Innovation and Intellectual Property Rights (IPRs) – An Introduction
By Akriti Jain
What is Innovation?
Innovation is the application of new or existing ideas, commodities, processes, and methods in a new and improved way to use it commercially to extract value out of it. Rogers (1998) provided a comprehensive comparison of the definitions provided by OECD, Australian government agencies, and businesses. It concluded, however, that there is no one straightforward definition of innovation that fits all forms of organizational setting.
In the literature of innovation and technical change, the contribution of Schumpeter (1934) is regarded as pioneering and inspirational. OECD jointly with the Statistical Office of the European Communities (Eurostat) provides international guidelines for the definition, collection, and interpretation of innovation data through a manual called ‘Oslo Manual’.
Definitions of innovation as given in the earlier edition of this manual specifically focused on technological product and process innovation (OECD, 1997). Gradually, the concept got refined and coverage of innovation expanded to non-technological innovations. As per Mortensen and Bloch (2005, p. 46),
“An innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relation”.
The key concept of IPRs lies in the notion of putting the invention in the “public domain” and giving the right to the inventor to restrict its commercial use by others.
What is the National Innovation System (NIS)?
The concept of NIS originated in late 1980 by Freeman (1987) and Lundvall (1992). The concept is widely used as a conceptual framework to analyze technological change and growth. Metcalfe (1995, p.38) defined NIS as,
“.. a set of distinct institutions which jointly and individually contribute to the development and diffusion of new technologies and which provide the framework within which governments form and implement policies to influence the innovation process”.
Chung (2002, p.486) expanded this definition by bringing in innovation actors and defined NIS as, “a complex of innovation actors and institutions that are directly related to the generation, diffusion, and appropriation of technological innovation and also the interrelationship between innovation actors”.
Thus, NIS is an interactive system of various private and public players (institutions, universities and government agencies) that are collectively or individually involved in the production and dissemination of Science and Technology (S&T) knowledge within national borders.
The overall innovative strength of any nation depends largely upon how well different institutions and actors link and interact as a system of knowledge creation, absorption, and diffusion. An understanding of the NIS helps in identifying leverage points to enhance innovation and the overall competitiveness of a nation.
Overall, NIS institutions can be divided into five main categories:
- Government,
- Public and private bridging institutions linking governments and performers of research. An example of such institutions is the Council of Scientific and Industrial Research (CSIR) in India,
- Private enterprises industrial labs,
- Universities or academic institutions,
- Public funded research institutes.
Public and private research institutions along with the bridging institutions, that are staffed with university trained professionals, engineers, and scientists, form a crucial element of the innovation system. The government also plays the crucial role of facilitator and coordinator by providing various financial, legal, and infrastructure support to strengthen the innovation system of the nation. Universities by combining the function of education and research also play a vital role in NIS. The research function of universities and academic institutions is the prime source of knowledge and innovation at regional, national, and international levels.
What is Intellectual Property Rights (IPRs)?
Innovations based upon technological ‘inventions’ result from scientific ‘discovery’. Inventions can be of any new composite material; chemical or metallurgical process; electronic, electrical, mechanical, or medical devices; and techniques of manufacturing them etc, while innovations result from the commercial application of scientific inventions. Innovation can be new to the ‘organization’, while, the invention is new to the ‘world’.
Since inventors or creators of new ideas invest a significant amount of time, energy, money, and labor to create the prototype, appropriation of returns from their investment is important for personal and societal benefit. The absence of such appropriation discourages the incentive to invent, the wider public disclosure of inventions, and hence limits the scope of innovation and development. Therefore, to protect the interest of inventors, for a ‘fixed period’, the legal system of the incentive scheme called Intellectual Property Rights (IPRs) has been established.
The key concept of IPRs lies in the notion of putting the invention in the “public domain” and giving the right to the inventor to restrict its commercial use by others. The formal system of IPRs was developed in sixteenth century Europe after the industrial revolution when patent rights were provided to encourage domestic inventions. IPRs are ‘territorial’ in nature that enables the right holder to restrict the commercial use or application of invention without permission for a ‘fixed period’. The objective of such legal rights is to encourage public disclosure of inventions for the wider public good and thus to encourage further investment and innovation.
IPRs are of two types: industrial rights and copyrights. Industrial rights are provided for inventions, trademarks, industrial designs, and geographical indications for which the foundation was laid in the Paris Convention for the Protection of Property Rights (1883). Copyrights, on the other hand, are provided for literary works, films, music, and artistic works, and the foundation for this was laid in the Berne Convention for the Protection of Literary and Artistic Works (1886). Among various forms of IPRs, the patents have been used widely as one of the key parameters to measure innovation in existing literature as patent data is easily available and accessible.
Patents are exclusive ‘territorial’ rights that are provided to the inventor for a ‘limited period’ to restrict the commercial use (production, distribution, and sale) of the patented product without the consent of the right holder. Patents, are significant output of the applied sciences, differ from basic sciences output i.e. scholarly publications in implication and process.
There are three main criteria for the grant of patent: ‘novelty’ (new or improved product or process), ‘non-obviousness’ or ‘inventive-steps’ (should have inventive steps for the person skilled in the art) and ‘industrial application’. It is provided for the period of 20 years after which, patented inventions enter into the public domain for commercial use.