Is India’s intellectual property (IP) regime WTO compliant?

In the just released Special 301 report on trade and industry practices,the US Trade Representative (USTR) has stopped short of downgrading India to ‘Priority Foreign Country’ (PFC) list.

Under Special 301, USTR tracks intellectual property (IP) rights record of countries and lists countries that could face trade sanctions and other countries whose IPR regimes are deemed to be areas of lesser concern. If on review, it identifies substantial deterioration in its IP regime, the country gets downgraded to PFC status.

India may have escaped it for now, but ‘damocles sword’ hangs as USTR intends to conduct what it calls ‘out-of-cycle’ reviews to promote engagements on IPR challenges with India.

Describing as unilateral probe under US law which India has not committed to under WTO, Commerce Secretary, Rajeev Kher has ruled out being a party to engagement. Instead, he insists that issues can be discussed at US-India Trade Policy Forum.

Indian government’s stance draws strength from a ruling of WTO dispute settlement panel (1999) – in a dispute between EU and USA – that a country cannot take unilateral action against another member country which is inconsistent with WTO laws.

Just in case US contemplates to impose sanctions on India, it will have to file a dispute in WTO and if panel decides in favour of US, it will have to seek authorization from WTO. Only thereafter, US can proceed against India.

By leveraging rules, government can at best get a temporary reprieve. The mere implausibility of any action against us without WTO sanction does not make us any less vulnerable. What if, USA goes to WTO and latter finds our regime to be non-compliant.

Indian authorities have repeated time and again ‘India is compliant with its commitments under Trade-Related Aspects of Intellectual Property Rights (TRIPs) and we have used flexibilities which are available to WTO members and that is entirely within the remit and commitments made by India under WTO agreements’.

Yet, US administration remains un-convinced!

We need to move away from ritual pronouncements (that at times become indistinguishable from rhetoric) to an objective and dispassionate analysis of whether our actions are truly in full compliance with WTO.

There are three major areas of concern viz., (i) poor enforcement of Patent (amendment) Act 2005; (ii) denial of protection to proprietary data submitted for registration of new pharmaceutical and agro-chemicals and (iii) refusal to recognize patent while granting market approval to ‘me too’ registrants.

As regards (i), the biggest area of concern is section 3(d) in the amended Patent Act. The section bars grant of patents to new forms of known substances, unless the new form results in significant enhancement in efficacy over the known substance.

This section was justified to prevent so called ever-greening of patent, a euphemism for extension of monopoly beyond patent term. This premise is flawed. If for Glivec (cancer treatment drug), beta crystalline form of pre-existing compound imatinib mesylate gets a patent, it is wrong to infer ever-greening as latter product will still be available for generic play at end of its patent term.

Yet, the scare generated by alleged ever-greening has come in to full play at various levels in our patent system and judiciary. Section 3(d) has been turned in to a prime vehicle for indiscriminate and incessant attempt to block grant of patent.

During the past 18 months or so, as many as 15 medicine patents have been challenged. In several cases, the office of Patent Controller has moved with alacrity in either denying grant of patent or even revoking a patent already granted. The courts too have upheld the decision of patent controller.  The order of Supreme Court (SC) in Glivec case has made matters worse.

While, rejecting patent for beta crystalline form, SC opined that test of efficacy can only be ‘therapeutic efficacy’. This implies that pharmacological/chemical properties alone should be sole consideration for grant of patent. This knocks at the very foundation of incremental innovation and surest way of ensuring that no such patent is granted.

Ironically, even in areas where an MNC is able to thwart patent challenges, Government has taken recourse to grant of compulsory license (CL) to Indian companies. Thus, in 2012 it issued a CL for domestic manufacture of Nexavar, a patented drug of Bayer to Natco Pharma. Plans are afoot to grant CL to more drugs.

As regards protection of regulatory data, innovator companies spend millions of dollars in conducting long-term studies viz., toxicological, environment etc to demonstrate safety and efficacy of new products for seeking market approval. This data needs to be protected to give them a reasonable opportunity for recuperating such heavy investment and have incentive to continue investing in R&D.

Article 39.3 of TRIPs Agreement requires member governments to protect such data. In Feb, 2004, Government had set up a committee under Secretary, Department of Chemicals and Petrochemicals to ‘consider the steps to be taken in the context of provisions of Article 39.4’. In May, 2007, Committee recommended 3 years of data protection for agro-chemicals and 5 years for traditional medicines. It also suggested protection of information against un-authorized disclosure/use of agro-chemicals and pharmaceuticals.

In the Pesticides Management Bill (PMB), a provision was incorporated to provide for data protection of agro-chemicals for 3 years. It was introduced in Rajya Sabha in 2008 and has since been languishing there for close to 6 years now.

As regards recognizing patent for granting market approval to ‘me too’ registrants or ‘patent linkage’(as IP experts call it), government has dismissed this outright as a TRIPs ‘plus’ requirement.

Regulators viz., Central Insecticides Board & Registration Committee (CIB&RC) for agro-chemicals and Drug Controller General of India (DCGI) for medicines have a crucial role in import/manufacture and sale of these products. If, they grant registration to someone despite existence of a patent and without the holder’s consent, it will tantamount to nullifying the patent.

Far from being TRIPs plus, denying patent linkage by regulators is an act of blocking enforcement of patent rights of the innovator.

Thus, even if government ignores USTR terming its review as unilateral under its laws, we have lot to answer in terms of WTO commitments. At WTO, India will have to deal with specific areas of deviation and non-compliance.  Mere harping on ‘flexibilities’ available under TRIPs Agreement may not be enough to ward off potential threat.

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