Nuclear technology transfer – Intellectual property issues

By, Vaibhav Saxena*

India’s nuclear power expansion programme banks heavily on imported technologies which have developed at high cost and risk over a long period. Not unreasonably therefore, the nuclear technology developers would expect compensation for transfer of their technologies. When the technology is transferred in whatever form (sale, JVs, localiastion or full ownership transfer) the technology provider will want to ensure that its competitive advantage, as the developer of the technology is protected. If current trends in the nuclear industry are any indication, host countries the world over are placing an increasing priority on both localisation and technology transfer.

Intellectual property (IP) has an international dimension, and technology providers want to make sure that the host country acknowledges and enforces the technology provider’s IP rights. They genuinely want to have confidence that the other party to the transaction will honour and respect their IP rights including the licences granted in respect of the technology. A patent is granted only to the inventor or the owner of the invention and the principle behind patent protection is that in return for disclosing his invention, the inventor is given limited exclusivity for it and thus provided an exclusive right to make, use and sell the invention within the jurisdiction of that patent.  Nuclear capabilities and activities have created a shrinking world necessitating wide-ranging international co-operation. As a backward step though the World Trade Organisation (WTO) – Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement gives freedom to each country to frame its patent and other IP related laws and confirms that the patent laws are ‘territorial’. Patent laws are therefore, national in scope and eventually IP rights may need to be enforced through the national courts.

According to sub-section (1) of section 20 of the Atomic Energy Act, 1962, no patents shall be granted for inventions which in the opinion of the Central Government are useful for or relate to the production, control, use or disposal of atomic energy or the prospecting, mining, extraction, production, physical and chemical treatment, fabrication, enrichment, canning or use of any prescribed substance or radioactive substance or the ensuring of safety in atomic energy operations. As a corollary to this, section 4 of the Patents Act, 1970 provides that “No patent shall be granted in respect of an invention relating to atomic energy falling within sub-section (1) of section 20 of the Atomic Energy Act, 1962”.

As a consequence,  inventions useful for or relating to the production, control, use or disposal of atomic energy or the prospecting, mining, extraction, production, physical and chemical treatment, fabrication, enrichment, canning or use of any prescribed substance or radioactive substance or the ensuring of safety in atomic energy operations can not be patented in India and in the absence of patent protection their inventors have to protect their rights through a confidentiality clause in the contract or a separate confidentiality agreement so that in case of breach, the supplier can have a right of recompense. Such remedy however, will be enforceable against the buyer and not against the government or the regulatory authority to whom information of proprietary nature is communicated by the buyer in compliance with the legal and regulatory requirements as in the absence of the privity of contract the government and regulatory authorities can not be held liable for the breach of confidentiality. Obviously intellectual property rights are available in rem while contracts normally bind the parties concerned. Yet it can be argued that the buyer may still be liable if it failed to inform the government or the regulatory authority of the proprietary nature of third party intellectual property related information submitted to them in compliance with the applicable local laws.

Though carefully drafted confidentiality agreements have a significant role in protecting intellectual property, such an agreement can, at best secure compensation for breach of contract between two parties and can hardly be a substitute for clearly delineated express laws which have binding force and are enforceable through deterrent penal provisions that can introduce order in the IP regime. Therefore, true international cooperation for protection of IP is absolutely essential which can only prosper in an atmosphere of mutual trust and equality by digging at currently prevalent fragmentary ‘territorial’ approach reflected in the WTO-TRIPS international IPR regime and the out-fashioned national laws like sub-section (1) of section 20 of the Atomic Energy Act, 1962 and Section 4 of the Patents Act, 1970. This is of great relevance in the context of highly-specialised technological endeavours such as the nuclear sector and deserves treatment of a forewarning that the host government might find it difficult to attract project participants and to achieve the desired levels of localisation and technology transfer to the extent to which the host country shows lack of respect for IP rights. New approaches to IP protection are therefore, the need of the hour.

* Advocate and a Member of the Nuclear Law Association, India and the International Nuclear Law Association. He  recently interned at the Nuclear and Treaty Law Section, Office of Legal Affairs, International Atomic Energy Agency (IAEA) at Vienna. Author is alone responsible for the contents of the write-up.
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