Biotechnology is one of India’s fastest
growing industries.
However, biotechnology industry is still in its infancy
compared with the robust and well-developed pharmaceutical
industry. Even as early
as 1990s, 90% of the total global patents of biotechnology were
collectively concentrated in the hands of United States (41%), Japan
(36%) and Europe (19%). This can be attributed to the fact that
major R&D establishments are stationed in these developed
countries. India too is
focusing on the need to establish funds to finance R&D. The R&D expenditure of
the Indian industry in the year 2000 stood at 2% of the sales
compared with that of 18.5% of their US counterparts. But everything is not
gloomy, as it seems.
Major pharmaceutical companies have started spending around
4-7% of sales on their R&D.
In technology transfer, the control
over hardware or software is institutionalized through certain
safeguards such as patents, so that rights of the possessor are
protected. The countries which have well established Research and
Development (R&D) dominate in the sphere of patents. In recent
times, marked by liberalization and privatization, transnational
corporations have become major forces of R&D. Technology transfer is
implemented at two levels, at the government level between the
states and at the private level between transnational
corporations. There are
different modes of technology transfer existing in the current
international system.
They include foreign direct investment, licensing and joint
ventures that involve the transfer of equipment and materials,
skilled manpower, know-how and organizational innovations. Other
prominent modes of technology transfer include franchising, design
and drawing, management contract, marketing contracts technical
service contracts, turnkey contracts and international
sub-contracting.
With this background in mind, this
article plans to focus on the problems faced by Indian Educational
Institutions in Technology Transfer.
1.
Non-patented technology:
Indian educational institutions face the problem in
technology transfer when the technology is non-patented (consisting
of trade secret and know-how).
Non-patented technologies form a major chunk of technology
transfer agreement around the globe, especially in the United States
and Japan.
Interestingly, in Japan, 50% of such technology transfer
agreements cover know-how or trade secret. Naisbitt, the author of
“Megatrends” in his first chapter describes the changeover from an
industrial society to an information society, mentions know-how as
the new form of wealth.
But when such non-patented technology is to be transferred,
it creates complex problems of scope, duration and termination. For Illustration, if the
technology is patented, the transferee pays royalty only for the
life of such patent (i.e. 20 years). Whereas, if such technology
is non-patented, transferee would have to pay royalty for more than
20 years (since the technology would have no expiry or protection
terms).
2.
Black Box
problem: The second
threshold problem is that of maintenance of secrecy during
negotiation of such non-patented technology. The Indian educational
institutions is not interested to pay unless they knows what exactly
are they paying for and the seller is not interested to disclose his
non-patented technology unless he receives payment. This is the so-called ‘black
box” problem the Indian educational institutions face.
3.
Strategic
importance of Trade secret:
The Black box problem arise because the owner of such
non-patented technology prefers not to file for patent
protection. Why the
owner of such technology does not file for patent protection is a
strategic business decision.
Patent provides protection for 20 years while trade secret
can be protected indefinitely.
Thus, there may be a clear incentive for the owner of such
technology to not avail patent protection. For illustration, Coca Cola
is a trade secret formula, which was strategically not patented but
kept as a confidential trade secret. Thus, when the technology is
a trade secret, it creates even further problems for Indian
educational institutions.
4.
Patenting
Biotechnology in India:
Another major problem in the area of biotech technology is
that the Indian Patents Act 1970 recognizes only process patents and
not product patents.
This loophole resulted in the burgeoning pharmaceutical
industry, which is based on reverse engineering. Even though biotechnology is
one of the fast-growing areas, its growth is hampered by patent
uncertainty. Similarly,
when an educational institution owns such biotechnology, it cannot
patent it in India creating problems in transfer and policing of
such technology.
5.
Technical
problem in Evaluation of technology: The educational institutions in India
face a unique problem of evaluation of the technology. The so-called black box
problems present us with a problem of evaluation. Unless the educational
institutions know what they are buying, they may not be able to
evaluate the economic feasibility of the technology. This may lead the
educational institutions to either underestimate or overestimate the
economic of such technology creating a business blunder. Furthermore, what are the
mechanisms available for a non-profit organization like UoP to
evaluate technology it wish to buy? Evaluating the economics of
technology is a difficult job for a non-profit organization if it
has no such business background (which of course is very typical of
Indian educational institutions).
6.
Absence
of Technology Transfer Center:
The Indian
Educational Institutions need Technology Transfer Center on the
basis of National Technology Transfer Center (NTTC) in the United
States. NTTC is a
full-service technology-management center, providing access to
federal technology information, knowledge management and digital
learning services, technology assessment, technology marketing,
assistance in finding strategic partners, and electronic-business
development services. The NTTC fosters relationships with national
clients, showcases technologies and facilitates partnerships between
clients and. industry.
III.
Conclusion:
The
need to have a systematic system in place to deal with technology
transfer is not only going to help in the long run but assure the
participation of many Indian educational institutions in such a
purported “long run”.
The
liberalization of Indian economy and the WTO obligations wherein
international education institutions could very much become part of
our education arena makes is empirical for Indian educational
institution not only to impart education but also to generate
technology like their foreign counterparts and license it to
generate revenues.
© Vishal
Katariya
LLB., LLM (UK)., LLM
(US).
IPR-Chair: University of
Pune
WWW.unipune.ernet.in/chairs/iprchair
(O)20-560 1386, (R)
20-565 2661
