Patent Law in India

Patents refer to enforceable exclusive rights granted to the inventor in exchange for his/her making their invention public.  In India, an invention pertaining to a new product/process, involving an inventive step and capable of industrial application can be patented. Patents are a form of intellectual property.  An inventor can also appoint an assignee who acts on his/her behalf and incurs both the rights and the liabilities.

Patents are enforced by nations. However, though the specifics of the Patent Law are determined by each country, countries work under the framework of the multilateral treaty, TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights)

History of Patent Law in India

• In 1911, the Indian Patents and Designs Act was enacted, providing basic protection to patents.
• The Patents Act, 1970 is the legislation that till date governs patents in India. It first came into force in 1972.
• The Patents Act has been repeatedly amended: 1999, 2002, 2005, 2006. These amendments were required to make the Patents Act TRIPS-compliant
• The major amendment was in 2005, when product patent was extended to all fields of technology like food, drugs, chemicals and micro organisms. 2005 was the final deadline for complete compliance with TRIPS. The Rules under Patent Act were also amended in 2012, 2013, 2014.

Role of TRIPS

• TRIPS became effective on January 1, 1995 by agreement of WTO member states, who then became obligated to implement domestic laws to comply with the TRIPS minimum requirements.
• Developing countries were initially given up to five years (i.e. until January 1, 2000) to implement domestic laws in accordance with TRIPS.
• Member states obligated to provide patent protection for an area of technology for which no domestic protection existed as of the effective date of TRIPS received an additional five years (for a total of ten years, or until January 1, 2005) to bring their domestic laws into complete compliance with respect to product patents in the new area of technology.
• Both of these five-year provisions applied to India in the area of pharmaceuticals, as it was a developing country and also a country whose laws had no provisions for protection of patents of drug and pharmaceutical products.
• The TRIPS Agreement forced developing countries to adopt product patents on medicines. Prior to the negotiation of TRIPS, many countries excluded pharmaceuticals from patentability to keep prices down. India allowed only process patents, which could be used to reverse engineer the products.

2005 Amendment of the Patent Law

Salient features of the Patents (Amendment) Act 2005 related to product patents:

1. Extension of product patent protection to products in sectors of drugs, foods and chemical.
2. Term for protection of product patent shall be for 20 years.
3. Introduction of a provision for enabling grant of compulsory license for export of medicines to countries which have insufficient or no manufacturing capacity; provided such importing country has either granted a compulsory license for import or by notification or otherwise allowed importation of the patented pharmaceutical products from India (in accordance with the Doha Declaration on TRIPS and Public Health)
4. Section 3 (d) regarding patentability

Effects of 2005 Amendment

The amendment intended to make Indian drug and pharmaceutical industries competitive at par with multinational companies. Despite initial reservations, Indian pharmaceutical companies manufacturing generic drugs have flourished in the last decade. Also, MNCs have opened R&D Centres in India.

Increased prices of products due to the new patent regime was considered to be a major hindrance during the time the amendment was passed. However, the government has taken proactive measures to ensure low prices for essential drugs, and has used compulsory licensing as a tool to keep exorbitant prices under check.

Issues around Section 3(d)

Section 3 of the Patents Act speaks of inventions which are not patentable Section 3(d) of the Patents Act was introduced by the 2005 Amendment. The section sets a ‘novelty’ standard. For a product to be patentable, something genuinely new should have been discovered or added to an existing product.

The section stipulates conditions under which the product will not be patentable:-

• If the alleged ‘new product’ just involves the discovery of a new form of an existing substance, AND  it does not enhance the efficacy of the older form of the product
• Mere discovery of a new use for an already known substance
• Mere discovery of any new property
• Modified usage of an already existing and known process, machine or apparatus without it resulting in a new product or employing at least one new reactant

The part of section 3(d) that has been controversial is the part which prohibits granting of patents for mere discovery of new usage of known substance. To better illustrate through an example, Aspirin was initially used to alleviate headaches and other ailments. However, it was later discovered that Aspirin also serves as a blood-thinner and can be used in the treatment of cardio-vascular diseases. Now, a new patent for Aspirin cannot be filed just because a new use was discovered for the same product.

The above portion of section 3(d) along with the part prohibiting granting of patents for discovery of new form of a known substance has been exploited by pharmaceutical companies to evergreen patents.

Ever-greening of Patents

In India, a patent is granted for a period of 20 years. However, sometimes, minor modifications are made to the original product and another patent, this is done any number of time, thus extending the period for which the patent is applicable. This is called the ever-greening of patents. This phenomenon is commonly observed in the pharmaceutical industry. The pharmaceutical company’s patent for a medicine lapses after twenty years, when it loses the right to be the sole manufacturer, seller and distributor of the product. In such a scenario, pharmaceutical companies producing generic medicines can step in, and produce the same product. Since, the generic company does not invest in R&D to develop the product like the company that invented the medicine, it is able to offer the medicine at a much lower rate. Hence, when the patent lapses, the company that had initially invented the medicine stops making profits on it. To avoid this, such companies take to ever-greening of the patent so that they make continue earning high margin of profits. Section 3(d) of the Patents Act seeks to curb this by placing restrictions on getting patents for products without making changes that enhance its efficacy or add value to it in some way.

Novartis Case

In the Novartis case of 2013, the applicability of section 3(d) of the Patents Act was discussed. In this case, the SC upheld an order rejecting Novartis’ patent for its drug, Glivec, which helps fight cancer. The Court ruled that the alleged new drug Glivec was only a ‘beta-crystalline’ form of the already existing cancer drug Imatinib. Hence, Glivec was just a new form of a known substance, imatinib, and therefore the patent for Glivec was rejected under section 3(d) of the Patents Act.

Novartis brought up the issue of Article 27 of TRIPS which states that patents are available for inventions provided they are:-

• new
• involve an inventive step
• capable of industrial applications

As a member of TRIPS, India is required to strictly adhere to comply with this. However, if a country deems it necessary it may go over and above the basic framework that TRIPS provides. In the case of section 3(d) that is what India has done. It has raised the benchmark for inventiveness provided by TRIPS by introducing the requirement of ‘enhanced efficacy’ in the new product. This was challenged by Novartis, but the SC ruled that India was well within its right to add this requirement. Also, section 3(d) has been approved by the WHO Public Health, Innovation and Intellectual Property Rights Report, 2006, which states that countries can adopt legislation and guidelines which require a level of inventiveness that would prevent ever-greening of patents.

However, despite this, section 3(d) of the Patents Act has attracted controversy and the ire of USA.

Response to the Novartis Decision

Good outcomes/Praise of the decision

• The Novartis judgment was welcomed by WHO, MSF (Medecins sans Frontieres) and other groups for its efforts to curb ever-greening of patents.
• The decision puts a stop to ever-greening of patents by pharmaceutical companies and limits their monopolistic tendencies.
• Considering the widespread poverty and lack of affordable medicines in India, the decision provides relief to thousands of persons struggling to buy medicines because the rejection of the patent allows generic companies to produce cheaper alternatives.
• Also, some experts believe that this high bar for ‘invention’ set by the Courts will spur the pharmaceutical companies to invest more in R&D because they are left with no option but to invent new medicines since ever-greening is strictly curbed.

Bad outcomes/Criticism of the decision

• Many critics have opined that this decision will curb innovation because it reduces the incentives for pharmaceutical companies to do so.
• Lack of profits for pharmaceutical companies might lead to reduced expenditure on R&D, which will result in lack of progress in developing treatments/medicines for various diseases.
• India is now perceived as a nation with a weak IPR (Intellectual Property Rights) regime. This might discourage MNCs from entering Indian markets.

Criticism against India’s patent regime

USA has been leading the charge against India’s Patent regime.  The Global Intellectual Property Centre, which is an affiliate of the US Chamber of Commerce, ranked India the lowest out of 25 countries  in its International IP Index for having the weakest intellectual property environment. In May 2014, the US Trade Representative’s report, the Special 301, decided to conduct an out-of-turn review of India’s intellectual property regime. Also, there is a pending US International Trade Commission investigation to determine whether India applied its patent laws in a manner adversely affecting American pharmaceutical companies. Some of the specific areas in which India’s patent regime is criticized is given below.

Indian Patent Law allows for a mechanism termed pre-grant opposition, which allows a third party to challenge the validity of a patent applications before it is granted. Such a procedure is not recognized in most countries. However, it gives a much-required opportunity to NGOs and other such public-spirited to bodies to present their case, and hence, plays a uniquely important role in India. Pre-grant opposition has led to the rejection of patents of many American companies, and hence, USA has expressed disapproval of this mechanism. Globally too, USA has taken measures to limit the employment of this mechanism by countries by including provisions in its trade agreements preemptively prohibiting countries from introducing pre-grant opposition.

Another controversial decision has been the granting of India’s first compulsory license to Bayer’s patented drug Nexavar. Critics fear that this will open the floodgates, leading to a plethora of compulsory licenses being issued. However, compulsory licensing is allowed by TRIPS itself and the Patents Act too. And in all these years, India has invoked this provision only once. Further, the move has forced the pharmaceutical companies to evolve new pricing strategies. After the compulsory license was granted, there was a deluge of price cuts across drugs. This brought some much needed relief to the people, and goes to prove effectiveness of the mechanism.

A major criticism of the patent regime in India is that it doesn’t adequately protect intellectual property. However, India is in full compliance with the clauses of TRIPS. Also, all the recent controversial decisions, be it regarding compulsory licensing or rejecting of patents has been done in accordance with the law, and the legality of these decisions has been established by the Courts of the country.