INTELLECTUAL PROPERTY : Indian IT Wakes Up to Patents

Indian Tally: Lagging Behind MNC Scorecard: Way Ahead What they Do
	Sasken and TCS, with 39 and 35 patents filed, respectively, top the Indian list
	Texas Instruments (India) is way ahead of others in the creation of intellectual property. It has filed for 350 patents so far, and has been awarded 223
	Intel’s India development center–4 years old–has already filed for 21 patents
	Wipro has made $10 mn in the last 2 years from the sale and licensing of IPs

Almost every business is born of an idea never thought of before. A new
technology, a new process... or simply a new way of looking at things. But more
than most, the very foundation of the information technology industry has rested
on this single premise that in many ways has also been the industry’s anthem–innovate
or die.

The Indian IT services industry, which was born out of the Y2K boom, hasn’t
traditionally looked at innovation the way IT firms worldwide have. Of course,
it innovates–most good businesses do–but it has never really had an
inclination toward protecting that innovation the way the IT sector worldwide
does. Copyrights and patents haven’t really been top-of-the-mind concerns.

There are reasons, of course. One is history and the circumstances in which
this industry was born and boomed. Bodyshopping and Y2K were hardly the stuff
that intellectual property could be made of. The other is the business model
itself. The services model does lend itself to the creation of a lot of IP–the
very concept of intellectual capital in India comes from this premise. The catch–very
little of this IP is easy to patent.

Finally, of course, there’s the missing cultural context. Traditionally,
India hasn’t been a country with great respect for IP as it is understood in
the modern context–neither in respecting other people’s IP, nor in
protecting its own. The IT services sector is not peculiar in that context–the
controversy over two non-Indian companies patenting neem and basmati wasn’t so
long ago.

All of which shows up in the widely disparate number of patent applications
filed by Indian IT services companies, when compared to those filed by
multinational development centers in India. For one, most of the MNC development
centers are working in product-related areas where the IP is eminently
patent-able. For another, a patent culture comes to them in the very DNA of
their parent companies. HP’s tagline says Invent. Intel’s Andy Grove made
innovation paranoia a cult within the company. IBM has been the world’s
largest patent filer for the past many years.

A new horizon

But things are beginning to change. Over the last two years–about the time
we started this segment actually–IP and patents have increasingly appeared on
the radar of the Indian IT services companies.

There are a few eminent examples. Bangalore-based Sasken, for instance, has
filed for 39 patents in the area of telecom software in the last two-and-a-half
years. The company has an impressive array of silicon and multimedia IPs. Sasken
licenses its multimedia solutions to terminal equipment manufacturers and has a
relationship with six of the 10 handset manufacturers in the world. It also
recently announced the adoption of its multimedia component technology for NEC’s
next-generation FOMA (NTT DoCoMo’s 3G service) phones and expects more than 10
different models globally to run on Sasken IP by the end of the year.

Another big one is Tata Consultancy Services. According to Prof Mathai
Joseph, who heads the Tata Research Development and Design Center (TTRDC), the
company has filed 35 patents so far–16 of them in the last fiscal alone. These
include patents in areas as diverse as process engineering–improved techniques
and models for mineral processing, cement manufacture, ferrous and non-ferrous
metal processing–that ultimately feeds into the company’s manufacturing
vertical’s offerings. The bulk of its recent patent applications are, however,
for innovations in the general area of software tools and products.

There are also several smaller companies like Mistral that offer silicon IPs
(SIPs) which are proprietary designs. A lot of these patents actually arise out
of product development-related work. Bangalore-based vMoksha has filed for a
patent for an authentication protocol that was developed while working on an
applications security product; Geometric software has filed for a couple of
patents for its feature recognition technology; Ittiam systems, a DSP Systems
company founded in 2001, has filed for two patents in the areas of audio and
video technology. In fact, as a product company, Ittiam’s research and
development expenditure is more than half of its overall budget.

The question then–is enough being done?

New challenges

Probably not. A majority of Indian software services R&D efforts are
aimed at generating other forms of IP, like reusable components. At a very
simple level, IP in the IT services context can be defined by the ownership of
code and the ability to sell the same piece or block of code to multiple
customers.

For example, Wipro’s IP offering largely revolves around reusable
components that help in the reduction of the development cycle time for clients.
Wipro has made more than $10 million in the last two years from the sale and
licensing of IPs and through the service business from implementing these IPs.
It offers reusable components in areas like home media, networking, wireless and
wireline, and its portfolio of building blocks consists of IPs for IEEE 802.11,
IEEE 1394, USB and Ethernet technologies. Patenting is not a mandatory part of
Wipro’s IP policy.

Therefore, even though most Indian software companies often have an "IP
portfolio", they have few or no patents to show for it. Mistral Software,
for instance, has several IPs to its credit, including special creations for car
telematics, bio-medical solutions and video signal processors. But Mistral has
not applied for patents. The company is candid enough to admit that like other
Indian companies, it lacks what it calls the "patenting mentality".

This is in complete contrast to companies in the US, for example, where
people apply for patents even before the product is far from complete. Indian
companies are not patent-savvy enough yet to do so. But it has local role models
from whom lessons can be learnt.

The new role models

These are the MNC development centers in India. Much has been written about
the IP they generate and the number of patents they file (see box). There’s
little understanding, however, of how they do this and just how aggressive they
are on that front.

Texas Instruments India, for instance, applied for five patents while
developing the first asymmetric digital subscriber line router-on-a-chip. Two of
these patents were filed in the initial stages of the development. The other
three were filed for after the chip was fully developed. The company’s India
center does some of the most cutting edge work in the country.

Intel’s development center in India–a mere four years old–has already
filed for 21 patents from here and is now talking of a "Made in India
Chip" by 2005. The microprocessor giant recently announced that it was
setting up a design team to work on the Centrino mobile technology.

Cisco’s development center in India has "owned" its popular 7500
router series for more than a year. The company also says there are people in
India who are doing pioneering work in the area of broadband for the 7600
series. IBM’s India Research Lab leads the company’s research in areas
related to web-based commerce.

Part of the difference lies, of course, in the very nature of products and
technologies that MNC development centers work on. But the other part is the
difference in approach. Most of these development centers have aggressive patent
fostering initiatives. Intel has a ‘Wall of Fame’ with photographs of every
one of their engineers involved in patent creation; there are monetary rewards–$100
(approx Rs 4,900) for every invention disclosure and $1,000 (approx Rs 49,000)
for every patent filed. There are other incentives too like ‘Inventors’ Day’,
when patent-holders are wined and dined. Often, holding patents has a bearing on
promotions and salary hikes.

But it goes beyond merely motivational sops...

New methods

A lot of it is about how much IP generation and patent filing are part of
the regular processes of a company. At Texas Instruments India, for instance, an
‘Ideas Committee’ meets once a month, and engineers present their ideas.
Senior people from engineering teams sit on this committee to examine these
claims. The committee then either rejects the idea, sends it back for rework or
if it sees sufficient merit, assigns a team to work on it. Intel India too
follows a similar system, under which it conducts periodic and regular "IP
harvesting" drives.

However, Indian IT services companies–due to the nature of the business–work
on thin margins and are far more driven by immediate client needs. Wipro, for
instance, started its ‘Innovation Initiative’ in 2001. At the first level,
the themes or broad areas where IP is actively encouraged is predefined for each
year, depending on market demand. For example, the current four themes at the
company are home networking, mobile internetworking solutions, content commerce,
collaboration and knowledge management. At the second level, the key gate
watcher who gives the go-ahead–or not–is the immediate business manager
concerned. The final okay on the idea comes only after at least two customers
have given tentative commitments to buying the idea.

Often, the entire exercise may not even result in a patent filing. The IPs
are often created to demonstrate technology expertise in a particular area and
to use that to get more business from a client. In a way, these are
confidence-building measures with the client.

Other Indian companies follow different variations of the same model.

In this industry more than most, there are long-term returns on IP. The most
easily quantifiable are things like licensing and royalty revenues. But the far
larger gains often come from a radical new idea, or simply a radical new way of
doing the same old thing that can change the fate of a company forever. When
that happens, often the face of the industry also changes with it.

Long-term returns, however, require long-term investments. True, radical
technologies are often discovered by accident. They do, however, require an
environment in which such an accident is possible.

TV MAHALINGAM