Business Law

Role of IPR in the Growth of an Economy

By Adv. Apurva Chodankar

Intellectual Property can be described in various forms, it has grown tremendously for the past few years. Some countries have stringent legislation of Intellectual Property Rights (IPR) which contributes to the growth of an economy and the development of the country. New inventions and innovative ideas play an important role in IPR to strengthen its economy. Often, there arises a question in the mind of a common man as to how does intellectual property rights affect the development process in the terms of economy? Objects like pens, pencils, tables, chairs, computer, automobiles, utensils, and so on are used in day-to-day life, all these objects are human-made with the help of tools and the use of modern technology.  

There are a number of reasons for the economic development and the growth process which are based on factors like Gross Domestic Product (GDP), Foreign Direct Investment (FDI), production, consumption, trade of goods and services its history, and so on. IPR revolves around the success and productive circumstances of each country.

International establishments like the Agreement on Trade-Related Aspects of Intellectual Property Rights also called as TRIPS Agreement and World Trade Organization (WTO) pose a question as to how far it will make an impact on economic growth. Internationally, it is observed that the developing countries are very careful while drafting IPR laws as it involves the process of innovation, Foreign Direct Investment (FDI), and technology. 

The developing countries are willing to have stronger patent rights though there is uncertainty whether the new arrangement/ authorities will be able to have successful economic growth and development on the basis of progressive models of the developed countries.

The factors that are responsible for the growth of the economy are International Trade, Foreign Direct Investment (FDI), licensing, research, and development (R&D). Studies suggest that IP laws encourage the development process in the economic growth for suitable changes, these changes help the IP laws to expand and have a fair competition in the market. 

Establishing exclusive rights to use and sell the goods and services, requires promoting a stake in knowledge, creativity, and innovative business venture. In case of the absence of such rights, the valuable information could be relevant without compensation by an opponent.

The importance of economic growth for any country is to adopt and accept new foreign technologies. It is mostly the developing countries that learn from or look upon the developed countries. Countries that have low Gross Domestic Product (GDP) growth, tend to have less development success of the technology. 

Economic development plays a vital role in IPR as there may be positive impacts as -well -as negative impacts. Positive impact would mean that there is an inter-dependency of economic growth and economic development. IPR encourages inventors to innovate new things, produce new products, and have technical changes. Developing countries are more likely to opt for a low-cost replica of outside products and machinery. As a result, the local laws are not able to grant protection to such inventions. Even when there is a low level of economic development there can be restrained on technical changes.

Whereas, negative impact states that while making the IPR law stronger, it is difficult to keep balance in the growth and development of developing countries because there is already labor that is doing unauthorized work like copying or duplication of other works, such labor try to search and improve their skills, so by the time when laws are made in the developing countries it is a challenging work to frame and implement policies with stronger IPRs. There is a lot of pressure on policymakers to introduce powerful and stringent laws. 

The developed countries are mostly in support of the concept of monopoly in the market. These countries have given protection to product patents in agricultural, medicinal drugs, chemicals, biotechnology, and plant breeds. These will have a major holdover in the market. 

Coming to the position of India with regards to IP laws there has been significant growth in research and development areas, many new establishments and infrastructures are set up. The future is based on innovation, ideas, knowledge, ability to gain wealth. The present 21st century is called the “century of technology and artificial intelligence.”

The development process with regards to the economic growth is slow because, in the past, the IP laws were not in consonance with the TRIPS Agreement, India became a signatory to TRIPS Agreement in the year 1994, it came into force on 1st January 1995. Thereafter, MNCs started investing in Indian markets. There was a need to make necessary changes to be made to IP policies and regulations. India is a diverse and developing country, changes are comparatively slow.

After all the compliance with the TRIPS agreement, many multinational companies started to invest in India. This has a direct influence on the economy of the country as it has given rise to employment and the transaction of taxes. Companies like Ranbaxy have employed 1700 people in the year 2005, the number of employees increased to 10983 in 2012. Dr. Reddy’s employed 7525 people in the year 2006, the number of employees went up to 23524 in 2018.

The total revenue brought about by the Intellectual Property Officers of India was Rs. 608. 31 crores in the year 2016-2017.

The Department Related To Parliamentary Committee On Commerce presented its 161 reports of the intellectual property rights regime in India, which has stated that, in the year 2019, 2,50,000 patents were granted which is quite low as compared to the US and China. IP crimes like counterfeiting and piracy are rising, this is a threat to IPR that needs to be controlled urgently. The report has also pointed and made comparisons with the United States and European Union.

India has ranked 46th by the World Intellectual Property Organization in the Global Innovation Index 2021 ranking. For the past few years, India ranked at Global Innovation Index (GII) for rank 81 in 2015 to 46 in 2021.

 The Modern IPR system is not fully sufficient to overcome the problems faced in the existing structure and effective technological transition. The legislation must be based on a broader vision as it becomes easier to be in competition policies. These policies should be focusing on skill development, as to how to market enterprising work, transparency aspect should be covered, fair competition rule and no discrimination. Also, some economists have pointed out that there has to be a check kept on the balance and benefits incurred by such innovations in IPR. The underdeveloped and developing countries will not be able to spend money on expensive innovation as a result, countries that are developed will not be so much interested in investing in countries that are economically backward.  

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