2.4 Protection and Promotion of Industrial Property Rights

Lincoln has very aptly said: the patent system adds “the fuel of interest” to “the fire of genius". Inventions and innovations are the bedrock of technology generation, and industrial and technological progress. These constitute the driving force of technology, economy and even culture of a society. Reliable guarantees of granting and using industrial-property rights (inventions, industrial designs, trade marks for goods and service, etc.) are important characteristics of a civilized country. A country’s system for the protection of industrial-property rights is an integral part of the overall system for the protection of intellectual property in a country. The latter caters for the development of national economy, protection and improvement of the scientific and engineering potential, development of foreign trade, stimulation of innovation activity, as well as protection of economic and social interests of the citizens.

One of the most important measures in respect of a country's efforts for protection of industrial-property/rights is the establishment of a patents office. Patents office usually performs the functions of a central executive body and ensures realization of the policy objectives, through the enforcement of legislative and administrative stipulations. Usually the laws are promulgated in relation to the protection of rights in inventions, utility models, industrial designs, marks for goods, services, development of varieties of plants, etc.

A few specific points can be made about the usefulness and feasibility of a patent system in a developing country. First, a patent system requires a procedure for validating claims by applicants that a new product or process represents "a significant technological advance" with clear industrial applicability. The enforcement of the industrial-property protection laws is a matter falling certainly in the purview of the international treaties. The countries have to adopt such treaties in order to be eligible to export freely. The conditions attached to the membership of General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) invariably require ratification and enforcement of such laws in the member countries.

However, there are certain impediments and drawbacks associated with the ratification and promulgating of such enactments. First, considerable expertise in a particular area is required to evaluate the significance of a new technology. In many developing countries, such expertise is in short supply and it is legitimate to ask whether the limited supply could be more usefully employed in the productive-sector for generating technologies, rather than in the public-sector, evaluating them. A further concern is that, if a country does not discriminate between nationals and multinationals in awarding patents, a vast majority of patents in many countries would be registered and awarded to the multinationals, which are much more active in innovation. If the profits from the foreign-owned patents are transferred abroad, then the answer to whether the country benefits from patenting depends on: (i) whether the product would have been developed otherwise, and (ii) whether the social benefits to the country, at the expiration of the patent, from having that product available are greater than the social costs of paying higher prices for it during the life of the patent. Another issue relates to the possibility that much of the innovation that occurs in developing countries is incremental in nature, consists of minor improvements to a production process; firms can only benefit from such innovations by keeping them secret.

If market protectionism on the one hand, inhibits the national innovation-mood, it at the same time becomes necessary and only viable alternative to give incubation to the young, immature start-ups. This is necessary to safeguard the local entrepreneur against the breakneck competition prevalent in the international markets. An example in this regard is the manufacture of the Ammonia Compressor for ice-plants and cold storages: restriction on import of new machinery provided impetus to the development of this industry in the local market. The earlier fears of a tendency to establish a monopoly by some manufacturers to deliver low-quality products have been dissipated with the emergence of a number of local competitors in the market. Through a fair competition, the manufacturers have been able to considerably increase the quality of their products.