This is the second post from a series on the Spicy IP Blog by Mrinalini
Kochupillai “The Public Funded R&D Bill: Does India Need a Bayh
Dole?”. Mrinalini Kochupillai who is an Adjunct Professor at Franklin
Pierce Law Centre has worked extensively on technology transfer in
India, here she looks into the terms and conditions under which various
government agencies in India grant funding for R&D and the impacts
of a Bayh Dole like legislation.

To read the post from Spicy IP chick here.

“What
are the constitutional obligations on the State when it takes action in
exercise of its statutory or executive power? Is the State entitled to
deal with its property in any manner it likes or award a contract to
any person it chooses without any Constitutional limitation upon it?”
What are the parameters of the statutory or executive power in the
manner of awarding a contract or dealing with its property?”
— Justice Bhagwati in R.D Shetty v. Airport Authority (’79) ASC 1628.

After
a long break, I continue with the series of posts on the Public Funded
R&D Bill. At the outset, I must confess that I got carried away
with researching the various policies of the numerous funding agencies
of the Government of India. Unfortunately, most of the websites do not
provide updated information of their IPR policies. I did however manage
to dig out some “spicy” information. I discuss some of it here and
reserve some for later posts:

Department of Information Technology

The Department of Information Technology’s (DIT) policy from a contact in a government funded institute.

As
it turns out, the DIT’s “Terms and Conditions governing Grant-in-aid”
are very different from DST’s guidelines (discussed in the previous
post of this series). The interesting bits (i.e. those pertaining to
intellectual property) state (the numbering of the paragraphs here is
not the same in the terms and conditions):

1. The know-how
generated by the project shall be property of DIT. Any receipt by way
of sale of know how, transfer, royalties training etc., shall accrue to
DIT. DIT may, in its discretion, allow or direct a portion of such
receipts to be retained by the grantee organization.

2. DIT will
have the right to call for drawings, specifications and other data
necessary to enable the transfer of know-how to other parties and the
grantee shall supply all the needed data at the request of the DIT

3.
The grantee institution will first make all efforts to protect
intellectual property generated out of the project. The grantee
institution will examine IPR protection issues in consultation with IPR
Cell, DIT to file patents, register the copyrights etc. before making
it public by publishing in the technical journals and books, presenting
findings in Conferences etc.

4 The intellectual property and
the rights associated with it shall be assigned to DIT. In cases where
the fundings have been done jointly with other organizations, the IP
rights would be appropriately shared.

If India were to pass a
Bayh-Dole, the DIT type terms and conditions of grant would be the
first to require modification. What I do not understand is, what does
the DIT do with all the know how that it collects? Are there any
instances of licensing? If anyone from the DIT reads this space, we
would be grateful for any information. If there are very few or no
instances of licensing of know-how/patents, it may indeed be a good
idea to reconsider their policies.

More importantly, the
question to consider is – what are (or what have been) the instances
when the DIT has exercised “its discretion, [to] allow or direct a
portion of such receipts to be retained by the grantee organization.”
(See clause 1 of the DIT terms above). In this regard, I had the good
fortune of discussing the Bill with Justice MN Venkatachaliah, one of
India’s most respected Supreme Court judges (now retired). He quoted
the Constitution of India and stated that under Article 14 (right to
equality), the government is under an obligation to distribute its
largess on fair and equitable terms. Similarly placed persons cannot be
treated differently unless there is a rationale for the classification.
(See the famous RD Shetty v. Airport Authority case cited above.)

Having
read the RD Shetty case, it is clear that this rule of reasonableness
and equity is also applicable to the government when it acts like a
private entity and enters into commercial contracts.

This got me
thinking – is the discretion envisaged by clauses such as clause 1
Constitutional? I have my doubts. If some grantee institutions are
permitted to retain part or whole of the royalty and some not, there
must be some guidelines that are open for all to scrutinize that are
applicable to the exercise of such discretion. Undoubtedly, government
has the right to frame any policies, but these policies must be readily
accessible (and not left to the grantee institutions’ imagination or
good luck) and uniformally applied. If I am missing something here
(which I sincerely hope I am… because if not, there is a good chance
that the DIT guidelines can be struck down as unconstitutional!)please
do let me know. This may indeed be one of the most important reasons
why India needs a Public Funded R&D Bill – to make the policies of
the government more clear, uniform and non-arbitrary!

AICTE Schemes

Another
“interesting” clause I found is in the Terms and Conditions of the
“Research Promotion Scheme (RIS)” of the All Indian Council for
Technical Education AICTE which states:

“10.The assets acquired
out of the grant shall be the property of the Institute. No assets
acquired out of the grant shall be disposed off without the prior
permission of the Council.”

Another version of this clause is in
the AICTE’s Scheme For Modernisation And Removal Of Obsolescence In
Technical Education (MODROBS), which states:

“23. Assets
Acquired.- As per Government of India’s Decision (7) (b) under Rule 149
(3) assets created/procured out of the project grant should be
submitted to the funding agency. The assets thus Created/procured out
of the grant should be maintained and submitted to AICTE, as per the
Format as given in Annexure- X, along with the project completion
report.”

In furtherance of the mandate of this clause, the RIS
and MODROBS guidelines also require the agency receiving the funds to
fill out FORM GFR-19 “Assets acquired wholly or substantially out of
government grants.”

Again, I discussed the applicability of
Rule 149 to IP assets with Prof. NS Gopalakrishnan, an eminent IP
academic in Cochin University. He was of the view that the said Rule
was drafted keeping in mind only assets such as land or machinery (i.e.
tangible assets) and not intellectual property. He said that in
relation to intellectual property, each funding agency has separate
rules that need clearance from the concerned Ministry.

However,
given that the “terms and conditions” of the AICTE schemes are silent
on who owns any IPR that may be created using the funds, and given that
IPRs are “assets,” it seems logical to presume that clauses 10 and 23
reproduced above, suggest that all IPR would belong to the AICTE.
However, it is pertinent to note here that Decision (7) (b) was under
Rule 149 (3) of the General Financial Rules, 1963. These rules have now
been replaced by the GFR 2005, under which FORM GFR-19 has been
deleted. I am now confused… can GFR 1963 continue to rule in the
AICTE terms and conditions despite the rules having been replaced in
2005? More interestingly, the RIS scheme encourages the applicants to
apply for funding for R&D that has a patentable element. If this is
the case, wouldnt one expect there to be a specific provision
mentioning what exactly the do’s and donts are vis-a-vis the IPR
generated? I would like to reiterate here that absent a provision
detailing who owns the IPRs, I would imagine that the Patents Act would
kick in and the “inventor” would be the owner of the IPRs. Is it just
me or is it truly most likely that in such a situation, the government
will immediately quote clauses such as clause 10 and clause 23 of the
AICTE terms to demand rights over all/any IP created??

From
having reviewed a number of terms and conditions under which various
government agencies grant funding for R&D, I think I can safely say
that India is currently in a place of transition – from being a country
that was completely oblivious or indifferent to the existence and
importance of IP, it is now a country that is semi-aware of IPRs (as is
obvious from the half baked provisions of the AICTE guidelines). If
this is the current state of affairs, from a practical point of view,
will having a Bayh-Dole type legislation at this stage truly lead to
increase in innovation? More interesting statistics and arguments both
for and against in the forthcoming posts… till then, please keep your
comments coming.