India: India’s Patents Bill, 2005 - Is It TRIPS Compliant?

Finally, the Indian Parliament passed the Patents Bill (Bill No. 32-C of 2005). The Bill replaces the Patents Ordinance, 2004. For the first time in independent India’s history, national newspapers carried 4-column headline news covering ‘patents’. Patents Bill was also the topic of prime-time news in national TV channels. The ‘news value’ of the patents amendment bill was because of the political color it acquired. The Ordinance was strongly criticized by the Left Parties. The Patents Bill to substitute the Ordinance, therefore, created a national uproar. Finally, with several amendments mooted reportedly by the Left Parties, the Bill is passed. These amendments have considerably diluted the Ordinance. On a preliminary reading, the Bill (as passed) seems to fall short of TRIPS compliance. This memo highlights the major differences between the Ordinance and the Patents (Amendment) Bill, 2005 (hereinafter ‘the Bill’) and also enquires if it is TRIPS compliant!

A new section 2(1)(ja) substituted the existing definition of ‘inventive step’ to mean "a feature of an invention that involves technical advances as compared to the existing knowledge or having economic significance or both and that makes the invention not obvious to a person skilled in the art".

This is an interesting attempt to ‘redefine’ one of the cardinal patentability criteria. ‘Inventive Step’ was originally defined in the Act to mean ‘a feature that makes the invention not obvious to a person skilled in the art’. An Explanatory note to Art. 27 (1) of the TRIPS Agreement states that ‘inventive step’ is synonymous with ‘non-obviousness’. There exists a plethora of judicial pronouncements on what constitute ‘non-obviousness’ as a criterion of patentability. Further, many national patent offices have practice guidelines explaining the fundamental propositions concerning what is not obvious to a ‘person of ordinary skill’ in a given technological art – so as to make an invention patentable.

The new wording of this Section does not reflect the distilled stock of knowledge on this subject. The wording ‘technical advances as compared to existing knowledge’ rather dilutes the very basis of obviousness/novelty requirements. If an invention is not adequately distinctive over prior art – it is not patentable. As such, what is the additional safeguard achieved by adding expressions that have the scope to make the whole definition vague and arbitrary?

The second phrase is ‘economic significance’. An invention to be non-obvious has to have ‘economic significance’ or ‘technical advances as compared to existing knowledge’! If so, what is the very purpose of the ‘utility’ criterion for patentability? By bringing ‘economic significance’ under the definition of ‘non-obviousness’ what has been fundamentally diluted is a cardinal principle of patent law! This new definition defeats the objectives behind the amendment. It interferes with the time-tested principles of patents law, and in that process has created a new definition that can lead to loose interpretations. It indeed falls short of the international legal practices on patentability – And arguably it is TRIPS non-compliant.

Unprecedented it is. The Bill retains the old definition of ‘invention’ in Section 2(1)(j). It however, added a definition on ‘new invention’. ‘New invention’ means any invention or technology which has not been anticipated by publication in any document or used in the country or elsewhere in the world before the date of filing of a patent application with complete specification, i.e. the subject matter has not fallen in public domain or that it does not form part of the state of the art.

Now the central question is this – whether the aforesaid definition of ‘new invention’ is an additional limitation on the definition of ‘invention’ under Section 2(1)(j). And if it is, does this amendment conform to Art. 27 of the TRIPS Agreement?

Here again, one can see a fundamental dilution of the tested principles of patent law. ‘Novelty’ of an invention is typically ascertained by testing if the invention has been anticipated by prior publication, or prior public working or prior public knowledge. There exists a huge stock of case laws on this. There are ways to ascertain this as well – of course with some levels of inherent limitations in carrying out prior art searches. But, redefining the ‘novelty’ requirement in the manner provided in the Bill deviates from the foundational norms on the test of novelty (to in turn ascertain patentability). This is another amendment that takes this Bill far away from the TRIPS Agreement. It puts unreasonable burden on a patent applicant to substantiate the novelty (and consequently patentability) of the claimed invention.

The Ordinance amended Section 3(d) to ensure that what is not patentable is only mere new use. If a second medical indication of a known drug molecule passes the test that it is not a mere new use – as per the Ordinance it would have been patentable. The Bill drops this provision. Instead, it contains a rather too long explanation on the Section 3(d) exemption. According to this Section what is not patentable is:

"The mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance"

"The mere discovery of any new property or new use for a known substance"

"The mere use of a known process, machine or apparatus – unless such process results in a new product or employs at least one new reactant"

Consequently, if a discovery of a new form of a known drug molecule (as for example) results in an enhancement of its known efficacy, it is patentable. Similarly, the mere discovery of a new use of a known substance is not patentable. The amended Section 3(d) when read in conjunction with Section 3(i) would ensure that all method of use inventions are unpatentable. A joint reading of the amended Section 3(d) and Section 3(i) is capable of keeping a major portion of pharmaceutical R&D outside the scope of patents.

The Bill provides an explanation that salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy. The phrase ‘differ significantly in properties with regard to efficacy’ is the final test of patentability as regards all inventions around a drug molecule. It seems this Explanation will keep a huge amount of research and development activity outside the scope of patentability – because the properties concerning efficacy (according to the Bill) will have an overriding effect over the standard tests of patentability when it comes to pharmaceutical inventions.

The objective behind such an elaborate explanation in Section 3(d) seems to be to check what the Indian generic drug makers allege as ‘evergreening’. However, this exclusion also seems to result in nonconformity of the amended law with the general mandate on patentability provided in the TRIPS Agreement.

The Bill dropped the amendments to Section 3(k) as contained in the Ordinance. The Ordinance had introduced a new Section 3(ka) to exclude ‘mathematical methods, business methods or algorithms’ from the scope of patentability. As per Section 3(k) (as contained in the Ordinance) a computer program’s technical application to industry or a computer program in combination with hardware was patentable. What was not patentable was only computer program per se.

The Ordinance attempted to strike a balance between the arguments for and against software patents. It indeed brought the position close to the European Patent Office practices. That was a welcome change. Conventionally, there has been an argument in India that copyright is a preferred mode to protect computer software. That kept a huge amount of R&D activities involving computer software outside the scope of patents. India’s leading IT companies and industry associations favored a reasonable level of protection of computer software through patents. The Bill deviated from the Ordinance and brought back the original position. Now what is patentable in this area is – what is not computer program per se.

A Patent acquired through the Mail Box route is virtually of no use. The Bill says that a patentee who gets a patent through the Mail Box cannot institute infringement action against any enterprise that has been producing and marketing the patented product prior to January 1, 2005 and continues to manufacture the product as on the date of grant of the patent. Therefore a pharmaceutical company that has filed a patent application through the Mail Box route when eventually gets a patent for its product, it cannot file an infringement action against an Indian generic manufacturer who continues to manufacture the patented product. All what the patentee-company can ask for is ‘reasonable’ royalty! This provision takes away the very sanctity of Mail Box and transitional protection as envisaged in the TRIPS Agreement.

The above provision can be found in the newly inserted 3^rd proviso to Section 11A. It is one of the amendments mooted during the recent political deliberations. This proviso undermines the whole concept of transitional protection under the TRIPS Agreement and definitely makes the Bill TRIPS non-compliant.

All grounds available for post-grant opposition have been made available to pre-grant opposition as well. The Bill thus envisages 2 oppositions! – First when the application is published, and second when a patent is granted. The post-grant opposition has to be initiated by an ‘interested person’. But any person can institute pre-grant opposition with the same ground as that of the post –grant opposition!

Interestingly the law allows a pre-grant opponent the right to be heard! There is, however, no provision in the Bill enabling the Applicant to counter the pre-grant opposition. That alone makes it a one-sided affair.

It is pertinent to highlight that the Rules framed under the Ordinance even mandated that the Pre-grant opponent has to file ‘a statement supported by evidence’. That made the pre-grant opposition a legal proceeding involving a process of adducing evidence. In a proceeding when the Opponent is allowed to adduce evidence against the patent applicant and if the patent applicant is given no chance to counter the evidence, it violates the fundamentals of administrative law & justice. That can possibly make this provision arbitrary and hence unconstitutional. Accordingly, the pre-grant opposition provision, which does not give the Patent Applicant the right to counter evidence adduced against him, may not stand the test of judicial scrutiny.

The already elaborate Compulsory Licensing grounds got another boost. The newly inserted Section 92A(1) of the Bill expanded the scope of issuance of Compulsory Licenses for manufacture and export of patented pharmaceutical products to countries having insufficient manufacturing capacity in the pharmaceutical sector, if that country has by notification allowed such importation.

As on date is the Indian Patents Act, 1970 (as amended by the Patents (Amendment) Bill, 2005 TRIPS complaint? This is the million-dollar question! While there cannot be a final answer to this until competent bodies address and decide on it, there are reasons to consider that it in fact is not TRIPS compliant. It has been reported in the national dailies that the Government will seek expert opinion on some issues pertaining to patentable subject matters. If so, presumably the final TRIPS compliance is yet to happen. It is time to wait and watch how the International community responds to India’s latest attempt on TRIPS compliance.

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