The US Trade Representative [USTR] has placed India on its Priority Watch List [PWL] [besides 10 other countries, including China, Indonesia, Russia etc] 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 over the past year.
The USTR acknowledges that over the past year, India took steps to address intellectual property challenges and promote IP protection and enforcement, but laments that many of the actions have not yet translated into concrete benefits for innovators and creators, and long-standing deficiencies persist.
The countries on the PWL for multiple years [India being one of them] will be the subject of increased bilateral engagement with the USTR to review the developments against the benchmarks established in the Special 301 action plans.
For such countries who fail to address US’ concerns, the USTR will take actions, such as enforcement actions under Section 301 of the Trade Act or pursuant to the World Trade Organization [WTO] or other trade agreement dispute settlement procedures, necessary to combat unfair trade practices. .
So, what are the major IP challenges and areas of concern? What is the way forward?
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 protecting against the unfair commercial use, as well as the unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for crop protection products.
The biggest challenge is Section 3[d] in 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 the known substance. The applicant should demonstrate that the ‘new form’ gives substantially higher ‘efficacy’ over a previously known compound. Indian law makers 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 [SC] in the case of Glivec (anti-cancer drug) [2013], 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’; ‘new delivery systems’ etc. 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 ‘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 inventor of ‘known’ compound 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 license [CL] – a flexibility available to developing countries under TRIPs [trade related intellectual property rights] agreement which is often misused. A CL authorizes 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 CL can be issued for “private commercial use” if it is found that 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 CL citing circumstances of “national emergency or extreme urgency or in case of public non-commercial use”.
In 2012, using Section 84, CL 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 SC in 2014.
In regard to protection of registration data, the 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 utilize new chemical entities, the submission of un-disclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. In addition, Members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use.”
In February, 2004, the government had set up an inter-ministerial committee under chairmanship of Secretary, department of chemicals & petrochemicals to “consider the steps to be taken in the context of the provisions of the Article 39.3 for protection of un-disclosed test or other data submitted to the Regulator for seeking market approval of agro-chemicals and pharmaceuticals.”
In its report submitted on May 31, 2007, the committee recommended 3 years of data protection [DP] for agro-chemicals and also suggested protection of information against un-authorized disclosure/use of agro-chemicals and pharmaceuticals. In Pesticides Management Bill [PMB] introduced in Rajya Sabha in 2008, the government proposed DP for 3 years. The bill is still pending.
In all the three areas, the gulf between USA and India is a bit too wide. While, USTR wants Section 3[d] to go or substantially diluted, India is in no mood to yield. On compulsory license, though the latter has used it only once, its being on the statue makes the former scary. On DP, with things coming to a standstill, 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 DP, dilute provisions of Section 3[d] and instill confidence that CL 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!