Should generic drug manufacturers, who have a substantial market share of the Indian drug industry, have any immediate worries arising from the new patent regime for pharmaceutical products, introduced by the Patents (Amendment) Ordinance 2004, effective from January 1, 2005?
The answer appears to be in the negative - the generic drug manufacturers are here to stay. There are three reasons for this: Firstly, majority of the drugs manufactured in India are off patents or are not patentable in India for lack of novelty. Secondly, several ‘mail box’ applications have been filed prior to January 1, 2005 for the grant of pharmaceutical product patents. Examination or processing thereof is to commence only now, i.e., from the beginning of 2005. However, the Indian Patent Office lacks sufficient resources to process them expeditiously. The problem of a huge backlog of pending mailbox applications is likely to multiply with the expected increase in patent filings under the new regime. Thirdly, there are sufficient provisions in the amended patent law which will facilitate generic drug manufacturers to continue to thrive, at least for some years to come.
In this article, the authors intend to analyse some of the provisions of the amended patent law that may be beneficial to generic drug manufacturers. These may be conveniently divided under the following heads: (1) ‘Mail box’ applications, i.e. pharmaceutical product patent applications filed under the ‘mail box’ system prior to January 1, 2005. (2) New applications, i.e., pharmaceutical patent applications that may be filed post January 1, 2005 under the new patent regime.
Mail box applications
The generic drug manufacturers would want to know whether they can, without fear of any potential liability, continue to manufacture the generic versions of drugs for which patent applications have been made prior to January 1, 2005 under the ‘mail box system’, the processing of which will commence only now. In this context, a new section 11A(7) introduced by the Ordinance is relevant. In substance, it provides that patent infringement proceedings can only be instituted after a patent has been granted (i.e. post grant). It further provides that in respect of ‘mail box’ applications, patent rights shall accrue to a patentee only from the date of the grant of the patents i.e. there can be no liability by way of damages for any ‘infringement’ prior to the date of the grant of the patent.
The effect of this provision is that a generic drug manufacturer will not incur any liability in respect of a product covered by a ‘mail box’ application until the date of the actual grant of the patent in respect thereof. Thus, so long as a patent for a ‘mail box application’ is not actually granted / sealed, the generic drug manufacturer can freely manufacture the same without any fear of liability for damages.
One other implication of the above provision is that the effective patent term of products covered by the ‘mail box’ application will be much less than 20 years. This is because the patent term of 20 years is to commence from the date of the application, whereas the patent rights come into existence only after the grant of the patent, which is likely to be some years after the application date.
One subtle issue may also be noted. Before the Ordinance came into force and whilst ‘mail box’ applications were being accepted, Section 3 of the Patent Act provided that ‘new use for a known substance’ was not patentable subject matter. Hence new pharmaceutical uses for a known substance was excluded from patentability. However, the Ordinance amends Section 3 so as to provide that ‘mere new use for a known substance’ would not be patentable. The word ‘mere’ restricts the scope of non-patentable subject matter and widens the scope of patentability. Accordingly, ‘new pharmaceutical use for a known substance’, even though the substance itself is known and comprises part of the ‘state of the art’, would still be patentable. Thus 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.’
It is the opinion of the authors that for ‘mail box’ applications, patents should not be granted for new pharmaceutical uses for a known substance if the substance itself comprised part of the ‘state of the art’ as of the date of the application. This is because on the date of such ‘mail box’ application (which is material for considering novelty and the patent term, if granted) the same did not constitute patentable subject matter by virtue of the old Section 3 referred to above.
The scheme of the patent regime suggests that novelty and ‘state of the art’ is to be determined as of the date of the patent application. Similarly, the patent term of 20 years commences from the date of the application. In respect of the ‘mail box’ applications, rights and privileges conferred upon a patentee commences from the date of the grant of the patent. However, in respect of pharmaceutical product patent applications made after January 1, 2005, such rights and privileges accrue to a patentee upon publication of the patent application by the patent authorities in the patent journal during the examination process, though infringement proceedings in respect thereof can only be instituted after the patent has been granted (New Section 11(A)7).
Thus in respect of such new applications made after January 1, 2005, a generic drug manufacturer can be prevented from manufacturing the product covered by the application only after the grant of such patent. No damages for infringement can be claimed in respect of such manufacture until the date of publication of the application by the patent authorities. Since the rights and privileges accrue to the patentee from the date of publication, one view is that damages for patent infringement may be claimed from the date of publication and not only from the date of grant of the patent. However, in this context section 111 of the Patent Act of 1970 is also relevant. It provides that no damages for patent infringement can be claimed against an alleged infringer ‘who proves that at the date of the infringement he was not aware and had no reasonable grounds for believing that the patent existed.’ In view of the authors this defense may be available so long as a patent has not been granted because until then the question of ‘patent existed’ cannot arise. Hence it is not certain whether damages can be claimed from the date of publication of the application since during such period the patent would not have existed. From the date of the grant of the patent, an infringer would be liable for damages unless he is able to prove that he had no knowledge or had no reason to believe that a patent existed.
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.
However even if the Ordinance is approved / passed by the Parliament, the generic drug industry is likely to continue to flourish by having recourse to the beneficial provisions of the patent regime and due to the known delays in processing the patent applications by the patent authorities.
© 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.
Originally published in the Business Line on January 11, 2004
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