New Indian Patent
Law, A Sell Off
By Alternative
Law Forum
24 March, 2005
Alternative Law Forum
On
23 March 2005 the Patent (Amendment) Bill 2005 was passed by the Upper
House of the Indian Parliament (Rajya Sabha). There has been very little
public debate around the Bill to determine the effects of the amendments
that have been made.
Several amendments
have been made to the Ordinance (the new Patent Bill 2005). However,
many of these fail to address the serious concerns of the issues relating
to access to medicines.
From the text that
has been made available, the following provides a critique of the key
issues of the new law which were voted on and the potential impact:
Expansion of the
Scope of Patentability:
TRIPS does not define
the basic criteria of patents viz. novelty, inventive step and industrial
application. Further, the only obligation under TRIPS Agreement is to
protect pharmaceutical products. As a result implementing countries
have the option to limit the patent protection only to a new chemical
entity. However, according to latest reports data shows that there are
8926 applications pending for examination in the mailbox in India, the
vast majority by U.S and E.U multinational pharmaceutical companies.
However, only 274 new chemical entities received marketing approvals
from the US FDA between 1995-2003. This is a clear indication that many
of the applications in the mailbox are patenting of products with frivolous
or marginal changes and, therefore, fall outside of the requirement
of protection required for patents by TRIPS.
The clauses in the
Bill to limit the scope of patentability are extremely ambiguous and
full of technical loopholes which allow for evergreening . Ideally the
law should clearly limit patent protection to ?new chemical entities
.
Some of the key
issues relating to the scope of patentability are given below.
Inventive Step
:
The Bill provides
the following definition of what is required of a patent application
to meet the inventive step criteria:
a feature of an
invention that involves technical advance as compared to the existing
knowledge or having economic significance or both that makes the invention
not obvious to a person skilled in the art .
The above provision
arguably broadens the existing provision to the benefit of patent holders
and is ambiguous to the extent that it allows for two criteria for meeting
an inventive step. As it stands, to meet an inventive step criteria
the patentee will either have to show that the invention includes a
technical advance or has economic significance, or both.
The provision should
have required the applicant to comply with both requirements for an
inventive step, namely existing knowledge and having economic significance
and delete the term or both. Otherwise, the requirement of technical
advance is compromised and diluted by the fact that a patent could be
simply granted on economic significance alone. Economic significance
alone, cannot determine the inventive step of a patentable invention.
Pharmaceutical
substance:
The amendment currently
describes Pharmaceutical substance as any new entity involving one or
more inventive steps.
As it stands, the
provision is too broad as it allows all types of pharmaceutical substances.
The term chemical ought to have been inserted so as to read any new
chemical entity.
Inventions not
patentable:
Section 3(d) has
been amended to read:
?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 or the mere discovery of any
new property or new use for a known substance or the mere use of a known
process, machine or apparatus unless such known process results in a
new product or employs at least employs one new reactant.
The use of the phrase
which does not result in the enhancement of the known efficacy is ambiguous,
too broad and potentially allows for new forms of existing substances
to become patented. For example, result in enhancement of efficacy could
be a minor amendment to an existing invention to in order to get around
the provision as it stands.
In addition, the
new Act retains the word mere which potentially causes ambiguities within
the provision.
Also, the explanation
supporting the above provision provides:
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 unless
they differ significantly in properties with regard to efficacy is not
necessary and offers an entry point in favour of the patentee, thus
leading to excessive litigation. For example, certain properties are
never known or are clear at the time of application in the claim so
one would not know how they differ, thus leaving any recourse to opposition.
The definition of
pharmaceutical substance is not linked to the provisions relation to
the exclusion for patents and, therefore, stands alone. Furthermore,
the inventive step requirement has been severely diluted. As a result,
section 3(d) allows ?evergreening.
Immunity to ongoing
generic production:
The Bill permits
generic manufacturers to continue producing generic version of new drugs
which are in the mailbox. However, this only applies where the generic
producer has made a significant investment provided they were producing
and marketing the generic version prior to 1 January 2005. However,
the generic companies are required to pay the patent holder a reasonable
royalty.
The question of
significant investment poses a threat of potential infringement suits
as the generic producer would have to clearly show that it has made
what would be considered a significant investment in producing and marketing
the generic drugs. With respect to the reasonable royalty it creates
the problem of excessive demands from the patent holder and litigation.
The reasonable royalty rate should have been fixed at a particular percentage,
the norm being 4%.
For example in that
in South Africa, Glaxo Smith Kline demanded a royalty of 25 % before
the courts intervened.
Pre-grant Opposition:
The amendment has
restored the ability for any member of the public to oppose patent applications
before its grant. The grounds for bringing an opposition remain as before
and provide recourse to challenging frivolous and legally invalid patents.
However, the effectiveness
of the opposition process depends upon the access to information on
the mailbox applications. The Patent Office in 2005 has issued a notification
in its official journal that inventions either filed or claiming priority
on 30 July 2003 have been deemed to have been published. However, there
no actual physical publications available. This lack of publication
takes away the possibility of accessing information relating to the
patent application and the ability to oppose the same.
Publication:
The Bill amends
Section 11A of the Patents Act which prescribes the initial publication
requirement. After the publication the applicant shall have the rights
as if patent for the invention had been granted on the date of publication
of the application. However, no infringement proceeding is permissible
until the grant of patent. This means that one can get the privilege
of patent from the date of publication i.e. even before filing the request
for the examination of application. Lastly the Bill refers to the publication
of an application, but fails make the publication of the complete specification
available to the public. This will greatly hamper opposition proceedings
(see above).
Compulsory Licences:
The effective and
efficient issuance of compulsory licences is imperative to curb the
abuse of patent rights by the patentee. The amendment has only made
cosmetic changes to quicken the process of dealing with an application
for a compulsory licence in section 84(6) to the extent that where the
applicant has made efforts to obtain a licence from the patentee on
reasonable terms and conditions and such efforts have not been successful
within a reasonable period, the Controller can now interpret ?reasonable
period? to mean a period not ordinarily exceeding 6 months.
However, the amendment
does not remove the existing requirement that only after three years
after the grant of a patent, (unless there is a national emergency,
which has never been used) can a person make an application to the Controller
for the grant of a compulsory licence. Therefore, in total the request
for a compulsory licence does not have to be considered for at least
3 years and 6 months from the date of the grant of the patent. Furthermore,
one also has to take into the account that the Bill fails to provide
a timeline within which the Controller must deal with compulsory licence
application once made. Therefore, this could lead to a further delay
before any licence can be issued as it is well known that MNC pharmaceuticals
often refuse to deal with requests for compulsory licenses or demand
high royalties.
With respect to
exporting drugs to a country which makes a request for a generic drug,
the amendment no longer requires the importing country to issue a compulsory
licence. However, one question that arises is whether the procedure
for the grant of the compulsory licence for the domestic market (under
section 84(6) discussed above) will also be the same for compulsory
licenses for export. It is quite possible to argue the procedure both
ways, therefore, potentially delaying urgent new drugs that a developing
or least developing country may require.
The Act further
fails to provide the safeguard available within Article 44 of TRIPS,
which effectively allows Member States to limit remedies to remuneration
that would be available to the patent holder where third parties are
authorised by the Government, without the authorization of the right
holder, to use the patented good rather than issue an injunction.
Discretionary powers
of the patent office: The Ordinance took away the limitations imposed
by the Act, and made it discretionary of the Patent Office by virtue
of the Rules. As a result, the patent office can now tamper with the
various time lines by amending the Rules as and when they choose. Under
the amended ordinance, 7 types of time limits will be determined by
the office through the Rules and not by the statute. The excessive and
unbridled delegation to the Patent Office is further increased by the
following provision: ?the central government may, if it is satisfied
that circumstances exist, which render it practically not possible to
comply with such condition of previous publication, dispenses with such
compliance?. As a result, the public will not be given an opportunity
to offer its comments to the Rules before it being amended.
Quick Examination:
As per the Ordinance the time frame for making the examination report
is left to the Rules. The new Rules provide a period 1-month for the
examination report to be issued following the application. This period
was previously 18 months period.
This is likely to
create immense pressure on the Indian Patent Office as there will not
be enough examiners to deal thoroughly with the flood of applications
which is likely to occur, thus resulting in improperly examined and
legally invalid patents. Indeed, as the U.S Federal Trade Commission
report mentioned in its 2003 report ?the increasing rate of 10% of patent
applications each year is causing examiners only having 8 to 25 hours
to read, understand, search for prior art and evaluate the patentability
of the applications?. The Indian Patent Office does not have the infrastructure
for research, access to information and capacity to face the challenge
that the new Act will bring.
Rule Making Powers:
The Act takes away
the limitations imposed by the Act, and makes it a matter of discretion
for the Patent Office by virtue of the Rules. As a result, the patent
office can now tamper with the various time lines by amending the Rules
as and when it requires. Under the amended ordinance, 7 types of time
limit will be determined by the office through the Rules and not by
statute. The excessive and unbridled delegation to the Office is further
increased by the following provision: ?the central government may, if
it is satisfied that circumstances exist, which render it practically
not possible to comply with such condition of previous publication,
dispenses with such compliance?. As a result, the public will not be
given an opportunity to offer its comments to the Rules before it being
amended.