India seems to be on an upward trend to become a global hub for innovation, technology and entrepreneurship. Along that journey, there are ideas that could change the world, which may be why it’s imperative to protect their intellectual property. And that could foster creativity, incentivize innovation and maybe, even spur economic development. But, what are the nuances of the IP landscape in India? What are some complexities that may be inherent in India’s IP realm?
And what does India’s entrepreneurship landscape not get about intellectual property?
According to Swati Sharma, Partner & Head – Intellectual Property at Cyril Amarchand Mangaldas, “IP is one of the most important assets that defines one’s company and business, giving one competitive advantage, making their business different from others, allowing them to create moats and preventing third-parties from entering the same field of business. It gives one such a great competitive advantage in the long run that people fail to see in their immediate future and are reluctant to invest in protecting their IP”.
Sharma remarks, “There’s a lack of information and knowledge, in terms of forms of protection and enforcement, by not just startups, but also, mature organizations. Especially with startups, I would face the issue of reluctance in conducting due diligence or asking IP-related questions in terms of whether the IP should be protected in India or outside the country”.
“Cost is a big issue attached to an IP matter. When it comes to protecting IP, it comes down to what budgets have been allocated for this subject matter, something which may not be considered as closely as if it were for an M&A deal or a private equity deal or an investment coming into the business. People start a company with the intent of an IPO in the next 10 years, but they put IP protection on the back burner. What I’ve seen personally is when companies are looking at an IPO in the next 2-3 years, that’s when they’ll start building up their patent or trademark portfolio”, adds Sharma.
Sharma remarks, “So, the reluctance comes from the investment in the initial years and not seeing an immediate return. Secondly, a lot of entrepreneurs think that IP should come last and there are more burning issues to handle. What they don’t realize, especially for patents, is that there are certain laws requiring one to seek statutory protection first. If one has developed a technology, new product or a new process of doing something and they want to create a monopoly over it, then they need to file for patent protection before they can commercialize it or speak to manufacturers or customers or before information comes into the public domain; if they haven’t done it, they lose the right to file for a patent at a later stage”.
Sharma adds, “People need to know that IP protection, especially in India, is not an expensive affair. Trademark protection creates a monopoly right in perpetuity and, therefore, spending some money on initial protection could give one a perpetual right to run their business or commerce under a certain name or brand excluding others. And that is such a great monopolistic right to possess. So, think about the long run”.
What about AI startups and businesses in India specifically? How should they be looking at IP?
“What I would tell entrepreneurs developing an AI model is: conduct your due diligence at the machine learning stage, be mindful of the data you use to conduct machine learning for the AI, be cognizant that you do not exclude copyright notices, have very well-drafted terms of use for your website and a privacy policy. Your terms of use define the exact manner in which your AI will function and how you will divide the ownership in the derivative or the generative AI work. Currently, it’s being debated whether content generated by AI can be owned by the person who made the AI system or machine or whether it could be owned by the user who prompted the AI machine to give a certain result”, declares Sharma.
What about VCs? Sharma explains, “Any VC would ask a company on its growth path what patents they have or what IPs they hold. VCs do ask what one’s IP portfolio looks like and how well they are protected. If there are ten people doing the same businesses, there is no worth”.
And what does the current IP landscape look like in India?
Sharma comments, “Thanks to COVID-19, India’s way of litigating in the courts has changed. Judges are accepting virtual hearings. Court proceedings are so efficient that IP cases can even be concluded within a period of 6-18 months. What used to take decades a few years ago has come down to a year and a half, which is brilliant for an IP dispute, where you could get your relief or your remedy on Day 1. If you are seeking an ex parte injunction, it can be granted within day 1 of filing”.
But, what about the International IP Index 2024 where India ranked 42 out of 55 countries? What are the on-the-ground realities of this?
Sharma opines, “India is currently the third-largest trademark filer in the world and fifth-largest in terms of patents. The number of trademark applications and patent applications, that are being filed on an annual basis, is on a steep rise. The Indian patent office has been understaffed for a long time. To hear trademark cases or patent cases, one needs to have certain technical knowledge, information and qualifications. So, to get people who are well-qualified and be part of the IP office system is a huge challenge. However, this is being tackled by the Indian government filling 900 posts to make sure the backlog of trademark applications or patent applications comes down significantly. According to numbers released by the Indian Patent Office, in the last financial year, it granted more than 100,000 patients”.
Since late 2022, it’s said that the golden age of AI is underway. So, what’s the deal with IP in an AI terrain?
Sharma explains, “Consider AI being used to make a yesteryear singer, who passed away, sing a modern song. It could sound good, one could relive their memories and enjoy a new version of a song in their voice. But, that could mean many challenges with respect to copyright violation, whether the personality rights of the artists and the singers are being infringed by this new version, whether the copyright in the new song is being violated by getting a late singer to perform it or sing it: these are issues that revolve around copyright infringement”.
“Unfortunately, India, yet, has not seen too much litigation around AI. But, there are two decided cases, one involving Amitabh Bachchan and one involving Anil Kapoor, where each personality was copied by AI. The court identified that the work created using AI was not original work and could be traced back to these personalities who enjoy a huge reputation and goodwill in the country. In order to protect personality rights, the court did injunct two service providers from using images, voices or their likeness”, outlines Sharma.
Sharma remarks, “AI has immense potential, but there are checks and balances that one needs to apply. The kind of data and analysis that AI could manage is humanly impossible for us to do. Thus, there are advantages that we, as humans, need to tap into, use AI more responsibly and stay out of any kind of legal issues that are in the realm of copyright infringement”.
Sharma reveals, “There are pending cases in the US revolving around data in the form of books or articles being used to train data of AI software. Generative AI is nothing but a copy or a reproduction with minor changes to the original content which belongs to the original copyright holders, who are the artists and authors. What is, also, being sought is that the AI owners must acknowledge that the data, when fed into the machine learning stage, must retain copyright notices. This means that if there’s a book an author may have written must not have its copyright notice taken off, ensuring that when generative AI is created, the author gets credit for the original work”.
“People don’t understand that the legal environment in India is so conducive to IP protection and enforcement, so much so, that India is leading in terms of IP enforcement. The kind of reliefs and orders that one is able to get from courts in India in such record time is actually unbelievable; one would never actually get it for any other subject dispute in the country”, quips Sharma.
Watch the entire interaction here:
