Patent Working PIL (Update): Court Clarifies Patent “Licensing” Confidentiality and Suggests Form 27 Reform

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Last week, we brought to you news of yet another well reasoned and lucid order from a Division Bench of the Delhi High Court (comprising Acting Chief Justice Gita Mittal and Justice Hari Shankar) in our Patent Working PIL (see here and here).

This order (dated February 7, 2018) is now available on the Delhi High Court website here. The order again reiterates the importance of the patent working disclosure requirement and expresses dismay at the fact that the petition had been filed way back in 2015 and nothing had been done as yet. Here is what the court says:

“Given the fact that this writ petition complaining of several pitfalls, illegalities as well as the admitted position on the part of the respondents that Section 146 of the Patents Act, 1970 has not been effectively worked, was filed as back as in the year 2015, this matter ought to have engaged the attention of the respondents long ago.”

“It is also astonishing that the matter has proceeded in this manner for a long period of 45 years since the statute was enacted. Be that as it may, expeditious steps regarding the working of the statutory provisions as well as the changes, if any, are required in the statute, rules and prescribed forms deserve to be taken.”

Clarification on Patent Licensing Confidentiality

The order then goes on to provide some clarity in terms of what aspects of a patent licence need to be disclosed to comply with Section 146 (the statutory provision containing the patent working disclosure requirement), without unduly compromising confidential business information. As we’d noted in our earlier post, Ericsson took issue with the court’s observation in para 13 of its January 10 order that “the details of licensees, licenses and sub-licenses” are not confidential and are required to be submitted by the patentees while submitting Form 27. It argued that it may not always be possible for the patentee to disclose all the terms of the license. The court therefore clarified as below:

“It is, therefore, made clear that the reference in para 13 of the order dated 10th January, 2018 to “details of licensees, licenses and sub-licensees” is only the specification with regard to number, date and particulars of the licensees and sub-licensees. In case, any party has reservation of any kind in furnishing details, it would have to disclose the reasons for such reservation and the patent office would be required to take a view in the matter so far as its satisfaction regarding compliance with the requirements of Section 146 is concerned.”

The court however made clear that a patentee could not, under the guise of confidentiality, refuse to disclose the very existence/factum of licenses and the names of licensees. The court noted the arguments of Abhimanyu Bhandari, counsel for the petitioner, who had stressed the importance of Section 67 of the Patents Act which requires a mandatory disclosure of the existence of the licenses and the names of licensees. Section 69 only permits the patentees to request the Patent Office to secure the confidentiality of terms of the license. However, the existence of the license and the names of licensees are to be a part of the register which is open to public inspection under Section 72.

To quote from the courts’ ruling in this regard: “In this regard, Mr. Bhandari has drawn our attention to Section 67 of the Patents Act which requires a register of patents to be maintained which contains the names and particulars of licensees. The information which is required to be furnished must comport to the requirements of Section 67 of the Patents Act as well.”

Natco’s Compliance with Working?

As noted in our earlier post, Natco objected to the petitioner’s contention that it had not filed the relevant working information over its sales of the generic version of Nexavar, a patented drug over which it had been granted a compulsory license. In an earlier post, we’d noted that our assertion in this regard was backed up by two RTI responses from the patent office, which affirmed that Natco had not submitted this information.

If indeed Natco had submitted this information, then clearly the Patent Office’s answer to our RTIs was incorrect. Further, Natco’s own admission in its intervention application suggests that it is yet to comply with this mandate in full, since it has not yet submitted Form 27 format information for the years 2013 and 2014. As we’d noted in an earlier post:

“Has Natco complied with the mandate to submit working information under Form 27?  Not so! In their intervention application filed before court, they’ve attached Form 27 filings in this regard for 2015 and 16, but not for the previous years (2013 and 2014). They admit that they hadn’t filed this for some years. So clearly, by their own admission, they are not in full compliance. And yet they have the temerity to allege that I made false allegations against them for personal private gain! While they are “bonafide”! Here again, something appears to be amiss, since when we checked the patent office website as late as 2016, we didn’t see any Form 27 filings from Natco for the year 2015.”

The judges however were careful to not make any factual determination in this regard, for this public interest petition is not about whether individual patentees have complied or not with the patent working requirement. And the court can hardly be expected to make individual determinations in this regard. Rather this petition is about systemic non-compliance and inaction by the Government and the court’s response thus far has been to treat it as such. Here is what the court said in this regard:

“It is submitted by Ms. Rajshree, learned counsel appearing for the applicant in CM No. 2108/2018 that, in paras 7 to 9 of our order dated 10th January, 2018, this court has noted the submission on behalf of the petitioner that the applicant has not furnished the information in terms of Section 146 of the Patents Act, 1970. We may clarify that this court has only noted the submission of the petitioner in this regard and has not expressed any opinion on the merits of the petitioner’s contentions.”

Reforming Form 27

A key part of the order also agrees with the representations by the various counsels/parties to this litigation (petitioner and intervenors etc.) that Form 27 should be amended in order to make for a better working disclosure format. Here is what the court says in this regard:

“During the course of hearing, all the learned counsels have pointed out that one of the major difficulties in ensuring compliance with the provision of Section 146 of the Patents Act, 1970 is the manner in which Form-27 has been worded. It is submitted that this form was notified in the year 1970, and though amended in the year 2003, has failed to take into consideration the several scientific and technological requirements as well as the confidentiality issues relating to some of the patents. We are informed by Mr. Amit Mahajan, learned CGSC that he has been instructed that the matter needs a relook.”

The Delhi High Court then goes on to direct the Government as below:

“In view thereof, the respondent no.1 shall place before this court, within two weeks from today, the timeline regarding the manner in which the steps required for effecting the necessary modification to the prescribed forms would be undertaken. The same shall be placed on affidavit before us within this period with advance copy to all parties through counsels who are represented before us.”

In short, the Government is to file an affidavit within two weeks spelling out how it will reform Form 27 and also how it proposes to put in place an enforcement mechanism against errant patentees. The matter has now been listed for 1st March.

In the next post we’ll bring you a more detailed analysis on the need to reform Form 27, a point we raise significantly in our petition.

P.S.: Ashutosh Gambhir of Bar & Bench carried an excellent summary of the Delhi High Court order here.

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Indian Performing Rights Society wants royalties for music used by telcos

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NEW DELHI: A group representing composers, lyricists and music publishers has initiated the process of seeking royalties from Indian telecom companies and platforms such as Apple and YouTube for the use of their works, including songs and music made available for streaming and downloads.

The Mumbai-based Indian Performing Rights Society (IPRS) sent notices to carriers including Bharti AirtelBSE -1.75 %, Vodafone India, Idea CellularBSE 0.43 % and Reliance Jio Infocomm last month to sign licensing agreements with them for collecting royalties.

“We have sent letters to all, asking them to obtain licence for the literary and musical works, sound recording and cinematographic film that we own as part of the value added services that they offer,” Rakesh Nigam, chief executive officer of IPRS, told ET. The society, which was formed in 1969, was granted registration under the Copyright Act and Copyright Rules in November 2017.

Apple, which has iTunes, YouTube, Bharti Airtel, Vodafone India, Idea Cellular and other telcos did not respond to ET’s queries on the notices. The Cellular Operators’ Association of India, which represents all carriers, said it will meet with IPRS on February 20 to discuss the matter.

“We would like to get more clarity on the issues raised by IPRS on the scope and scale of their representations and the claims that have been made on the carriers,” said Rajan Mathews, director general of the association. Nigam said the seeking of licence agreements to pay royalties to owners of the original works is a valid demand.

“We deal with the licensing of underlying literary and musical work,” Nigam explained. He said that while the society has not made any monetary demands, it has set royalty rates for 48 categories of music used in places including airports, amusement parks, clubs, factories and on-demand streaming services.

In the case of mobile value added services, the royalty varies from 8% of the end-user price less taxes and/or the revenue generated by downloads with a minimum fee for ringtones and caller-back tones and the sale or download of songs in a digital format, to 12% for music streaming services on a yearly basis.

Officials from some carriers, speaking on condition of anonymity, said the notices don’t hold much relevance because they get their music and other content through different ways, including aggregators such as Saregama and Hungama, platforms such as Hotstar and AltBalaji and from direct partnerships with original content creators, for instance, Netflix. In each case, some form of revenue-sharing or payment is involved.“Most of the aggregators say that they have been granted only one kind of right, which may be that of sound recording or cinematography, but not that of underlying literary and musical work,” said Nigam.

Experts said it would be hard to ascertain whether claims made by IPRS are valid because the agreements between original content creators and those granted the rights to use the content will have to be seen.“It is not possible to comment on the validity or otherwise of the claims made by IPRS without examining the complete chain of paperwork and agreements/documentation,” said Pavan Duggal, a senior lawyer who specialises in cases of cyber-law and intellectual property rights.

There are normally three kinds of contracts – one that the original musician signs in favour of a record or label company, the other is what the record company signs with individuals or production houses that buy those rights, and third between the rights owners and those to whom the rights get allocated in terms of service providers, he added. Sometimes, there can be just one or two agreements.

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Goa needs IPR panel, says expert

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PANAJI: Goa will benefit from an intellectual property rights (IPR) facilitation centre in order to protect intellectual property of people in the state, said T Ramakrishna, professor of law and chair (IPR), National Law School of India University, Bengaluru.

During various awareness sessions conducted in the state over the past three years, he said he has seen growing interest in IPR. "Today's economy is a knowledge-based economy and Goa should not fall behind as a state," he said, adding that Karnataka has three such intellectual property rights facilitation centres and its government is already contemplating on a separate IPR policy for the state that will be integrated with its industry policy.

The centre or cell can help identify potential geographical Indication (GIs) in the state and start giving them protection. "The unit can take this up as its first task. It can also register all potential GIs of Goa and ensure that these producers have a highly-paid domestic market," he said.

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'Expect India's rank to improve in global IP index'

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India's rank may improve in the international intellectual property index this year with the introduction of national IPR policy adding to its systemic efficiency, a top official at the Global Innovation Policy Center said today.

India languished near the bottom in the index last year, ranking 43rd out of 45 global economies.

The sixth edition of the report brought out by the US Chamber of Commerce's Global Innovation Policy Center (GIPC) will be released on February 8. This year, the index will map the performance of 50 countries against 40 indicators.

However, the GIPC perceives India's IP systems to be relatively weak compared to other major markets, including other BRICS (Brazil-Russia-India-China-South Africa) nations. It wants legal certainty especially for attracting investment in research and development in high-risk sectors like pharma.

"You will see that India's performance on our index is very similar to the trend with the Global Innovation Index, with the World Bank Doing Business report. India has gradually climbed the ladder on these so you will find it is a similar trend on our index too. 

"I think it will be a good news for the policymakers here in keeping with the steps that have been taken under the new (IPR) policy," Patrick Kilbride, International Vice President, GIPC told PTI.

He said a new category has been introduced this year on systemic efficiency, which looks at how countries are working to enable domestic entrepreneurs to take advantage of intellectual property (IP) rights, where India is expected to perform quite well. 

Talking about India's national IPR policy, Kilbride said "When a statute makes it likely that a patent will be overturned or it creates that impression of uncertainty then it makes it difficult for the industry to invest in long term high risk, expensive R&D".

He said India has the ability to position itself to take advantage of its strengths in the technology sector and knowledge economy. 

"We think that one element of the (IPR) policy should have to say we need to review our statutory environment for IP and look at how we can bring it up to international standards," Kilbride said on changes required in IPR policy.

Elaborating, he said, there should be a deterrent level of enforcement to have IP rights honoured so that when somebody violates a trademark recourse is available. 

"India's current regime area is uneven. There are remedies available in some places and not others," Kilbride said. 

The Global Intellectual Property Center has been rebranded as the Global Innovation Policy Center.

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DIPP arm launches competition for college students

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NEW DELHI: Cell for IPR Promotion and Management (CIPAM), under the department of industrial policy and promotion, has launched a competition for college and university students to foster a culture of innovation and creativity in the youth.

The competition - IPrism - invites students to submit films on piracy and counterfeiting under two categories of 30 and 60 seconds, it said in a statement.

Another category in the competition is for a mobile gaming app on intellectual property (IP).

Cash prizes of Rs 4 lakh will be given to the winning teams along with mementos and certificates.

The competition would also provide the enthusiasts a unique opportunity to see their creations recognised on a national platform.

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Donald Trump considers big 'fine' over China intellectual property theft

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President Donald Trump said on Wednesday the United States was considering a big "fine" as part of a probe into China's alleged theft of intellectual property, the clearest indication yet that his administration will take retaliatory trade action against China.

In an interview with Reuters, Trump and his economic adviser Gary Cohn said China had forced U.S. companies to transfer their intellectual property to China as a cost of doing business there.

The United States has started a trade investigation into the issue, and Cohn said the United States Trade Representative would be making recommendations about it soon.

"We have a very big intellectual property potential fine going, which is going to come out soon," Trump said in the interview.

While Trump did not specify what he meant by a "fine" against China, the 1974 trade law that authorized an investigation into China's alleged theft of U.S. intellectual property allows him to impose retaliatory tariffs on Chinese goods or other trade sanctions until China changes its policies. 

Trump said the damages could be high, without elaborating on how the numbers were reached or how the costs would be imposed.

"We're talking about big damages. We're talking about numbers that you haven't even thought about," Trump said. 

US businesses say they lose hundreds of billions of dollars in technology and millions of jobs to Chinese firms which have stolen ideas and software or forced them to turn over intellectual property as part of the price of doing business in China.

The president said he wanted the United States to have a good relationship with China, but Beijing needed to treat the United States fairly. 

Trump said he would be announcing some kind of action against China over trade and said he would discuss the issue during his State of the Union address to the U.S. Congress on Jan. 30.

Asked about the potential for a trade war depending on U.S. action over steel, aluminum and solar panels, Trump said he hoped a trade war would not ensue.

"I don't think so, I hope not. But if there is, there is," he said. 

Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics, said the penalties under Section 301 of the Trade Act of 1974, which authorized the investigation into China's intellectual property practices, would likely include a package of both tariffs and restrictions on Chinese investment in the United States.

"I suspect the U.S. measures will involve restrictions in areas where we don't have WTO (World Trade Organization) obligations," Schott said. "Trump likes to talk about tariffs so that may be part of the package too. The Chinese would have the legal right to retaliate against tariff increases."

Throughout his 2016 election campaign, Trump routinely threatened to impose a 45 percent across-the-board tariff on Chinese goods as a way to level the playing field for American workers. At the time, he was also accusing China of manipulating its currency to gain an export advantage, a claim that his administration has since dropped.

Trump said on Wednesday that China stopped meeting the criteria for currency manipulation after his election, and he said making that designation while trying to work with Beijing to rein in North Korea would be tricky.

"How do you say, 'hey, by the way, help me with North Korea and I'm going to call you a currency manipulator?' It really doesn't work," Trump said.

The president also said he and Chinese President Xi Jinping had not discussed China's plans with regard to purchases of U.S. Treasury bonds. 

The president also said he and Chinese President Xi Jinping had not discussed China's plans with regard to purchases of U.S. Treasury bonds.

Bloomberg reported earlier this month that Chinese officials reviewing the country's foreign exchange holdings had recommended slowing or halting purchases of U.S. Treasury bonds. 

Trump said he was not concerned such a move would hurt the U.S. economy.

"We never talked about it. They have to do what they do," he said. 

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Spotify sued for $1.6bn in unpaid royalties as it reportedly files for IPO

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Music streaming service Spotify has been sued by a music publishing company for $1.6bn (£1.18bn), for hosting songs it allegedly doesn’t have the full rights to. The news comes at an awkward moment for the tech company, which is reportedly preparing for a stock market sale.

Wixen, a Californian company that collects royalties on behalf of artists including Tom Petty, Neil Young, Janis Joplin and the Doors, alleges that Spotify “took a shortcut” when it cut deals with major labels to host their back catalogues.

The suit states that under the US Copyright Act, each song has two copyright claims: one to the recording, and the other to the composition. Wixen claims that Spotify didn’t obtain the composition rights in their deals, and is seeking damages of $150,000 per song, for over 10,000 songs.

The company is the most successful in the music streaming business, with over 60m paying subscribers. It is reportedly valued at $19bn, and is expected to be floated on the stock market later this year.

According to news website Axios Spotify has filed documents for an initial public offering (IPO) in December. Spotify will reportedly go public under a direct listings – which allows a company to sell stock without the usual investor roadshow and saves on some banking expenses.

If the company lists on the New York Stock Exchange, as expected, it would be the first to do so with a direct listing. NYSE recently changed its rules to accommodate such sales and a successful listing would likely encourage others to follow. Spotify declined to comment on the story.

Nor has the company yet commented on the suit, but it has faced similar claims in the past. In 2015, the company launched a “publishing administration system” to more fully recompense royalty holders, after punk label Victory Records claimed it was missing out on composition royalties, but Spotify has nevertheless faced further lawsuits since. In 2016, it paid over $20m in outstanding royalties to a number of publishers via the National Music Publishers’ Association, while in May 2017, it settled a lawsuit with three small publishers, including the estate of Jaco Pastorius, for over $43m.

Spotify has two outstanding lawsuits filed against it in July 2017, from publishers including Bob Gaudio of the group Frankie Valli and the Four Seasons.

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Education reform startup Chrysalis raises pre-series A funding

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CHENNAI: Chrysalis, incorporated as EZ Vidya Pvt. Ltd., a Chennai based educational reform startup, has raised a pre-series A funding round from Indian education sector focused investor Gray Matters Capital

The amount raised will be used by Chrysalis to build on its research and development and to strengthen its multichannel approach leading the company to further target on its goal of improving education in K-12 schools. There are currently 250 million children enrolled in these schools of which 100 million are in the private school segment. 

Chitra Ravi, Founder and CEO, Chrysalis, said, "Our mission is to stand up for the child, by reforming the Indian education system in a way that every child realizes his/her human potential. In our estimation, we have more than 15,00,000 schools failing in this regard. We have established a roadmap to bring in a fundamental change in the system by engaging 5 principal mediums - policy makers, government schools, private schools, parents and public, by open-sourcing our intellectual property selectively.We are committed to this mission and were seeking investors who were aligned to it. We found the right fit in Gray Matters Capital, which has a vision to transform human lives using education as a medium." 

Chrysalis' flagship product is ThinkRoom, a student-centric academic programme based on a 'Human Potential' framework developed through 16 years of pedagogic research.

"We see Chrysalis as one of the most innovative, mission driven and student centric educational enterprises in India, which has the potential of bringing about a tangible change in the way education is imparted in our schools," said Ragini Bajaj Chaudhary, India CEO, Gray Matters Capital, outlining the investment rationale.

Boutique investment bank Unitus Capital acted as a financial advisor to Chrysalis, while impact investment management firm CBA Capital supported Gray Matters Capital in the transaction. 

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End of an era: Amazon’s 1-click buying patent finally expires

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Get your pointer fingers ready: Amazon’s one-click buying process, patented by the Seattle-based company back in the heady days of 1999, expired on Tuesday. And retailers, which until now have either had to not use one-click buying or pay Amazon licensing fees to do so, might be looking to capitalize.

The Amazon 1-Click button lets customers buy things with just one click without having to enter and re-enter billing, payment or shipping information. In the last couple of decades, it has become a major part of Amazon’s checkout process, being extended to other Amazon products like Dash, which was essentially one-click ordering via a small button, and Echo, where customers can buy things with one voice command.

Amazon fiercely protected the 1-Click patent, suing Barnes & Noble for implementing a similar technology back in the late ‘90s and licensing it out to companies including Apple. Amazon CEO Jeff Bezos even wrote a letter in 2000 that defended Amazon’s patents, opening with, “I’ve received several hundred e-mail messages on the subject of our 1-Click ordering patent. Ninety-nine percent of them were polite and helpful. To the other one percent — thanks for the passion and color!”

The big problem one-click buying eliminates is shopping-cart abandonment. It’s an issue both on mobile and desktop and can represent major revenue losses for retailers. The average shopping cart abandonment rate is about 70 percent, according to a number of studies done this year.

While it’s unclear how much money 1-Click brought Amazon, one estimate, which assumed the technology increased Amazon sales by 5 percent, valued the patent at $2.4 billion annually.

“Amazon sets the standard for e-commerce experiences,” said Eric Mayville, co-founder at ad agency Wondersauce, which works for retail clients including DKNY and Bombas. Mayville pointed out that Shopify, for example, has tried to mimic 1-Click with a workaround where if you buy something on one site, for instance, it’ll recognize you on another. Still, it’s not foolproof.

“For Bombas, for example, even if you only buy socks once in a while, the fact that you can’t buy with a single click isn’t great,” said Mayville. “Getting something like 1-Click in place is definitely important, but Amazon is looking toward things like predictive AI to figure out when you’re going to run out of toilet paper and send you another dozen rolls proactively. So 1-Click would be table stakes in the big picture for brands that have routine or even seasonal purchase repetition like Bombas.”

It’s certainly on the wish list for most retailers. One retailer that declined to speak on the record said he’s finding a large percentage of orders being lost because the process after clicking “purchase” or “add to bag” is too long. He hopes he can now implement one-click buying on his site. And if e-commerce providers like Demandware or Shopify can add one-click payments to their offerings for retailers, it would be a marked improvement in conversions, executives said.

At Shopify, the company is focused on accelerating the checkout flow, said Mohammad Hashemi, director of product and payments. The company didn’t elaborate on whether it plans to implement one-click buying but said it recently developed its own accelerated payment feature, called Shopify Pay, which makes checkout completion 40 percent quicker.

Many retail executives also say one-click payments could be especially beneficial for retailers that sell slightly smaller-ticket items, like in online grocery. “It could potentially be beneficial in online grocery, where consumers are pantry loading and buying things they need every week instead of browsing for product info,” said Angela Edwards, vp of marketing and client services at conversion marketing agency Catapult.

Others, including Amazon competitors, have already noticed the 1-Click patent’s expiration. Last year, a group of companies in the alliance known as the World Wide Web Consortium, including Apple, Facebook and American Express, started working on standards to implement one-click purchasing. Google is also reportedly working on a one-click payment solution. 

How Valuable is Amazon’s 1-Click Patent? It’s Worth Billions

Since 1999, the 1-Click patent has generated billions of dollars in revenue for

1-Click shopping removes the single biggest friction point for completing an online purchase: the checkout process.

Amazon filed the 1-Click patent in 1997 and it was granted by the USPTO in 1999. In fairly broad terms, it protects any E-commerce transaction executed with one-click using stored customer credentials to validate.

The result of this “innovation” is that Amazon achieves extremely high conversion from its existing customers. Since the customer’s payment and shipping information is already stored on Amazon’s servers, it creates a checkout process that is virtually frictionless.

But, wait a minute.

Is Amazon doing the rest of the world a disservice by enforcing a patent that makes the experience of shopping online so much more enjoyable?  No more fumbling through my wallet for a credit card, payment errors, multi-page checkout or silly upsells. Isn’t this the way the world should be? And doesn’t the idea of 1-Click checkout seem to be pretty obvious?

As is the problem with most software patents, Amazon was able to protect a fairly broad concept. The patent protects a “business method” vs. a specific invention. Not to mention, 1-Click technology could be helpful to every other U.S. online retailer in existence.

The Europeans agree. Amazon was never able to get the patent granted in the Europe in the first place. They’ve been appealing the decision since 2001 and were rejected again in 2011.

Despite the controversy, you can’t argue with that fact that this patent allows Amazon to provide a customer experience that is vastly superior to any other retailer in the U.S.  Why wouldn’t they protect that? Despite Amazon’s unwillingness to share, they are willing to “partner” with other retailers for a price.

Apple licensed Amazon’s 1-Click technology in 2000.  Apple felt that frictionless checkout was so important; it incorporated the tech into iTunes, iPhoto and the Apple App Store.  How many times have you impulsively bought a song on iTunes or downloaded a new iPhone app without even a second thought? You can thank US 5960411 for that Holiday Angry Birds download. Instant purchase drives orders. There’s no question.

But, our original question was how much?

In 2011, Amazon did $48.1 Billion in revenue. Let’s assume that 1-Click increases Amazon’s sales by 5% each year. That’s an additional $2.4 Billion in annual revenue due to 1-Click. For the 12 months ending March 31, 2012 Amazon’s operating margin was 1.7%. That’s an additional $40.8 Million in operating income. And that number doesn’t include the licensing fees collected from Apple.

Together with Amazon Prime, Amazon has put forth what are probably the two biggest game changing products in online retail over the past two decades. The 1-Click patent is scheduled to expire in 2017, but my guess is that Amazon doesn’t really care.

They’ve already got their next innovation on the horizon: Same-day delivery. With that dagger, one has to ask if Amazon will put an end to local brick & mortar retail for good.

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Strong IP standards can lead to innovation, which, in turn, can lead to jobs and growth

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When it comes to promoting innovation, India is already taking the lead among emerging economies. Earlier this year, GoI launched the India Innovation Index, which ranks its states on innovation through an online portal. Then, in June, it unveiled an action plan for the Scheme for Intellectual Property Rights (IPR) Awareness, an important part of implementing the 2016 National IPR Policy.

Now, GoI is working to develop an IP exchange to better capitalise on, and support, existing patents. India’s states are also taking steps towards innovation. For example, Punjab recently welcomed India’s first Technology and Innovation Support Centre —a World Intellectual Property Organisation (WIPO) initiative to stimulate a vibrant conversation on IPR protection.

Emerge and Shine

These innovation-led growth strategies give India the opportunity to serve as an example for other emerging economies. According to a new Harvard University study, India is expected to remain among the fastest-growing economies with an estimated annual growth rate of 7.7% until 2025. Simultaneously, the 2017 Global Innovation Index — a joint initiative by business school Insead, the World Intellectual Property Organisation (Wipo), and Cornell University — ranked India 60 out of 127 countries, indicating steady progress from its rank of 81in 2015.

However, a recent report by Niti Aayog-IDFC Institute that analyses state-wise development shows that job growth, particularly good quality job creation, remains a challenge. India will need to continue reforming to sustain its economic growth trajectory.

It will need to create one million jobs a month, invest heavily in research and development, and integrate into the global value chain quickly. If its economy falters, India risks falling into the ‘middle-income trap’ — the point when rapidly growing countries are susceptible to a loss of economic momentum or even stagnation.

They are trapped in an impasse: they are no longer low-income, low-wage, resource-driven economies, but have failed to make the transition to high-income, high-innovation economies. This is when economic growth plateaus. The Brazilian and South African experiences are cases in point.

To realise India’s innovation vision, and to avoid the middle-income trap, GoI must first fix the gaps in its National IPR Policy: the key to the growth of innovative and creative industries. An effective IPR framework is indispensable to attract foreign investors, disseminate creativity and encourage local innovators to invest in their own ideas.

India can further sharpen its National IPR Policy to realise the innovation-growth relationship by capitalising on specific sectors, such as its flourishing generic drugs industry and the thriving services sector. For instance, the policy should help India foster an environment that welcomes and protects life sciences investments, one that recognises genuine inventive steps in drug formulations.

As for services, the removal of the restrictive novel hardware requirement for computer-related inventions is an encouraging step towards recognising the patentability of all forms of technology. However, greater clarity on patentability can supplement GoI’s ‘Startup India’ initiative.

Furthermore, GoI must follow through on updating legislative infrastructure in a way that enables domestic and foreign innovators to protect their trade secrets and accelerate technology transfers. As GoI looks to address the shortcomings in its innovation and IP policies, it can also examine three opportunities more closely.

First, India can encourage and enhance a streamlined, market-based licensing business model for greater technology diffusion. New research from a joint study by the US Chamber of Commerce and Pugatch Consilium ( indicates a strong relationship between effective licensing and innovative technology diffusion, job creation and economic growth.

Learn From (Their) Mistakes

The study also shares examples from China, Brazil, South Africa and Indonesia, where a mix of administrative hurdles, legal barriers and coercive licensing issues pose serious barriers to technology diffusion. India can innovate by eliminating its peers’ failed policies.

Second, India could consider strengthening its patent system and remove price control mechanisms on medical innovations. According to a 2016 study by the London School of Economics (, policies that strengthen patent protection and remove price controls significantly reduce drug launch time and accelerate drug diffusion.

This data must be taken into consideration, especially as GoI considers extending price controls to more drugs along with the recent inclusion of orthopaedic knee implants to its list of medical devices. Also, additional price controls proposed in the recent draft pharmaceutical policy is at cross-purposes with the ultimate goal of spurring innovative research and improving drug quality.

Finally, India’s transition from pro innovation messaging to innovation-led growth merits the effective communication of benefits to all stakeholders.

The growing introduction of IPR education in Indian law schools is welcome. GoI should collaborate increasingly with foreign law institutions to adopt IPR curricula in line with global best practices. It could work with the private sector to disseminate the positive outcomes of any joint collaboration, including, for instance, Pfizer’s innovation accelerator programme, Qualcomm’s ‘Design in India’ initiative, or partnerships with GoI’s Jan Aushadhi programme.

Strong IP standards can fuel the growth of domestic innovative industries, help attract greater foreign investment and bolster India’s economic prosperity. They can also provide an example to other emerging economies by showing how innovation leads to growth.

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