Thursday 14 March 2013

Moving Ideas to Markets at Veda Semantics

-Ganesh Subramanian, IP Dome
First – Invest Early to Protect Ideas

eMudhra provides secure communication solutions for mobile and web applications. Since 2008, Taxsmile, an eMudhra flagship product, is widely used by thousands of Indians to file their taxes online. In 2009, eMudhra approached IP Dome to protect and brand its ideas relating to secure communication and semantic applications. Veda Semantics (hereinafter Veda) is eMudhra's venture in semantic technology. Veda applications collect and organize unstructured data repositories to present superior information content for mobile and web applications.

"I would like the message to contain a link to the site with the full judgement."

-A leading lawyer at High Court of Madras

Next – Products Must be Tailored

Veda continues to develop tailored solutions for lawyers, doctors, accountants, recruiters and other professionals. Veda's products comprise Veda msg, Veda txt, Veda mobinary and Veda eXbrl, all of which use semantic technology to return contextual information that can be superior to traditional keyword based search. Veda msg, for example, provides lawyers with updates on the latest Indian case law on the subject of their choosing. Veda obtained patent protection for its technologies in India and Africa. Trademark protection was obtained in India, Africa and the United States.

 "it is a good input on the go and since the section is mentioned it is possible to search it and use it"

Ganapatheeswaran, Advocate, High Court of Madras
Lessons from Veda

By investing  early in protecting its ideas, Veda was  able to best adapt its products and services at the product development stage. Later, in the process of filing its patents, it perfected its product mix. Other important information such as knowledge about its competitors was made discoverable via a prior art search. On the other hand, startups with poor understanding of user or market needs, risk failure.

Women's Day Special Edition

-Swapna Sundar, CEO, IP Dome
 A Successful Woman Engineer? Or A Successful Engineer Who Is Also A Woman?
 This is the question I asked as the Keynote speaker at the Observance of Women's Day at Mailam Engineering College on the 8th of March, 2013.

After a fairly long trip - during which owing to the threshing of grain on service lanes along the National Highway, we took a serene road - I reached the temple town of Mailam, and espied the tall, colourful and futuristic buildings of the Mailam Engineering College.
At the entrance I was welcomed by the gracious Principal Dr. Senthil and Ms. Vijaykumari who was instrumental in my invitation along with Ms. Sumithra who was coordinating the events.
A sumptuous banana leaf lunch had been arranged for me and the special invitees - the women members of the Management trust. Ms. Abhinaya, studying MBA and her team provided warm hospitality. 
The college auditorium was filled to overflowing with about 850 women students of the college. Owing to paucity of space they had been unable to accomodate the men students and the women I year students. The atmosphere was festive and anticipatory.
The programme began with 'Thamizh Thai Vaazhthu' led by the students. The Principal's Welcome Address was an eye-opener for me. He spoke about the origins of the college which were started by the Mailam Murugan Trust to bring technical education to the surrounding rural areas.
The forty-Acre Mailam campus of the group houses both the MBA and engineering colleges and hostels for men and women students. The Trust in conjunction with the Mankula Vinayakar Trust also runs schools for medicine, nursing and other disciplines of higher education. I was delighted to learn that the number of women students in the college had grown from about 350 in 1998 when the college was opened to about 1500 in 2013. We were informed that the college first began observing Women's day in 2006 when the small group of women could be seated in a smaller hall. "And," added the Principal, "I am wondering where I am going to fit the women's day programme next year - perhaps in the open air auditorium!". He went on to extoll the virtues of the women students in the college - discipline, dedication to their field of study, patience, intuition and caring.
I was given 40 minutes to make my presentation. The presentation is uploaded here 
I made the presentation as interactive as one can with an audience of 850 - which isn't much, but I found the response remarkable. Two girls - Vidya and Aishwarya - came up to make their presence felt at Slide 12, which was a really inspiring moment. I was given to believe that these girls from rural Tamil Nadu would need a lot of encouragement to break out of their shells; however, I found them ready to engage with the issues of the day, and also confident and willing to express their opinions freely. The credit definitely goes to the management.
A word about Ms. Vijaykumari who contacted me through a mutual friend - Gayathri, an officer in Central Excise. Vijaykumari is the Student Counsellor at the college. Students and staff informed me that she is doing a great job of supporting the students through issues of late adolescence and young-adult hood, complicated as it is in India with the high expectations of parents and cultural obstacles.
Addressing the students as engineers-in-the-making, rather than as young women, I pointed out the importance of maintaining relationships with women classmates, colleagues and friends which provides much needed support, strength and resource at crucial moments in our lives. I also pointed out that technical education for women is essential and that several women in the world have shown that technology is comprehensible and indeed can be mastered by women. Further, a technologically superior female work force is critical to a country's innovation goals and competitiveness.
I hope the students found my talk interesting and useful.
My talk was followed by a cultural programme with a bharatnatyam recital, several group dances, a mime on women's empowerment and dance aimed at raising awareness of the plight of Tamil women in Sri Lanka.
I enjoyed the event and look forward to future interactions with the Institution.
(c) swapna sundar, 2013


-Swapna Sundar, IP Dome

On the 4th of March, 2013, the IPAB passed orders on the Bayer V. Natco Compulsory Licensing application.[1] The present order confirmed the order of Compulsory License passed by the Controller of Patents, Mumbai on 12th March, 2012, and modified it only in the rate of royalty to be paid to the Patentee, Bayer by the Compulsory Licensee, Natco. The case has made it apparent that companies entering India with patents must follow radically new strategies to benefit from their patents. And after studying the case in quite some detail, I am of the opinion that the best strategy is responsible use of the patent and surrounding IP.

From the case, we have identified certain lessons for companies aspiring to get and use Indian patents commercially.

1.            Indian patents are granted to inventive technologies to encourage socio-economic development, technological advancement, transmission of technology to the public domain and the dissemination of technology to the mutual advantage of manufacturers and users.

In India, by way of patent disclosure, the new technology should enter the public domain to benefit both the manufacturers and the users of the technology. Patent owners should ensure that the patent is used to encourage socio-economic development, say by setting up a factory to produce the product or train workers to gain a new skill. Bayer failed in its duty as the owner of an Indian patent as it made no effort to encourage socio-economic development.

Strategically, the owner of an Indian Pharma Patent should take advantage of governmental initiatives including 100% FDI in greenfield projects and up to 49% in brownfield projects to enter the manufacturing segment. Perhaps some lessons can be learnt from the foreign car companies with Indian manufacturing units who are competitive against CBU importers simply given the difference between taxes on Indian-manufacture units v. imported units. Moreover, as the companies are invested in India for between 20 and 50 years, they are able to sell each unit more cheaply leveraging the long-term investment.

2.            Patents are granted in India to make the benefit of the patented invention available at reasonably affordable prices to the public without undue delay. Further, the grant is not absolute but conditional upon the use of the technology for the benefit of the public at commercial scale without undue delay and at reasonable prices.

Patents are not granted as a reward for exceptional inventiveness or to enable the inventor to recover his R&D expenses. Patents are granted to ensure the inventor works with a sense of security surrounding his invention, confident that should there be infringement he can always have remedies in law; and that he works with this confidence to bring the benefit of the invention to the general public at reasonable cost. The reasonable price at which the drug is to be made available to the public does not depend on the cost of developing the drug, but on the economic position of the consumer of the drug.

Strategically, in marketing the patented drug product, the manufacturer must delink R&D costs from the pricing plan. This is easier said than done. One way of delinking R&D costs from the price of the drug suggested by the Knowledge Ecology International (KEI), which was also heard in the case, is a ‘National Innovation Prize’ or a Governmental grant from a dedicated fund that could compensate the costs of developing a marketable invention, thereby enabling the inventor to sell the drug at an affordable cost.

It has been made clear in the IPAB decision that the general cost of development of new drugs in the industry cannot guide pricing for a particular drug. Drug price has to be decided on a case to case basis. As manufacturing costs are lower in India, drug companies should consider manufacturing the drug in India rather than importing and transferring the applicable taxes to the consumer.

Companies choose to enter special therapeutic areas with a clear business agenda. Strategically, in the case of orphan drugs, companies with a large range of product lines, like Bayer, should create internal mechanisms by which profit from drugs with high market potential can be leveraged against those with lower profit margins over a longer period of exclusivity.

3.            The working of a patent is essential for its survival for 20 years. Working implies substantial ‘working’ which could be adequate importation at a commercial scale, processing, manufacturing, packaging or substantial assembly of the patented product in India. The applicant for compulsory license must demonstrate that he is willing and able to ‘work’ the invention and make the benefits of the invention available to the public at a reasonable price without undue delay.

While the Controller of Patents, Mumbai had decreed that the ‘Working’ requirement meant ‘Local Manufacture’ or ‘local working’, the IPAB judgement disagrees with this and suggests a more flexible meaning. The IPAB states that even if ‘import’ would suffice for fulfilment of ‘working’ requirement, it has to be on a commercial scale to an adequate extent and should be affordable to the public at a reasonable price. Further, the ability of the patentee to provide capital for working, and sincere efforts to increase the market and access to the market shall be considered towards making a decision on whether the patentee is ‘working’ the invention. It is interesting to note that charitable activities and subsidised sales would not be termed ‘working’; neither will infringing use by a non-licensed party.

Strategically, the holder of an Indian Patent should be aware that the ‘working’ requirement means that he has to attempt to reach the widest possible consumer base at the earliest possible time. This he should do through a good long-term pricing strategy, or licensing to ‘authorised generics’ in India to leverage the existing supply chains of the authorised generics until their own supply chain can take over, tying up with hospitals and government health care systems and by creating a strong and reliable brand.

5.            Licensing conditions cannot be onerous. They cannot amount to restraint on trade, prevention of international transfer of technology, exclusive grant back of IP, prevention of challenges of validity of the patent, or stifling the Indian manufacturing industry through importation.

Holders of Indian patents should be aware that anti-competitive practices such as unreasonable restraint on trade, or exclusive grant back of IP or agreements preventing challenges of patent validity can result in the patent being unenforceable. This resonates positively with other regimes globally.

Strategically, the holder of an Indian patent should work closely with the licensee to improve the patented technology or process, making it more effective or cheaper, and thereby increasing the consumer base. Given India’s strengths in research and manufacture in the pharmaceutical sector, the patent holder can leverage the lower cost of research and development in India, creating a strong local brand and better products for a global market. Strong and positive collaboration with the generic industry in India is bound to show positive outcomes for both the generic industry as well as the patent holder as the generic player becomes a partner in the industry rather than a competitor.

6.            In considering an application for compulsory license, the Controller takes into account as to whether the applicant has made efforts to obtain a voluntary license from the patentee on reasonable terms and conditions and the refusal to grant a voluntary license within a reasonable period.

A compulsory license would be granted to another participant in the market if his legitimate demand to work an ‘unworked’ patent is refused by a patent holder on unreasonable grounds or through the device of unreasonable delay.

Within a few months of the grant of the compulsory license by the Controller Bristol-Myers-Squibb is fighting a Compulsory License application against its cancer drug, Sprycel (dasatanib).  As compulsory licensing becomes more common, strategically, a patent holder would do better to design his course of action. The patent holder should sincerely attempt to capture a large part of the market, or be willing to license to authorised generics. Attempts to capture the market should be documented fully including market surveys, studies on brand acceptability, studies for deciding on pricing strategy, supply chain and royalty payments should be documented to prove that the patent holder is sincere in his attempts to ‘work’ the invention. A close watch on the generic competition becomes imperative.

7.            In considering an application for compulsory license, the Controller will also consider whether the reasonable requirements of the public with respect to the patented invention have been met by the Patentee.
Reasonable requirements of the public are deemed not to have been met if by reason of the refusal of the patentee to grant the license on reasonable terms, manufacturing industry is prejudiced, the demand for the product is not met on reasonable terms, the market for export of the patented article manufactured in India is not being supplied, or the establishment of commercial activities in India is prejudiced.

Strategically, an inventor should undertake a study of the Indian market prior to entering the market, or filing a patent in India and file a patent only if a reasonable expectation of commercial success is reported. In the NEXAVAR case, it seems obvious that the market would not support the product at the price at which it was necessary for Bayer to sell the drug to make a profit. The failure of market studies would leave the product open to market and compulsory licensing challenges.

8.            Anti-competitive practices and preservation of monopoly by trivial improvements in technology are not encouraged by the IP system in India.

Having considered the real possibility of facing a compulsory license application, and decided on a more liberal licensing course, it is essential for the patent holder to ensure that his licenses are not deemed to be restrictive or anti-competitive Restrictive technology licensing contracts including conditions such as exclusive grant backs, and contracts preventing challenges to validity are sought by patent holders to expand the scope of and extend the monopoly of the original granted patent. Other tactics include seeking patent rights over trivial improvements and minor modifications. All of these are prohibited specifically by the Indian Patent Act. Coercive package licensing contracts which force the licensee to license patents that are not required by him are also anti-competitive and restrictive contracts. Patent laws in certain jurisdictions prohibit experimentation on the product to improve it, without a specific license authorising such use of the patented product.

Strategically, a patent holder should be careful in crafting voluntary licenses. Exclusive grant back licenses can be considered acceptable means of protecting a technology licensor’s interests while promoting the licensing of the underlying technology. If the improvement is closely related to the patented technology, the license is non-exclusive and if the term of the grant-back license is less than or equal to the term of the patent protection on the underlying technology it would be acceptable in law while ensuring that the patentee meets the strict criteria of the Indian patent regime.

Some modifications and improvements would not be patentable in India, in which case a carefully crafted license agreement would protect the interests of both the improver of the technology as well as the holder of the original patent.

© Swapna Sundar 2013

[1] Order No.45 of 2013 in OA/35/2012/PT/MUM passed by Hon’ble Smt. Prabha Sridevan, Chairman with D.P.S.Parmar, Technical Member