DRDO grants free patent access to boost indigenous production

Introduction

Defence Research and Development Organisation (DRDO) is mandated to develop defence technologies, systems and products that are required for Indian armed forces. In a recent guideline the DRDO has decided to grants free patent access to boost indigenous defence production. DRDO develops defence technologies through projects executed by a network of laboratories. These laboratories are also engaged with academia and industries for research and development and production through ‘development contracts, research boards, technology development fund (“TDF”) scheme, extramural research and grant-in-aid schemes. DRDO has been generating Intellectual Properties (IP), trade secrets, patents and copyrights from its research and development and design and development activities. Matured technologies that are ready for production are transferred to Indian Industries. DRDO provides the relevant ‘know-how’ in the form of technology transfer documents (“TTD”) and handholding support. It also provides the freedom to industries to carry out value addition to the base technology in consultation with DRDO to improve performance or economic viability.

The process of development

The DRDO Policy for use of Patents by Indian Industry (“Policy”) was introduced in September, 2019 and it got a fresh lease due to recent Defence Procurement Plan, 2020 (DPP 2020) and the initiatives by the Government of India to indigenise defence manufacturing.

This is qualitatively different from acquiring technology from foreign Original Equipment Manufacturer (OEM) wherein such value addition is often prohibited. Therefore, DRDO makes a significant contribution to the capability enhancement of the Indian defence industry through transfer of technologies. Some of the defence technologies developed by DRDO also have utility in the civilian market. Such technologies are transferred to the industries with dual licensing rights for defence sector/departments of Government of India and commercial market. Thus, Transfer of Technology (ToT) of DRDO developed technologies to Indian industries contributes to self-reliance in technology, industrial growth and overall national development.

Types of technology

DRDO Guidelines for ToT were issued vide Government letter No. DRDO/ CCR&D(SI)/DI2 TM/07/ToT/2108/D(R&D) dated 30 June 2015. As per this, there are two (2) categories of technology:

(i) Category ‘A’ technology: These technologies are military technologies for which Indian Armed Forces, MHA, other Government agencies (central and state) are only end users. Export of Category A technologies to friendly countries is subject to permission of DRDO/ Ministry of Defence (MoD) and Ministry of External Affairs (MEA).

(ii) Category ‘B’ technology: This is the dual use technology (including spin-off technologies) that is not security sensitive technology and has large commercial potential beyond just usage in the defence sector. The ToT is given to the manufacturing industries for utilising the technology to manufacture the products in India/abroad and sell products in India and/or abroad.

Eligibility to avail the benefits

The companies that can benefit from the Policy include any state-owned or privately owned defence equipment/ material manufacturer including Micro, Small and Medium Enterprises (MSMEs) and start-ups. This benefit can be utilised under two (2) conditions:

(i) The company must submit annual commercial reports to DRDO
(ii) The company must be equipped to absorb the technology in question, along with infrastructure to manage quality of the production as well as production capability based on the technology.

These conditions ensure that the DRDO can keep a tab on the distribution and usage of such technology as well as make sure that the quality of the manufactured goods are in line with prescribed technological integrity and standards.

New initiative by DRDO

For transfer of these technologies the requisite ToT fee and royalty (as applicable) are charged by the respective labs/departments of DRDO from the licensee as they have the patent rights. Now, DRDO has put its over four hundred and fifty (450) patents for free access to industries for commercial exploitation. The unprecedented move is intended to provide a boost to domestic industries, especially in the strategic sector through free access to patents held by the DRDO, which has a network of over fifty (50) national laboratories, involved in Research and Development (R&D).

As per the new Policy, the DRDO, the MoD will offer complete access to its patents filed in India without any licensing or royalty fees. This shift in policy is a welcome change as the former licensing and royalty fee would go as high as a several lakhs to over a few crore Rupees based on the kind of technology licensed, the expenditure on such technical projects along with the baseline price and post production sales to non- defence sectors. Under the new Policy, only a processing fee of one thousand Rupees (Rs. 1,000) is to be charged.

DRDO has displayed both the procedure and the complete list of technologies on its website. The technologies, relating to missiles, life sciences, electronics and communications, naval and aeronautics systems, combat engineering, electronics, armaments, among others, have military applications and some have spin offs that can be transferred to commercial market.

Conclusion

This is seen as a welcome step from the start-ups and MSMEs since it is an initiative to encourage domestic manufacturing and help uplift the domestic industries and create a global standing as far as defence manufacturing is concerned. It is better to offer the patents free of cost to these industries rather than keep them in the shelf and pay hefty protection fee for their lifetime as this move would be seen as a major boost to the indigenous production and would also be in consonance with the DPP 2020.

This update is by Shambhavi Singh, Advocate & Associate at Agarwal Jetley & Co., Advocates & Solicitors. Contact: Email: shambhavisingh@agarwaljetley.com or Mob: (+91) - 9650424966