INDIA’S PATENT LAW – RIGHT BALANCE BETWEEN INNOVATION AND PUBLIC INTEREST – A PHARMA PERSPECTIVE

Recently, India was given a low ranking of 43 out of 45 countries in US Chamber of Commerce’s (USCC) annual intellectual property index. The index ranked countries based on points received on various aspects of patents, copyrights, trademarks, trade secrets and market access, enforcement, and ratification of international treaties. According to USCC, there are fundamental weaknesses in India’s IP framework and policies launched by the Indian government hasn’t done much to remedy that. The major reason accorded by USCC, for such poor assessment of India, is ALLEGED dilution of India’s patent law and rules. One of such concerns raised by multi-national companies and the US government is with respect to Section 3(d) of India’s Patent Act, 1970, which is perceived as a restriction on patenting incremental changes. Further, US-based pharma majors are irked that India allows domestic companies to launch cheaper variants of patented medicines in public interest under the "compulsory licensing" clause of the Indian Patents Act. US companies call it patent violation while the Indian government calls it a legitimate right.

Even though India is constantly criticized for its patent policies, governments around the world are modeling their pharma laws on the lines of the Indian Patents Act. In 2008, for instance, China introduced a new pharma law which has been largely inspired by Indian laws. In fact, Indian patent laws are being modeled or being considered by about 30 to 40 developing countries. The reason for such adoption is simple - the Indian patent laws/rules are framed/structured in favour of relative affordability of drugs/health care for masses while ensuring adequate protection for patented inventions.

In fact, an analysis of judgments/orders that come out of the Courts in India will establish that patent rights of various international pharmaceutical companies and other entities/organizations are actively protected by Indian Courts. Recent examples of some such cases are that of the famous Sitagliptin and Vildagliptin cases where numerous injunction orders were passed in favour of Merck Sharp & Dohme Corporation and Novartis AG in order to safeguard their patent rights. It is rather unfortunate that such decisions are never highlighted and an erroneous impression is sought to be created about enforcement of IP rights in India.

The Indian patent system while being conducive to health interests has ensured compliance with the requirements of TRIPS agreement. This has resulted in India successfully balancing innovation incentives against the social costs/affordability of pharmaceutical products. This middle ground has been achieved by the Indian government, by creating various laws, such as enactment of Section 3(d) that provides protection to new forms of known substances only if there is enhancement in the therapeutic “efficacy” of the known substances. Thus, while promoting grant of patents for incremental innovations/ improvement, the Patents Act, 1970 also safeguards against evergreening or illegal extension of patent monopoly.

INDIAN PERSPECTIVE OF ITS PATENT LAWS/RULES

1. Section 3(d) of the Patent Act

For many years prior to its membership in the World Trade Organization (WTO), India did not recognize product patents for pharmaceuticals and only process patents were granted in respect of food and medicine. However, after becoming a member of the WTO and signing TRIPS agreement, Indian legislature made multiple amendments in its domestic intellectual property laws (including Patents Act) in order to bring them in line with the TRIPS agreement. Accordingly in 2005, India amended its IPR laws (The Patents (Amendment) Act of 2005,) to provide full patent protection to pharmaceuticals products. Further, in order to ensure that patent monopoly is not illegally exploited or misused and in order to assuage fear of evergreening, section 3(d) of the Patent Act was enacted.

Article 27 of the TRIPS Agreement states, “[P]atents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application…….Member states may not exclude any field of technology from patentability as a whole and they may not discriminate as to the fields of technology, the place of innovation etc.,”.

Many experts/groups/researchers, particularly PhRMA (The Pharmaceutical Research and Manufacturers of America) have held that Section 3(d) of the Act, is not TRIPS complaint, as according to them, linking the grant of patents for pharmaceutical substances only to a new chemical entity or to a new medical entity may prima face amount to ‘excluding a field of technology’ even when they satisfy the basic requirement of patentability. However, many believe it is not in any manner in violation of TRIPS agreement and proposal to implement similar provisions in their legislation is being considered by various nations.

Section 3(d) has not only been able to withstand challenges to the effect that it is TRIPS compliant, it has also over the course of time been established that it is not anti-patents. In fact, in the famous case of Novartis AG Vs. UOI & Ors, the Supreme Court of India specifically observed that section 3(d) does not bar grant of patent protection to incremental innovations. Further, what would constitute as enhancement in therapeutic efficacy will be decided on the basis of individual facts of every case. Subsequent to the aforesaid judgment, several patents have been granted in relation to new polymorphic forms, esters etc. of known compounds/drugs by Indian Patent Offices thereby dispelling any misconceptions in respect of the said section.

Thus, one can safely say that incorporation of Section 3(d) was an attempt at balancing the competing interests of different stakeholders including Pharma MNC’s and masses/consumers. Further, there are provisions related to grant of ‘patent of addition’ under which patents for improvements which would be regarded as obvious in view of the main patent are allowed.

II. Compulsory Licensing

Article 31 of the TRIPS Agreement deals with compulsory licensing in case of patents. While TRIPS phrases it as ‘other use without authorization of the right holder’, it allows government to grant a license to be given to a generic manufacturing company for manufacture of the patented products if certain conditions are being met (however, this requirement may be waived in case of national emergency, extreme urgency, or public non-commercial use)

Article 31 of the TRIPS Agreement leaves Members the freedom to determine grounds for granting compulsory licenses, provided that the conditions and procedures imposed by Article 31 are met, and also while taking into account the other provisions of TRIPS. Compulsory licenses are generally defined as "authorizations permitting a third party to make, use, or sell a patented invention without the patent owner's consent." The stipulations for a compulsory license to be granted are laid down under Sections 84 and 92 of the Patents Act, 1970.

In the year 2012, India issued a Compulsory license (CL) to Natco Pharma for Nexavar- - i.e. the drug Sorafenib Tosylate. Since then the Indian Patent law has gained a lot of prominence worldwide. Many developed countries have raised their concerns and are against this decision. Pharmaceutical companies are worried because descriptions of “national emergency or extraordinary situation” and “public interest” are broad and undefined. However, while raising such apprehensions specific analysis of the legal provisions pertaining to grant of compulsory license in India have not been undertaken by such entities. Further, no reference is made to numerous cases where grant of compulsory license has been specifically denied.

As per the scheme of the Patents Act in India it is only in exceptional circumstances that a compulsory license will be granted when the patented invention is not being adequately worked to fulfill the reasonable requirement of the public at reasonable price. In fact, no application for grant of a compulsory license can be made till after 3 years of grant of a patent so as to ensure that a patentee has adequate opportunity to work the patent in India. Further, a patentee is always given an opportunity of being heard while a compulsory license application is considered. Thus, any specific circumstances due to which there has been delay in working of the patent in taken into consideration. Moreover, a patentee can file an application and seek termination of a compulsory license on the ground that the circumstances which gave rise to grant of a compulsory license no longer exist and are unlikely to recur. Thus, appropriate countermeasures are contained in the Indian Patent Law.

CONCLUSION

India has been long under the radar for disallowing provisions of ever-greening and is pressurized to change its laws. Any critique of Indian Patent Laws/Rules must take into account the complete picture and should not be based on selective information or rhetoric. India’s concern for securing access to drugs and to prevent ever-greening ought not to be labeled as anti-patent. The attempt to camouflage known inventions as innovation is anti-patent as it kills the very spirit of innovation and invention. Patents have always been awarded to recognize intellectual achievements and India has ensured that it is not misused at the cost of health and life.