It’s unfortunate that the USTR, the US trade body, has put India on a ‘priority watch list' for intellectual property rights violations. For now, the rift appears too wide and requires adjustments by both sides. Protection of IP rights isn’t always inimical to public interest
The US Trade Representative (USTR) has placed India on its Priority Watch List (PWL), alleging lack of “sufficient measurable improvements” to its Intellectual Property (IP) framework on long-standing and new challenges that have negatively affected American right holders. It has warned of enforcement actions under Section 301 of the Trade Act or pursuant to the World Trade Organisation (WTO) or other trade agreement dispute settlement procedures, necessary to combat unfair trade practices.
The long-standing IP challenges facing US businesses in India include those which make it difficult for innovators to receive and maintain patents in that country, particularly for pharmaceuticals, insufficient enforcement actions and lack of an effective system for protection against unfair commercial use as well as unauthorised disclosure of undisclosed test or other data generated to obtain marketing approval for agrochemical products.
The biggest challenge is Section 3(D) in the amended Indian Patent Act (2005), which bars grant of patents to new forms of known substances unless the new form results in significant enhancement in efficacy over known substance. The applicant should demonstrate that the “new form” gives substantially higher “efficacy” over a previously known compound. Indian law-makers had justified this as a step to rein in tendencies to seek “frivolous” patents on some minor modifications to an existing substance or “ever-greening.”
The Constitutional validity of Section 3(D) was upheld by the Supreme Court of India in the case of Glivec (an anti-cancer drug) in 2013, the beta-crystalline form of pre-existing compound ‘imatinib mesylate’, for which Swiss major Novartis AG had sought a patent. It virtually shut the door to “incremental” innovations such as “new dosage form” and “new delivery systems.” This is what worries global R&D companies and the USTR.
A perception that this will tantamount to “ever-greening” is a myth. Patent protection is confined only to a “new form” of “known” substance. The latter on completion of its patent term is already available to “generic” players for manufacture and marketing. Moreover, any company other than the inventor of a “known” compound, including Indian firms, can come up with a “new form” or a “new dosage” or “delivery system” and take patent cover.
While getting a patent is difficult, securing its enforcement is even more daunting. A major factor here is the use of compulsory licence — a flexibility available to developing countries under trade-related intellectual property rights (TRIPs) agreement — which is often misused. A compulsory licence authorises a generic firm to manufacture and market a patented product without prior consent of the patent holder.
Under Section 84 of Indian Patent (Amendment) Act 2005, a compulsory licence can be issued for “private commercial use” if it is found that the patent holder has not taken required steps to make patented product available in “sufficient” quantities or price charged is not “affordable.” Further, under Section 92, the Government can issue the compulsory licence citing circumstances of “national emergency or extreme urgency or in case of public non-commercial use.”
In 2012, using Section 84, compulsory licence was granted to Natco Pharma to make cheaper version of Bayer’s kidney and liver cancer drug sorafenib (brand name: Nexavar). This was upheld by the apex court in 2014. With regard to protection of registration data, Article 39.3 of the TRIPs agreement states as under: “Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural products, which utilise new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use.”
In February 2004, the Government had set up an inter-ministerial committee under the chairmanship of Secretary, department of chemicals and petrochemicals, to “consider the steps to be taken in the context of the provisions of Article 39.3 for protection of un-disclosed test or other data submitted to the regulator for seeking market approval of agrochemicals and pharmaceuticals.”
In its report submitted on May 31, 2007, the committee recommended three years of data protection for agrochemicals and also suggested protection of information against unauthorised disclosure/use of agrochemicals and pharmaceuticals. In Pesticides Management Bill (PMB) introduced in the Rajya Sabha in 2008, the then Government had proposed data protection for three years. The Bill is still pending.
In all the aforementioned three areas, the gulf between the US and India is a bit too wide. While USTR wants Section 3(D) in the amended Indian Patent Act, 2005, to go or substantially diluted, India is in no mood to yield. On compulsory licence though, the latter had used it only once, its being on the statute makes the former scary. On data protection, with process of enacting the PMB going nowhere, the US has become jittery. No wonder, USTR has declared India as a repeat offender.
Both countries need to make efforts to bridge the gulf. India should expedite passing a law on data protection, dilute provisions of Section 3(D) and instill confidence that compulsory licence will be sparingly used. For this, it will have to shed a mindset that views protection of IP rights as being inimical to public interest. On its part, US-based MNCs will have to demonstrate that they won’t exploit these rights to the detriment of patients and Indian farmers. However, for now, this seems to be a remote possibility.
(The writer is a New Delhi-based policy analyst)
