B Y M A R G A L I T E D E L M A N

&Inventors,

Innovations

Intellectual

Property

Inventors,

Innovations

Intellectual

Property

S p o n s o r e d b y

Hispanic American Center for Economic Research

Inventors,

Innovations

Intellectual

PropertyB Y M A R G A L I T E D E L M A N

&Inventors,

Innovations

Intellectual

Property

Sponsored by HACER Hispanic American Center for Economic Research© Copyright 2001

‘‘The high level of intellectual property protection and the

unparalleled access to the U.S. market provided by an American patent

served as the greatest incentive to patent in the U.S.’’

With the U.S. economy thrivingand advanced by an informationrevolution, the once staid subject

of intellectual property has received greaterpublic attention.The financial impact of suchknowledge-based products as computer pro-grams, pharmaceuticals, and evenentertainment-related goods (films, videogames, etc.) has increased awareness of the lawsand principles that protect their producers.Much recent debate on the topic has spanneda wide gamut—from the legitimacy of softwarepatents and the public health implications ofowning genetic information to online swap-ping of digital music and software.

Nonetheless, the intrinsic value of intellec-tual property has long been enshrined inAmerica. Indeed, the founding fathers includeda provision on patenting in the constitutionand the first patent office was created in 1790,headed by none other than Thomas Jefferson.

Yet, in many other countries, acknowledge-ment of intellectual property rights is a recent(and often controversial) development.As thesecountries struggle to implement an intellectualproperty rights regime that balances inventor’srights and the public good, many researchershave sought to demonstrate the benefits ofestablishing patent, copyright and trademarkprotections.

Much research has focused on the connec-tions between intellectual property and foreigninvestment. Edwin Mansfield demonstrated aclose correlation between American, Japaneseand German firms’ willingness to invest in foreign countries and the level of intellectualproperty protection provided. Similarly, RichardRozek and Robert Rapp found a causal linkagebetween increasing intellectual property protec-tion and stimulating economic modernization.

Rather than duplicate the work of theseresearchers, we sought to gauge the impact ofintellectual property protection from anotherviewpoint: that of inventors.We hoped to find

out the ways in which such protections (ortheir absence) help or hinder these creators ofintellectual capital.

We contacted foreign inventors who hadpatented inventions in the United States todetermine the primary reasons for patentinghere and to investigate any possible correlationbetween the level of intellectual property pro-tection provided by the United States, theinventor’s home country and the decision topatent in the United States.

We also wanted to see how countries couldcreate optimum conditions to promote andsupport innovation and invention. In our orig-inal survey and in secondary interviews, wequestioned inventors to find out what drovetheir inventive processes, what bureaucratic andinstitutional hurdles they faced, and what theirgovernments (as well as the business commu-nity) might do to encourage inventive efforts.

We specifically targeted three countriesoften cited by the United States TradeRepresentative for poor intellectual propertyprotection:Argentina, India, and Egypt.We alsosought inventors in Mexico, a country thatimplemented intellectual property reform as aresult of obligations under the NAFTA treaty.Additionally, we sent out surveys to a randomselection of Latin American inventors.

Our results demonstrate that the high levelof intellectual property protection and theunparalleled access to the U.S. market providedby an American patent served as the greatestincentive to patent in the U.S.A. A majority ofthe inventors also agreed that the U.S. patentprocess, particularly the speed and reputationof United States Patent and Trademark Office’s(USPTO) technical examination, influencedtheir decision.A third of all respondents con-curred that their country’s lack of adequateintellectual property protection encouragedthem to patent in the U.S., while about 22%said that an American co-inventor was a factorin the choice.

Margalit Edelman 1

Introduction

Thomas Jefferson, inventor and the firstCommissioner of the U.S. Patent andTrademark Office

Our inventor respondents were nearlyunanimous in their agreement thatthe high level of intellectual prop-

erty protection provided by a United Statespatent influenced their decision to patent inthe United States.

Nearly 60% of the inventors strongly agreedwith the statement,“I patented my inventionin the U.S. because the U.S. provides anextremely high level of intellectual propertyprotection.”Another 33% agreed with thestatement, while only 6% were neutral and 1%disagreed. [See Table I]

We also asked the inventors to respond tothe statement,“I patented my invention in theU.S. because my country lacks adequate intel-lectual property protection”

The response to this statement was lesshomogeneous, but telling nonetheless. Onethird of all respondents strongly agreed oragreed with the statement, a relatively highpercentage.About 25% were neutral, and 40%disagreed or strongly disagreed. [See Table II]

The notion of “adequate” intellectual prop-erty protection, however, involves much morethan having patent, copyright and trademarklaws on the books.The strength of the laws,actual implementation and enforcement varygreatly among the countries surveyed.

The Trade Related Aspects of IntellectualProperty (TRIPs) agreement, a part of the1995 Uruguay round of negotiations that cre-ated the World Trade Organization, set globalstandards for intellectual property protection.Depending on their level of development,

countries had between one and ten years toimplement agreed minimums of patent, copy-right and trademark protection.

Many countries used the transition periodto improve copyright laws, adding protectionsfor software and other innovations. However,TRIPs—required patent law adjustments havefaced more controversy.

While copyright laws are frequently consid-ered to be a way of protecting the interests oflocal performers, artists and others, strongerpatent protection is often perceived to be indirect conflict with local industries—mostnotably in the pharmaceutical sector—thatcopy patented products. Many countries didnot protect pharmaceutical patents prior to theUruguay Round, and the implementation ofsuch protections has met with much politicalstrife as local copy-based industries often challenge research-based (usually foreign) com-panies. For many politicians, the long-termbenefits that a culture of intellectual propertyrights offers do not necessarily outweigh thepolitical costs of short-term adjustments.

Ironically, many of the local companies thatreject stronger patent protection end uppatenting their innovations in the UnitedStates.As one surveyed Indian scientist freelyadmitted, India presently accepts,“…processpatent, not product patent, whereas in USAand Europe, product patent is accepted. In sucha scenario, when we invent a new drug, weprefer to protect it in those countries.”

More often than not, independent inventorssupport reform that strengthens intellectualproperty protection for every type of inven-tion, though they are wary of the influence ofthe companies that dominate both sides of thedebate.When questioned about their percep-tion of intellectual property laws, severalinventors expressed the opinion that such lawswere,“…imposed by multinational industries.”Others welcomed changes in laws and praisedstronger protection as beneficial for localindustry.

One Argentinean scientist who inventedseveral devices used during heart surgery com-pared protection in the U.S. and Argentina,“There is no doubt that intellectual property isbetter [in the U.S.] and you are more pro-tected. It is difficult to protect it here, somethings are copied a lot.”

Inventors, Innovations Intellectual Property2

0

20%

40%

60%

80%

100%

Total Argentina Egypt India Mexico Others

Agree Strongly agree

TABLE I: Statement 1I patented my invention in the U.S.

because the U.S. patent system providesan extremely high level of intellectual

property protection.

“[U.S.] Patent laws

are quite conducive

to inventors”

—RAMADOSS SUNDER,INDIAN INVENTOR

Patenting in the U.S. and Intellectual Property Protection

Country

0

20%

40%

60%

80%

100%

Total Argentina Egypt India Mexico Others

Agree Strongly agree

Margalit Edelman 3

Frustrated with inadequate patent offices, spottyjudicial backing, and little civil recognition ofintellectual property, many independent inven-tors have labored to make government attentiveto their needs. In this context, the TRIPS agree-ment offered new possibilities of intellectualproperty reforms that would promote innova-tion and help them safeguard their inventions.Inventors hoped that new TRIPs regulations(and the deadlines it set) would truly spurgovernments to recognize intellectual property

rights and allow inventors to take an active rolein crafting new laws and readjusting old ones.

While TRIPs and other WIPO treaties did pro-mote the principle of strengthening intellectualproperty protection, the practice of putting lawsinto place has met with much controversy. Thefiercest debates surround the TRIPs mandatedprotection accorded to pharmaceutical prod-ucts. In countries where previous intellectualproperty laws did not provide patent protectionfor pharmaceuticals, a number of interestedparties have faced off in the press, in front oflegislative bodies and in the public realm.

In many cases, the voice of independentinventors has been drowned out by industriesaffected by changes in patent legislation. InArgentina, India, and other countries, localpharmaceutical manufacturers, who rely on

weak patent protection in order to copy prod-ucts protected in other markets, have foughttooth and nail against any strengthening of thepatent regime. Research based pharmaceuticalmanufacturers, largely multinational companiesfrom Europe, Japan or the U.S., have tried toimprove patent protection, as their products areoften copied with little to no reimbursement.

The end result is usually a vicious battle, withpoliticians unsure of where there interests lie.

Many of the copy based industrieshave local power, can offer finan-cial support to politicians, andpromote a nationalistic worldviewthat appeals to many politicians.They also highlight their impact onthe local economy as a large scaleemployer, industrial motor, andprovider of competition. Politiciansmust weigh the short term trade-

offs of alienating this constituency with thebenefits that strong protections offer (some inthe short, some in the long term): increasedinvestment, promotion of innovation and ruleof law.

The harsh atmosphere takes its toll, oftenexacting political costs on what should bea non-partisan entity, the patent office.Argentina’s patent office provides an exampleof an institution caught in the divisive battleover pharmaceutical patents. According torenowned Argentinean patent lawyer ErnestoO’Farrell, “The discussion of pharmaceuticalpatents has poisoned the bureaucracy…whichis always afraid of granting too many rights toinventors… there is a lot of mistrust.”

As for the inventors themselves, they often feeltorn between the need for better protection

and a hesitancy to believe the big companies oneither side that claim to speak for their interests.

In our survey, we looked at the responses ofinventors whose inventions fell under theauspices of pharmaceutical and/or chemicalcompositions that would be affected by TRIPspatenting provisions. {See chart below}

There was little statistical difference between thetwo groups agreement with regard to patentingin the U.S. because of the high level of intellec-tual property protection. However, 34% of theinventors of pharmaceutical and chemical com-pounds strongly agreed or agreed that theypatented their inventions in the U.S. becausetheir home countries did not provide adequateintellectual property protection, 8% more thanthe inventors of non-pharm products. ■

TABLE II: Statement 4 I patented my invention in the U.S.because my country lacks adequate

intellectual property protection.

Country

Independent Inventors and the Fight over Pharmaceutical Patents

“The discussion of pharmaceutical patentshas poisoned the bureaucracy…which isalways afraid of granting too many rights to inventors…there is a lot of mistrust.”—ARGENTINEAN PATENT LAWYER ERNESTO O’FARRELL

...of the high level of IP protection

in the U.S.

...my country does notprovide adequate

IP protection

0

20%

40%

60%

80%

100%

Pharm & Chem(Strongly Agree/Agree)

Non-pharm(Strongly Agree/Agree)

I patented my invention in the U.S. because…

Once countries have established orimproved existing intellectual propertylegislation, the actual implementation can belacking in any number of areas. For manycountries, especially those with limitedresources, maintaining a fully functioningpatent office can present a number of chal-lenges. Finding enough competent examinersto conduct technical examinations, efficientlyprocess applications and award patents in atimely manner takes time and effort, andmost importantly, funding.Additionally, if thefight over intellectual property laws has beenespecially divisive, patent offices tend to be alocus of partisan bickering, with politicsinterfering in day-to-day operations.

Inventors who do receive patents stillneed the legal recourse to back them up.Yetpoor judicial infrastructure or corruptionmay stymie government efforts to promoteand enforce intellectual property laws.AGuatemalan software designer and inventorexplained the challenges that his and othercountries face,“Public legality in developingcountries cannot…catch up to the US inthese matters for quite a few years (say,twenty or thirty).The reason is that our totallegal system is in trouble. Even when wehave the right laws, we still don’t have thebudget to enforce.We also have so manycontradicting laws, that passing a new law (or several) won’t help much, either.”

Developing a consciousness of intellectualproperty rights, among the judicial andenforcement ends as well as the general populace, can improve the situation.As theMexican inventor of a medical methodcommented,“Intellectual property protec-tion is a new concept in Mexico, it didn’treally exist prior to NAFTA…That is verydifferent from other parts of the world, suchas the U.S., where such recognition formspart of daily life. In general, no one [there]would dare to violate or question theselaws.”

The vast majority of our respondentsalso concurred with the statementthat they chose to patent their

invention in the United States because ofthe great opportunities for licensing andcommercialization.

Although the numbers were slightly lowerthan the first statement, with 47% stronglyagreeing, 41% agreeing, 10% neutral, and1% disagreeing, the respondent commentsemphasized the importance of the U.S.market access an American patent provides.[See Table III]

One Argentinean, the inventor of a bone-stabilizing apparatus, summarized hisdecision to patent in the U.S. succinctly,“The principle reason is the possibility oflicensing or commercializing my inventionin the United States.”

By virtue of size and consumerspending —a population of 260 million ina $6 trillion dollar marketplace—inventorshave an obvious advantage with a U.S.patent.An Indian inventor who created aspecial alignment film used for LCD displaysalso pointed to the size of the U.S. market,“U.S. is a major economy and the usefulexploitation of a patent is more likely in theU.S. than in any other country.”

And while a number of inventors’ clubsand for-profit organizations have sprung uprecently in many countries to help inventorssell their inventions, the U.S. maintains a large,nearly unparalleled network of such groups.

Another Indian scientist, a member of ateam that created a new and distinct hybridplant, summed up the general sentiment,“[We desire] Protection and popularization ofour invention among global communities.”

Inventors, Innovations Intellectual Property4

U.S. Patents and Market Access

0

20%

40%

60%

80%

100%

Total Argentina Egypt India Mexico Others

Agree Strongly agree

Country

TABLE III: Statement 2I patented my invention in the U.S. because the U.S.offers extensive licensing/commercial opportunities

“I wanted to protect my invention in a large market”—ENRIQUE G. SEQOUIA, CORDÉS, MEXICO

Margalit Edelman 5

Argentina’s InventorsThe simple, unadorned room in a Buenos Aireselementary school contrasts sharply with theincredible energy and passion of the twenty orso inventors gathered here. It’s a mild Mondaywinter night, and the Argentine Association ofInventors (AAI) is holding its weekly meeting.

AAI President Eduardo Fernández, an accom-plished inventor himself, is leading thediscussion. If there is any person in Argentinathat has his finger on the pulse of thisdynamic community, it is Fernandez. He alsoworks as the executive director of FundaciónBiro, an organization founded by famedArgentine inventor Laszlo Biro (he invented theBirome, or ball point pen) that gives outannual awards for national inventions andhelps the winners attend an internationalcompetition in Geneva, as the director of aunique “young inventors school” which is heldSaturday mornings, and is also a consultant tothe World Intellectual Property Organization(WIPO) and the International Federation ofInventor Associations (IFIA).

Since its founding ten years ago, the AAI hasserved a crucial role for Argentine inventors.More than 500 members benefit from theorganization’s leadership and support. Asan advocate for independent inventors inArgentina, AAI helps promote the imageand activities of its inventors and also advisesnational and international authorities onnecessary changes to fortify industrial propertyrights that affect independent inventors. AAIalso helps its members navigate the sometimesrough waters of the inventive process, frompatenting their product to marketing andcommercialization, in Argentina and abroad.

According to Fernandez, the Argentine patentoffice receives approximately 6000 patentapplications annually, about 60% from foreignfirms, and 40% from local inventors. By con-trast, only 2% of all patent applications inother Latin American countries, such as Braziland Mexico, are filed by local inventors.

Many of the inventors at this evening’s meeting hold U.S. Patents. Some also holdArgentine patents, or are waiting for the

lengthy applicationprocess to be completed.

Conversations with theinventors yields almostunanimous responsesregarding the reasons for(and benefits of) patentingin the United States.

All the inventors interviewed cited the largeAmerican market as their greatest motivationfor patenting in the United States. In general,the chances of attracting investors and suc-cessfully commercializing a product aresubstantially higher in the U.S. than inArgentina.

According to a number of inventors, the intel-lectual property protection afforded by a U.S.patent also makes it indispensable.

Finally, the speed and efficiency with whichU.S. patents are granted also make themattractive to foreign inventors. It took onlyone year for Hector Luis Galano to receive aU.S. patent for a unique sculpting compoundhe created. He is still waiting for his Argentinepatent, even though his initial application wasfiled over six years ago.

Other inventors tell similar horror stories oftheir frustrating interactions with the NationalInstitute of Industrial Property (INPI).

Often mired in political controversy, theinventors believe that this essential institutionhas failed to meet its potential. Fernandezargues that the lack of institutional continu-ity—there have been five directors in sevenyears—inefficiency, and dearth of resources,including qualified personnel, “paralyzesinventors…they lose hope and prefer topatent and market elsewhere.” Fernandezestimates that his inventors wait on averagethree to five years for their Argentine patentsto come through.Yet despite these complaints,echoed by local lawyers and business people,INPI employees seem to be equally frustratedwith the political strife their embattled institu-tion has suffered, and would like nothing morethan to have the resources and support manyother patent offices receive. The employees

there greet customers with characteristicArgentine warmth, and do their best toovercome institutional shortcomings.

In October 2000, a new patents law tookeffect in Argentina. The subject of much con-troversy and political wrangling, the law hasearned mixed reviews from the AAI. The inven-tors are frustrated that, according to the newlaw, INPI will publish the formula or specifica-tions of the new product while the patent isstill being considered, allowing others to easilycopy the invention before an inventor hasreceived protection. They have also expresseddisdain with the amount of discretion given toINPI in awarding compulsory licenses. ■

The Argentine Industrial Property Office

Meeting of the Argentine Association of Inventors

Inventors, Innovations Intellectual Property6

0

20%

40%

60%

80%

100%

Total Argentina Egypt India Mexico Others

Agree Strongly agree

“The U.S. is more

organized. Legal services

are very good—especially in

helping get a patent—but

you have to pay a lot

of money.”—DOMINICAN INVENTOR

GUILLERMO SOLOMON PADIAL

TABLE IV: Statement 3I patented my invention in

the U.S. because thepatent process is simple

and accessible.

A slight majority of respondents agreedthat the simplicity and accessibility ofthe U.S. patent process affected their

decision to patent in the United States.18% Strongly agreed and 35% agreed with

Statement 3,“I patented my invention in theU.S. because the patent process is simple andaccessible.” 32% were neutral, 14% disagreedand 1% strongly disagreed. [See Table IV]

Respondent comments showed a greatrespect for the U.S. patenting process, withmuch praise for the efficiency and technicalcapability of the United States Patent andTrademark Office (USPTO).

Indeed, the U.S. patent was often prized asinternational recognition of an invention’slegitimacy and distinction. For example, inprofiling scientists and engineers, many Indiannewspapers often boast about the number ofU.S. patents the individual has obtained.AMexican inventor confirmed this opinion,“Apatent in the U.S.A. is a guarantee of world-wide prestige, since your analysis is of greattechnical and scientific quality.”

That prestige also carries weight that can aidin the commercialization of an invention.According to one Argentine inventor,“[Thepatent is useful for] the high level of influence[it] has on negotiations in and outside the U.S.”

Many inventors praised the speed at whichpatents were awarded, a particularly crucial fac-tor in some fields.As one inventor explained,“Time taken in scrutinizing and granting a

patent in U.S. is much less in relation to othercountries, including India.”

According to Walter Park, an economicsprofessor at American University who is anexpert in patent laws,“One of the reasons whyfirms might find the U.S. ‘simple and accessi-ble’ is that the rules are all laid out.A nice webpage at the USPTO guides patentees well.TheU.S. search and examination process is also topnotch in terms of quality review and turn-around time.Also most firms retain the servicesof law firms to help them file patents here inthe U.S., and there are many expert qualifiedattorneys here (who are of course also veryexpensive).There is trust in the system and itsrepresentatives. If something goes wrong, firmshave ways to sue attorneys for malpractice. Notso in Europe (at least not for foreigners), espe-cially from developing countries. It’s a lot moredifficult. Plus, the European patent office rulesare complex, and there are turf wars betweennational offices and the European PatentOffice (EPO), revenue sharing and so-forth,which might discourage firms from wanting toapply there rather than the U.S. Plus, EPO feesare high.“

However, many of the respondents criticizedthe high cost of obtaining a U.S. patent, out ofreach for many independent inventors orrequiring great personal sacrifice.As theDominican inventor of special engineexplained,“The U.S. is more organized. Legalservices are very good—especially in helping

The U.S. Patent Process

Margalit Edelman 7

get a patent—but you have to pay a lot ofmoney.” Consequently, efforts to profitablymarket the invention take on greater urgency.

A small number of inventors also listed theirpartnership with an American inventor orcompany as a factor in their decision to patentin the U.S. 22% of all respondents stronglyagreed or agreed that they patented in the U.S.because their partner is American, 17% wereneutral, and 52% disagreed or strongly dis-agreed.

Some of the inventors stated that theyworked for U.S. companies, which requiredthem to patent and also facilitated the process.One inventor explained that his companyincentivized patents in the U.S.

There are few things that can stanch apassionate inventor’s need to create.Perhaps the greatest antidote to the

exhilaration of innovation are the associatedcosts. Aside from the logistical costs of trans-lating an idea to an actual object, are theexpenses incurred to ensure adequate protec-tion through obtaining a patent.

Inventors in the U.S. and particularly othercountries with much lower per capitaincomes, sacrifice much in terms of time,effort and funding to secure intellectual prop-erty protection.

While the U.S. offers the shortest waitingtime generally for a patent, approximately 1to 2.5 years, the corresponding costs can bediscouraging. Independent inventors canexpect to spend anywhere from $5000 to$10,000 in lawyers’ fees, application andprocessing fees, and additional annual main-tenance fees once the patent is granted. Theymay also incur costs either defending theirpatent or challenging someone else’s.

Patenting costs, from filing fees to lawyer’scosts, vary widely among different countries.Few surveys exist, and even these cannot easily be compared due to differences inmethodology, samples surveyed, the patent

model used, and the prospective inventorcountry. In “Highlights and Perspectives onthe First Three International Symposia onReducing Patent Costs,” Walter Park sum-marizes some of the recent literature onpatenting costs. His review finds that one ofthe greatest expenses inventors encounter isthe cost of translating their patent applica-tions, particularly if they choose to file in theEuropean Patent Office or Japan.

Maintaining a patent is also a serious financialcommitment. Park cites a study by EdwinBerrier (“Global Patent Costs Must be Reduced”from Idea: The Journal of Law and Technology,Vol. 36, No. 4, pp. 473–511) that estimatesthe costs of applying for and maintaining untilexpiry a chemical patent in 52 countries at$472,414. The costs associated with Japanare most expensive, about 8.5% of total costs,while Hong Kong’s are the cheapest, accountingfor just 0.2% of the total.

Patscan News estimates that obtaining andmaintaining a patent for its full course in theUnited States would cost approximately$12,000. Maintenance fees for a similarpatent would cost US$70,000 to cover eightEuropean Community countries and $30,000in Japan. ■

Patent Costs

A sample of patent waiting time and filing costs (does not include attorney’s fees, translation costs or other charges)

Country Patent Wait Filing Costs(in years) (in U.S.$)

U.S.A. ................1 – 2.5 .................1390 Japan .................5 – 7 ....................4772 France ................2 – 3 ....................3042 Germany ............1.5 – 5 .................3066 Italy....................2.5 – 3 .................3662 Spain .................1.5 .......................3504 Switzerland ........2 ..........................2995 UK .....................3 – 4 ....................1220 Argentina...........2 – 4 ....................2415 Brazil..................3.5 – 4 .................1770 Chile ..................2 ..........................1170 Mexico ...............3 ..........................2605 India ..................2 – 3 ....................460 Australia.............2 ..........................970 Canada ..............3 – 4 ....................690

Photo of telegraph

Inventors, Innovations Intellectual Property8

You need not go much further than India’snewspapers to gain insight on the conflictingattitude towards inventing, innovation, andintellectual property protection.

Local press lavish Indian scientists there andabroad with praise for their accomplishments,often lauding the number of U.S. patents they hold.

Yet the same newspapers also feature vitriolic editorials or opinion pieces lambasting efforts toimpose “first world” patent laws and urging Indiato delay implementation of the TRIPs accord.

In no other country has the issue of intellectualproperty inspired such heated and emotionaldiscourse. Although local and foreign indus-tries with a huge stake in the issue have oftensteered the debate, a number of highly publi-cized intellectual property cases involving localproducts, and a strong sense of nationalismhas invigorated the public to sound off as well.

In his article, “The Indian Intellectual PropertyRights Regime and the TRIPs agreement,”London School of Economics professorShondeep Banerji deftly explains the Indianpatent regime and the circumstances whichhave led to loud public and political discussionof TRIPs and its implementation.

According to Banerji, India did have a stronglegacy of patent protection, exemplified by the

Indian Patent and Design Act of 1911.However, a number of amendments passed in1970 severely weakened protection. The“…reasons for this apparently unusual act areembedded in the broader economic and ideo-logical environment that prevailed between1947 and 1970. At that time, steps taken bythe Indian government seemed logical in lightof its overall development plan.” That planstrengthened local companies, giving themdistinct advantages over foreign companiesoperating in India.

The local pharmaceutical companies blossomed inthis environment, producing copies of patenteddrugs that were sold in India and exported toother countries as well. This enormous marketpower was also a source of national pride. Theincreased patent protection mandated by TRIPsnaturally threatens these industries.

Many Indians also raised the issue of “bio-piracy,” the patenting of traditional orindigenous knowledge that appears to be inthe public domain. Several high profile dis-putes involving efforts to patent well knownIndian products such as turmeric, neem and

Basmati rice have heightened sensitivity andincreased hostility to patent laws. Nonetheless, a number of safeguards haveeffectively invalidated undeserved patents. Forexample, in 1993, two American scientists ofIndian origin filed a patent for use of turmericto heal wounds. However, the U.S. Patent andTrademark Office (USPTO) revoked the patentafter a number of groups challenged it’s legiti-macy, successfully citing ancient texts as priorart. Similarly, a Texas company that patentedthe “Basmati” Rice variety withdrew several of

its patent’s claims after the Indian governmentcontested the patent. In the future, similar dis-putes may be resolved by new measuresregarding geographical indications. Severalgroups have also been pushing for amend-ments to TRIPs which would specificallyprotect indigenous knowledge.

The scientists and inventors we surveyed heldmixed opinions. Some saw intellectual prop-erty protections as the result of unwanted,outside influences, and unlikely to help thescientific community, “There is no genuineencouragement in India for good and creative

M any of our respondents were alsoseeking or planning to seek patentsin their home countries or other

countries, such as Japan or the European Union.For those inventors who plan to commer-

cialize their inventions locally, a patent in theirhome country is a necessity. However, if theyare also planning efforts to market their inven-tion internationally, a foreign patent from theU.S., Japan and/or Europe is especially valuablesince it is often awarded quickly, denotes legiti-macy and offers solid intellectual propertyprotection.

The Patent Cooperation Treaty (PCT) hasfacilitated patenting in more than one country.

Globalization has increased the necessity of seeking patent protection throughout theworld.As inventors attempt to sell their innovations beyond local boundaries and the most recognized markets, they must also thoroughly protect their products.Thus, the PCT allows inventors to seek patent protection simultaneously in each of a large number of countries by filing an international patent application.The end result is not actually an “international patent,” but rather a process that serves as a clearinghouse, so that one patent application can take effect in all 89 PCT member states.

Indian Inventors and Intellectual Property

Patenting at Home and Abroad

“…To become globally competitive, especially, in emerging areas such as IT,pharma and biotechnology, strong intellectual property protection both withinIndia and outside is a necessity.” —INDIAN SCIENTIST

While our sample was relativelysmall, the results of our surveyand follow-up interviews are

nonetheless significant.Many countries recognize the value of pro-

moting innovation and by speaking first handwith inventors, we have gleaned some infor-mation on how they can best accomplish that.

The purpose of a patent is to reward aninventor with exclusivity for a period of timein exchange for the public disclosure of hisinvention.Thus, we find that the inventorshighly value intellectual property rights.Moreover, the intellectual property protectionthey seek involves not just the granting of apatent, but more importantly, the actual

functionality of that patent, and the necessaryinstitutional infrastructure to defend that patent(through adequate legal procedures).

There can be little doubt that in a rapidlyevolving information economy, a frank discus-sion of how we access and protect knowledgeis crucial to promoting innovation and thepublic good.

However, a less encouraging trend nowemerging is a seemingly wholesale distrust ofintellectual-property rights. So long as intellec-tual property rights are viewed as a “first worldimposition,” it will be difficult to make gains inpromoting reform and improvement.As J.Michael Finger and Philip Schuler explain intheir study, Implementation of Uruguay RoundCommitments:The Development Challenge, “Thelack of instinctive ownership of the reformsneeded to comply with WTO obligations willmake implementation very difficult, and willlikely push governments to superficial adjust-ments aimed at avoiding clashes with tradingpartners. Private and social sector shareholderswere not involved in the creation of these obli-gations—nor even the government agenciesthat will ultimately be responsible for imple-mentation.”

Some of our inventors seemed to display acontradictory attitude, which lauded strongerintellectual property laws (that protected theirefforts) but then criticized them as heavy-handed intrusions into local sovereignty.Others, particularly in scientific fields, thoughtthe new laws would help attract investment,but recognized that they would be inadequatewithout proper government backing and struc-ture, as well as increased public support.

A second theme that emerges from our sur-vey is the importance of access to certainmarkets and greater investment opportunities.Most of our inventors felt that they were morelikely to succeed in gaining financial backingand commercializing their products in theUnited States or Europe than in their owncountries. However, in many cases, their inven-tions have an international applicability.Inventor associations and for-profit marketingarrangements can help inventors gain marketaccess locally and abroad.The internet hasbecome an excellent resource for advertisinginventions and ideas as well.

Margalit Edelman 9

scientific work. Elitist Indians in India have aslavish mentality and the pharmaceuticalmultinationals are the new colonists. They usemoney [and] power to suppress good scien-tific work on traditional Indian medicinalconcepts and practices.”

But others urged India to see strong intellec-tual property protection as an importantmeans of modernization, “As far as industrygrows, the very fact that India is getting inte-grated into the world patent conventionsleads to investments in patentable R&D. It isnow recognized by the Indian industry thatfor it to become globally competitive, espe-cially, in emerging areas such as IT, pharmaand biotechnology, strong intellectual prop-erty protection both within India and outsideis a necessity.”

Banerji points out that despite the tremendousprofitability of the copy-based pharmaceuticalsector in India, only 1 to 2% of sales areactually dedicated to research and develop-ment of new molecules. This is in sharpcontrast to research based pharmaceuticalcompanies, which reinvest over 20% of salesback into research and development.

As one analyst at the Liberty Institute, a thinktank in New Delhi, argues in the organiza-tion’s newsletter, “…the cost of rejecting IPR,whether on ideological grounds (as in the

former socialist countries) or on pragmaticgrounds in the hope of bringing immediatebenefits to the people (as in India) are increas-ingly becoming obvious. It is not coincidencethat even with one of the highest levels ofscientific and technical manpower, India hasfailed to develop the scientific temper andmake her presence felt globally.” ■

Conclusion

...of the high level of IP protection

in the U.S.

...India does not provide adequate

IP protection

0

20%

40%

60%

80%

100%

Pharm & Chem(Strongly Agree/Agree)

Non-pharm(Strongly Agree/Agree)

This Argentine Inventor created a unique sculpting compound

I patented my invention in the U.S. because…

Inventors, Innovations Intellectual Property10

How can governments and business help pro-mote innovation and support the work ofinventors in many different fields? The follow-ing comments from different inventors helphighlight the many areas that can beaddressed to foment inventive activity.

● Helping inventors individually“Bridging the gap between the inventors andthe business community is the area whereeffort needs to be put. Inventors need tounderstand their rights and obligations. Mostinventors come from a very technical back-ground and lack the basic business skills suchas writing a business plan, understandingthe concepts of Venture Capital, how to dealwith banks, private investors, what revenue(royalties) they should expect if they licensetheir invention, etc.” —Adel Danish, Egyptianinventor of a telephone keypad matrix.

● Increasing private/public sector participation and funding

“Private industry needs to play an importantrole in raising the level of research in Indianuniversities. There is no lack of talent/capabil-ity in academia, however, a greater exposureto the latest/relevant areas of research basedon business needs will be of great help.”—Mahesh Mehendale, Indian inventor of a configurable logic circuit and method.

“I think we need to direct research to solveour problems, not problems of developedcountries. I also believe that we need toestablish a link between industry and University,state the problems, commercialize the solutionsdeveloped and maybe even market these

solutions, turn them into inventions if they areof that quality. Also, we need to make use ofour large number of scientists and researcherin a more practical sense in the field by givingthem a chance to practice and produce. A linkwith the developed world is essential to exchangeknowledge and cooperate on internationalprojects.”—Mohab Hallouda, Egyptian inventor of anadjustable speed drive used for motors inresidential applications (such as air conditioners).

“…I believe we already have a number ofelements in place to develop research inMexico (the National Council of Science andTechnology, National System of Researchers,etc.). It would be enough just to channelgreater resources to the sciences to help themgrow. They have never given this sector prior-ity, and this is translated in insufficient fundsto help it grow. The private industry here,especially if you compare it with the U.S.A.,does not participate in the development ofresearch. Greater participation by the privateindustry could vastly change the panorama.—Felipe Vadillo, Mexican inventor of a methodof predicting premature fetal membrane rupturein preganant women.

● Raising awareness of importance ofinnovation and patenting

“The concept of inventorship and the neces-sity as well as compulsion to create wealthout of knowledge is of a recent origin inIndia. Only in the last ten years has thiscountry realized that its immense intellectualpotential must be harnessed to generatewealth. Consequently, patenting has become

more visible in the last decade. There are sev-eral incentives in place within publicly fundedorganizations such as NCL to reward inventorsin monetary terms.” —S. Sivaram, Indiainventor of a chemical catalyst system for thepreparation of “drag reducers” that helpimprove the flow of petroleum in pipelines.

“The government of Mexico should set asidea bigger budget to stimulate this type of[inventive] activity, create patent offices, andrecruit business specialists to work for theresearch institutions so that we can reallypatent and commercialize what we patent.This would be particularly helpful since weresearchers ourselves don’t have our ownfunds nor the adequate experience to realizethese objectives” —Dra. Ma. de LourdesMunoz, Mexican inventor of a process toobtain antibodies that identify pathogenicamebiasis, a disease that is a major publichealth problem in developing countries.

“We are exporters of talent. There needs tobe greater protection for inventors and stimu-lation of inventive capacity.” —MercedesSuarez, Argentinean inventor of an umbrellafor publicity purposes.

● Better Intellectual Property Laws and Patent Offices

“The first step the government has to take isto strengthen the Indian patent office andmodernize its functions. Secondly, it has toframe legislation in areas such as agriculture,biodiversity etc. by which Indian inventors canobtain protection for new ideas. Lastly, bothgovernment and industrial organization willneed to create an internal value system by

Promoting Innovation

An inflatable remote control protector was designed by Argentine inventor, Mario Ribeiro.

Margalit Edelman 11

which inventors are accorded the same levelof peer recognition which academic scientistsenjoy at the present time.” —S. Sivaram,India inventor of a chemical catalyst system forthe preparation of “drag reducers” that helpimprove the flow of petroleum in pipelines.

“Govt. should make strict laws and vigil toestablish patent protection and stop piracy.” —Ranjan Chalkrabarti, Indian inventor ofpharmaceutical compositions used in thetreatment of diabetes and related diseases.

“Set up an intellectual rights educational pro-gram for developing countries. In Guatemala,for example (in all of Central America, for thatmatter), patents are *almost* the same ascopyright, and this is terrible! Patents are pre-sented and “inscribed”, and that’s it: “you’vegot a patent to your name,” they’ll say. Andthis confuses everybody. They can’t now dis-tinguish between a copyright and a patent.(Once again, this happens because there isno budget to review each application, andthe rest is simply put...lack of education.)”—Armando Amado, Guatemalan inventorwho holds a number of patents, includingone for a supporting technology integratingspreadsheets and databases.

“Unfortunately, the INPI (Argentine IndustrialProperty Office) does not function as it shouldand is often counterproductive for inventors.It should not be a controversial subject thatthe patent office works, offers good protec-tion, and ultimately helps inventors reach themarketplace.” —Eduardo Fernandez,Argentinean inventor ■

Governments and the private sector canalso play a role in promoting inventive activ-ity. Public-private partnerships which bringtogether universities, research institutions, andprivate companies offer unique collaborativeopportunities. Overall, however, the inventorswe spoke with lamented a general disintereston the part of governments in aiding andadvancing innovation.They criticized not justa lack of funding, but also the absence of edu-cational and civil initiatives.They wished theirgovernments would hold a more enlightenedview on the importance of inventive activityin generating economic growth.

Finally, our inventors often registered frus-tration with the patenting process and thefunctioning of their patent offices, whichwere usually mired in politics.Two importantissues emerge from this observation: theinability of patent offices with few resourcesto handle the great demands of the patentprocess and also the need for governments todepoliticize patent offices.

The first problem is in some ways beingrectified by technology, expanded use of thePatent Cooperation Treaty and increasedattention (and resources) devoted to improv-ing national patent offices, though there is stillmuch to be done in the way of infrastructure.

The second problem is more complex.While the TRIPs agreement is binding, thereis still much debate over its implementation,and the applicability of patent laws to certainproducts or processes, most notably pharma-ceuticals.Yet, patent laws and offices as awhole often suffer even if the debate is just

focused on this one area, since the weakeningof patent laws for a specific type of inventionalso erodes the overall intellectual propertyprotection provided to all inventions.Moreover, if the patent office is convertedinto a political tool, it’s resources becomedependent on the outcome of partisanassaults, with appointees often hired and firedwith little thought to continuity. Inventorsand investors have little confidence in theinefficient and unstable institution that canresult from these circumstances.

Inventors will always exist, and they willalways invent. Indeed our inventors remindedus that there are few obstacles that can thwartthe compulsion to create, the need to seeksolutions for problems small and large.However, there are ways to help inventors, toreward them for their efforts and to ensurethat their inventions benefit society. In aworld increasingly dependent on knowledgeand technology, those countries that best sup-port inventors and innovation have the mostto gain.There is no set formula to establish-ing an environment that will produce thenext renaissance, but there are some essentialingredients: solid intellectual property protec-tion, institutional infrastructure, rule of law,and a civil society that recognizes the impor-tance of inventors. No country, regardless ofsize or situation, holds a monopoly on inven-tiveness. Nonetheless,those nations that viewtheir inventors as valuable resources and treatthem as such are most likely to see an explo-sion of innovation in the 21st century andreap the resulting benefits. ●

Patent illustration for a surgical tool

Inventors, Innovations Intellectual Property12

Acknowledgements

The author would like to thank the following institutions for their support and assistance incompleting this study:

Atlas Economic Research Foundation - www.atlas-fdn.orgHispanic American Center for Economic ResearchThe Fraser Institute - www.fraserinstitute.caFundación Republica para una Nueva Generación Fundación Libertad - www.libertad.org.arAlexis de Tocqueville Institution - www.adti.net

We are also extremely grateful to the many inventors who graciously completed our surveys, aswell as the Argentine Association of Inventors for their cooperation and U.S.P.T.O. staff whohelped us track down patents.

To contact the author:

Margalit EdelmanAtlas Economic Research Foundation

4084 University Drive, Suite 103Fairfax, Virginia, U.S.A. 22030-6812

Margalitedelman@yahoo.comTel: 1-703-934-6969

Fax: 1-703-352-7530Patent illustration for the ballpoint pen

Margalit Edelman 13

References

Banerji, Shondeep. 2000 “The Indian Intellectual Property Rights Regime and the TRIPsAgreement.” In Intellectual Property Rights in Emerging Markets, ed. Clarisa Long. Washington, D.C.:American Enterprise Institute Press.

Finger, Michael J.and Philip Schuler. 1999 Implementation of Uruguay Round Commitments:TheDevelopment Challenge World Bank Policy Research Working Paper no. 2215

Lippert, Owen., ed. 1999. Competitive Strategies for the Protection of Intellectual Property.Vancouver:The Fraser Institute.

Mansfield, Edwin. 1995.“Intellectual Property Protection, Direct Investment and TechnologyTransfer: Germany Japan and the United States,” Discussion paper no. 27.Washington, D.C.:International Finance Corporation,World Bank

Mansfield, Edwin. 1994.“Intellectual Property Protection, Foreign Direct Investment andTechnology Transfer” Discussion paper no. 19.Washington, D.C.: International FinanceCorporation,World Bank

Park,Walter. 1997.“Issues in International Patenting” paper prepared for the Working Group onInnovation and Technology Policy, Directorate of Science and Technology OECD, Paris France

Park,Walter. 1997.“Highlights and Perspectives on the First Three International Symposia onReducing Patent Costs”

Rapp, Richard T., and Richard P. Rozek. 1990.“Benefits and Costs of Intellectual PropertyProtection in Developing Countries.”Working Paper no. 3, National Economic ResearchAssociates, Inc.

Ryan, Michael R. 1998. Knowledge Diplomacy: Global Competition and the Politics of intellectualProperty.Washington, D.C.: Brookings Institution Press.

Tucker, Bonnie. 2000 “Invented in Argentina.” Buenos Aires Herald Magazine July 1:18-24

“Where do Patents Deliver the Best Market Value.” 2000. Patscan News(www.library.ubc.ca/patscan/news/wintnews.html#cost)

Inventors, Innovations Intellectual Property14

Appendix A: Inventor Survey

I . Please indicate your agreement with the following statements:

1. I patented my invention in the U.S. because the U.S. patent system provides an extremelyhigh level of intellectual property protection.Strongly Agree, Agree, Neutral, Disagree, Strongly Disagree

2. I patented my invention in the U.S. because the U.S. offers extensive licensing/commercialopportunities.Strongly Agree, Agree, Neutral, Disagree, Strongly Disagree

3. I patented my invention in the U.S. because the patent process is simple and accessible.Strongly Agree, Agree, Neutral, Disagree, Strongly Disagree

4. I patented my invention in the U.S. because my home country lacks adequate patent protection.Strongly Agree, Agree, Neutral, Disagree, Strongly Disagree

5. I patented my invention in the U.S. because my partner(s) is American.Strongly Agree, Agree, Neutral, Disagree, Strongly Disagree

6. Please list any other reasons why you chose to patent your invention in the United States:

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

II. Is your invention patented in your home country?Yes No

III. Is your invention patented in any other country?Yes (Country? ___________) No

IV. Are you seeking a patent in any other country?Yes (Country? ___________) No

Additional Comments:

TOTAL [Argentina, Egypt, India Mexico, Other Latin America]S1 S2 S3 S4 S5

Strongly Agree (SA) 59.57% 46.81% 18.09% 13.83% 12.77%Agree (A) 32.98% 41.49% 35.11% 19.15% 9.57%SA/A 92.55% 88.30% 53.19% 32.98% 22.34%Neutral 6.38% 10.64% 31.91% 25.53% 17.02%Disagree (D) 1.06% 1.06% 13.83% 35.11% 31.91%Strongly Disagree(SD) 0.00% 0.00% 1.06% 6.38% 20.21%SD/D 1.06% 1.06% 14.89% 41.49% 52.13%

ARGENTINA TOTALS S1 S2 S3 S4 S5Strongly Agree (SA) 52.00% 52.00% 12.00% 4.00% 16.00%Agree (A) 36.00% 36.00% 48.00% 20.00% 8.00%SA/A 88.00% 88.00% 60.00% 24.00% 24.00%Neutral 12.00% 12.00% 20.00% 40.00% 16.00%Disagree (D) 0.00% 0.00% 20.00% 36.00% 24.00%Strongly Disagree(SD) 0.00% 0.00% 0.00% 0.00% 24.00%SD/D 0.00% 0.00% 20.00% 36.00% 48.00%

EGYPT TOTALS S1 S2 S3 S4 S5Strongly Agree (SA) 50.00% 50.00% 12.50% 25.00% 37.50%Agree (A) 50.00% 50.00% 37.50% 12.50% 12.50%SA/A 100.00% 100.00% 50.00% 37.50% 50.00%Neutral 0.00% 0.00% 50.00% 25.00% 25.00%Disagree (D) 0.00% 0.00% 0.00% 25.00% 0.00%Strongly Disagree(SD) 0.00% 0.00% 0.00% 12.50% 25.00%SD/D 0.00% 0.00% 0.00% 37.50% 25.00%

INDIA TOTALS S1 S2 S3 S4 S5Strongly Agree (SA) 62.79% 46.51% 23.26% 13.95% 6.98%Agree (A) 32.56% 44.19% 32.56% 13.95% 6.98%SA/A 95.35% 90.70% 55.81% 27.91% 13.95%Neutral 4.65% 9.30% 30.23% 16.28% 11.63%Disagree (D) 0.00% 0.00% 13.95% 44.19% 48.84%Strongly Disagree(SD) 0.00% 0.00% 0.00% 11.63% 20.93%SD/D 0.00% 0.00% 13.95% 55.81% 69.77%

MEXICO TOTALS S1 S2 S3 S4 S5Strongly Agree (SA) 71.43% 42.86% 14.29% 14.29% 14.29%Agree (A) 21.43% 42.86% 21.43% 28.57% 21.43%SA/A 92.86% 85.71% 35.71% 42.86% 35.71%Neutral 7.14% 14.29% 42.86% 35.71% 28.57%Disagree (D) 0.00% 0.00% 14.29% 21.43% 7.14%Strongly Disagree(SD) 0.00% 0.00% 7.14% 0.00% 14.29%SD/D 0.00% 0.00% 21.43% 21.43% 21.43%

OTHER LATIN AMERICAN RESPONDENTSS1 S2 S3 S4 S5

Strongly Agree (SA) 50.00% 25.00% 25.00% 50.00% 0.00%Agree (A) 25.00% 25.00% 25.00% 50.00% 0.00%SA/A 75.00% 50.00% 50.00% 100.00% 0.00%Neutral 0.00% 25.00% 50.00% 0.00% 25.00%Disagree (D) 25.00% 25.00% 0.00% 0.00% 50.00%Strongly Disagree(SD) 0.00% 0.00% 0.00% 0.00% 0.00%SD/D 25.00% 25.00% 0.00% 0.00% 50.00%

Margalit Edelman 15

Percentage of inventors with or waiting for a patent in their home country Total 71%Argentina 76%Egypt 25%India 88%Mexico 50%Other respondents 25%

Percentage of inventors with or waiting for a patent in other countriesTotal 61%Argentina 72%Egypt 13%India 74%Mexico 43%Other respondents 0

Appendix B: Survey Results

Sponsored by HACER:The Hispanic American Center for Economic Research

First patent ever granted by U.S. Patent Office, July 31, 1790