The trend-there are increasingly more patents being filed out of India, but most of them come out of multinational development centers in the country. For patents filed during FY 2003 and FY 2004, the number stood at 2,064. In fiscal 2003 around 848 patents were filed, but during the fiscal 2004, this number went up to 1,216, as per the data we were able to get together. However, most of the patents were being filed by MNC development centers. Of the, 1,216 patents filed last year, 1,108 were filed by MNC development centers, while Indian companies account for just about 104. Similarly, for among 336 patents granted, for which data is available, 327 were granted to MNC development centers.

The good news is that Indian companies are beginning to wake up to the idea of protecting their intellectual property and its advantages. From 80 patents filed that we identified in fiscal 2003, the number has gone up to 108, while actual patents granted have gone up from five to nine.

Not surprisingly, most of these have come from areas where Indian technology professionals have an edge.

Advantage India
For the large part, much of the work done by the MNCs concentrates on the strength areas of their employee pool in India. This means, for one, Java.

Sun Microsystems does a whole lot of Java related development and additions from its India center. India also contributes to its Solaris testing and Gnome developments. In fact, according to Sun, there is not one element of Sun's products that is not touched by India.

India contribution to Intel's development agenda is also pretty high. With around 1,500 people in India, the development center contributes to the MNC in four major areas–switches and routers, Enterprise Products Group (EPG), E-business Group (EBG) and the next generation of mobile processors from India. The story is the same with Oracle, which states that everything that Oracle is involved in; India is involved in it too-from grid computing, to their database to their Linux initiatives.

Areas of dominant work among Indian companies also differed from company to company. For example, Sasken's work revolved around broadband DSL, 3G and 4G wireless along with MPEG. Mindtree, who filed their first patent this year, did it in the area of digital signal processing.

The year saw a bit more activity on the IP front, with Indian companies and organizations like Mindtree entering the list for the first time. More encouragingly, most of these organizations plan to stick to their IP policies. Mindtree itself has a target of five patent filings for the fiscal 2005.

Patent Barriers
Yet there are several major issues which hold back large scale awakening to IP among the Indian IT fraternity.

One of the major ones is cost. The biggest hurdle for patent filing in fiscal 2004 was the perceived cost factor. Patents don't come cheap, especially the international ones. An average patent costs over $35,000 or Rs 15.5 lakh through its entire lifecycle–which includes everything from patent drafting and filing to follow ups, to tracking and keeping the patent active after it is granted. While that is not a particularly huge outflow, companies seem reluctant to spend it. In addition, it could take up to five years before a patent is granted in a long drawn out, rigid, bureaucratic process, designed to discourage even the zealous and sometimes, even make the technology applied for, obsolete.

Secondly, there continues to be a general lack of awareness on what exactly patents can end up doing for the company concerned. This includes an ignorance of what makes for a patentable idea and the belief that patents do not offer as much immunity as is made out. In addition, many companies believe that the money spent on obtaining patents is better spent on marketing the service or product better. The argument being that the building of a brand idea can go much further than the mere grant of a patent in beating the competition. Many product companies therefore, end up going for plain copyrighting even when a patent is possible.

Moreover, by ignoring patents, companies miss out on a very important advantage brought in by patents apart from the strong initial entry barrier to potential competitors that it creates-a potential source of revenue. For example, Ittiam Systems, which filed for five patents last year and for 13 in 2003-04, expects its royalty revenues from IP to be 25% of the total revenues by the time they reach IPO maturity by around 2007. That should constitute a good number, considering that their revenues for fiscal 2004 were Rs 21 crore and there is a 30% YoY growth annually on the same.

Sasken Communications obtains about 10% of its total revenues from IP royalties now, and says royalty revenues will only rise in the near future. G Venkatesh who heads the company's Patents Division also says that IP revenues come with 90% profit margins.

What is scary is that a lot of other big Indian companies have still not woken up. Companies like i-flex and Subex have not yet initiated any processes for patent filing so far. Subash Menon, CEO of Subex, says that much of their products aren't patentable and that their domain expertise anyway gives them quite a comfortable head start. CEO (international operations) of i-flex, R Ravishankar says the company missed out on filing patents so far, but plans to start a patent initiative in fiscal 2005. Contrast this apparent placidness of Indian companies to the idea of patents of MNCs like Phillips, which has so far filed for more than 1,200 Invention Disclosures (ID) from its Indian center.

On the services side, without an 'IP aware sense', Indian service companies potentially face a danger that could hit the bottom line much more strongly–infringement on other people's IP. Considering that there are around 1 million IT related patents in the US alone, some of them covering the broadest of aspects like the double click and that service companies do sign agreements with customers accepting liability for any IP that is infringed upon as part of the service, its about time they developed it.

Unfortunately though, fiscal 2004 carries with it the strong suggestion that for the next two years at least, patent related IP will be restricted to very few companies in India and most of them will be repeat filers that is, companies which already have experience in filing or have been granted patents. Patent filing costs though are expected to go down in the near future as US law firms handling patents are increasingly outsourcing the work to Indian lawyers. That along with great IP awareness might just give a spurt to patent related IP activity from Indian companies. Ultimately, though, to borrow from Dickens, whether we have everything or nothing before us, will depend on a major change in the mindsets of Indian IT companies.

Sathya Mithra Ashok in Bangalor