India Moving Towards a TRIPS Compliant Patent Regime - Implications for the Pharmaceutical Industry

After independence in 1947, it took twenty-one years for India to enact a patent law. After joining WTO in 1995, India struggled through seven years of deliberations before it could amend its patent law to make it even partially TRIPS compliant. The last in the series of TRIPS compliance amendments in the national patent law was introduced in the Lok Sabha (the lower house of the Indian Parliament) on December 22, 2003. This Bill had been referred to the Department Related Parliamentary Standing Committee on Commerce. However, the dissolution of the Lok Sabha has necessitated the re-introduction of the Bill when the Parliament is convened after the general elections.

The proposed Patents (Amendment) Bill, 2003 aims to achieve the following:

1. make the national law compliant with Art. 27 of the TRIPS agreement;
2. provide for product patent protection for all categories of inventions;
3. repeal the provisions concerning Exclusive Marketing Rights (EMRs);
4. provide for a transitional provision to protect EMRs already granted;
5. introduce provisions to give effect to the Doha Declaration on TRIPS and Public Health; and
6. empower the IP Appellate Tribunal to adjudicate upon revocation of patents.

The proposed Bill will introduce product patents covering ‘all fields of technology’ ‘without discrimination as to the place of invention’, ‘the field of technology’ and irrespective of ‘whether products are imported or locally produced’. In all likelihood the product patent regime will change the way the pharmaceutical companies do business in India.

At the time of joining the WTO, India did not have product patents for certain categories of inventions viz., food, drug and medicine. As a WTO member, India was under obligation to provide transitional protection for inventions in these fields.

In December 1994, India promulgated an Ordinance to amend the Patents Act to provide for a ‘Mail Box’ mechanism to receive product patent applications. However the, Government of India failed to substitute this Ordinance with a legislation passed by the Parliament. Consequently, a case was filed at the WTO by the US and the EU against India for not complying with the TRIPS obligation. India lost the case at the Dispute Settlement Panel of the WTO. India preferred an appeal against the decision of the Panel to the Appellate Body. The Appellate Body also decided the case against India by December 1997 and gave fifteen months time till April 1999 to comply with the TRIPS obligation respecting the transitional protection. The controversy ended when India amended its Patent law in March 1999 and introduced a new chapter IVA dealing with Exclusive Marketing Rights. The Patent Rules 1972 was also amended in June 1999 to introduce Chapter IIIA to provide for filing and prosecution mechanism for Exclusive Marketing Rights.

EMR has been a key topic for deliberations in the Indian pharmaceutical business circles in the recent past. Very few companies have been able to meet with the requirements set under the amended patents law. The details of the EMRs granted so far as well as EMRs applied for are as follows:

Clause 21 of the proposed amendment bill omits Chapter IV A of the Patents Act, 1970 that deals with Exclusive Marketing Rights. A new set of provisions has been proposed in the Bill to protect the EMRs already granted. The pending applications for EMRs will be treated as request for examination under Section 11B. All EMR related infringement suits pending before the courts will be treated as patent infringement suits once the new law takes effect.

The availability of medicines at affordable prices is a key health concern. It was this key concern that compelled the Government of India to augment the reach and scope of compulsory licensing in the Patents Act. The Patents Act, 1970 contained detailed provisions respecting compulsory licenses. But these provisions were never put to use. However, in view of the introduction of product patents, the Government of India has made compulsory licensing provisions further stringent. Any interested person can apply to the Controller of Patents seeking a compulsory license if the ‘reasonable requirements’ of the public with respect to the patented invention is not satisfied, or the patented invention is not available to the public at reasonably affordable price, or when the patented invention is not worked in the territory of India. An attempt has been made to explain the meaning of an otherwise vague expression ‘reasonable requirements’ in Section 84(7). However these explanations do not clarify clearly the situations in which an interested person can invoke compulsory licensing provisions, leaving the expression ‘reasonable requirements’ more or less ambiguous.

The Patents (Amendment) Bill, 2003 introduces a new section namely 92A in the principal Act relating to the grant of compulsory licenses for manufacture and export of patented pharmaceutical products in certain exceptional circumstances. This amendment is intended to implement Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health. According to this provision compulsory license will be granted to manufacture and export patented pharmaceutical products to a country, having insufficient or no manufacturing capacity in respect of that product, provided the applicant has obtained a compulsory license in that country for that product.

The provisions on compulsory licensing will have a bearing on the way the multinational pharmaceutical companies propose to do business in India after January 1, 2005. Making drugs available at affordable prices will be a key issue for multinational pharmaceutical companies. Those who do not have their own manufacturing units will need to enter into licensing arrangements with local counterparts. Indian pharmaceutical companies are likely to make use of the ambiguity in the provisions relating compulsory licenses. The sub-clauses (a) through to (e) of Clause (7) of Section 84 are adequately ambiguous, giving the Indian companies the scope to use it to their advantage.

Parties aggrieved by the grant as well as the refusal of EMRs have filed cases at the High Court setting the scene for a large number of potential product patent litigations.

The scene has been set in India for an interesting era in the national patent system. The decade ahead will witness a vibrant phase of dialectics that will hopefully contribute to the emergence of a patent system capable of absorbing the often conflicting interests of the stakeholders – the Indian and the multinational pharmaceutical companies, the patent administration system and judiciary and the people of India.

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