India: ‘Patent’ly In Force?

Last Updated: 13 January 2005

By Mustafa Safiyuddin and Ajay Shaw, DSK Legal

Introduction:

Pharmaceutical product patents and patents for computer programs have at last found their way into the Indian patent regime through the Patents Amendment (Ordinance), 2004 promulgated by the President. The expediency of an Ordinance has been resorted to in an endeavour to comply with India’s obligations under Agreement on Trade Related Aspects of Intellectual Property Rights popularly known as "TRIPS" by the January 1, 2005 deadline. However, the Ordinance, seeking to amend the Patents Act, 1970 could lapse if it is not approved by Parliament during the monsoon session. It is questionable as to whether the Government should resort to a Presidential Ordinance bringing about far reaching changes in the patent law without a Parliamentary debate in the first place, in respect of issues on which views have been divided across the country.

The key amendments to the patent regime brought about by the Ordinance and their practical implications may be summarized under the following heads.

Pharmaceutical product patents:

From January 1, 2005, for the first time, the grant of full-fledged pharmaceutical product patents for a term of 20 years will be permissible. Pharmaceutical product patents are advantageous to multinational companies like Pfizer, Glaxco, Novartis and research based Indian drug companies such as Ranbaxy, Dr. Reddy’s and Wockhardt. However, the grant of such product patents may be detrimental to small indigenous generic drug manufacturers.

Further, patents for chemical products and food items are also being introduced. Until now only process patents for pharmaceutical products, chemicals and food items were permissible.

A hybrid system of exclusive marketing rights popularly know as "EMR" for pharmaceutical products had been in place for some time, but is now abolished by the Ordinance in view of the pharmaceutical products patent regime coming into force.

New use patents:

Earlier "new use for a known substance" could not be patented, however, the Ordinance now provides that "mere new use for known substance" cannot be patented. The insertion of a single word "mere" would open the floodgates for pharmaceutical product patents. This is because the word "mere" restricts the scope of non-patentable subject matter and widens the scope of patentability. The effect is that "new pharmaceutical use of a known substance", even though "the substance itself is known and comprises part of the state of the art" would be patentable. Not only first new medical use of known products but also second and subsequent new uses would be patentable. This can be achieved through cleverly drafted "Swiss form" of patent claims. For example, the new discovery that the consumption of the known substance aspirin can also be useful in thinning the blood can be patentable by making a claim for "use of aspirin in making a medicament for use in the prevention of blood clots".

Computer programs:

In an endeavour to encourage the software industry, the scope of patentablity of computer programs has been broadened. This is sought to be achieved by restricting non patentability to "computer programs per se" whilst computer programs’ technical application to industry or a combination with hardware would constitute patentable subject matter. Perhaps the effect is that patents shall not be granted for computer programs in the form of abstract creations lacking in technical character. But patent claims for computer programs having a technical effect may be granted. Thus a computer program product could be patentable if it resulted in additional technical effects that went beyond the ‘normal’ physical interaction between the program (software) and the computer (hardware) on which it was run. With this provision, the standards of patentability of computer programs would perhaps be close to that of the European Union but may not be as liberal as that prevailing in US.

Parallel imports and international exhaustion:

Patent holders often take recourse to the territorial nature of patent rights to prevent parallel imports. Thus if a US patented product is once sold in US, parallel imports thereof into developing countries are sought to be restricted by resorting to legally separate patent rights conferred upon the same product in the developing countries. This anti competitive practice of dividing markets is detrimental to the interests of the developing countries and enables the patentee to earn windfall profits. Through the Ordinance parallel imports into India cannot be prevented by resorting to the above method. This is because India has recognized the "first sale doctrine" also known as the doctrine of "international exhaustion" whereby the patent holder exhausts his rights upon first sale of the patent product in any part of the world and cannot prevent parallel importation thereof by resorting to the patent regime of each country.

Compulsory licensing of pharmaceutical products for exports:

Whilst resorting to the Doha declaration, the Ordinance permits the grant of a compulsory license by the patent authorities (and which may be against the wishes of the patentee) to manufacture and export patented pharmaceutical products from India to countries having insufficient supplies and facing public health problems. This is a departure from the normal rules of compulsory licensing which is permissible primarily to meet the local demands after the expiry of 3 years from the grant of the patent.

Opposition to grant of patent

Prior to grant:

Fundamental changes have been brought about in the opposition procedure with an endeavor to expedite the grant of patents. Earlier any person could oppose the grant of a patent by initiating opposition proceedings and the opponent had a right of audience in such proceeding. Now, under the new procedure, prior to grant of a patent, any person may merely make written representations to the patent authorities against the grant, but has no right of personal hearing.

Post grant:

The earlier law does not provide for any opposition procedure once the patent is granted but only for a right to apply for revocation. The Ordinance now introduces a system of opposition, which can be initiated within a period of one-year post grant of the patent. This is in addition to the revocation procedure which is already in place but only that the same needs to be filed before the newly constituted Appellant Board unless such revocation proceedings are by way of a counter attack in a High Court infringement suit. Since there is already a revocation procedure in place post grant, the need for introducing a new concurrent opposition procedure post grant is perhaps unnecessary.

Conclusion

If the patent regime is implemented in an efficient manner, it can assist India in attracting foreign investments and technology transfers so as to acquire a leadership position in the emerging markets. It can also encourage indigenous research and development.

© DSK Legal, 2005.

The views expressed in this article are those of the authors and do not represent the views of the firm. This article does not purport to be professional advice, nor a complete or comprehensive study on the subject. It is recommended that professional advice be sought before taking any action pursuant to any matter contained in this article.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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