This article was co-authored with Rishi Kumar M. Dugar, Advocate, Madras High Court.
It was published in The Economic Times on 11th December, 2005.
At a time when the world is anxiously watching the pharmaceutical scene in India as to how the Asian Tiger is complying with its obligations under the WTO, any anomaly in implementing these obligations can have the effect of sending the wrong signals. The recent amendments to the Patents Act, 1970 (“the Act”) has been in the thick of controversies thanks to the last-minute hustle in bringing the law in conformity with the WTO obligations. At the backdrop of all the hue and cry, two recent decisions of the Madras and Bombay High Courts, which have gone largely unnoticed, has turned the spotlight to the challenges in implementing the provision of the Act.
In November 2003, the Controller of Patents granted Exclusive Marketing Rights (a right to exclusively sell and distribute a product - EMR for short) to Novartis, a Swiss pharma giant, for its patented anti-cancer drug, ‘Glivec’ used in the treatment of Chronic Myeloid Leukaemia (CML) and stomach cancer. The drug containing Imatinib Mesylate did not enjoy patent protection in India, though it was patented in various countries. However, under Chapter IV A of the Act, (which has been omitted by the recent amendment since it was of a transitory nature) Novartis was able to obtain an EMR for Imatinib Mesylate.This move affected many Indian pharmaceutical companies who have been manufacturing the same drug, Imatinib Mesylate, under different trade names and selling them at a lesser price.
The preconditions stipulated under section 24 B of the Act for grant of an EMR were: (i) an application for the same invention should have been filed in a convention country on or after 1 January 1995, (ii) the patent and approval to sell and distribute the invention should have been granted in that country on or after the date of making a claim in India, and (iii)the approval to sell or distribute the invention should have been granted by the concerned authority.Upon the satisfaction of these conditions, the EMR is granted from the date of approval till a period of five years or till the date of grant of patent or the date of rejection of application for the grant of patents whichever is shorter. The grant of EMR assures a patent-like protection to be extended to the product even before the patent application is processed.
Section 24 E of the Act provides that all suits for infringement of a right under section 24 B shall be dealt with in the same manner as if they were suits concerning infringement of patents (Chapter XVIII). Exercising its right, pursuant to the grant of an EMR for its patented drug “Glivec”, Novartis initiated infringement action against various Indian manufacturers who were manufacturing the similar drug, in various courts, including the Madras High Court and the Bombay High Court.
The Madras High Court in Novartis AG v. Adarsh Pharma [2004 (29) PTC 108 (Mad)] granted an interim injunction in favour of Novartis, restraining the various Indian manufacturers from manufacturing drugs similar to ‘Glivec’. Though having the benefit of the Madras decision, the Bombay High Court in Novartis AG v. Mehar Pharma [2005 (30) PTC 160 (Bom)] differed with the finding of the Madras High Court and refused to grant an interim injunction. The Bombay High Court held, that the Madras High Court has not properly considered the settled law in the matter of grant of temporary injunction in relation to a patent of “recent origin”.
At the heart of the controversy is the applicability of a long-standing rule, that whether an interim injunction can be granted for a patent of “recent origin”? In the arguments canvassed before both the High Courts, a plethora of decisions on the aforesaid issue were referred and relied upon before the Madras High Court.
It was submitted before the Madras High Court that since the EMR was of a “recent origin” and once a challenge to the validity of the same is made, the Court should not ordinarily grant an injunction. Reliance was placed on the decision of the same Court in Manicka Thevar v. Star Plough Works AIR 1965 Mad 327, where it was held that an injunction will not be granted if the patent is a recent one and where the defendant disputes the validity of the grant. With regard to the criterion for determining the recent origin of a patent, the court formulated a proposition that any patent less than 6 years old was regarded as a recent one. The above ruling was followed by the Calcutta High Court in Hindustan Lever Ltd v. Godrej Soaps Ltd AIR 1996 Cal 367. A Division Bench of the Calcutta High Court in an earlier decision, Boots Pure Drug Co. v. May & Baker 52 CWN 253 also held similarly.
The Madras High Court distinguished the decision of Manicka Thevar by concluding that, since the validity of the EMR is for a period less than six years, then, a fortiori, the 6-year rule of “recent origin” will not apply.
It is submitted that the aforesaid finding is incorrect on two accounts. First, a rigid reading of the 6-year rule (to mean nothing but 6 full years) contributed to the finding that the EMR was for a shorter period than 6 years and hence the rule will not apply. The 6-year rule, which was formulated many decades ago, had its emphasis on the existing state of art; by which an invention would be open to challenge in its initial years.
Secondly, it was erroneous to hold that the EMR is of recent origin when the rule requires that the patent should be of recent origin. Keeping in mind the nature of the EMR which is a right granted on the basis of an earlier patent (foreign patent) granted in another country, it would not serve any purpose to compare the term of the EMR and conclude that the recent origin rule will not apply. Rather, the term of the patent (foreign patent) and the date of its grant should be the relevant factors. In the instant case, the patent based on which the EMR was granted came into force in August 2002 and would qualify for an invention of recent origin by any measure.
It is a settled law that the grant of an interlocutory injunction is a matter of discretion and depends on the facts and circumstances of each case and that there are no fixed rules as to when an injunction should or should not be granted. But when two High Courts, on similar set of facts, take diametrically opposite views on the issue of the grant of interim injunction, the trend is disturbing. For cases dealing with transitory rights like EMR, an interim order rendered by the court can be very critical and can have the effect of conclusively deciding the case.
The war between the big pharmaceutical giants and the generic pharmaceutical companies will soon be fought in new terrains. With India’s emergence as a key player in the pharmaceutical sector, judicial rulings on the Act must be tempered with clarity and sound reasoning. Ironically the Novartis case was the first ever decision involving the application of the new patent regime. If the above decisions by the High Courts are any indication of the things to come, then one shudders to think of the confusion in store.
Sunday, December 11, 2005
Saturday, November 05, 2005
Patentability issues: New medical uses of known substances
This article was published in pharmabiz on Wednesday, March 16, 2005.
Under the Patents Act, 1970 patents are granted only for inventions. For a thing or a substance to qualify as an inventions it should satisfy the three prerequisite conditions of novelty (the invention should be new), non-obviousness (the inventions should contain an inventive step) and should be capable of industrial or commercial application. The new ordinance has brought in patent protection for food, medicine and drug products. It is commonly understood that the patent would be for the invention of the product per se. To what extent medical uses of known substances would qualify for patent protection is an issue that the Patent Office will soon be called upon to decide.
The focus of pharmaceutical research has shifted in the recent past from the invention of new drugs to finding new uses for known substances. This fact is evident from the low number of new drugs that are clinically tested and approved for marketing in any given year. Pharmaceutical companies are now keen on discovering new properties or uses of known drugs. An oft quoted example involves the drug aspirin which was originally known to have only analgesic properties but later novel properties like thinning of blood were discovered.
A product patent would provide protection not only over the thing itself but also over all subsequent uses. Traditionally, the British approach treated a claim to a 'product for a particular use' as a claim to the product itself. Any novel use at a later time could not qualify for protection under the earlier patent. The product would lack novelty even if the product had been put to a different use. This approach did not recognise 'novelty of purpose' as a ground for the grant of a patent. This rigid approach has now been relaxed to include second and subsequent medical uses. The European Patent Office and the English courts have begun to recognise novelty of purpose in all fields of technology.
Novel medical uses
The question as to whether the discovery of a new advantage of an old thing used in an old way would be entitled to a patent protection under the new patent ordinance will have far-reaching implications on the pharmaceutical industry. The insertion of the word 'mere' in section 3(d) has opened new possibilities for claiming 'novelty of purpose' as per the Act. Section 3(d) of the Patents Act, 1970 reads as follows:"3.What are not inventions - The following are not inventions within the meaning of this Act - (d) the mere discovery of any new property or mere new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant;"It could be argued that the inclusion of the word 'mere' has widened the scope of patentability so as to include novel medical uses.
Exclusion of methods of medical treatment
Most countries regard the method of treatment of human and animal body as non-patentable. The exclusion of methods of treatment caused concern to the pharmaceutical industry which has by now shifted the focus of its research to discovery of new uses/new benefit from old substances, from the discovery of new substances. As a concession, pharmaceutical industries were entitled to claim patent for a new use of a known substance in many countries, particularly, United Kingdom where section 2(6) of the UK Patents Act, 1977 provides thus:
The above provision creates a statutory exception to the traditional British view that the mere discovery of purpose could confer novelty of an invention. The provision confers novelty through a new purpose, i.e., new pharmaceutical use of a known substance, even though the substance itself is known to be a part of the state-of-the-art.
Second and subsequent medical uses
Originally it was believed section 2(6) would apply only to the discovery of the first medical use of known products. A plain reading of the provision would clearly exclude second and further medical uses as they would lack novelty. The scope of a similar provision under the European Patents Convention (54(5)) was considered by Enlarged Board of Appeal of the European Patent Office in Eisai / Second Medical Indication (Eisai G5/83 [1985] OJEPO 64). Emphasising that exception to patentability should be constricted narrowly, the Board held that Article 54(5) also applied to second and subsequent medical uses. Such claims would be upheld, the Board opined, provided that the claims were drafted in a style known as the "Swiss form of claims."The status of second medical use was considered by the UK Patents court in Wyeth's Application [1985] RPC 545. One of the claims in this case was drafted in the Swiss form. The examiner refused to grant such a claim, but on appeal, the Patent Court allowed it. There are no provisions in the Indian Act similar to section 2(6) of the UK Act or article 54(5) of the European Patent Convention. But it is pertinent to note that provisions very similar to section 3(d) of the Indian Act exist in other countries which states that a "mere new use for a known substance" will not qualify for a patentable invention. It would only be a matter of time that express statutory provisions providing for patent protection for new use of a known substance would be introduced in Indian law in keeping with the global trend. Till then, the Patent Office could be urged to consider patents for new use of a known drug as the Indian Act excludes only a mere new use for a known substance. As such there is no prohibition in granting patents for the use of the substance in any method which does not form part of the state-of-the-art.
Under the Patents Act, 1970 patents are granted only for inventions. For a thing or a substance to qualify as an inventions it should satisfy the three prerequisite conditions of novelty (the invention should be new), non-obviousness (the inventions should contain an inventive step) and should be capable of industrial or commercial application. The new ordinance has brought in patent protection for food, medicine and drug products. It is commonly understood that the patent would be for the invention of the product per se. To what extent medical uses of known substances would qualify for patent protection is an issue that the Patent Office will soon be called upon to decide.
The focus of pharmaceutical research has shifted in the recent past from the invention of new drugs to finding new uses for known substances. This fact is evident from the low number of new drugs that are clinically tested and approved for marketing in any given year. Pharmaceutical companies are now keen on discovering new properties or uses of known drugs. An oft quoted example involves the drug aspirin which was originally known to have only analgesic properties but later novel properties like thinning of blood were discovered.
A product patent would provide protection not only over the thing itself but also over all subsequent uses. Traditionally, the British approach treated a claim to a 'product for a particular use' as a claim to the product itself. Any novel use at a later time could not qualify for protection under the earlier patent. The product would lack novelty even if the product had been put to a different use. This approach did not recognise 'novelty of purpose' as a ground for the grant of a patent. This rigid approach has now been relaxed to include second and subsequent medical uses. The European Patent Office and the English courts have begun to recognise novelty of purpose in all fields of technology.
Novel medical uses
The question as to whether the discovery of a new advantage of an old thing used in an old way would be entitled to a patent protection under the new patent ordinance will have far-reaching implications on the pharmaceutical industry. The insertion of the word 'mere' in section 3(d) has opened new possibilities for claiming 'novelty of purpose' as per the Act. Section 3(d) of the Patents Act, 1970 reads as follows:"3.What are not inventions - The following are not inventions within the meaning of this Act - (d) the mere discovery of any new property or mere new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant;"It could be argued that the inclusion of the word 'mere' has widened the scope of patentability so as to include novel medical uses.
Exclusion of methods of medical treatment
Most countries regard the method of treatment of human and animal body as non-patentable. The exclusion of methods of treatment caused concern to the pharmaceutical industry which has by now shifted the focus of its research to discovery of new uses/new benefit from old substances, from the discovery of new substances. As a concession, pharmaceutical industries were entitled to claim patent for a new use of a known substance in many countries, particularly, United Kingdom where section 2(6) of the UK Patents Act, 1977 provides thus:
"the fact that an invention consisting of a substance or composition for use in a method ofmedical treatment forms part of the state of the art, shall not prevent the invention from being taken to be new, if the use of the substance or composition in any such method does not form part of the state-of-the-art."
The above provision creates a statutory exception to the traditional British view that the mere discovery of purpose could confer novelty of an invention. The provision confers novelty through a new purpose, i.e., new pharmaceutical use of a known substance, even though the substance itself is known to be a part of the state-of-the-art.
Second and subsequent medical uses
Originally it was believed section 2(6) would apply only to the discovery of the first medical use of known products. A plain reading of the provision would clearly exclude second and further medical uses as they would lack novelty. The scope of a similar provision under the European Patents Convention (54(5)) was considered by Enlarged Board of Appeal of the European Patent Office in Eisai / Second Medical Indication (Eisai G5/83 [1985] OJEPO 64). Emphasising that exception to patentability should be constricted narrowly, the Board held that Article 54(5) also applied to second and subsequent medical uses. Such claims would be upheld, the Board opined, provided that the claims were drafted in a style known as the "Swiss form of claims."The status of second medical use was considered by the UK Patents court in Wyeth's Application [1985] RPC 545. One of the claims in this case was drafted in the Swiss form. The examiner refused to grant such a claim, but on appeal, the Patent Court allowed it. There are no provisions in the Indian Act similar to section 2(6) of the UK Act or article 54(5) of the European Patent Convention. But it is pertinent to note that provisions very similar to section 3(d) of the Indian Act exist in other countries which states that a "mere new use for a known substance" will not qualify for a patentable invention. It would only be a matter of time that express statutory provisions providing for patent protection for new use of a known substance would be introduced in Indian law in keeping with the global trend. Till then, the Patent Office could be urged to consider patents for new use of a known drug as the Indian Act excludes only a mere new use for a known substance. As such there is no prohibition in granting patents for the use of the substance in any method which does not form part of the state-of-the-art.
Tuesday, October 18, 2005
"Breaking Patents"
The drug oseltamivir patented by the Swiss pharmaceutical giant, Roche under the trade name Tamiflu, has the potential to become the most sought-after drug of recent times. All will now depend on the magnitude to which avian flu will spread. Panic symptoms are already in place with the U.S. Department of Health and Human Services procuring 12.3 millions of Tamiflu from Roche. On its part, Roche has also indicated that it would be increasing the production of the drug eight times the current output.
Cipla, which had donned the role of robin hood in the HIV drugs episode has once again proclaimed that it would not hesitate to bring out generic version of the patented drug. It had also expressed its willingness to fight legal battles in Indian courts on this account. The Tamiflu patent was filed in the Indian Patent Office on February 26, 1995 months after the new regime on patent was put into place. Cipla hopes that the Indian government would break the patent in the wake of a national health emergency.
There are legal provisions in the domestic patent laws of almost all countries to take care of public health requirements. The measures can amount either to cancellation of the concerned patent whereby generic companies will be free to bring in cheaper versions of the patented drug or force the patent holder to license the product to competitors.
Cipla, which had donned the role of robin hood in the HIV drugs episode has once again proclaimed that it would not hesitate to bring out generic version of the patented drug. It had also expressed its willingness to fight legal battles in Indian courts on this account. The Tamiflu patent was filed in the Indian Patent Office on February 26, 1995 months after the new regime on patent was put into place. Cipla hopes that the Indian government would break the patent in the wake of a national health emergency.
There are legal provisions in the domestic patent laws of almost all countries to take care of public health requirements. The measures can amount either to cancellation of the concerned patent whereby generic companies will be free to bring in cheaper versions of the patented drug or force the patent holder to license the product to competitors.
Saturday, October 08, 2005
Biotechnology and IPRs: Proprietary Rights on Life Forms
This article was published in Pharmabiz on Wednesday, May 18, 2005.
Biotechnology holds much promise for the agriculture and pharmaceutical industries. The recent efforts on regulating biotechnology should aim at giving the right impetus to this nascent technology, which has the potential to solve problems pertaining to food production, health and environment. World over, biotechnological inventions have enjoyed some form of protection by Intellectual Property Rights (IPRs). The choice of the form of protection for these inventions, have been a cause of much debate. The issues of morality and ethics have also hampered consensus in multilateral agreements.
Protection in the form of IPRs has, more often, revolved around the issue of equity. The developing countries have repeated accused foreign multinational companies for pirating and patenting biological material, which forms a part of their traditional knowledge and for not sharing the profits or the technology involved. The Convention of Biological Diversity attempts to remedy this situation.
With regard to biotechnology, its application can be studied from two viewpoints - (1) the way it affects the use of biotechnology in industry and (2) the application of biotechnology in agriculture. As for the former, the application pertains to chemical and medicinal substances derived from plants and animals. An apt illustration would be the commercial manufacture of anti-venom serum. Its application in agriculture concerns the use of genetic engineering in producing new plant and animal varieties. For example, rice varieties like IR8, which have superior qualities than naturally existing varieties can be developed using biotechnology.
Protection under TRIPS
The issue of providing patents for living organisms prevailed during the Uruguay
Round of negotiations as a standoff between US and other nations including the EU. US favoured a comprehensive policy that anything expect human beings, can be patented. Other nations did not reflect this sentiment. Resultantly, the WTO members agreed on a minimal protection for plant varieties, subject to review, in Article 27.3(b) of the TRIPS agreement. Paragraph 19 of the 2001 Doha Declaration has broadened the discussion under the Article to include biological diversity, the protection of traditional knowledge and folklore.
Article 27 excludes plants and animals from patentability. It also excludes biological processes for the production of plants or animals. However, the TRIPS Agreement does allow patents for microorganisms and non-biological and microbiological processes. It also provides for the protection of plant varieties either by patents or by an effective sui generis (a special regime that falls outside the traditional IPRs) system or a combination of both.
The minimal agreement reached by the member countries on 'plant and animal varieties' reflects Art 53(b) of the European Patent Convention (EPC) in its content. But, the exclusion of 'plants and animals' in article 27.3(b) of the TRIPS is broader than the 'plant and animal varieties' contained in the EPC. Cautiously, India has extended the exclusion from patentability to "plants and animals in whole or any part thereof other than microorganisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals" by section 3(j) of the Patents Act, 1970.
Life forms as 'invention'
Intellectual property protection for life forms have been riddled with many perplexing technical issues. The prerequisites for granting a patent, i.e., novelty and non-obviousness, are difficult to prove in the case of living organisms. In most countries, the test of novelty is satisfied if the biotechnological invention does not exist is the prior art (things already known). The requirement of inventive step is met if there is certain level of technical intervention by man. In addition to these prerequisites, plant varieties have to be 'distinct', i.e., the traits should be distinct from earlier varieties. Moreover, biotechnological inventions, compared to mechanical inventions, are difficult to replicate as they are reproduced sexually.
Thus, having excluded plants from patent protection, as a trade-off, India had to provide an effective sui generis system in place for the protection of new plant varieties. This was achieved with the passing of the Protection of Plant Varieties and Farmers' Rights Act, 2001 ("Act").
Sui generis protection
The sui generis system which evolved as a weaker form of protection than patents, was first recognised internationally by UPOV (French acronym for "International Union for the Protection of New Varieties of Plants") in 1961. The main objective of the UPOV convention, last revised in 1991, is the protection of new plant varieties by an intellectual property right. The twin freedoms of "breeders' exemption" (freedom of other breeders to use a protected variety as starting material, without prior authorisation or payment of royalty) and "farmers' privilege" (freedom of farmers to re-use saved seed of a protected variety) contained in the UPOV, have now been adapted into the Act."Breeders' exemption" is contained in section 30 of the Act which permits use of a variety by any person as an initial source of variety for the purpose of creating other varieties. "Farmers' privilege" is stated in section 39(1)(iv) of the Act, by which a farmer is entitled to save use, sow, resow, exchange, share or sell farm produce including seed of a variety protected under the Act.
Trade secret
Apart from patent and sui generis form of protection, biotechnological inventions may also be protected as trade secrets as provided for under article 39 of the TRIPS, which would enable breeders to maintain secrecy about the patent lines. This method of protection, however, does not protect the breeder against independent, bona fide discovery of the protected invention. Law and policy should encourage entrepreneurs through the grant of adequate intellectual property protection for biotechnological inventions. The Act strikes the right balance in affording adequate protection to breeders and farmers and providing access to technology for development of new varieties. The paranoia of monopolistic exploitation can be addressed better though efficacious use of competition law. Similarly, the grant of compulsory licences under the Act can take care of pubic interest issues. Contemporaneous legislation, like the Biological Diversity Act, 2002, further protects the use of biological resources and knowledge.
Biotechnology holds much promise for the agriculture and pharmaceutical industries. The recent efforts on regulating biotechnology should aim at giving the right impetus to this nascent technology, which has the potential to solve problems pertaining to food production, health and environment. World over, biotechnological inventions have enjoyed some form of protection by Intellectual Property Rights (IPRs). The choice of the form of protection for these inventions, have been a cause of much debate. The issues of morality and ethics have also hampered consensus in multilateral agreements.
Protection in the form of IPRs has, more often, revolved around the issue of equity. The developing countries have repeated accused foreign multinational companies for pirating and patenting biological material, which forms a part of their traditional knowledge and for not sharing the profits or the technology involved. The Convention of Biological Diversity attempts to remedy this situation.
With regard to biotechnology, its application can be studied from two viewpoints - (1) the way it affects the use of biotechnology in industry and (2) the application of biotechnology in agriculture. As for the former, the application pertains to chemical and medicinal substances derived from plants and animals. An apt illustration would be the commercial manufacture of anti-venom serum. Its application in agriculture concerns the use of genetic engineering in producing new plant and animal varieties. For example, rice varieties like IR8, which have superior qualities than naturally existing varieties can be developed using biotechnology.
Protection under TRIPS
The issue of providing patents for living organisms prevailed during the Uruguay
Round of negotiations as a standoff between US and other nations including the EU. US favoured a comprehensive policy that anything expect human beings, can be patented. Other nations did not reflect this sentiment. Resultantly, the WTO members agreed on a minimal protection for plant varieties, subject to review, in Article 27.3(b) of the TRIPS agreement. Paragraph 19 of the 2001 Doha Declaration has broadened the discussion under the Article to include biological diversity, the protection of traditional knowledge and folklore.
Article 27 excludes plants and animals from patentability. It also excludes biological processes for the production of plants or animals. However, the TRIPS Agreement does allow patents for microorganisms and non-biological and microbiological processes. It also provides for the protection of plant varieties either by patents or by an effective sui generis (a special regime that falls outside the traditional IPRs) system or a combination of both.
The minimal agreement reached by the member countries on 'plant and animal varieties' reflects Art 53(b) of the European Patent Convention (EPC) in its content. But, the exclusion of 'plants and animals' in article 27.3(b) of the TRIPS is broader than the 'plant and animal varieties' contained in the EPC. Cautiously, India has extended the exclusion from patentability to "plants and animals in whole or any part thereof other than microorganisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals" by section 3(j) of the Patents Act, 1970.
Life forms as 'invention'
Intellectual property protection for life forms have been riddled with many perplexing technical issues. The prerequisites for granting a patent, i.e., novelty and non-obviousness, are difficult to prove in the case of living organisms. In most countries, the test of novelty is satisfied if the biotechnological invention does not exist is the prior art (things already known). The requirement of inventive step is met if there is certain level of technical intervention by man. In addition to these prerequisites, plant varieties have to be 'distinct', i.e., the traits should be distinct from earlier varieties. Moreover, biotechnological inventions, compared to mechanical inventions, are difficult to replicate as they are reproduced sexually.
Thus, having excluded plants from patent protection, as a trade-off, India had to provide an effective sui generis system in place for the protection of new plant varieties. This was achieved with the passing of the Protection of Plant Varieties and Farmers' Rights Act, 2001 ("Act").
Sui generis protection
The sui generis system which evolved as a weaker form of protection than patents, was first recognised internationally by UPOV (French acronym for "International Union for the Protection of New Varieties of Plants") in 1961. The main objective of the UPOV convention, last revised in 1991, is the protection of new plant varieties by an intellectual property right. The twin freedoms of "breeders' exemption" (freedom of other breeders to use a protected variety as starting material, without prior authorisation or payment of royalty) and "farmers' privilege" (freedom of farmers to re-use saved seed of a protected variety) contained in the UPOV, have now been adapted into the Act."Breeders' exemption" is contained in section 30 of the Act which permits use of a variety by any person as an initial source of variety for the purpose of creating other varieties. "Farmers' privilege" is stated in section 39(1)(iv) of the Act, by which a farmer is entitled to save use, sow, resow, exchange, share or sell farm produce including seed of a variety protected under the Act.
Trade secret
Apart from patent and sui generis form of protection, biotechnological inventions may also be protected as trade secrets as provided for under article 39 of the TRIPS, which would enable breeders to maintain secrecy about the patent lines. This method of protection, however, does not protect the breeder against independent, bona fide discovery of the protected invention. Law and policy should encourage entrepreneurs through the grant of adequate intellectual property protection for biotechnological inventions. The Act strikes the right balance in affording adequate protection to breeders and farmers and providing access to technology for development of new varieties. The paranoia of monopolistic exploitation can be addressed better though efficacious use of competition law. Similarly, the grant of compulsory licences under the Act can take care of pubic interest issues. Contemporaneous legislation, like the Biological Diversity Act, 2002, further protects the use of biological resources and knowledge.
Thursday, September 15, 2005
Chemical Names as Pharmaceutical Trade Marks
Here's an odd one on trademarks.
The article was published in pharmabiz on Thursday, December 30, 2004.
Normally, any symbol or word capable of graphical representation and distinct enough to distinguish the goods and services of one person from those of others may be registered as a trade mark. Upon registration, the owner acquires an exclusive right, in perpetuity, to use the trademark.It is common practice to name drugs either by the name of the organ it treats (Liver: LIV-52), or by the principal ingredients (Cipro-floxacin: CIPRO), or the name of the ailment (Common cold: COLDARIN), which enables the doctor to associate a particular trade name with the organ, ingredient or ailment thereby reducing the chance of error.
Predominan-tly, trade names are derived from the chemical name or the generic name. The chemical names and generic names cannot per se be registered as trade mark as they are hit by section 13 of the Trade Marks Act, 1999. The section states that no word which is the commonly used and accepted name of any single chemical element or single chemical compound in respect of a chemical substance shall be registered as a trade mark.
Moreover, chemical names would be rendered unregistrable as a trade mark under clause (a) of section 9 which states that trade marks devoid of any distinctive character, capable of distinguishing goods of one person from those of another, shall not be registered. As chemical names designate the kind of goods, the goods will be rendered unregistrable even under clause (b) of section 9 which provides that trade marks which consist exclusively of marks which may serve in trade to designate the kind of goods shall not be registered.Under section 23(1) of the old Act (Trade and Merchandise Marks Act, 1958) the Central Government is empowered to give directions as to the list of marks that are not registrable. Accordingly, it has issued a direction that no trade mark shall be registered in respect of the following drugs:
1. Analgin
2. Aspirin
3. Chloropromazine
4. Ferrous Sulphate
5. Piperazine and its salt such as adipate, citrate and phosphate
6. New single ingredient drug first introduced in India
While making a trade mark application for pharmaceuticals pertaining to the above list, the Registrar of Trade Marks requires the filing of an affidavit stating that the trade mark applied for is not used or intended to be used in respect of the listed drugs. However, the new Act (Trade Marks Act, 1999) does not contain a similar provision.The pharmaceutical industry has devised ways to get over these provisions which restrict the use of chemical names. Ingeniously, drug manufacturers resort to coining words which contain a part of the chemical name, so that the product may be identified with a particular chemical substance. For instance, the drug containing the Active Pharmaceutical Ingredient (API) Ciprofloxacin is manufactured by different companies under the trade names ALCIPRO, CIPRO, CIPROBID, CIPROLET, CIPROVA. The word CIPRO figures in the trade names of all the above products. This serves the purpose of identifying the drug. But the same has also given rise to trade mark infringement cases filed by drug companies on the ground that product of its competitor which employs a part of the chemical name in its trade name, is deceptively similar to its own trade name.
In USV Ltd. v. Systopic Laboratories Ltd., 2004 (1) CTC 418, the Madras High Court had to decide whether the two pharmaceutical trade names "PIO" and "PIOZ" containing the API, Pioglitazone were deceptively similar. The Division Bench of the Madras High Court upheld the decision of the Single Judge in USV Ltd. v. Systopic Laboratories Ltd., 2003 (27) PTC 203 (Mad). In holding that the two names were not deceptively similar, the Court stated that the word "PIO" has become publici juris and that there could be no monopoly over it. The rules regarding deceptive similarity take a special connotation with regard to pharmaceutical trade names. As the drugs are prescribed by registered medical practitioners and dispensed by qualified pharmacists, the chances of confusion arising out of two products being deceptively similar are considerably reduced. To this extent, some similarity is allowed.
The concept of publici juris deals with public rights. The term signifies a thing or a right that is open and exercisable by all persons. It designates things that belong to the entire community, and not to any private party. The Madras High Court held that the term PIO being a part of the chemical name, PIOGLITAZONE, belongs to the public domain and as such no one can have a right over it.Usually, common suffixes or prefixes do not come in the way of distinctiveness. The nature of certain trades may require common suffix/ prefix for the purpose of familiarity. The distinctive nature of the word would then depend on the remaining part of the word attached to these common suffixes and prefixes. A term would be considered as a prefix or suffix only if they are derived from common or generic words.
But if the name is derived or coined form the name signifying the principal ingredient used in the medicine, no distinctiveness or exclusiveness can be claimed by the manufacturer in respect of that part of the name. It is now well-settled that no person can claim exclusive use of the descriptive and generic terms and it would be highly undesirable to confer on one trader proprietary right over the use of an ordinary, descriptive or generic word indicative of the nature, composition and quality of the goods as that would give him complete monopoly to exhibit the word to the exclusion of others(Panacea Biotec v. Recon, 1996).Pharmaceutical companies should cautiously exercise the choice of naming their products with trade names derived from the chemical or generic name. Though it grants familiarity to the new drug, it also dilutes the proprietary right over the trade name. There can be no monopoly over a chemical name which is descriptive of a particular ingredient.
The article was published in pharmabiz on Thursday, December 30, 2004.
Normally, any symbol or word capable of graphical representation and distinct enough to distinguish the goods and services of one person from those of others may be registered as a trade mark. Upon registration, the owner acquires an exclusive right, in perpetuity, to use the trademark.It is common practice to name drugs either by the name of the organ it treats (Liver: LIV-52), or by the principal ingredients (Cipro-floxacin: CIPRO), or the name of the ailment (Common cold: COLDARIN), which enables the doctor to associate a particular trade name with the organ, ingredient or ailment thereby reducing the chance of error.
Predominan-tly, trade names are derived from the chemical name or the generic name. The chemical names and generic names cannot per se be registered as trade mark as they are hit by section 13 of the Trade Marks Act, 1999. The section states that no word which is the commonly used and accepted name of any single chemical element or single chemical compound in respect of a chemical substance shall be registered as a trade mark.
Moreover, chemical names would be rendered unregistrable as a trade mark under clause (a) of section 9 which states that trade marks devoid of any distinctive character, capable of distinguishing goods of one person from those of another, shall not be registered. As chemical names designate the kind of goods, the goods will be rendered unregistrable even under clause (b) of section 9 which provides that trade marks which consist exclusively of marks which may serve in trade to designate the kind of goods shall not be registered.Under section 23(1) of the old Act (Trade and Merchandise Marks Act, 1958) the Central Government is empowered to give directions as to the list of marks that are not registrable. Accordingly, it has issued a direction that no trade mark shall be registered in respect of the following drugs:
1. Analgin
2. Aspirin
3. Chloropromazine
4. Ferrous Sulphate
5. Piperazine and its salt such as adipate, citrate and phosphate
6. New single ingredient drug first introduced in India
While making a trade mark application for pharmaceuticals pertaining to the above list, the Registrar of Trade Marks requires the filing of an affidavit stating that the trade mark applied for is not used or intended to be used in respect of the listed drugs. However, the new Act (Trade Marks Act, 1999) does not contain a similar provision.The pharmaceutical industry has devised ways to get over these provisions which restrict the use of chemical names. Ingeniously, drug manufacturers resort to coining words which contain a part of the chemical name, so that the product may be identified with a particular chemical substance. For instance, the drug containing the Active Pharmaceutical Ingredient (API) Ciprofloxacin is manufactured by different companies under the trade names ALCIPRO, CIPRO, CIPROBID, CIPROLET, CIPROVA. The word CIPRO figures in the trade names of all the above products. This serves the purpose of identifying the drug. But the same has also given rise to trade mark infringement cases filed by drug companies on the ground that product of its competitor which employs a part of the chemical name in its trade name, is deceptively similar to its own trade name.
In USV Ltd. v. Systopic Laboratories Ltd., 2004 (1) CTC 418, the Madras High Court had to decide whether the two pharmaceutical trade names "PIO" and "PIOZ" containing the API, Pioglitazone were deceptively similar. The Division Bench of the Madras High Court upheld the decision of the Single Judge in USV Ltd. v. Systopic Laboratories Ltd., 2003 (27) PTC 203 (Mad). In holding that the two names were not deceptively similar, the Court stated that the word "PIO" has become publici juris and that there could be no monopoly over it. The rules regarding deceptive similarity take a special connotation with regard to pharmaceutical trade names. As the drugs are prescribed by registered medical practitioners and dispensed by qualified pharmacists, the chances of confusion arising out of two products being deceptively similar are considerably reduced. To this extent, some similarity is allowed.
The concept of publici juris deals with public rights. The term signifies a thing or a right that is open and exercisable by all persons. It designates things that belong to the entire community, and not to any private party. The Madras High Court held that the term PIO being a part of the chemical name, PIOGLITAZONE, belongs to the public domain and as such no one can have a right over it.Usually, common suffixes or prefixes do not come in the way of distinctiveness. The nature of certain trades may require common suffix/ prefix for the purpose of familiarity. The distinctive nature of the word would then depend on the remaining part of the word attached to these common suffixes and prefixes. A term would be considered as a prefix or suffix only if they are derived from common or generic words.
But if the name is derived or coined form the name signifying the principal ingredient used in the medicine, no distinctiveness or exclusiveness can be claimed by the manufacturer in respect of that part of the name. It is now well-settled that no person can claim exclusive use of the descriptive and generic terms and it would be highly undesirable to confer on one trader proprietary right over the use of an ordinary, descriptive or generic word indicative of the nature, composition and quality of the goods as that would give him complete monopoly to exhibit the word to the exclusion of others(Panacea Biotec v. Recon, 1996).Pharmaceutical companies should cautiously exercise the choice of naming their products with trade names derived from the chemical or generic name. Though it grants familiarity to the new drug, it also dilutes the proprietary right over the trade name. There can be no monopoly over a chemical name which is descriptive of a particular ingredient.
Wednesday, August 31, 2005
Intellectual property rights — US, trade sanctions and IPRs
This article was published in The Hindu Business Line on Tuesday, Jun 15, 2004.
DESPITE India's recent endeavour to comply fully with its TRIPS (Trade Related Aspects of Intellectual Property Rights) obligations, the US has put India on the "priority watch list" under Section 301 for failing to provide adequate level of protection for Intellectual Property Rights.
Section 301 and USTR
Section 301 of the US Trade Act, 1974 permits the US to unilaterally treat trade related aspects of Intellectual Property Rights (IPRs) as a part of its trade law. Section 301, through an amendment in 1984, empowered the US President to take action for inadequate protection of IPRs of US citizens in foreign countries.
An investigation under Section 301 may be commenced either by a petition filed by an interested party before the United States Trade Representative (USTR) requesting an investigation of a particular practice of a foreign country or by suo motu action of the USTR. Upon the conclusion of investigation, the US may take retaliatory action against the recalcitrant country.
Action under Section 301 will include suspension or withdrawal of trade concessions, imposition of trade duties and other restrictions and suspension or withdrawal of benefits under the Generalised System of Preferences (GSP). GSP offers preferential treatment for developing countries.
Under Section 301, the denial of adequate and effective protection of the IPRs, even if the foreign country is in compliance with TRIPS, can be a cause for retaliatory action. Thus, the threshold of intellectual property protection mandated under Section 301 is much higher than the protection standards under TRIPS.
Section 301 also provides that where an investigation involves an alleged violation of trade agreement, like the WTO Agreement, the USTR must follow the dispute settlement provisions set out in that agreement. Thus, the power to initiate unilateral action against India for non-compliance with the TRIPS, which forms a part of the WTO Agreements, is inhibited, as the USTR must take recourse to the dispute settlement mechanism under the WTO.
"Special 301" Annual Report
The Annual Report of the USTR identifies countries that are "priority foreign country", where investigations on IPRs infringement were to be launched and action completed within the specified time limit. Though not required by law, the USTR also identifies and puts countries on the "priority watch list" (countries with whom bilateral negotiations are initiated) or the "watch list" (countries whose IPR developments are monitored).
The Special 301 Annual Report issued on May 3 identifies India as a `priority watch list' country and threatens it with trade sanctions, which may be imposed either unilaterally through Section 310 or multilaterally through the WTO system. In spite of complying with its TRIPS obligations, India continue to be monitored under Section 301. This is due to the fact that Section 301 demands a greater protection for IPRs than envisaged in the TRIPS.
Unilateralism vs multilateralism
The conclusion of the TRIPS Agreement was seen as a major gain for the developing countries insofar as they traded a unilateral measure — the Section 301 of the US trade law — for a multilateral agreement. But the US trade policy on the IPRs has cast doubt and makes the TRIPS negotiations seem a pyrrhic victory.
First, Section 301 remains a part of the US trade law and is actively used even after TRIPS came into force, despite the specific prohibition on unilateral measures contained in Article 23 of the WTO Dispute Settlement Understanding (DSU).
Second, what the TRIPS achieved was to arm all WTO member-countries with trade retaliation measures in the form of sanctions, a power which was earlier vested only with the US. This came to be known as the "internationalisation of Section 301".
Third, TRIPS multilateralised the gains from trade sanctions to all the WTO members through the most-favoured-nation (equal treatment) clause in Article 4 of the TRIPS Agreement.
It is not now open for one country to enter into a bilateral arrangement so as to limit the damage to only one trading partner.
Combating sanctions
The TRIPS Agreement can act to check the use of Section 301 actions on matters covered by the WTO Agreements as WTO members can challenge retaliation actions of the US under the WTO Dispute Settlement mechanism.
Moreover, the US is more likely to use the multilateral dispute settlement procedures under the WTO in settling trade issues on IPRs than resort to unilateral measures contained in Section 301 as it happened in 1997 in US vs. India ("mail-box case").
Even if the US sanctions are not challenged before the WTO, these trade sanctions are likely to have very little effect due to the country graduations from the GSP (once a country graduates from the GSP, it will not be affected by withdrawal of benefits under the GSP), product restrictions and the rapidly diminishing tariff margins between the countries.
The chief objective of the WTO is to progressively open national markets for international trade. This is done by the gradual reduction of tariff and the removal on non-tariff barriers such as product restrictions.
The effect of Section 301 actions by the US will be greatly subdued if developing countries opt to voluntarily forgo the GSP benefits granted to them.
DESPITE India's recent endeavour to comply fully with its TRIPS (Trade Related Aspects of Intellectual Property Rights) obligations, the US has put India on the "priority watch list" under Section 301 for failing to provide adequate level of protection for Intellectual Property Rights.
Section 301 and USTR
Section 301 of the US Trade Act, 1974 permits the US to unilaterally treat trade related aspects of Intellectual Property Rights (IPRs) as a part of its trade law. Section 301, through an amendment in 1984, empowered the US President to take action for inadequate protection of IPRs of US citizens in foreign countries.
An investigation under Section 301 may be commenced either by a petition filed by an interested party before the United States Trade Representative (USTR) requesting an investigation of a particular practice of a foreign country or by suo motu action of the USTR. Upon the conclusion of investigation, the US may take retaliatory action against the recalcitrant country.
Action under Section 301 will include suspension or withdrawal of trade concessions, imposition of trade duties and other restrictions and suspension or withdrawal of benefits under the Generalised System of Preferences (GSP). GSP offers preferential treatment for developing countries.
Under Section 301, the denial of adequate and effective protection of the IPRs, even if the foreign country is in compliance with TRIPS, can be a cause for retaliatory action. Thus, the threshold of intellectual property protection mandated under Section 301 is much higher than the protection standards under TRIPS.
Section 301 also provides that where an investigation involves an alleged violation of trade agreement, like the WTO Agreement, the USTR must follow the dispute settlement provisions set out in that agreement. Thus, the power to initiate unilateral action against India for non-compliance with the TRIPS, which forms a part of the WTO Agreements, is inhibited, as the USTR must take recourse to the dispute settlement mechanism under the WTO.
"Special 301" Annual Report
The Annual Report of the USTR identifies countries that are "priority foreign country", where investigations on IPRs infringement were to be launched and action completed within the specified time limit. Though not required by law, the USTR also identifies and puts countries on the "priority watch list" (countries with whom bilateral negotiations are initiated) or the "watch list" (countries whose IPR developments are monitored).
The Special 301 Annual Report issued on May 3 identifies India as a `priority watch list' country and threatens it with trade sanctions, which may be imposed either unilaterally through Section 310 or multilaterally through the WTO system. In spite of complying with its TRIPS obligations, India continue to be monitored under Section 301. This is due to the fact that Section 301 demands a greater protection for IPRs than envisaged in the TRIPS.
Unilateralism vs multilateralism
The conclusion of the TRIPS Agreement was seen as a major gain for the developing countries insofar as they traded a unilateral measure — the Section 301 of the US trade law — for a multilateral agreement. But the US trade policy on the IPRs has cast doubt and makes the TRIPS negotiations seem a pyrrhic victory.
First, Section 301 remains a part of the US trade law and is actively used even after TRIPS came into force, despite the specific prohibition on unilateral measures contained in Article 23 of the WTO Dispute Settlement Understanding (DSU).
Second, what the TRIPS achieved was to arm all WTO member-countries with trade retaliation measures in the form of sanctions, a power which was earlier vested only with the US. This came to be known as the "internationalisation of Section 301".
Third, TRIPS multilateralised the gains from trade sanctions to all the WTO members through the most-favoured-nation (equal treatment) clause in Article 4 of the TRIPS Agreement.
It is not now open for one country to enter into a bilateral arrangement so as to limit the damage to only one trading partner.
Combating sanctions
The TRIPS Agreement can act to check the use of Section 301 actions on matters covered by the WTO Agreements as WTO members can challenge retaliation actions of the US under the WTO Dispute Settlement mechanism.
Moreover, the US is more likely to use the multilateral dispute settlement procedures under the WTO in settling trade issues on IPRs than resort to unilateral measures contained in Section 301 as it happened in 1997 in US vs. India ("mail-box case").
Even if the US sanctions are not challenged before the WTO, these trade sanctions are likely to have very little effect due to the country graduations from the GSP (once a country graduates from the GSP, it will not be affected by withdrawal of benefits under the GSP), product restrictions and the rapidly diminishing tariff margins between the countries.
The chief objective of the WTO is to progressively open national markets for international trade. This is done by the gradual reduction of tariff and the removal on non-tariff barriers such as product restrictions.
The effect of Section 301 actions by the US will be greatly subdued if developing countries opt to voluntarily forgo the GSP benefits granted to them.
Thursday, July 28, 2005
Patents (Amendment) Bill, 2003: The inevitable regime change
This article had appeared in The Hindu Business Line on Friday, Apr 16, 2004.
The Patents (Amendment) Bill, introduced in the Rajya Sabha on December 22, 2003, shall have the prime objective of fully conforming the Patents Act, 1970 (Act) to the TRIPS obligations under the WTO. The Bill, seen as the final step in the transition period of 10 years granted to developing countries under Article 65 of the TRIP, brings forth the much anticipated regime change for the pharma industry. By January 1, 2005, product patents shall be awarded for food, medicine or drug substances in accordance with the TRIPS Agreement for 20 years.
THE Patents (Amendment) Bill, 2003 was introduced in the Rajya Sabha on December 22, 2003. The Bill, when it comes into force, shall have the prime objective of fully conforming the Patents Act, 1970 (Act) to the TRIPS (Trade-Related Intellectual Property System) obligations under the World Trade Organisation.
The Bill is seen as the final step in the transition period of 10 years granted to developing countries under Article 65 of the TRIPS; this period ends on December 31, 2004.
The Bill brings forth the much anticipated regime change for the pharmaceutical industry. By January 1, 2005, product patents shall be awarded for food, medicine or drug substances in accordance with the TRIPS Agreement for a period of 20 years. Earlier, the term of process patent for a drug or medicinal substance was five years from the date of sealing of the patent, or seven years from the date of the patent, whichever was shorter.
End of reverse engineering
As of now, Section 5 of the Act, offers only a process patent for food, medicine or drug substances. The Act had specifically excluded product patents for these substances. This concession gave the Indian pharmaceutical companies a right to manufacture drugs patented elsewhere by employing a non-infringing process. The phenomenal growth of the Indian pharmaceutical industry into a Rs 19,700-crore industry is directly linked to the patent concessions it enjoyed. The good days may be coming to an end. The Bill omits Section 5. Thus, Indian companies will no longer to allowed to manufacture patented drugs by reverse engineering.
Some believe that the Bill shall only have a minimal impact on the industry as less than 5 per cent of the drugs available in the Indian market are copies of patented products. Added to this, it is possible for Indian companies to export drugs to Less Developed Countries (LCDs), which shall come into this regime only by 2016.
The Bill introduces Section 92 A, which deals with compulsory licence for export of patented pharmaceutical products in certain exceptional circumstances. It is evident that this provision has been included to facilitate export of drugs to LCDs and elsewhere foreseeing situations such as the one faced by a drug company's HIV/AIDS drug in South Africa.
Unique provisions
As the patents law in India developed differently keeping in view the needs of the local consumers and producers, the Act in itself contained unique provisions not commonly found in the patent legislation of other countries.
One such provision is Section 3 of the Act which provides for the inventions that are not patentable. This Section enumerates 15 such non-patentable inventions which can be used as a ground in opposing a patent before its grant or in revocations proceedings after the grant. Another provision is Section 64 which gives 17 grounds on which a patent may be revoked after its grant. Interestingly, the Bill has not made any substantial change to the above two provisions.
EMRs to go
Understandably, the Bill omits Chapter IV A of the Act which deals with the transitions arrangement of granting Exclusive Marketing Rights (EMR) till the pending patent applications are processed.
The Bill provides for a transitional provision which states that every EMR shall continue to be effective with the same terms and conditions on which it was granted. Section 24 D of the Act provides that the government may, in public interest, sell or distribute the article for which EMR has been granted. The government may also, in public interest, direct that the article shall be sold at a regulated price. These two protections do not figure in the Bill.
The Bill retains the provision dealing with suits relating to infringement of EMRs now contained in Section 24E of Chapter IV A. As suits relating to infringement of EMRs would be treated as suits relating to infringement of patents under Chapter XVIII of the Act, the above grounds contained in Section 64 read with Section 3 could be raised as a counter-claim in a suit.
If the number of infringement suits filed in the recent past is any indication, it is very likely that the Indian courts shall witness a spate of patent related litigation post 2005.
The road ahead
Indian pharmaceutical companies have already devised innovative methods to meet the challenges of the new patent regime. They can continue to supply bulk drugs and active pharmaceutical ingredients (APIs) with the approval of the patent holder. The option of producing off-patent APIs is also open.
Another option would be to streamline the process of manufacture and to become the cheapest manufacturers of off-patent drugs. Given the distinction in reverse engineering that Indian companies have earned over the years, this prospect holds much promise.
The third option lies in licensing globally successful drugs in India. This shall, however, be subject to Chapter XVI of the Act which deals with Compulsory Licences and the desire of multinationals to team-up with Indian companies. Yet another option would be to position Indian companies as research and development centres for multinationals.
The Patents (Amendment) Bill, introduced in the Rajya Sabha on December 22, 2003, shall have the prime objective of fully conforming the Patents Act, 1970 (Act) to the TRIPS obligations under the WTO. The Bill, seen as the final step in the transition period of 10 years granted to developing countries under Article 65 of the TRIP, brings forth the much anticipated regime change for the pharma industry. By January 1, 2005, product patents shall be awarded for food, medicine or drug substances in accordance with the TRIPS Agreement for 20 years.
THE Patents (Amendment) Bill, 2003 was introduced in the Rajya Sabha on December 22, 2003. The Bill, when it comes into force, shall have the prime objective of fully conforming the Patents Act, 1970 (Act) to the TRIPS (Trade-Related Intellectual Property System) obligations under the World Trade Organisation.
The Bill is seen as the final step in the transition period of 10 years granted to developing countries under Article 65 of the TRIPS; this period ends on December 31, 2004.
The Bill brings forth the much anticipated regime change for the pharmaceutical industry. By January 1, 2005, product patents shall be awarded for food, medicine or drug substances in accordance with the TRIPS Agreement for a period of 20 years. Earlier, the term of process patent for a drug or medicinal substance was five years from the date of sealing of the patent, or seven years from the date of the patent, whichever was shorter.
End of reverse engineering
As of now, Section 5 of the Act, offers only a process patent for food, medicine or drug substances. The Act had specifically excluded product patents for these substances. This concession gave the Indian pharmaceutical companies a right to manufacture drugs patented elsewhere by employing a non-infringing process. The phenomenal growth of the Indian pharmaceutical industry into a Rs 19,700-crore industry is directly linked to the patent concessions it enjoyed. The good days may be coming to an end. The Bill omits Section 5. Thus, Indian companies will no longer to allowed to manufacture patented drugs by reverse engineering.
Some believe that the Bill shall only have a minimal impact on the industry as less than 5 per cent of the drugs available in the Indian market are copies of patented products. Added to this, it is possible for Indian companies to export drugs to Less Developed Countries (LCDs), which shall come into this regime only by 2016.
The Bill introduces Section 92 A, which deals with compulsory licence for export of patented pharmaceutical products in certain exceptional circumstances. It is evident that this provision has been included to facilitate export of drugs to LCDs and elsewhere foreseeing situations such as the one faced by a drug company's HIV/AIDS drug in South Africa.
Unique provisions
As the patents law in India developed differently keeping in view the needs of the local consumers and producers, the Act in itself contained unique provisions not commonly found in the patent legislation of other countries.
One such provision is Section 3 of the Act which provides for the inventions that are not patentable. This Section enumerates 15 such non-patentable inventions which can be used as a ground in opposing a patent before its grant or in revocations proceedings after the grant. Another provision is Section 64 which gives 17 grounds on which a patent may be revoked after its grant. Interestingly, the Bill has not made any substantial change to the above two provisions.
EMRs to go
Understandably, the Bill omits Chapter IV A of the Act which deals with the transitions arrangement of granting Exclusive Marketing Rights (EMR) till the pending patent applications are processed.
The Bill provides for a transitional provision which states that every EMR shall continue to be effective with the same terms and conditions on which it was granted. Section 24 D of the Act provides that the government may, in public interest, sell or distribute the article for which EMR has been granted. The government may also, in public interest, direct that the article shall be sold at a regulated price. These two protections do not figure in the Bill.
The Bill retains the provision dealing with suits relating to infringement of EMRs now contained in Section 24E of Chapter IV A. As suits relating to infringement of EMRs would be treated as suits relating to infringement of patents under Chapter XVIII of the Act, the above grounds contained in Section 64 read with Section 3 could be raised as a counter-claim in a suit.
If the number of infringement suits filed in the recent past is any indication, it is very likely that the Indian courts shall witness a spate of patent related litigation post 2005.
The road ahead
Indian pharmaceutical companies have already devised innovative methods to meet the challenges of the new patent regime. They can continue to supply bulk drugs and active pharmaceutical ingredients (APIs) with the approval of the patent holder. The option of producing off-patent APIs is also open.
Another option would be to streamline the process of manufacture and to become the cheapest manufacturers of off-patent drugs. Given the distinction in reverse engineering that Indian companies have earned over the years, this prospect holds much promise.
The third option lies in licensing globally successful drugs in India. This shall, however, be subject to Chapter XVI of the Act which deals with Compulsory Licences and the desire of multinationals to team-up with Indian companies. Yet another option would be to position Indian companies as research and development centres for multinationals.
Tuesday, June 21, 2005
Exclusive Marketing Rights — A monopoly without a right?
This article was published in The Hindu Business Line on Saturday, Mar 20, 2004.
THE grant of Exclusive Marketing Right (EMR) to Novartis ("Exclusive Marketing Rights — Novartis gets stay against 6 firms", Business Line, January 24) and the delay in granting EMR to Eli Lilly ("Eli Lilly's ED drug likely to face clone's onslaught", Business Line, February 15, 2004) have raised several controversial issues.
For Novartis, the grant means that it can exclusively sell or distribute its patented anti-cancer drug Glivec containing the active ingredient Imatinib mesylate, which is the subject matter of EMR. This move has affected six Indian pharmaceutical companies which have been manufacturing Imatinib mesylate at one-tenth its price, under different trade names. For Eli Lilly, the delay would result in the loss of profits over its patented drug, Cialis.
The impact of WTO
The Dunkel Draft — the predecessor to the Trade Related Intellectual Property Rights (TRIPS) Agreement — proposed that all countries that did not offer product patents for pharmaceutical and agricultural chemical products as on January 1, 1995 have to provide a means for accepting applications for such inventions (called the `mailbox'), apply applicable priority rights and provide exclusive marketing rights (EMRs) for such products.
The developing countries had a choice between EMR and product patents and many opted for the latter. As one of the chief opponents of TRIPS, India opted for the interim arrangements of `mailbox' and EMR.
Under Article 65.4 of the TRIPS, developing countries that did not have product patents were to get 10 years to comply with patent provisions in the pharmaceutical and agricultural chemical sectors. But in view of Articles 70.8 and 70.9, these countries did not get even one day's transition, as they had to accept product patent applications through the `mailbox' and EMR.
The concept of EMR has its origin in a US legislation — the Hatch-Waxman Act, 1984, which granted a five-year market exclusivity period for an innovative drug. This provision was meant to protect drugs that either enjoyed no patent protection or had less than five years of protection left at the time of approval.
Not surprisingly, the issue of EMR was brought up by the US before the panel of the WTO's Dispute Settlement Body. The issue in United States vs. India (1997) was whether the Indian Patents Act, 1970 (Act) had established a mechanism that adequately preserved novelty and priority with respect to patent applications covering pharmaceutical and agricultural chemical inventions, given that under the Act substances classified as "food, medicine or drug" were entitled to process patent and not product patent protection.
The WTO panel concluded that India did not comply with its obligations under Article 70.8(a) of the TRIPS Agreement and violated its obligation to provide EMR during the transitional period under Article 70.9. The WTO Appellate Body upheld the panel's conclusions.
Consequently, the Act was amended in 1999 granting product patents for pharmaceuticals from January 1, 2005. As a prelude to full implementation in 2005, the Act provided that applicants may immediately receive EMR, a patent-like right governed by conventional patent doctrines.
EMRs: Legal implications
EMRs were introduced as an effective way to stall imitation of patented products by the local industry. It is only a privilege granted in anticipation of a patent right. EMRs offer rights similar to that of patents.
The right to make or use an invention may not be commercially viable without the right to sell or distribute the product. EMRs are even stronger than patents as the right of a national patent office to grant or reject the right is severely circumscribed.
Chapter IV-A of the Act lays down certain preconditions that have to be met before EMRs are granted. Before a claim is made, an application for the same invention should have been filed in a WTO member-country on or after January 1, 1995.
The patent grant and approval to sell and distribute the invention should have been granted in that country on or after the date of making a claim in India. Moreover, the approval to sell or distribute the invention should have been granted by the authority specified in this behalf.
If these conditions are satisfied, the EMR shall be granted from the date of approval till a period of five years or till the date of grant of patent or the date of rejection of application for the grant of patents, whichever is earlier. The grant of EMR would mean that the patent-like protection would be extended to the product even before the patent application is processed.
Disastrous consequences
This interim arrangement can have disastrous consequences. In the event of the patent application failing to materialise in the form of a grant, it would mean that the EMR holder, in most cases pharma MNCs, , obtain a monopoly in selling and distributing products during the period of grant of EMR.
More sinisterly, it could mean exclusive exploitation of new markets without the backing of a right to do so. It is submitted that the Government should demand some security against such exploitation before granting EMR.
The grant of EMR results in a right stronger than that of a patent grant. Compared to a patent, the procedure involved in getting an EMR is much easier and without any provision for opposition of such a grant. India's belief that EMR obligation is weaker than that of product patents is misplaced. As the procedure for granting EMR does not have any review mechanism to check abuse, it can, in effect, offer a monopoly more rigid than that of patents.
THE grant of Exclusive Marketing Right (EMR) to Novartis ("Exclusive Marketing Rights — Novartis gets stay against 6 firms", Business Line, January 24) and the delay in granting EMR to Eli Lilly ("Eli Lilly's ED drug likely to face clone's onslaught", Business Line, February 15, 2004) have raised several controversial issues.
For Novartis, the grant means that it can exclusively sell or distribute its patented anti-cancer drug Glivec containing the active ingredient Imatinib mesylate, which is the subject matter of EMR. This move has affected six Indian pharmaceutical companies which have been manufacturing Imatinib mesylate at one-tenth its price, under different trade names. For Eli Lilly, the delay would result in the loss of profits over its patented drug, Cialis.
The impact of WTO
The Dunkel Draft — the predecessor to the Trade Related Intellectual Property Rights (TRIPS) Agreement — proposed that all countries that did not offer product patents for pharmaceutical and agricultural chemical products as on January 1, 1995 have to provide a means for accepting applications for such inventions (called the `mailbox'), apply applicable priority rights and provide exclusive marketing rights (EMRs) for such products.
The developing countries had a choice between EMR and product patents and many opted for the latter. As one of the chief opponents of TRIPS, India opted for the interim arrangements of `mailbox' and EMR.
Under Article 65.4 of the TRIPS, developing countries that did not have product patents were to get 10 years to comply with patent provisions in the pharmaceutical and agricultural chemical sectors. But in view of Articles 70.8 and 70.9, these countries did not get even one day's transition, as they had to accept product patent applications through the `mailbox' and EMR.
The concept of EMR has its origin in a US legislation — the Hatch-Waxman Act, 1984, which granted a five-year market exclusivity period for an innovative drug. This provision was meant to protect drugs that either enjoyed no patent protection or had less than five years of protection left at the time of approval.
Not surprisingly, the issue of EMR was brought up by the US before the panel of the WTO's Dispute Settlement Body. The issue in United States vs. India (1997) was whether the Indian Patents Act, 1970 (Act) had established a mechanism that adequately preserved novelty and priority with respect to patent applications covering pharmaceutical and agricultural chemical inventions, given that under the Act substances classified as "food, medicine or drug" were entitled to process patent and not product patent protection.
The WTO panel concluded that India did not comply with its obligations under Article 70.8(a) of the TRIPS Agreement and violated its obligation to provide EMR during the transitional period under Article 70.9. The WTO Appellate Body upheld the panel's conclusions.
Consequently, the Act was amended in 1999 granting product patents for pharmaceuticals from January 1, 2005. As a prelude to full implementation in 2005, the Act provided that applicants may immediately receive EMR, a patent-like right governed by conventional patent doctrines.
EMRs: Legal implications
EMRs were introduced as an effective way to stall imitation of patented products by the local industry. It is only a privilege granted in anticipation of a patent right. EMRs offer rights similar to that of patents.
The right to make or use an invention may not be commercially viable without the right to sell or distribute the product. EMRs are even stronger than patents as the right of a national patent office to grant or reject the right is severely circumscribed.
Chapter IV-A of the Act lays down certain preconditions that have to be met before EMRs are granted. Before a claim is made, an application for the same invention should have been filed in a WTO member-country on or after January 1, 1995.
The patent grant and approval to sell and distribute the invention should have been granted in that country on or after the date of making a claim in India. Moreover, the approval to sell or distribute the invention should have been granted by the authority specified in this behalf.
If these conditions are satisfied, the EMR shall be granted from the date of approval till a period of five years or till the date of grant of patent or the date of rejection of application for the grant of patents, whichever is earlier. The grant of EMR would mean that the patent-like protection would be extended to the product even before the patent application is processed.
Disastrous consequences
This interim arrangement can have disastrous consequences. In the event of the patent application failing to materialise in the form of a grant, it would mean that the EMR holder, in most cases pharma MNCs, , obtain a monopoly in selling and distributing products during the period of grant of EMR.
More sinisterly, it could mean exclusive exploitation of new markets without the backing of a right to do so. It is submitted that the Government should demand some security against such exploitation before granting EMR.
The grant of EMR results in a right stronger than that of a patent grant. Compared to a patent, the procedure involved in getting an EMR is much easier and without any provision for opposition of such a grant. India's belief that EMR obligation is weaker than that of product patents is misplaced. As the procedure for granting EMR does not have any review mechanism to check abuse, it can, in effect, offer a monopoly more rigid than that of patents.
Tuesday, May 24, 2005
Welcome to all!
Dear All,
I have just started a dedicated blog on pharmaceutical patents. I hope to post my first piece soon.
Feroz Ali
I have just started a dedicated blog on pharmaceutical patents. I hope to post my first piece soon.
Feroz Ali
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