

than the Innovation Input Index Score, which indicates that China’s innovative capacity in

this period is driven by its innovative output. In 2012, China was ranked first globally in

terms of innovation Efficiency, which is a ratio of output score to input score (INSEADc

2012, 22). This metric is designed to be neutral to countries’ stage of development because it

measures’ countries innovative capacities without focusing solely on their inputs into

innovation like infrastructure and R&D.

Figure 8. Level of Innovation - CHINA

In 2012, China ranked 1st on percentage of firms offering formal training, 4th on

high-tech imports, 6th on R&D financed by businesses, and 7th on cluster development

(INSEADc 2012). A dramatic data point was 2016, when China’s innovation output score

was far higher than its innovation input score. This means that China is highly efficient on

converting its inputs into outputs. By 2015, China led the middle income category in terms of

quality of innovation through improvement of educational institutions (INSEADf 2015,

xviii), infrastructure, and creative outputs. As of 2019, China has three higher educational

institutions ranked in the Top 10 universities in middle income economies. These are

Tsinghua University, Peking University, and Fudan University (INSEADa 2019, xxv).

Worldwide, China also has the second highest number of science and technology clusters

which are considered “innovative hotspots” (INSEADa 2019, 66). China has also notably

risen from only 10% of global R&D expenditure in 1996 to 31% in 2017 (INSEADa 2019,

3). From 2011 to 2019, China outperformed every other economy in its region – South East

Asia, East Asia, and Oceania. This is similar to India, which outperformed all other

economies in its region, the Central and South Asia Region.

Table 2 organizes national legislation regarding patents, trademarks, patents, and

industrial designs as well as the implementation measures to enforce these legislations into

clusters across five decades. Looking at the domestic implementation measure clusters, the

most implementation measures have taken place between the late 1990s and the 2010s. This

coincides with China’s accession to the WTO and the signing of the TRIPS agreement.

Comparing these clusters to the previously displayed IP treaty obligations reveals that the

gradual rise in the IP international treaties in the 2000s and 2010s is also reflected in

clustering of implementation measures in domestic legislation in the 2000s and 2010s. This

co-occurrence is indicative of the effect of international commitments on domestic policy

regarding IPR which has become more robust in order to meet international standards.

Table 2. IP Legislation – Implementing Measures

FINDINGS AND ANALYSIS

a. International IPR Commitments and IPR Utility Trends

First, I plotted the variable, IPR utility (measured by an additive index of number of

patents, trademarks, and industrial designs filed per year) on the primary y-axis, and

international commitments (measured by an additive index of number of direct IP and IP-

related treaty obligations per year) on the secondary x-axis, to understand simultaneous

trends in both variables.

Figure 9. Time Trends - International IPR Commitments & IPR Utility (INDIA)

For India, both variable move in the same direction and slope upwards, indicating a

positive relationship between international commitments and IPR utility, i.e. as pressure from

international commitments through treaty obligations rises, the number of IP filings also

rises. This analysis does not attempt to establish a truly causal relationship between the

variables but rather a similarity in trends between the two variables. The trend over the

examined period indicates that with a small rise in international commitments there is a large

rise in IPR utility. This could be indicative of the effect of pressure from these commitments

that might lead the government of India to modify its IPR legislation to become compliant

with international standards. This increases ease in IPR filing procedures as displayed by the

rising IPR filing numbers.

Figure 10. Time Trends - International IPR Commitments & IPR Utility (CHINA)

For China, the trend line slopes upwards showing a positive relationship between

international commitments and IPR utility, that is, as pressure from international

commitments through treaty obligations rises, the number of IP filings also rises. While a

truly causal relationship between the variables cannot be established without controlling for

all relevant intervening variables, I argue that there is a trend similarity between the two

variables (Figure 10). This could be indicative of modifications in national IPR legislation to

become compliant with international standards as a result of these treaty obligations. This

eases IPR filing procedures as displayed by the rising IPR filing numbers. Therefore, my

research hypothesis for the impact of pressure from international commitments on IPR utility

holds across both countries. This means that, although I cannot definitively claim causality,

the variables trend together and thus have a positive relationship.

b. IPR Utility & Level of Innovation Trends

I plot the Level of Innovation (measured by an additive index of GII overall score,

Innovation Input Sub-Index score, and Innovation Output Sub-Index score per year) on the

primary y-axis and IPR utility (measured by an additive index of number of patents,

trademarks, and industrial designs filed per year) on the secondary y-axis to understand the

trends in the variables.

Figure 11. Time Trends - IPR Utility & Innovation (INDIA)

For India, the innovation data plotted in Figure 11 is extremely varied for the time

frame, with the additive index not showing a clear pattern of rise. There are many troughs in

innovation scores. Due to this, the two variables seem to not trend together. However, I note

that this index for innovation is not fully indicative of level of innovation because it does not

control for the realities of developing economies. For instance, India is placed at Rank 1 in

innovation in the Central and South Asian region consistently for the entirety of the

timeframe for analysis, and has significantly high scores in innovative output. However, this

is not reflected in the final score. Furthermore, because the metrics of this index change over

time, the comparability across years, across samples, and across sub-variables is difficult to

claim with full certainty. Therefore, this analysis should not be treated as conclusive proof for

a lack of a relationship between IPR utility and innovation. However, it can be argued that

IPR intensity is not a causal factor for innovation.

Figure 12. Time Trends - IPR Utility & Innovation (CHINA)

For China, both variables seem to trend together and rise (see Figure 12). This points

to a positive relationship between IPR utility and innovation, that is, as the number of IP

filings rise, the GII additive index also rises. This data shows a similar strain of limitations

like India in that it does not fully account for developing countries realities. Nevertheless, for

China it seems that there is a positive relationship between IPR Utility and Innovation given

the metrics. I argue that there is a co-occurrence; that is, in China innovation and IPR utility

are both on a rise simultaneously during the time frame of this research; however, it is

challenging to ascertain a directional relationship.

The findings indicate a strong relationship between international commitments and

IPR utility, and a co-occurrence of rising IPR protections and rising innovation. To some

extent, the data reflects that developing nations are not uni-directional receivers of Northern

innovation but rather active players in the innovation and IPR sectors. However, this research

can be taken forward through the application of these hypotheses in specific sectors to study

whether at the sectoral level IPR intensity actually leads to greater innovation of whether

other factors are at play.

Chapter 4. International Commitments, IPR, and Innovation: Sectoral Analysis

Despite their many similarities, like being giant economies, enormous labor markets,

and highly populous, middle-income developing countries, India and China have undertaken

very different development models and growth paths, owing to their governance styles and

economic structures. The development patterns of India and China have not followed the

typical stages that most industrialized nations do, which are sequential growth of the

agricultural sector, light or consumer industries, heavy industries, high-tech industries, and

IT-oriented industries. China has followed this route albeit at a much faster pace, covering

these steps in a mere 3 decades. On the other hand, India has grown directly from an agrarian

to a service-oriented economy, spending very little time in primary and secondary industry

sectors rapidly moving into a tertiary sector economy. Shi (2010) has emphasized how

China’s governance style, with its heavy emphasis on the power and control of the center, has

allowed it to invest in large scale infrastructure projects and build strong centrally controlled

manufacturing industries. India, conversely has grown as a consumer-oriented rather than an

investment-oriented economy. It has a strong service sector, especially in the labor-intensive,

IT services industry (Shi 2010). These differences make them interesting comparative case

studies to study the impact of IPR codification on national innovation.

As these countries grow, they have reached the threshold where imitation economics

may no longer be an efficient pathway and to keep growth rates sustainable, they have to

develop intrinsic innovation capacities. This section studies the IT and pharmaceutical

industries in India and China to gauge the depth of IPR codification and its subsequent

impact on industry growth and innovation. These sectors are some of the leading sectors in

India and China but adopted different growth strategies and thus, display different innovation

levels. This analysis provides sector-wise context to the previous sections and highlights the

sectoral differences in innovation environments and bottlenecks, knowledge creation

capabilities, and depth of IPR codification. Within these sectors, what role has IPR policy

played in innovation and development? Is it causal, assistive, disruptive, or just irrelevant to

the growth of these sectors? In what areas has China excelled and in what areas does India

have the upper hand?

Both India and China were latecomers to the current international intellectual property

rights framework as stipulated by the WTO and the subsequent TRIPS agreement in 1995.

They were allowed some time to bring their national laws into compliance with the

agreement; however, since their advent into the globalized economic framework, both have

faced significant international pressure to bring their national IPR standards to par with the

international standard. As indicated in the previous sections, both countries have signed many

direct IPR treaties and IPR-related treaties. Both have also experienced exponential rise in IP

filings at both national offices and within the mandate of the Patents Cooperation Treaty

(PCT), which allows countries to seek international patent protection through single filings.

These filings have also resulted in extensive patents granted for Indian and Chinese

innovation especially in the sectors in this study. However, patenting volume may not be an

adequate indicator of sector growth and innovation. This has been discussed further in

subsequent sections.

The following graphs show the IPR activity in China (Figure 13) and India (Figure

14) respectively, specifically in patent applications and grants. For China, there is a rise in

patent applications and grants post 2001 when it became party to the WTO and by extension

to the TRIPS Agreement. For India there is an uptick in patent filings and grants post 2005,

which is when the TRIPS Agreement became binding for India (WTOc n.d.). Developing

countries were provided a five-year transition period to bring their national legislation in

compliance with TRIPS and another five years to bring patent laws for pharmaceuticals into

compliance (He 2019). This trend is indicative of the previous hypothesis that stated that

pressure from international commitments and integration into the international system leads

to greater exercise of IPR. Around 2008 we see a slight dip in India’s application and grant

data, which could be attributed to the 2008 financial crisis.

Figure 13. Total Patent Applications and Grants for China from 1980-2018, WIPO

The patent volume in China is significantly higher than India. This is not necessarily

indicative of a tremendous difference in innovation and patenting levels in the two countries,

but a difference in patenting culture and stringency. Since the 2000s, China has seen a rapid

rise in patent volume (Figure 13). In fact, in 2016, 42.8% of all patent applications in the

world were processed by China’s Intellectual Property Office, the National Intellectual

Property Administration (CNIPA). This indicates a surge in patenting activity in China.

However, this does not necessarily indicate a dramatic advancement of innovation. It is

important to examine whether these patents meet the international standards of assessment. In

2016, 96% of Chinese patents were filed in Chinese patent offices, while only 4% were filed

abroad (WIPOf 2017). In international patent standards, the Triadic patent family (consisting

of the US Patent Office, the European Patent Office, and the Japan Patent Office) is

considered the gold standard within patents and the hardest patents to be granted indicating a

commitment to quality and innovation standards (L. Y. Chen 2018). According to the OECD,

in the Triadic patent family in 2015, Chinese patents made up a mere 5.2% of total patent

filings (Organization for Economic Cooperation and Development 2015). This indicates that

China’s national standard for patent grants are not as stringent as international standards.

Within its patent grants, invention patents (19%) are the smallest proportion with utility

model (56.2%) and design (24.8%) patents representing the bulk of patent grants (Chinese

National Intellectual Property Agency 2017).

Figure 14. Total Patent Applications and Grants for India from 1980-2018, WIPO

Similar to China, India’s patent grants through the Triadic Family Offices, represent a

much lower number of truly innovative patents (Organization for Economic Cooperation and

Development 2015) (Figure 15). However, the difference is not as vast as total patent volume

(Figure 14) owing to certain patenting legislations like anti “ever greening” laws, that are

discussed later in this chapter.

Figure 15. Total Triadic Patent Family Patent Grants for India & China (1985-2015),

OECD

For sectoral research, IPR utility has been measured through total IPR grants (national

and foreign) and innovation has been measured through total Triadic Family patent grants for

the respective sectors.

IT INDUSTRY

This section looks at the various components of IT sector in India and China to assess

the reasons for the growth of the sector in both countries and how IP plays into their growth

paths. The IT sector is typically divided into two technological types, hardware (primarily

manufacturing based) and software (primarily service based). It can also be characterized by

the business nature, whether business is from local or outsourcing demand (Xiangdong Chen

2019). These classifications affect the level IP development in the sector.

a. Sector Overview

In comparison, India and China represent successes in different aspects of the

aforementioned classifications. A 2014 study analyzing the international and national

partnerships of firms in the IT industry of India and China found that at the local/national

level of IT manufacturing or hardware sector, Chinese IT companies represented the bulk of

collaboration (62%) within the investigated pool of firms, whereas Indian firms only made up

about 2.9%. Conversely, India displayed high levels of collaboration at the international

level, working closely with large, multinational software firms, whereas Chinese companies

were linked primarily with hardware multinationals, like Microsoft, Panasonic, etc. (Wang, et

al. 2014).

India

India’s IT Industry is evolving from a servicing to a solutions economy. The market

size of the Indian IT Industry is at US$ 177 billion as of 2019 and India holds the largest

market share of the global sourcing market (Business Process Outsourcing, BPO) (India

Brand Equity Foundation (IBEF) n.d.). Between April 2000 and June 2019, India has

attracted over US$ 39 billion worth of Foreign Direct Investment (FDI) for the software and

hardware sector (National Investment Promotion and Facilitation Agency n.d.). This sectoral

growth has been driven mostly by software service technology, with leading firms like

Wipro, Infosys, etc. working on technologies like block chain, artificial intelligence, etc. to

work with global clients. India’s IT revenue comes predominantly from its exports (US$ 126

billions), with domestic revenue (US$ 41 billion) representing a smaller proportion in 2018.

The Government of India has set up 136 Special Economic Zones (SEZs) focusing on

IT/ITES/Electronic Hardware/ Telecom equipment, representing over 50% of the total

number of SEZs as of 2019 (National Informatics Centre 2019). India has also set up 60

Software Technology Parks of India to promote the Software Technology Park (STP) scheme

and the Electronics Hardware Technology Park (EHTP) scheme. In 2018-2019, the IT sector

exports from STP units were valued at Rs. 4,21,103 crores (approximately US$ 55 billion)

and from EHTP units were valued at Rs. 7,677 crores (approximately US$ 1 billion)

(Ministry of Electronics and Information Technology n.d.). The main export markets for

Indian IT industry services and products are the US, UK and the EU representing 62%, 16%,

and 11% of export volume from India in 2018-2019 (Ministry of Electronics and Information

Technology 2019).

As of 2018, IT services represent 51% share (US$86 billions) of total Indian IT sector

revenues, with services like Banking, Financial Services and Insurance (BFSI) being a major

contributor. India also continues to be the leading outsource site for Business Process

Management (BPM) Services which account for 19.2% (US$ 32 billions) of total sector

revenue. Software products and engineering services represent 19.8% (US$33 billions) of

total sector revenues with 83.9% revenues stemming from exports. And finally the hardware

sector, which represents 9.3% of revenue (US$ 15.4 billions) (India Brand Equity Foundation

(IBEF) n.d.). Thus, it can be seen that excluding software and engineering services and

hardware, 70.2 % of India’s total IT revenue is represented by IT services and BPM and

BPO.

China

From 2016 to 2017, China’s software sector grew in revenue by 13.9% to US$ 800

billion. However, China’s hardware industry, also known as the electronic information

manufacturing industry reported a revenue of US$ 1.96 trillion the same year. Contrary to

India, China’s hardware industry occupies a much larger proportion of the country’s total IT

export at 71.1 % (2017) as opposed to India’s 9.3% (2018). Electronic components and

devices are subsectors of the hardware industry that display the most significant growth

(Digital China Union 2018). China’s extremely high investment in manufacturing and its fast

rollout of schemes to promote high-tech hardware manufacturing has allowed it to develop

this sector more rapidly, as opposed to India which has focused government policy and

investment into the software sector. Since its reforms in 1991, China has established 169

High-Tech Industrial Development Zones (as of July 2018) that focus on research and

development of high-tech electronic products (China Torch 2020). The top export

destinations for China are the US, Japan, Hong Kong, and Germany (The Observatory of

Economic Complexity (OEC) n.d.).

As of 2018, China’s IT services and BPM/BPO sector’s revenues capped at US$

276.3 billion (China Academy of Information Communication Technology 2018). According

to the Ministry of Industry and Information Technology of China, the software sector’s

revenues reached US$ 890 billion for the year of 2018 (Ministry of Industry and Information

Technology in China (MIIT) 2018). China’s maximum IT sector revenue came from their

hardware industry, which consists of their computer, communications equipment, electronic

device manufacturing. The hardware industry reported a total revenue of US$ 2.1 trillion for

2018 (Ministry of industry and Information Technology (MIIT) 2018).

b. Innovation and Patenting in the IT Industry

India

In India, the patenting culture and intensity in the IT Industry has been affected by

various factors, the most crucial being changing domestic IPR legislation and the

composition of the sector itself. The following section study the total patent volume and

innovative patent volume, and how patent laws and the composition of the IT sector impacts

this patent volume.

i. IPR Intensity and Innovation

Figure 16 displays total patent grants (national and foreign) recorded by WIPO

(WIPOe n.d.) and the type of technology patented. Figure 18 displays total patent grants

(national and foreign) recorded by WIPO in comparison to Triadic Family patent grants in the

IT Sector (Organization of Economic Cooperation and Development (OECD) n.d.). The total

patent grants represent IPR intensity in India and Triadic Family patent grants represent

innovative patents that meet international standards of novelty required in patenting.

Table 3. India IT Industry: Technology Types, WIPO

Technology Type of Technology

Electrical machinery, apparatus, energy Mostly Hardware

Audio-visual technology Both Software and Hardware

Telecommunications Both Software and Hardware

Digital communication Both Software and Hardware

Basic communication processes Software

Computer technology Mostly Software

IT methods for management Software

Semiconductors Hardware

Optics Hardware

Figure 16. India IT Industry: Total patent grants (1980-2018), WIPO

Figure 17. Triadic Patent Family IT Industry Patent Grants: India (1999-2015)

Figure 18. India IT Industry Total Patent Grants vs. Innovative Patent Grants (1999-2015), WIPO & OECD

From Figure 17 and Figure 18, it is evident that while total number of patents has

steadily risen, the number of innovative patents constitutes a small fraction of total patents.

Thus greater exercise of IPR has not necessarily resulted in a rise in innovation. The

following section analyses whether this is due to a lack in innovation capacity or because of

some other sectoral characteristics.

ii. Legislation

Intellectual property rights for inventions have been codified through the Patents Act

of 1970, which was further amended in 2005 to make it compliant to the requirements of the

TRIPS Agreement. It has since been amended and widened in scope. Prior to the 2005

Amendment, computer related invention patents were limited due to the language of the

legislations. Under section 2.1 (j) of the Act, “Inventions” were defined as any useful and

novel (i) art, process, method or manner of manufacture; (ii) machine, apparatus or other

article; (iii) substance produced by manufacture. The unambiguity of this clause made it

impossible to patent computer related inventions that were not “method”, “process”, or

“manner of manufacture”. This excluded a huge realm of computer programs, mathematical

methods and IT related business process management methods that did not directly result in

“manufacture”. This clause was modified by the Patent (Amendment) Act 2002, which

modified the definition of “invention” in Article 2.1 (j) to “a new product or process

involving an inventive step and capable of industrial application;” and defined “inventive step

in section 2.1 (ja) as “a feature of an invention that involves technical advance as compared

to the existing knowledge or having economic significance or both and that makes the

invention not obvious to a person skilled in the art;”. However, in Section 3 of this Act

introduced many exclusions that prevented patentability of many computer-related inventions

- “(k) a mathematical or business method or a computer programme per se or algorithms; (l) a

literary, dramatic, musical or artistic work or any other aesthetic creation whatsoever

including cinematographic works and television productions; (m) a mere scheme or rule or

method of performing mental act or method of playing game; (n) a presentation of

information;” (Office of the Controller General of Patents, Designs and Trademarks 2013, 4).

This is clearly visible in Graph 8.1 with a dip in patent grants from 2002 to 2009.

In 2013, the Office of the Controller General of Patents, Designs and Trademarks,

issued guidelines to allow for more inclusive examination of computer related inventions so

that novel computer programs, methods, and algorithms would not automatically be

overlooked. The office has done this by providing room for ambiguity instead of very clearly

defined exclusions. The guidelines allow examiners of patent applications to consider

applications which would have previously been excluded under three categories (i)

method/process, (ii) apparatus/system, and (iii) computer programme product. For

“methods/process”, the guidelines just emphasize the importance of the examiner’s role in

deciding, thus indicating a level of leeway. For “apparatus/system”, the guidelines allow

patentability in computer related inventions if they are “novel”, “inventive”, or have

“industrial applicability”. Computer programme products are seen as mere replications of

method/process applications but in a physical manifestation like CDs, DVDs, etc. and are

thus not patentable (Office of the Controller General of Patents, Designs and Trademarks

2013, 14-16). The 2013 easing of patentability requirements is also clearly seen in the sectors

patent grants which rise significantly in 2013-2014 (Figure 16).

The 2015 Guidelines further eased the patentability requirements. Computer related

inventions were now allowed patentability if they were (i) a novel hardware, (ii) a novel

hardware with a novel computer programme, or (iii) a novel computer programme with a

known hardware which goes beyond the normal interaction with such hardware and affects a

change in the functionality and/or performance of the existing hardware. The Office also

provided guidelines for the determination of the technological advancement in the interaction

of the software and hardware (Office of the Controller General of Patents, Designs and

Trademarks 2015, 13). These determinants exempted the application from the 2002 exclusion

clauses and allowed them to be considered for patentability.

Finally, the 2017 Guidelines created a differentiation between algorithms and

underlying inventions from patent claims such as “method/process, apparatus/system/device,

computer program product/ computer readable medium”; the latter being part of excluded

categories that cannot be patented. However, the former, the foundational inventive

algorithm/process may be considered for patenting in its raw form but not as multiple claims

as applied in various scenarios like different computer programs, languages, etc. (Office of

the Controller General of Patents, Designs and Trademarks 2017, 14). Thus, it is apparent

that computer related inventions, especially software, are increasingly difficult to patent and

protect in India.

iii. Sector Composition

The IT Industry in India has developed primarily as a service industry, focusing

heavily on providing IT software and BPO/BPM outsourcing services to international

multinational firms. In fact, in 2018, IT services export and BPO/BPM outsourcing

constituted 70.2% of India’s IT related revenue. This sector itself is not innovative or

disruptive, thus, very little new IP or patenting comes out of this enormous part of the Indian

IT Industry. The part of the sector which is patentable under the existing laws are hardware

and to a limited extent, software, however, these sectors combined represented a little over

29% of the sector’s revenue in 2018 (India Brand Equity Foundation 2018). Of this 29%,

two-thirds constitutes software and engineering. From the previous section, it is apparent that

patenting software technology in India is notoriously difficult. Another important feature of

India’s IT sector that affects its indigenous innovation and patent volume is its internationally

oriented outsourcing and service sector. Because India’s bulk of IT activity is in the form of

exports of services to MNCs, the requirement for self-owned IP is low. In fact, because of its

sophistication in the outsourcing department, India is able to license and exercise foreign IP

resources to provide world class service to foreign MNCs without ever needing to develop its

own IP. However, without a domestic need driving demand, the IT sector does not push for

innovation and this is clearly apparent in its patent volume in comparison to China. However,

a future push for domestic innovation and investment in R&D could change this landscape.

China

In China, the patenting culture and intensity in the IT Industry is largely determined

by the composition of the sector and the government policy guiding decisions on what is to

be manufactured. IPR legislation does not play a crucial/ specific role in the innovative patent

volume.

i. IPR Intensity and Innovation

Figure 19 displays total patent grants (national and foreign) recorded by WIPO

(WOPOe n.d.) and type of technology patented. Figure 21 displays total patent grants

(national and foreign) recorded by WIPO in comparison to Triadic Family patent grants in the

IT Sector (Organization of Economic Cooperation and Development (OECD) n.d.). The total

patent grants represent IPR intensity in China and Triadic Family patent grants represent

innovative patents that meet international standards of novelty required in patenting.

Table 4. China IT Industry: Technology Types, WIPO

Technology Type of Technology

Electrical machinery, apparatus, energy Mostly Hardware

Audio-visual technology Both Software and Hardware

Telecommunications Both Software and Hardware

Digital communication Both Software and Hardware

Basic communication processes Software

Computer technology Mostly Software

IT methods for management Software

Semiconductors Hardware

Optics Hardware

Figure 19. China IT Industry: Total Patent Grants (1980-2018)

Figure 20. Triadic Patent Family IT Industry Patent Grants: China (1999-2015)

Figure 21. China IT Industry Total Patent Grants vs. Innovative Patent Grants (1999-2015), WIPO & OECD

From Figure 20 and Figure 21, it is evident that while total number of patents has

steadily risen, number of innovative patents while rising make up a very small fraction of

total patents. Thus greater exercise of IPR has not necessarily resulted in a rise in innovation.

Whether limited patent filing is due to a lack in local innovation capacity or a sectoral

phenomenon is examined in the following sections.

ii. Sector Composition

The development for China’s IT sector has been more traditional albeit fast in

comparison to India. China’s IT Industry developed from demand in domestic markets,

followed by demand from international markets. This tiered growth path has allowed China

to develop significantly more intrinsic IP, as compared to India. The sectoral composition of

China’s IT sector has also played a key role: the Chinese government, since the 1991

reforms, has emphasized the importance of domestic manufacturing industries. Thus, it rolled

out multiple initiatives to set up research centers and factories to bolster the product national

manufacturing capacity. Initiatives like the High-Tech Industrial Development Zones are

focused on product development. The hardware sector, by nature, is more easily patentable

than the software and service sectors (Xiangdong Chen 2019). Thus, by focusing on IT

hardware, China has developed huge amounts of indigenous IP in this sector represented in

the immense patent volume as seen in Figure 19. The triadic family patents, albeit a small

proportion of total patent volume, have also grown (Figure 20). In China, it is also notable

that total patent growth has surged post 2005 which is when the TRIPS Agreement was

enacted and a global standardization of IP occurred. However, truly innovative Triadic

Family patents have grown at a much slower pace. Thus, in China, international pressure for

standardization and implementation of stronger IP laws has led to artificial inflation of patent

volume without a dramatic rise in innovation.

c. Analysis

Figure 22. IT Industry Triadic Family Patent Grants, India and China (1999-2015)

It is evident from the triadic family patent volumes that China has higher innovation

in terms of patents granted. However, this cannot entirely be attributed to the innovative

capacity of the countries. From the previous sections, it is apparent that the sectoral

composition and patent legislation play a key role in the amount of patents filed. India has a

lower patent volume because the sector itself is dominated by technology that cannot

necessarily be patented. Alternatively, China’s IT sector is dominated by more conveniently

patented hardware production.

PHARMACEUTICAL INDUSTRY

This section looks at the pharmaceutical sector in India and China to assess the

contribution of IP to the growth of the sector. Both countries are in different stages in the

growth path of their respective pharmaceutical industries. The Indian pharmaceutical

companies, although displaying less patent volume, controls more of the national market

share and international prominence. China, conversely, has greater overall patent volume, but

produces inferior quality or lower value products like active pharmaceutical ingredients

(APIs). They also occupy a far smaller domestic market share than India and are dominated

by foreign owned or joint stock companies.

a. Sector Overview

India

The Indian pharmaceutical industry is an interesting case study of a sector that

became innovative within a protectionist national strategy. In 2017, the sector was valued at

USD$ 33 billion and India is the largest producer of generic drugs globally, accounting for

over 50% of the global supply of various vaccines and over 80 % of the global supply of

antiretroviral drugs to combat AIDS (Acquired Immune Deficiency Syndrome). By March

2019, India’s pharmaceutical exports, consisting of bulk drugs, intermediaries, biologicals,

drug formulations and indigenous medicine, reached US$ 19.14 billion. Indian companies are

seen at par with international pharmaceutical standard occupying a 30% (volume) and 10%

(value) stake in the US$ 70-80 billion US generics market. In 2017, Indian companies 304

approvals for New Drug Applications by the US Food and Drug Administration (USFDA).

According to the Department of Industrial Policy and Promotion, between April 2000 and

March 2019, the drug and pharmaceutical sector received cumulative FDI inflows worth US$

15.98 billion. As of 2018, Indian pharmaceutical companies are also investing 8.5% of their

sales revenue back into research and development (Indian Brand Equity Foundation n.d.).

Another key characteristic that underpins the innovative environment in the sector is

that the sector is transitioning from a clear imitation to innovation. However, this would not

have been possible with a deliberate protectionist agenda pushed by the Indian government in

the 1990s and early 2000s. The government’s protection of the nascent indigenous industry

through policy and patent laws allowed Indian companies to master generics through reverse

engineering. This imitative R&D allowed for the creation of basic and necessary

competencies and move up the value chain. This allowed the industry to withstand stiff

competition from the international market when faced with international pressure to impose

stronger intellectual property rights in the post TRIPS era, specifically after its full

implementation in India after 2005. India grew from producing APIs to generics and is now

preparing to fully move into the innovative phase with drug discovery. Until 1970, Indian

pharmaceutical companies were involved in merely marketing and distributing foreign drugs.

90% of the market share was occupied by MNCs and only domestic companies accounted for

10%. However, in this period there was an active push from the Indian government towards

independence in the drug production market owing to insecurity about drug supply. A “weak”

patent law introduced in 1970 allowed reverse engineering and Indian firms soon perfected

this strategy and reintroduced generics of internationally produced drugs within 1-5 years of

their release. By the 1990s, these firms began “creative imitation” which was the process of

producing generic products but with new performance features like dosages and strengths that

allowed them to be patented. This has allowed for the sector to flourish and beginning in this

period, Indian pharmaceutical giants like Ranbaxy, Sun Pharmaceuticals, etc. have even

acquired US and Europe-based firms to set up manufacturing, marketing and distribution

channels in foreign markets. By 2003, Indian companies made up 8.9% and 28.2% of all new

drug approvals in the USFDA’s ANDA (Abbreviated New Drug Application) and DMF

(drug master file) respectively (Kale and Little 2007). While the general trajectory of the

sector is positive, the drug discovery market is still very much in nascent stages.

Pharmaceutical companies that are ambitious enough to pursue new drug discoveries through

trials often end up licensing their new compounds in early stages to foreign collaborators

when faced with the high costs, long timelines, low expertise in clinical development, etc.

(Differding 2017)

China

The Chinese pharmaceutical industry has been growing steadily displaying growth

rates of 1.63% in 1998, 2.77% in 2009 (Liu 2012) to 23.9% by 2010. By 2010, the Chinese

pharmaceutical industry was already the third largest seller of pharmaceutical products online

(IMS Institute for Healthcare Informatics 2010). By 2017, the revenue of listed

pharmaceutical companies had increased by 14.64% (Chen and Wang 2017). The industry

has focused production capacities on active pharmaceutical ingredients (APIs),

pharmaceutical machinery, pharmaceutical packaging, pharmaceutical excipients,

intermediaries, and preparations. China is the world’s largest producer and exporter of

penicillin, P-Lactum drugs and vitamins (Liu 2012). Another key feature of the Chinese

pharmaceutical market is its openness to foreign collaboration. The top pharmaceutical

companies of the world all have joint ventures with Chinese firms and hold key regional and

national market power. In 2008, 40 out of the 50 top selling drugs in the market were foreign

owned or joint-stock drugs (C. Wang 2008). China’s top ten pharmaceutical company make

up a measly 15-18% of the total market share in China (J. Wang 2013).

Another feature of the Chinese pharmaceutical market is low investment in R&D for

new drug production. A 2015 study of pharmaceutical managers in the US revealed that the

top 50 global pharmaceutical companies invested over 10% of their annual turnover on R&D.

In China, only three out of the top 100 pharmaceutical firms invested over 10% in R&D in

2015. Innovation in this sector is focused in research institutions, not pharmaceutical

companies and thus, pharmaceutical patents are increasingly owned by these institutions and

not the actual manufacturers of the drugs. Chinese companies have focused increasingly on

imitating foreign owned and patented drugs or domestically produced listed drugs, with many

enterprises producing the same drugs which are usually lower-end, less technology intensive,

and low value-added. These companies rarely own the IP of the drugs they produce (Liu

2012). Because of the large capacity of producers producing the same drugs, there is an

overcapacity leading to underutilization and wastage of capital (Wu 2006). In fact, generic

drugs occupied 85% of all pharmaceutical sales in 2015 (Deloitte 2011, 13). However, it is

the patented drugs that accrue enormous profits through market exclusivity during their

patent period. But in China, patent owning companies are usually foreign owned or joint

ventures. For instance, in 2010, 303 varieties of patented drugs ended their patent period. Out

of the 315 companies that produced these, 253 were foreign owned, 61 were joint-stock, and

merely one was a domestic enterprise, meaning that the bulk of the patent protection profit

was in the hands of foreign pharmaceutical innovators (PAC 2010). Approximately 90% of

the patented drugs in the Chinese market are produced and intellectually owned by foreign

companies. There are 8 times more imported patented drugs than domestic patented drugs

(Jiang, Guo and Hua 2017). Unlike India, China has fully accepted the IP stipulations of the

TRIPS Agreement on pharmaceutical innovations.

b. Innovation and Patenting in the Pharmaceutical Industry

India

In India, the patenting culture and intensity in the pharmaceutical Industry has been

affected by various factors, the most crucial being changing domestic IPR legislation and the

shift from imitation to innovation in the sector.

i. IPR Intensity and Innovation

Figure 23 displays total patent grants (national and foreign) recorded by WIPO

(WIPOe n.d.) and type of technology patented. Figure 25 displays total patent grants (national

and foreign) recorded by WIPO in comparison to Triadic Family patent grants in the

pharmaceutical sector (Organization of Economic Cooperation and Development (OECD)

n.d.). The total patent grants represent IPR intensity in India and Triadic Family patent grants

represent innovative patents that meet international standards of novelty required in

patenting. The various technology types considered, as categorized by WIPO and OECD, are

Pharmaceuticals, Biotechnology, Medical Technology and Organic Fine Chemistry.

Figure 23. Pharmaceutical Industry Total Patent Grants: India (1980-2018), WIPO

Figure 24. Pharmaceutical Industry Triadic Family Patent Grants: India (1999-2015)

Figure 25. India Pharmaceutical & Related Industry Total Patent Grants vs. Innovative Patent Grants (1999-2015), WIPO & OECD

From Figure 23 and Figure 25, it is evident that while total number of patents in the

pharmaceutical industry has steadily risen, number of innovative patents, although rising,

make up a very small fraction of total patents. Thus greater exercise of IPR has not

necessarily resulted in a rise in innovation. Whether limited patent filing is due to a lack in

local innovation capacity or a legislative characteristic is examined in the following sections.

ii. Legislation

During World War II, the colonial powers fueled their drug shortage by calling on

Indian medicine manufacturers which in turn led to a bustling pharmaceutical sector to begin

in India. Still governed by colonial patent laws left over by the British Raj, India found that

the patent laws intended to bolster innovation in India were, in fact, crippling Indian

producers. Post-colonial India, faced with unemployment, infant mortality, famines,

epidemics, and inaccessible public healthcare among other problems, was also reliant on

exorbitant foreign imports for basic essential medications like penicillin and insulin owing to

the British favoring colonial patenting system. In 1957, a government appointed committee

was set up to assess the status of the country’s patent laws in health and mortality. This

committee urged the government to prioritize public health and outlaw product patents in the

pharmaceutical or food products sectors. Thus, the committee recommended that patents be

allowed only for the process of food or medicine manufacture in India and not the finished

product, thus allowing domestic competition, lowered prices, and greater access to

medication. These recommendations were reflected in independent India’s very first patent

law “Patents Acts of 1970” (Halliburton 2017).

Chapter II, Article 5 of the 1970 patents law clarifies that only processes, not

inventions, are patentable. “In the case of inventions – (a) claiming substances intended for

use, or capable of being used, as food or as medicine or drug, or (b) relating to substances

prepared or produced by chemical processes (including alloys, optical glass, semi- conductors

and inter-metallic compounds), no patent shall be granted in respect of claims for the

substances themselves, but claims for the methods or processes of manufacture shall be

patentable.” Chapter VIII, Article 53 also capped the patent protection at five years from the

date of sealing the patent or seven years from the date of the patent, whichever came first, in

the case of food or medicine or drug inventions. Chapter XVI, Article 83 clarified the goals

of the government with regards to patents further stating that patents must be granted to

encourage inventions and these protections must contribute to the promotion of technological

innovation and dissemination of technology to the mutual benefit of both producers and users

of commodities in a manner conducive to welfare. They must not impede provision of

healthcare and nutrition. Patents must not be granted merely for the purpose of establishing a

monopoly for imports. Chapter XVI, Article 97 specified that in the case of patented products

that were necessary for public interest, compulsory licenses for these products will be made

available so that the products may be availed by the public at reasonable prices (Intellectual

Property India 2017). These provisions allowed domestic pharmaceutical producers to

reverse engineer existing drugs to find newer, more efficient methods of production and

patent these methods. This also allowed these companies to export these cost efficient

generics and gain considerable market share in the international generics market.

With its ascension to the WTO, India was also faced with the challenge of bringing its

IPR regime in compliance with the TRIPS standards while balancing its public health

priorities. However, as a developing nation, India was afforded a 10-year grace period to

reach this compliance. This resulted in three successive Amendment Acts to the Patent Law

in 1999, 2002, and 2005. The final Amendment in 2005 included product patents, made

reverse-engineering without licensing from the patent holder illegal, and provided 20-year

patent protection terms to patent holders. However, the Government of India also enacted

provisions to maintain access to affordable and equitable healthcare. These were to prevent

“ever greening” of patents, to allow compulsory licensing (Intellectual Property India 2017,

64-73), and have pre and post-grant oppositions to patents. Kumar and Nanda (2017) describe

patent ever greening as “a strategy employed by the innovator companies to recover high

costs incurred by them in Research and Development and as a means to legally protect any

minor modifications that are intentionally made to the parent patent just to obtain multiple

patents on the same drug and hence extend the overall term of the patent to enjoy monopoly

for extended periods of time.”(Kumar and Nanda 2017). This allows MNCs to endlessly

benefit from exclusive patent rights. Thus, a new section 3(d) in the 2005 Amendment

emphasized that unless a modification or new drug enhanced the known efficacy of a

substance, or a process resulted in a new product or utilized a new reactant, it will be

considered the same substance and will therefore not be patentable (Intellectual Property

India 2017). India also utilized Article 30 and 31 of the TRIPS Agreement to obtain

compulsory licenses by the national government in the case of “a national emergency or other

circumstances of extreme urgency or in cases of public non-commercial use” without the

permission of the patent holder (WTOd n.d.). The 2005 Amendment also created further

provisions that further eased the compulsory licensing process through Chapter XVI, Article

84(Intellectual Property India 2017, 65) by allowing licenses – “(1) At any time after the

expiration of three years from the date of the grant of a patent, any person interested may

make an application to the Controller for grant of compulsory license on patent on any of the

following grounds, namely: (a) that the “reasonable requirements of the public” with respect

to the patented invention have not been satisfied, or (b) that the patented invention is “not

available to the public at a reasonably affordable price”, or (c) that the patented invention is

“not worked in the territory of India.” India also retained pre-grant oppositions and

introduced post-grant oppositions that call for closer examinations of new or existing patents

to ensure novelty and invention through Chapter V, Article 25 (Intellectual Property India

2017, 25-28).

These provisions and loopholes within the patent laws allowed India to create an

innovative and efficient generics market, control the dominant domestic market share, built a

successful export portfolio, fulfil its commitment to public health, and develop a domestic

innovation system. Had India been pushed into an absolutist patent regime in its nascent

stages, this sector would have never flourished to be able to eventually grow into an

innovative industry. Thus, even though the patent volume is India is lower than in China, its

market share, self-ownership of patents, affordability, and rapid growth are clearly indicative

of a successful sector.

China

Unlike India, China has fully complied with the requirements of the TRIPS

Agreement. This has allowed foreign pharmaceutical firms considerable patent ownership ad

market power in the Chinese market.

i. IPR Intensity and Innovation

Figure 26 displays total patent grants (national and foreign) recorded by WIPO

(WIPOe n.d.) and type of technology patented. Figure 28 displays total patent grants (national

and foreign) recorded by WIPO in comparison to Triadic Family patent grants in the

pharmaceutical sector (Organization of Economic Cooperation and Development (OECD)

n.d.). The total patent grants represent IPR intensity in China and Triadic Family patent

grants represent innovative patents that meet international standards of novelty required in

patenting. The various technology types considered, as categorized by WIPO and OECD, are

Pharmaceuticals, Biotechnology, Medical Technology and Organic Fine Chemistry.

Figure 26. China Pharmaceutical & Related Industry Total Patent (1980-2018), WIPO

Figure 27. Pharmaceutical Industry Triadic Family Patent Grants: China (1999-2015)

Figure 28. China Pharmaceutical & Related Industry Total Patent Grants vs. Innovative Patent Grants (1999-2015), WIPO & OECD

It is evident through Figure 26 and Figure 28 that while total number of patents in the

pharmaceutical industry has steadily risen, number of innovative patents, although rising (see

Figure 27), make up a very small fraction of total patents. Thus greater exercise of IPR has

not necessarily resulted in a rise in innovation. Whether limited patent filing is due to a lack

in local innovation capacity, or a legislative characteristic is examined in the following

sections.

ii. Legislation

China’s Patent law was first enacted in 1984 and amended in 1992, 2000, and 2008.

The 1984 legislation recognized pharmaceuticals as crucial to social welfare and under

Article 25(5) outlawed the patenting of pharmaceutical products and substances obtained as a

result of chemical processes. However, in 1992 China signed a Memorandum of

Understanding on the Protection of Intellectual Property Rights with the United States which

led to an amendment of the patent legislation. This pressured the Chinese government to

extend patent protections to all processes and product in both agricultural and pharmaceutical

chemical inventions (Government of the People's Republic of China 1992).

The 1984 Patent Law also held provisions for compulsory licensing similar to India,

in that compulsory licenses could be granted to domestic firms if foreign firms did not

exercise their patents in the country within three years of obtaining the patent. However,

these provisions were modified in 1992 after which a compulsory license could only be

granted if a possible licensee has made a reasonable authorization request which has not been

approved by the patentee within a reasonable period of time (Article 51) or if a national

emergency, extraordinary state of affairs, or public interest necessitates a compulsory license

(Article 51). The 2008 amendment also added another provision whereby a compulsory

license could be granted in a public health crisis to produce and export medicines to countries

or regions that are party to international treaties to which China is also party (People's

Republic of China 2008). However, these provisions while present are not effectively

exercised and so far China has not granted any compulsory licenses. Thus, China has

effectively complied to all provisions of the TRIPS Agreement, however these stringent IP

protections have not resulted in an enhance innovative environment in China, where the top

ten domestic firms occupy 15-18% of the total market share as opposed to India’s over 35%

(J. Wang 2013).

c. Analysis

It is evident from the triadic family patent volumes that China has higher innovation

in terms of patents granted but this difference is less stark in comparison to the IT sector.

These patent volumes cannot entirely be attributed to the innovative capacity of the countries.

From the previous sections, it is apparent that the patent legislation plays a key role in the

amount of patents filed. India has a lower patent volume because the patent law in the

country has historically prioritized public health and is less strict that the international TRIPS

standard. This does not imply an absence of innovation; it simply means that the patent law

has enabled the sector to reach the base competencies to be able to innovate in the future.

Thus, patent volumes should steadily increase in the future as domestic firms increase R&D

for drug discovery. Alternatively, China’s pharmaceutical sector reached compliance with the

TRIPS standards in 1993 and displays higher patent volume. However, this again, is not

indicative of higher indigenous innovative capacity. The pharmaceutical market in China is

dominated by foreign firms and products, thus, even though China has a higher patent volume

than India, these patents are unable to compete with foreign drug patents to occupy market

share. It is important to look at both countries and examine the market share to determine

whether the “innovation” represented by the patent volume is in fact, a good metric to

measure the innovative capacity of the country.

Conclusion

The objective of this research was to determine the effects of pressure from international

commitments on IPR and the effect of greater IPR on innovation. Throughout my research I

found that there was a strong correlation between international commitments and the exercise of

intellectual property, that is, as countries opened themselves up to economic and political

integration into the international system, there was a standardization of the norms and utility of

intellectual property rights. While the degree of standardization has varied, there has been a

definite shift towards a universal IPR regime. However, the question I attempt to address with

this research is whether this rise in the exercise of IPR has indeed led to innovation in developing

nations. My research at the national level suggested that this correlation of IPR and innovation is

not significant for my case countries – India and China. For both, rising patent volumes do not

necessarily indicate a rise in innovation.

On the sectoral level, India and China displayed very different growth paths in the

researched sectors – IT industry and Pharmaceutical Industry, owing to different competitive

advantages, sectoral compositions, choice of products, and level of global integration. The

growth paths for both these countries are determined by several factors, only one of which is

intellectual property protections. In the IT industry, I observe a drastic difference in the patent

volume in India and China, with China displaying exponentially larger amounts of patent grants.

However, this is not so much an indication of the level of innovation in the sector but rather the

sectoral composition and the IPR legislation. India, as a service-oriented economy displays lower

patent volumes because its product mix is predominantly made up of services and software

products that are not easily patentable. On the other hand, China’s IT industry has focused

primarily on product manufacturing, specifically hardware, an area of production that is, by

nature, more patentable. Thus, there may be innovation happening but may not be reflected in

patentability because of local legislation or sectoral composition. In the pharmaceutical sector,

China once again displays a greater patent volume, albeit not by much. However, Indian

pharmaceutical companies holds a far greater domestic market share than Chinese

pharmaceutical companies. The Chinese pharmaceutical market is dominated by foreign-owned

or joint-stock companies. Thus, the higher patent volume and “innovation” has not translated

into increased market shares for Chinese firms. In terms of legislation, Chinese patent law is

more compliant with the international standard, i.e. the TRIPS Agreement. However, this

standardization has helped foreign companies exercise their intellectual property in China but has

not encouraged the growth of domestic innovation and market power. Alternatively, India’s

patent laws have taken longer to reach compliance with international standards, which has

allowed domestic firms to build foundational capacities through “creative imitation”, which

allowed them to increase their market share and prepare for moving into the innovative drug

discovery phase. Had India chosen the pathway of China and standardized its IPR legislation

faster, these domestic industries would have been unable to cope with international competition

and lost market share in the domestic market. Similar to China, the pharmaceutical market in

India would have been dominated by foreign companies.

Thus, it can be seen that in the case of developing countries, it is not increased IPR that

has led to innovation. In fact, in some cases, like the pharmaceutical industry, increased patent

protections would have crippled domestic industry or allowed foreign companies to monopolized

market power. All these inferences raise a few key questions – who does the current IPR regime

benefit – is it for the Global North to exercise their intellectual property and gain market power

in the Global South, or is it to enable domestic innovation in the Global South? My analysis

indicates that there is a need to re-evaluate the impact of the current IPR regime and redefine

innovation. IPR in the developing world continues to be a rousing area of research and as more

and more countries make the shift from lower to middle, and middle to high income economies,

it is all but certain that intellectual property will continue to be a hot button issue. It will be

compelling to see how emerging economies are impacted by the current IPR regime and if these

economies embrace, shun, or reshape this institution of the globalized, capitalist international

order.

References

—. 2013. "Guidelines for Examination of Computer Related Inventions (CRIs)."

—. 2017. "Guidelines for Examination of Computer Related Inventions (CRIs)."

Chen, Lulu Yilun. 2018. China Claims More Patents Than Any Country’ Most Are Worthless. September 29. https://www.bloomberg.com/news/articles/2018-09-26/china-claims-more-patents-than-any-country-most-are-worthless.

Chen, Yongmin, and Thitima Puttitanun. 2005. "Intellectual property rights and innovation in the developing world." Journal of Developmental Economics 78 (2): 474-493.

Chen, Z., and J. Wang. 2017. "The Impact of China's Pharmaceutical Industry Policy on the Innovation and Development of Pharmaceutical Enterprises (in Chinese)." Management and Administration 8: 40-42.

China Academy of Information Communication Technology. 2018. "China Academy of Information Communication Technology: A Report on the Development Trend and Business Index of Chinese Internet Industry." China Academy of Information Communication Technology.

China Torch. 2020. List of High-Tech Industrial Zones (in Chinese). Accessed April 20, 2020. http://www.chinatorch.gov.cn/gxq/gxqmd/201803/a2db909ac4294a7e9712d23b04ebff7e.shtml.

Chinese National Intellectual Property Agency. 2017. CNIPA Monthly Statistics Reports. Accessed April 20, 2020. http://english.sipo.gov.cn/statistics/.

Cornell University; European Institute of Business Administration (INSEAD); World Intellectual Property Organization (WIPO). n.d. About the Global Innovation Index. Accessed November 5, 2019. https://www.globalinnovationindex.org/about-gii#framework.

Deloitte. 2011. "The next phase: Opportunities in China's pharmaceuticals market." Report.

Differding, Edmond. 2017. "The Drug Discovery and Development Industry in India’ Two Decades of Proprietary Small Molecule R&D." ChemMedChem 12 (11): 786-818.

Digital China Union. 2018. "Digital China Union: Development Report of the Chinese IT Industry for 2017, published at Chinese IT Leaders’ Summit Meeting."

Diwan, I., and D. Rodrik. 1991. "Patents, appropriate technology, and North-South trade." Journal of International Economics 30 (1991): 27-48. https://doi.org10.3386/w2974

Edwin, L., and C. Lai. 1998. "International Intellectual Property Rights Protection and the Rate of Product Innovation." Journal of Developmental Economics 55 (1): 133-153. https://doi.org/10.1016/S0304-3878(97)00059-X

Gilbert, Helen, and Joanne Tompkins. 1996. "Post-Colonial Drama: Theory, Practice, Politics." In Post-Colonial Drama, ix-344. London: Routledge.

Government of the People's Republic of China. 1992. "Article 1 of the Sino-US Memorandum of Understanding on the Protection of Intellectual Property Rights."

Halliburton, Murphy. 2017. India and the patent wars: pharmaceuticals in the new intellectual property regime. Ithaca: ILR Press.

He, Juan. 2019. "Indian Patent Law and Its Impact on the Pharmaceutical Industry: What Can China Learn from India?" In Innovation, Economic Development, and Intellectual Property in India and China, edited by Kung-Chung Liu, Uday S. Racherla, 251-269. Singapore: Springer Nature Singapore Pte Ltd.

Helpman, Elhanan. 1993. "Innovation, Imitation, and Intellectual Property Rights." Econometrica 61 (6): 1986-1998. https://doi.org/10.2307/2951642

Huh, Hyeon-Seung and Cyn-Young Park. 2019. A New Index of Globalization: Measuring Impact of Integration on Economic Growth and Income Inequality, ADB Economics Working Paper Series. Working Paper, Economics, Asian Development Bank, Manila, Philippines: ADB.

Hwang, Hong, Jollene Z. Wu, and Eden S. H. Yu. 2016. "Innovation, Imitation and Intellectual Property in Developing Countries." Review of Developmental Economics 20 (1): 138-151. http://dx.doi.org/10.1111/rode.12205

IMS Institute for Healthcare Informatics. 2010. "The Global Use of Medicines: Outlook through 2015."

India Brand Equity Foundation (IBEF). n.d. IT & ITeS Industry in India. Accessed April 20, 2020. https://www.ibef.org/industry/information-technology-india.aspx.

India Brand Equity Foundation. 2018. It & ITES. December. Accessed April 18, 2020. https://www.ibef.org/download/it-ites-dec-2018.pdf.

Indian Brand Equity Foundation. n.d. Indian Pharmaceutical Industry. Accessed April 20, 2020. https://www.ibef.org/industry/pharmaceutical-india.aspx.

INSEADa (European Institute of Business Administration). 2019. "Global Innovation Index." Index, INSEAD, Cornell University, WIPO.

INSEADb (European Institute of Business Administration). 2011. "Global Innovation Index 2011." Index, INSEAD; Cornell University, WIPO.

INSEADc (European Institute of Business Administration). 2012. "Global Innovation Index 2012." INSEAD; Cornell University, WIPO.

INSEADd (European Institute of Business Administration). 2014-2018. "Global Innovation Index 2014, 2015, 2016, 2017, 2018." Index, INSEAD, Cornell University, WIPO.

INSEADe (European Institute of Business Administration). 2011-2019. "Global Innovation Index 2011-2019." Index, INSEAD, Cornell University, WIPO.

INSEADf (European Institute of Business Administration). 2015. "Global Innovation Index 2015." Index, INSEAD, Cornell University, WIPO.

Intellectual Property India. 2017. "The Patents Act 1970 (updated till 23 June 2017)." Patent Law.

Jiang, L., W. Guo, and X. Hua. 2017. "Chinese patent medicine market analysis under the background og national drug price negotiation (in Chinese)." World Clinical Drugs 38 (5): S31-S34.

Kale, Dinar, and Steven Little. 2007. "From Imitation to Innovation: The Evolution of R&D Capabilities and Learning Processes in the Indian Pharmaceutical Industry." Technology Analysis & Strategic Management 19 (5): 589-609.

Kumar, A, and A. Nanda. 2017. "Ever-greening in Pharmaceuticals: Strategies, Consequences, and Provisions for Prevention in USA, EU, India, and Other Countries." Pharmaceutical Regulatory Affairs 6 (1).

Liu, X. 2012. Monopsony, Pricing and R&D Input in China's Pharmaceutical Industry (in Chinese). Dissertation, Shandong University.

Lune, Howard, and Bruce L. Berg. 2012. Qualitative Research Methods for the Social Sciences. New York, New York: Pearson.

Mingst, Karen, Margaret Karns, and Alynna Lyon. 2017. The United Nations in the 21st Centure. Boulder, Colorado: Westview Press.

Ministry of Electronics and Information Technology. 2019. "Annual Report 2018-19." Annual Report, MeitY, 124.

Ministry of Electronics and Information Technology. n.d. STPI. Accessed April 20, 2020. https://meity.gov.in/content/stpi.

Ministry of industry and Information Technology (MIIT). 2018. "A Research Report on the Comprehensive Development Index of Chinese Electronic Information Manufacturing Industry."

Ministry of Industry and Information Technology in China (MIIT). 2018. "The Economic Operation Situation of Chinese Software Industry in 2018 (January to November)." MIIT.

Ministry of Industry and Information Technology of China (MIIT). 2018. "The Economic Operation Situation of Chinese Software Industry in 2018 (January to November)."

National Informatics Centre. 2019. Sector-wise Distribution of approved SEZs. January 22. Accessed April 20, 2020. http://sezindia.nic.in/upload/uploadfiles/files/Sector%20wise%20distribution%20of%20SEZs.pdf.

National Investment Promotion and Facilitation Agency. n.d. IT & BPM Sector. Accessed April 20, 2020. https://www.investindia.gov.in/sector/it-bpm.

Office of the Controller General of Patents, Designs and Trade marks. 2015. "Guidelines for Examination of Computer Related Inventions (CRIs)."

Organization for Economic Cooperation and Development. 2015. Triadic patent families Total, Number, 1985 – 2017, OECD Patent Statistics: Patents by main technology and by International Patent Classification (IPC. Accessed April 20, 2020. https://data.oecd.org/rd/triadic-patent-families.htm.

Organization of Economic Cooperation and Development (OECD). n.d. Patents by Technology: India. Accessed April 18, 2020. https://stats.oecd.org/viewhtml.aspx?datasetcode=PATS_IPC&lang=en#.

PAC. 2010. "Study of China's original drug and generic drug - Price differences and market share status report."

Pallister, Stuart. 2011. "Pushing the boundaries: innovation and imitation in China and India?" INSEAD Articles (INSEAD).

People's Republic of China. 2008. "Patent Law of the People's Republic of China."

Shi, Y. 2010. "Nature of Indian Pattern and Its Impact on Chinese Economic Development (In Chinese)." Economic Development in SEZ (Special Economic Zone) (03): 86-87.

The Observatory of Economic Complexity (OEC). n.d. Country Profiles: China. Accessed April 19, 2020. https://oec.world/en/profile/country/chn/.

United Nations. 2009-2019. "World Economic Situation and Prospects (WESP) report." United Nations. Accessed November 6, 2019. https://www.un.org/development/desa/dpad/document_gem/global-economic-monitoring-unit/world-economic-situation-and-prospects-wesp-report/.

Wang, C. 2008. "Innovation needs encouragement policies for the creation of major new drugs (in Chinese)." Venture Capital 0 (1): 26-28.

Wang, J. 2013. "The study on investment of pharmaceutical companies in the context of global patent drugs expiration tide (in Chinese)." Dissertation, Shanghai Jiao Tong University.

Wang, J. 2013. "The study on investment of pharmaceutical companies in the context of global patent drugs expiration tide (in Chinese)." Dissertation, Shanghai Jiao Tong University.

Wang, J. 2013. "The study on investment of pharmaceutical companies in the context of global patent drugs expiration tide (in Chinese)." Dissertation, Shanghai Jiao Tong University.

Wang, Jian, Dazi Conet Theodore Kouassi, Huixia Liu, Zhongsheng Wu, and Qiong Wu. 2014. "Analysis on Network of IT Service Innovation System: A Comparative Study Between China and India." Science and Technology Progress Policy (in Chinese) 31 (4).

WIPOa (World Intellectual Property Organization). n.d. WIPO-Administered Treaties. Accessed November 5, 2019. https://www.wipo.int/treaties/en/.

WIPOb (World Intellectual Property Organization). n.d. Patents. Accessed November 5, 2019. https://www.wipo.int/patents/en/.

WIPOc (World Intellectual Property Organization). n.d. Trademarks. Accessed November 5, 2019. https://www.wipo.int/trademarks/en/.

WIPOd (World Intellectual Property Organization). n.d. Indusrial Designs. Accessed November 5, 2019. https://www.wipo.int/designs/en/.

WIPOe (World Intellectual Property Organization). n.d. Patent Grants by Technology: India. Accessed April 18, 2020. https://patentscope.wipo.int/search/en/search.jsf.

WIPOf (World Intellectual Property Organization). 2017. World Intellectual Property Indicators 2017. World Intellectual Property Organization, Geneva: World IntellectualProperty Organization, 7.

World Bank. 1980-2019. "World Bank Operational Income Category Changes." World Bank. Accessed November 6, 2019.

World Bank. 2019. World Bank Country and Lending Groups - Country Classification. Accessed November 6, 2019. https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups.

WTOa (World Trade Organization). n.d. TRIPS: What are intellectual property rights? . Accessed November 4, 2019. https://www.wto.org/english/tratop_e/trips_e/intel1_e.htm.

WTOb (World Trade Organization). n.d. Understanding the WTO: The Agreements - Intellectual property: protection and enforcement. Accessed November 5, 2019. https://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm7_e.htm.

WTOc (World Trade Organization). n.d. Frequently asked questions about TRIPS [ trade-related aspects of intellectual property rights ] in the WTO. Accessed April 20, 2020. https://www.wto.org/english/tratop_e/trips_e/tripfq_e.htm#Transition.

WTOd (World Trade Organization). n.d. "AGREEMENT ON TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS." WTO.org. Accessed April 20, 2020. https://www.wto.org/english/docs_e/legal_e/27-trips.pdf.

Wu, J. 2006. "Research on China pharmaceutical industry policy – Based on the perspective of background, behavior and performance (in Chinese)." Dissertation, Fudan University.

Xiangdong Chen, Ruixi Li, Miaochen Lv, Dian Chen, and Lingzi Yang. 2019. "Information Technology Industry in China ." In Innovation, Economic Development, and Intellectual Property in India and China: Comparing Six Economic Sectors, by Applied Research Centre for Intellectual Assets and the Law in Asia (ARCIALA), edited by Uday S. Racherla Kung-Chung Liu, 77. Singapore: Springer Nature Singapore Pte Ltd.

Yang, Guifang, and Keith E. Maskus. 2001. "Intellectual property rights, licensing, and innovation in an endogenous product-cycle model." Journal of International Economics 53 (2001): 169-187. https://doi.org/10.1016/S0022-1996(00)00062-3

Appendix

TABLES

LIST OF INTERNATIONAL IPR TREATIES (observed by either China or India)

S.No. Treaties Year

1 Paris Convention on the Protection of Industrial Property 1883

2 Berne Convention 1886

3 Madrid Agreement (Marks) 1891

4 Nice Agreement 1957

5 Rome Convention 1961

6 Locarno Agreement 1968

7 Patents Cooperation Treaty 1970

8 Strasbourg Agreement 1971

9 Phonographs Convention 1971

10 Budapest Treaty 1977

11 Nairobi Treaty 1981

12 Vienna Agreement 1985

13 Madrid Protocol 1989

14 TRIPS Agreement 1989

15 Washington Treaty 1989

16 Trademark Law Treaty 1994

17 WIPO Copyright Treaty 1996

18 WIPO Performances and Phonographs Treaty 1996

19 TRIPS IP Protection Amendment for compulsory licensing of essential medicines

2005

20 Singapore Treaty on the Law of Trademarks 2006

21 Beijing Treaty on Audio-visual Performances 2012

22 Marrakesh VIP Treaty 2013

LIST OF INTERNATIONAL IP-RELATED TREATIES (observed by either China or India)

S.No. Treaties Year Type

1 United Nations Convention on the Law of the Sea 1994 IP Related Multilateral Treaty

2 United Nations Convention to Combat Desertification in Those Countries Experiencing Serious Drought and/or Desertification, Particularly in Africa

1996 IP Related Multilateral Treaty

3 Cartagena Protocol on Biosafety to the Convention on Biological Diversity

2003 IP Related Multilateral Treaty

4 International Treaty on Plant Genetic Resources for Food and Agriculture

2004 IP Related Multilateral Treaty

5 Kyoto Protocol to the United Nations Framework Convention on Climate Change

2005 IP Related Multilateral Treaty

6 WHO Framework Convention on Tobacco Control 2005 IP Related Multilateral Treaty

7 International Plant Protection Convention (1997) 2005 IP Related Multilateral Treaty

8 Stockholm Convention on Persistent Organic Pollutants (as amended in 2009)

2010 IP Related Multilateral Treaty

9 Convention for the Safeguarding of the Intangible Cultural Heritage

2006 IP Related Multilateral Treaty

10 Agreement for the establishment of the Global Crop Diversity Trust

2004 IP Related Multilateral Treaty

11 Convention on the Protection and Promotion of the Diversity of Cultural Expressions 2005

2007 IP Related Multilateral Treaty

12 Convention on the Rights of Persons with Disabilities 2008 IP Related Multilateral Treaty

13 Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization to the Convention on Biological Diversity

2014 IP Related Multilateral Treaty

14 Nagoya - Kuala Lumpur Supplementary Protocol on Liability and Redress to the Cartagena Protocol on Biosafety

2018 IP Related Multilateral Treaty

15 International Convention for the Protection of New Varieties of Plants (UPOV)

1998 IP Related Multilateral Treaty

16 Protocol to the Convention for the Protection of Cultural Property in the Event of Armed Conflict

1956 IP Related Multilateral Treaty

17 Convention for the Protection of Cultural Property in the Event of Armed Conflict

1956 IP Related Multilateral Treaty

18 International Covenant on Economic, Social and Cultural Rights

1976 IP Related Multilateral Treaty

S.No. Treaties Year Type

19 Agreement between the Government of the Russian Federation and the Government of the Republic of India for the Promotion and Mutual Protection of Investments

1996 IP Relevant Bilateral Treaty

20 Agreement between the Government of the Republic of India and the Government of the State of Israel for the Reciprocal Promotion and Protection of Investments

1997 IP Relevant Bilateral Treaty

21 Agreement between the Government of the State of Qatar and the Government of the Republic of India on the Reciprocal Promotion and Protection of Investments

1999 IP Relevant Bilateral Treaty

22 Free Trade Agreement between India and Sri Lanka 2001 IP Relevant Bilateral Treaty

23 Preferential Trade Agreement between the Republic of India and the Transitional Islamic State of Afghanistan

2003 IP Relevant Bilateral Treaty

24 Framework Agreement on Comprehensive Economic Cooperation between the Republic of India and the Association of Southeast Asian Nations

2004 IP Relevant Bilateral Treaty

25 Comprehensive Economic Cooperation Agreement between the Republic of India and the Republic of Singapore

2005 IP Relevant Bilateral Treaty

26 Agreement on Trade, Commerce and Transit between the Government of the Republic of India and the Royal Government of Bhutan

2006 IP Relevant Bilateral Treaty

27 Preferential Trade Agreement between the Republic of Chile and the Republic of India

2007 IP Relevant Bilateral Treaty

28 Agreement between the Government of the Republic of India and the Government of the Republic of Trinidad and Tobago for the Promotion and Protection of Investments

2007 IP Relevant Bilateral Treaty

29 Preferential Trade Agreement between the MERCOSUR and the Republic of India

2009 IP Relevant Bilateral Treaty

30 Revised Treaty of Trade between the Government of India and the Government of Nepal

2009 IP Relevant Bilateral Treaty

31 Protocol to Amend the Framework Agreement on Comprehensive Economic Cooperation between the Association of Southeast Asian Nations and the Republic of India

2009 IP Relevant Bilateral Treaty

32 Comprehensive Economic Partnership Agreement between the Republic of Korea and the Republic of India

2009 IP Relevant Bilateral Treaty

33 Agreement on Trade in Goods under the Framework Agreement on Comprehensive Economic Cooperation between the Association of Southeast Asian Nations and the Republic of India

2009 IP Relevant Bilateral Treaty

34 Comprehensive Economic Cooperation Agreement between the Government of the Republic of India and

2011 IP Relevant Bilateral Treaty

S.No. Treaties Year Type

the Government of Malaysia

35 Agreement between the Government of the Republic of Chile and the Government of the People's Republic of China concerning the Encouragement and the Reciprocal Protection of Investment

1995 IP Relevant Bilateral Treaty

36 Agreement between the Government of the Republic of Uzbekistan and the Government of the People's Republic of China on the Protection of Intellectual Property Rights

1999 IP Relevant Bilateral Treaty

37 Framework Agreement on Comprehensive Economic Cooperation between the Association of South East Asian Nations and the People's Republic of China

2003 IP Relevant Bilateral Treaty

38 Agreement between the Government of the People's Republic of China and the Government of the Republic of Bolivia concerning the Encouragement and Reciprocal Protection of Investments

2003 IP Relevant Bilateral Treaty

39 Closer Economic Partnership Arrangement between China and Macao, China

2003 IP Relevant Bilateral Treaty

40 Agreement on Cooperation in the Field of Intellectual Property between the Government of Ukraine and the Government of the People's Republic of China

2004 IP Relevant Bilateral Treaty

41 Agreement between the Government of the Republic of Trinidad and Tobago and the Government of the People's Republic of China on the Reciprocal Promotion and Protection of Investments

2004 IP Relevant Bilateral Treaty

42 Agreement on Trade in Goods of the Framework Agreement on Comprehensive Economic Cooperation between the Association of South East Asian Nations (ASEAN) and the People's Republic of China

2004 IP Relevant Bilateral Treaty

43 Free Trade Agreement between Chile and China 2006 IP Relevant Bilateral Treaty

44 Free Trade Agreement between China and Pakistan 2007 IP Relevant Bilateral Treaty

45 Free Trade Agreement between the Government of New Zealand and the Government of the People's Republic of China

2008 IP Relevant Bilateral Treaty

46 Agreement on Trade in Services between China and Pakistan

2009 IP Relevant Bilateral Treaty

47 Free Trade Agreement between China and Peru 2010 IP Relevant Bilateral Treaty

48 Framework Agreement on the BIMST-EC Free Trade Area and its Protocol and the Declaration establishing the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation

2004 Regional Economic Integration Treaty

49 Agreement on South Asian Free Trade Area 2005 Regional Economic

S.No. Treaties Year Type

Integration Treaty

50 First Agreement on Trade Negotiations among Developing Member Countries of the Economic and Social Commission for Asia and the Pacific (Bangkok Agreement)

1976 Regional Economic Integration Treaty

INDICES

International Commitment Index (China)

Year IP Treaty Obligations (+1)

IP Related Treaty Obligations (+0.5)

International Pressure (Total)

2009 17 13.5 30.5

2010 17 14 31

2011 17 14 31

2012 18 14 32

2013 19 14 33

2014 19 14 33

2015 19 14 33

2016 19 14.5 33.5

2017 19 14.5 33.5

2018 19 14.5 33.5

International Commitment Index (India)

Year IP Treaty Obligations (+1)

IP Related Treaty Obligations (+0.5)

International Pressure (Total)

2009 10 14.5 24.5

2010 10 14.5 24.5

2011 10 15 25

2012 10 15 25

2013 11 15 26

2014 12 15.5 27.5

2015 12 15.5 27.5

2016 12 15.5 27.5

2017 12 15.5 27.5

2018 14 16 30

Innovation (India)

Year GII Index Score

Innovation Input Score

Innovation Output Score

Level of Innovation (Total)

2011 34.52 36.47 32.56 103.55

2012 35.7 34 37.3 107

2013 36.17 35.77 36.56 108.5

2014 33.7 36.97 30.42 101.09

2015 31.74 35.51 27.97 95.22

2016 33.61 40.49 26.73 100.83

2017 35.47 42.84 28.11 106.42

2018 35.18 42.53 27.83 105.54

Innovation (China)

Year GII Index Score

Innovation Input Score

Innovation Output Score

Level of Innovation (Total)

2011 46.43 46.08 46.77 139.28

2012 45.4 42.7 48.1 136.2

2013 44.66 45.19 44.12 133.97

2014 46.57 45.79 47.35 139.71

2015 47.47 48.36 46.57 142.4

2016 20.57 53.12 48.02 121.71

2017 52.54 54.22 50.87 157.63

2018 53.06 55.13 50.98 159.17

IPR Utility (India)

Year Patents Trademarks Industrial Design

Total IP Filings

2009 11,939 1,53,938 4,886 170763

2010 14,871 1,90,326 6,738 211935

2011 15,897 1,94,796 8,179 218872

2012 18,201 1,97,877 7,137 223215

2013 20,907 2,04,987 7,006 232900

2014 22,444 2,37,250 8,021 267715

2015 23,990 2,83,491 9,257 316738

2016 25,853 2,94,375 7,882 328110

2017 28,009 2,72,137 10,374 310520

2018 30,036 3,33,441 15,211 378688

IPR Utility (China)

Year Patents Trademarks Industrial Design

Total IP Filings

2009 2,41,435 8,38,071 3,69,631 1449137

2010 3,08,327 11,13,120 4,48,121 1869568

2011 4,36,168 14,45,916 5,63,868 2445952

2012 5,61,404 16,94,024 7,18,127 2973555

2013 7,34,093 19,40,908 7,65,242 3440243

2014 8,37,814 24,22,084 6,77,318 3937216

2015 10,10,524 31,00,283 7,30,548 4841355

2016 12,57,425 41,92,656 7,94,092 6244173

2017 13,06,080 63,88,344 8,62,625 8557049

2018 14,60,244 81,18,135 9,57,241 10535620