Introduction
India’s economy thrives on intellectual property! By protecting innovation through IPRs, research and development gets a major boost. This fuels economic growth because innovation leads to valuable new products and ideas. IPR and economic expansion genuinely go hand in hand. “How?” one would think. In short, IPRs create the incentive and space for creativity, which in turn drives the economy forward. The property developed through the human mind and intellect is known as intellectual property. These days, intellectual property and the rights associated with it are extremely valuable and precious. IPR is protected by well-established legislative, administrative, and judicial systems in India. India must establish the relevant laws in order to abide by the Agreement on Trade-Related Intellectual Property Rights (“TRIPS”). Trademarks, copyrights, patents, and geographical indications of commodities are all covered under intellectual property rights. The laws protecting some special species of Intellectual property rights in India are:
- The Geographical Indications of Goods (Registration and Protection) Act, 1999;
- Trade Marks Act, 1999;
- The Semiconductor Integrated Circuits Layout Design Act, 2000;
- The Protection of Plants & Varieties and Farmers Rights Act, 2001;
- The Biological Diversity Act, 2002;
- The Copyright Act, 1957; and
- The Patent Act, 1970
Imagine it this way: India has an emphasis on innovation to differentiate itself from competition in the highly competitive global marketplace. Businesses are establishing incubator facilities and allocating substantial sums of money just for innovation. Other companies are always searching for the newest innovations that will allow them to increase productivity or expand into uncharted commercial terrain. Regardless of the situation, innovators want to ensure that they reap the greatest rewards from this corporate viewpoint. Herein lies the role of IPR. When an inventor has a patent, they may provide licenses for large-scale production, which boosts the economy.
For instance, the ability to patent an innovation like technical innovation would be hindered, even in the event that low-quality or counterfeit copies were to appear on the market. This would have an immediate effect on the economy. Both producers and consumers should be encouraged to invest in the market via IPR regulations. At the level of abstract analysis, this topic and the more general problem of trading off incentive and access issues have shown to be manageable1.
The link between IPR and the economy is examined in this research. IPR has both a beneficial and a detrimental effect on the economy. People are evolving in terms of invention and creation, which is Protecting the rights and interests of those who have a direct impact on the development and expansion of the nation is crucial.
Page Contents
Inter-connection between Intellectual Property and Economy
The following are the roles that intellectual property plays in the economy.
- to grant the author exclusive rights, protect their interests, and encourage funding for information development and research;
- Prevent rivals or other parties from exploiting or abusing the property without the creator’s consent; and
- to generate a market for any type of innovation so that it may be usefully applied and encourage other people to think creatively and innovatively.
Fresh ideas are key to cutting costs in today’s market, making innovation crucial. Strong IPR (intellectual property rights) laws are vital to protect those ideas and incentivize further inventions. But good laws alone aren’t enough – effective enforcement is crucial. Weaknesses or lax enforcement create loopholes that stifle innovation by allowing exploitation of others’ work. In short, strong and well-enforced IPRs are essential for a thriving innovation ecosystem.2
The impact of IPR on the economic process in many nations relies on different stages of development, such as GDP growth and human capital development, imitation activities and technical advancement, etc. Due to various R&D initiatives, high income nations often create the majority of discoveries. IPR protection also promotes innovation by enabling inventors to profit handsomely from their creations. Material possession rights have a favorable impact on the economy in middle-income countries overall, although this effect is less pronounced than in high-income countries. This can be attributed to the extremely low level of intellectual property rights protection in these nations.3
Positive impacts of IPR on economic development
More recently, when it consented in 1994 to a three-phase, ten-year plan to bring its patent system into line with TRIPS, India moved into the innovation stage of economic growth. Through a ten-year plan that steadily increased IPR protections, India was able to reform its patent system. In India, domestic pharmaceutical companies now have 77% of the market share.4 This shows how successfully India has implemented a strategy for intellectual property and encouraged the development of a homegrown pharmaceutical sector. The impact of IPR on the economic process in many nations relies on different stages of development, such as GDP growth and human capital development, imitation activities and technical advancement, etc5. like recent examples the report on IPR report on manufacturing underscored the contributions of the sector to India’s GDP growth and employment generation, at 15% and 12%respectively6. Due to various R&D initiatives, high income nations often create the majority of discoveries. IPR protection also promotes innovation by enabling inventors to profit handsomely from their creations. Material possession rights have a favorable impact on the economy in middle-income countries overall, although this effect is less pronounced than in high-income countries. This can be attributed to the extremely low level of intellectual property rights protection in these nations.
Violations of copyright carry comparable consequences. Pirate companies begin taking advantage of the law and the market in nations with lax copyright regulations. Technical innovation would be hindered, even in the event that low-quality or counterfeit copies were to appear on the market. This would have an immediate effect on the economy. Both producers and consumers should be encouraged to invest in the market via IPR regulations. Additionally, this guarantees quality, which is critical for protecting the interests of the clients.
Customers may be put in danger by phony or counterfeit goods, including food, medication, cosmetics, and drinks for example we can co relate with the present scenario like IPR in current digital economy that is of Because more people are using internet, the digital economy is expanding quickly, yet capacity limits and registration force are still evolving at the same time. These developments help to expand global content marketplaces, which benefits content owners. However, they also create a risk, such as piracy, which might seriously damage creative industries7.
Negative impacts of IPR on Economic Development
Developing nation governments must carefully consider how best to use their limited resources when it comes to managing patents. they must consider that when patent rights are strengthened in order to comply with TRIPS, there will probably be a rise in both domestic and international patent applications. One approach would be to combine the development of domestic examination capacities with international cooperation—through the PCT, regional agreements, or “patent extension systems”— by concentrating on technical domains in which local enterprises specialize. Under the correct conditions, improving IPRS can promote growth and development, but there may be significant social and economic costs associated with it. In fact, because many of the costs of protection would materialize before the dynamic gains, emerging economies might experience net welfare losses in the near future.8 Like for example I just want to put emphasis on the comparative differences between the IPR and the competition law that how feasibility of having them in the national legal regime related with the economic of India that the recent implementation of the IPR system in the global economy appears to have had a significant impact on the macrocosm. The problems with the adoption of TRIPS under the WTO, which promotes uniform protection in all countries and advances the propaganda of the global free trade regime, the issue takes on an even more complicated complexion. An other cause for worry is that the current framework of intellectual property laws, which grants creators a monopoly right over their creations, may potentially work against the WTO by impeding the development of a free and competitive market economy. 9
The competitive spirit maintains equilibrium in terms of both pricing and product quality. IPR regulations establish a monopoly in the industry. IPR laws like patents, copyright, and trademarks make it harder for rivals to utilize innovations. Because of competition, manufacturers are forced to take into account the needs and contentment of their customers, as dissatisfied customers would go to other rivals in the market. Producers are free to set any price they like, and this will have an immediate impact on customers and the market. This is frequently the case with the law of demand, which states that little demand exists for high values.
Ongoing expansion of Intellectual Property Rights
Since 1999, India has significantly altered its intellectual property laws. More recently, the IP regime has been strengthened thanks to the Kalam Program for Intellectual Property Literacy and Awareness Campaign (KAPILA), the National IPR Policy, the National (IP) Awareness Mission (NIPAM), and a few procedural optimizations.
The New IPR policy, the provision of an efficient toolkit in the form of a checklist that will serve as a reckoner for the police to deal with IP crimes, or the encouragement of innovators to file first in India and receive expedited patent examination—all of these recent developments in India are part of a much-needed attempt to improve the overall security of IPR and encourage the creation of more IP in the nation. India possesses an abundance of resources, including inexpensive labour, readily available raw materials, and a highly skilled and inventive labour force.
According to WIPO, India was placed 40th out of 132 countries in the Global Innovation Index(GII) 2022 rankings. India came in at number 46 in 2021 and 81st in 2015.10 And India wants to become a global manufacturing powerhouse and is quickly moving in the direction of being Asia’s innovation hub. India must reach developed status by the year 2047, according to the Prime Minister.
Conclusion
Since that intellectual property rights are such a complicated topic with varying potential effects over time and across sectors, it is challenging to define the functions that they may play in the process of economic growth. The choice of intellectual property regimes is, in general, endogenous. We are expecting lower-income countries with weaker technological capabilities to adopt weaker systems with lots of outliers and extensive constraints. Deeper protection becomes more desirable as nations get wealthier and enter more sophisticated manufacturing and service industries. There are two immediate implications: many parties may find that international efforts to unify IPRs at TRIPS levels or even higher TRIPS-Plus standards are not ideal. In the future, economists should focus on determining whether emergent effects are improving or deteriorating development prospects, and under what circumstances. The link between IPRs and economic development might not be as straightforward as it seems. Studies suggest a complex relationship, influenced by several factors. While IPRs potentially encourage innovation and growth, they also have drawbacks like increased costs and potential for anti-competitive practices. Ultimately, IPRs can be a powerful tool for tackling market challenges in knowledge-driven industries, but their implementation needs careful consideration to avoid potential harms.
You’re right, there’s an interesting “asymmetry of interests” at play regarding copyright and patent term extensions. While creators and rights holders benefit from longer terms, these extensions do little to incentivize new creations. In other words, they primarily reward past innovations without driving future ones. This suggests the motivations behind such extensions might go beyond incentivizing innovation and likely involve lobbying and influence from rights holders seeking to maximize their profits rather than foster progress. Laws serve society, not the other way around. Each one aims to improve lives but can have unintended consequences. The TRIPS agreement (Article 31) allows “compulsory licenses” in specific situations, like curbing unfair practices or addressing public health emergencies. This ensures India’s intellectual property law balances both flexibility and dynamism, protecting innovation while serving societal needs.
1 Richard A. Posner is a Judge of the U.S. Court of Appeals for the Seventh Circuit and a Senior Lecturer, University of Chicago Law School both in Chicago, Illinois.
2 SIGNIFICANT ROLE OF IPR TOWARDS ECONOMIC GROWTH IN INDIA, BY: LEXPEEPS, ON: MARCH 15,2022(last visited on Feb 7,2024)
3 Banga, R. (2003b), “Impact of Government Policies and Investment Agreements on FDI Inflows” Indian Council for Research on International Economic Relations (ICRIER), Working Paper (116), November.
4 A Hybrid Legal and Economic Development Model that Balances Intellectual Property Protection and Economic Growth: A Case Study of India, Garrett Halydier.
5 India Development Update, World bank Report, June 2016 India Development Report, June 2016
6 Intellectual Property Rights to fuel economic growth in India,20 Nov 2023, https://www.livemint.com/industry/intellectual-property-rights-to-fuel-economic-growth-in-india-unnat-pandit-11700489753255.html(last visited on Feb 7,2024)
7Role of IPR in Economic Growth, Feb 24, Benazeer Fatima, https://articles.manupatra.com/article-details/Role-of-IPR-in-Economic-Growth (last visited on Feb 8,2024)
8 The Role of Intellectual Property Rights in Economic Development, By Srija R, https://www.legalserviceindia.com/legal/article-7335-the-role-of-intellectual-property-rights-in-economicdevelopment.html#:~:text=Another%20big%20issue%20is%20that,as%20obstacles%20to% 20the%20entrance.( last visited on Feb 8, 2024)
9 Even the TRIPS Agreement under Section 8 of Part II has accepted the importance of anti-competitive provisions in the form ‘Control of anti-competitive practices in contractual licenses’ 10 https://pib.gov.in/PressReleasePage.aspx?PRID=1941489, (Last visited on Feb 9,2024)
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