Internationally-known IP attorney Heinz Goddar has worked with several Tata companies on intellectual property rights (IPR) issues. He is a partner of Boehmert & Boehmert, one of Germany’s largest IP firms, and a former president of Licensing Executives Society International. Mr Goddar has a strong technical background with a PhD in physics. He works with several international intellectual property institutes and is a regular visitor to India. In this interview with Subramaniam Vutha and Sujata Agrawal, Mr Goddar gives his views on the importance of IPR, with particular focus on the Indian environment.
When did you first visit India? What was the IPR environment then?
My first visit to India was a personal one in 1977. I was deeply impressed by the wealth of labour, but I also saw the poverty. I saw that this was not a country of technology and hence I did not expect any IP business from India. At the time, I often travelled to Japan and the US, and even China. I used to go to Beijing for weeks or months at a time to teach and train patent attorneys.
It was at a time when India had made its decision to accept the agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). Indian industry had become interested in the consequences of the changes of the law, particularly the pharma industry, which was curious to see how generic drug companies could survive when pharmaceuticals became patentable.
Patents are not necessarily used only to keep others out of using your innovation; they are instruments that help transfer technology against a reasonable price through licensing. For example, a drug manufacturer who has no market in India can get a patent here and then give an Indian company the licence to make this drug against a reasonable royalty, which is something like 25 per cent of the profit margin or so. It is a winwin situation.
So in 1995 I spoke about licensing in India to calm down the concerns about patenting and also made many Indian friends. Over the years, cross licences have become more popular. I tried to teach Indian companies to create their own patent portfolio, to innovate and get patents on their innovations. They can also improve a substance and get patents around a further development, a new side group, with better stability. Then two companies can exchange licences under the basic patent and under the improving patent; that’s what we call cross-licensing. This is the story I learned in India — about how to survive and even benefit in a highly-patented world.
What is the change you find 25 years later?
One change I see is in pharmaceuticals, which today is a mature IP area. For instance, licensing in pharma is a highly international business. Very often there may be territories (say Brazil or New Zealand) in which you have no interest, but there is a local player who is interested. So licensing agreements can be internationalised where one territory is served by one company and another region by a different player.
This is the big change I have seen mainly in the pharmaceuticals industry but also in other areas. Tata Motors for instance has filed about 80 patents for the Nano. So now when the company goes to another car manufacturer who asks for cross-licensing, it will be able to show them their portfolio of patents.
Recently, at a large electronic fair, there was a small company from Pune making electrical switching elements that had just filed its first four Indian patent applications and also wished to apply in Germany and Europe. It was a small family business with maybe 50- 60 employees. The amazing thing was they understood patents and were proactively using the idea of patenting, licensing and cross-licensing to develop international business. Over the years, I see that India has changed a lot.
Tatas now do more business outside India. What are the challenges for Tata companies in the area of IPR?
Tata is a lighthouse in this regard; I don’t know of any Indian company that has developed the understanding of the necessity of harvesting innovation the way Tata has. What Tata has successfully started is a system for collecting inventions. One thing to consider in the Tata group is that because it has so many different companies, it may be more reasonable and economical to have a central department looking at IP issues.
Many of the system components, like contacting attorneys in foreign countries to do these applications, can be centralised with a staff of 20-30 people, including legal assistants and good secretaries. The Volkswagen group, for instance, has a central department particularly for foreign applications.
What India needs is to have more local experts in IP. To translate technical subjects — the innovations made by engineers — into legal language in a patent document that can be understood by courts and other lawyers is a skill. What India needs is a training system for technical people to become patent agents or patent attorneys.
What lessons can Indian companies learn from their German counterparts?
The basic point you need to learn is that not a single innovation should remain unobserved. Somebody has to look at its worth. In Germany this happens even in small and medium enterprises (SMEs). Germany creates more than 50 per cent of all European inventions; out of these more than 80 per cent come from SMEs.
China is a communist country but the Chinese are much more concerned with their own individual profit. Indians have a tendency to think more about the country and the environment and what is good for humanity. But the real driving force for human beings is some kind of personal benefit, not necessarily financial. So you need an IP system that gives incentives for innovating.
You also need a system which allows for price differentiation — for instance, to be able to sell pharmaceuticals in Africa at a much lower price than a high-priced region like Germany, and then prevent these goods from going freely back into high-priced countries because this destroys the profit basis for the investors.
What lessons can India learn from the experiences of other countries?
What India still needs to do is to not make it easy to get patents here just because they have already been granted in other countries. It needs a good examination system to make sure that low-quality patents from abroad don’t get filed and become obstacles to free competition in the country. It has to have a better and faster examination system for foreigners who want their patents in India. You need to have your own standards and set them in the interest of your society. It is very important to improve your patent office to make it quicker and more critical.
The other thing is priority claiming. Before people spend say $50,000 for foreign filings, they need to know what is the potential for patentability. Big companies such as the Tatas, Intels, Microsofts and Boschs of the world don’t need this because they have their own internal databases and search systems, which will help them in the prior art or search and examination stages. SMEs who don’t have this knowledge of worldwide patent literature will need this more. So if you want more innovations from small companies to get patents, you need to improve the systems for priority claiming, search and examinations.
Can you tell us about your role in Licensing Executives Society (LES) International and setting up LES in India?
I was a member of LES Germany and when it automatically became a member of LES International, I became active in its committee and was responsible to World Intellectual Property Organization, World Trade Organization, International Association for the Protection of Intellectual Property and other organisations.
It is in the bylaws of LES International to spread the idea of licensing worldwide and to create local licensing executive societies in all countries of need and interest. India was a white spot on the map of LES International. In Germany, we have regular licensing courses for members and non-members; we started to do the same in India.