India: Exceptions & Limitations To Patent Rights In India

In this knowledge based economy the understanding of Intellectual Property Rights (IPRs) is crucial to promote innovation and growth of the country. The various forms of IPRs are frequently talked about in debates and general conversations on such diverse topics as industrial policy, traditional knowledge, agriculture, biotechnology, medical devices, education, food security, entertainment and mass media. Despite of such popularity of IPRs, some people still regard it as an impediment in the growth of innovation & technology.

The omnipresence of IPRs in the areas of human development has made it critical to access the benefits and encumbrances it carries. For this purpose countries adopted exceptions to patent rights and other related rights to use IPRs as a tool for their sustainable development. However, after signing of the World Trade Organization's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which allows Member Countries to provide more extensive protection of intellectual property, the exceptions and limitations to patent rights in India underwent something of an evolution. The 'Exceptions to Rights Conferred' has been incorporated as Article 30 of TRIPS. It provides that 'Member Countries may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties.'1

Types of Exceptions & Limitations:

Article 30 of TRIPS allows for limited exceptions to the exclusive rights conferred by a patent. The exceptions must not unfairly prejudice the legitimate interests of the patent owner.

Private and Non-commercial Use Exception

The exclusive rights conferred by a patent do not allow private use or monopoly over commercial activity. If a patentee is neither using nor vending the invention for profit, the Government has the power to grant a license, known as Compulsory License (CL), to a third party to use the patented invention so as to restrict the rights of the patentee for the purpose of preventing the abuse/ misuse of the rights by the property holder and to prevent the negative effect of such action on the public. The concept of CL comes into play when the patented invention is not commercialized in India or the invention is not available to the public at reasonable prices or the invention is not manufactured in requisite amount. The provisions of private and non-commercial use exception have been provided under Section 84 (Compulsory licenses), Section 85 (Revocation of patents by the Controller for non-working) and Section 92 (Special provision for compulsory licences on notifications by Central Government) of Patents Act, 1970 (herein after "the Act"). Currently, the provision of CL is seen as the only optimum solution of improving access to costly patented drugs in India while creating an atmosphere that harnesses R&D.

Experimental / Scientific Use Exception

The experimental use exemption is incorporated under Section 47 of the Act. Under sub section 3 of the said section, the grant of a patent is subject to the condition that any product or process, in respect of which the patent is granted, may be made or used by any person for the purpose merely of experiment or research including the imparting of instructions to pupils.

This is one of the most widely known exceptions to patent rights and it grew up out of the concern that patent rights should not hamper the "bona fide" experiments and scientific processes. This form of experimental use exception permits third parties to carry out experimental or scientific activities relating to the subject matter of the patent without infringing the patent holder's rights.

Regulatory-use/ Prior-use Exemption

The patent rights, on the one hand, provide economic incentives to innovate, but on the other hand, the exclusive rights they confer result into monopoly and unaffordable pharmaceutical products. Consequently, the Indian Patents (Amendment) Act, 2005 incorporated the regulatory-use or prior-use exemption under section 107A to offer a trade-off between incentives to the innovators, and limited access and costs to consumers.

This exemption is also referred as Bolar Provision and is a statutorily created exemption to patent rights that allows the manufacturers of generic drugs to undertake steps reasonably related to the development and submission of information required for obtaining marketing approval anywhere in the world in respect of a patented product without the consent of the patentee. Some countries permit the generic drug manufacturers to use the technology of a patented drug to generate data and to demonstrate bioequivalence that would assist in the regulatory or marketing approval of the generic product, while the patent is still in force.

This provision allows the generic producers to market and manufacture their goods as soon as the patent term expires. Bolar Provision has been upheld as conforming to the TRIPS agreement and is used in several countries to advance science and technology. However, exemption under Section 107A of the Act does not allow for the use of patented drug to obtain the license to manufacture and distribute the generic drug before the expiry of the term of patent.

Foreign Vessels, Aircraft or Land Vehicles Exception

As per Article 5 of the Paris Convention, rights conferred by a patent shall not extend to the use of the patented invention on board of vessels when such vessels temporarily or accidentally enter the waters, provided that the invention is used exclusively for the needs of the vessel.

As this exception is not optional for countries party to the Paris Convention, Indian Patents Act, in order to comply, incorporated the said exception under Section 49. According to the said section, the patent rights are not infringed when the patented invention is used exclusively for the needs of foreign vessels, aircraft, or land vehicles and other accessories thereof, when such foreign vessels, aircraft, or land vehicles temporarily or accidentally comes into India.

The term "Temporarily" not only includes the accidental and unintentional entry but also the intentional and regular going into a port, provided that the vessels, aircraft, or land vehicles does not remain permanently in the territorial waters or the territory of the country. This exception is beneficial in facilitating uninterrupted international travel and reducing tensions between countries over the treatment of vessels flying their flag.

Exhaustion of Patent Rights

The Doctrine of Exhaustion or First Sale Doctrine refers to the exhaustion of the exclusive rights of the patent holder once the patented invention is sold without any restriction. As per this Doctrine, the first unrestricted sale of a patented item exhausts the patentee's further control over that particular item.

The rationale behind the patent holder exhausting their rights once they have sold the patented product is that, by first sale of the patent invention the Patent holder has already used the exclusive rights to prevent others from making, using, selling, offering for sale in the territory of patent grant or importing an invention into the territory of patent grant and therefore has already reaped the benefits conferred by a patent.

Conclusion

A Patent on an invention confers right on the patentee to exclude others from making, using, selling, offering for sale in the territory of patent grant or importing an invention into the territory of patent grant for a limited time, in return for the public disclosure of the invention. This might have led to monopoly and uncompetitive practices. Therefore, the TRIPS agreement introduced substantive provisions on exceptions under Article 30 for the sustainable growth and development of the developing countries.

Article 30 of TRIPS, provides that: "Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties2."

However, if a policy maker of any of the member countries wishes to include a new exception, in order for it to be valid, it must meet the criterion laid under Article 30 of TRIPS.

Footnotes

1. http://www.wto.org/english/docs_e / legal_e /27-trips_04c_e.htm retrieved on 03/06/2014

2. http://www.wto.org/english/docs_e/legal_e/27-trips_04c_e.htm retrieved on 03/06/2014

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