Thursday, January 19, 2006

Patents Ordinance: Surviving the Winds of Change

This article was published in Pharmabiz on Wednesday, January 12, 2005.

The apprehensions of the pharmaceutical industry voiced by various associations seem more like a knee-jerk reaction to the recent Patents Ordinance than a studied response. The Ordinance contains, by and large, the very same provisions as the Patents (Amendment) Bill, 2003 which was introduced in the Rajya Sabha on December 22, 2003. The industry had sufficient time to react to these new provisions. The amendment in the law was inevitable as India had to comply with the obligation of fully conforming the Patents Act, 1970 (Act) to the TRIPS (Trade Related Aspects of Intellectual Property Rights) Agreement under the WTO. Everybody knew that the transitional period of 10 years granted to developing countries under Article 65 of the TRIPS would come to a definitive end on December 31, 2004.

The Ordinance has put an end to the era of reverse engineering. Expectedly, the pharmaceutical industry has raised some fears about the Ordinance mainly with regard to patentability, pre-grant opposition and compulsory licensing.


As the patents law in India developed differently keeping in view the needs of the local consumers and the domestic producers, the exclusions on patentability are more than those found in patent legislations of other countries. The Act defines "invention" as a new product or process involving an inventive step and capable of industrial application. Section 3 of the Act provides for the inventions that are not patentable. The 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. Contrary to the popular belief, the Ordinance has made only cosmetic changes and has left the existing provisions intact.

The issue of patentability assumes importance as it limits the scope of inventions for which a patent can be claimed. The Ordinance provides for challenge of an invention at various levels.

Multi-level challenge mechanism

The Ordinance has introduced a multi-level patent challenge mechanism. First, it provides for a preliminary challenge even before the patent is granted. Section 25 contains a mechanism by which any person can represent by way of opposition to the Patent Controller against the grant on the ground of patentability. This is known as the pre-grant opposition. Some sections of the Industry have raised their dissatisfaction that only a "representation" is permitted and that the opposition of the person is not "heard". The objections at this stage are of a preliminary nature and any failure at this stage can be remedied at the next level.

Secondly, the Ordinance provides for post-grant opposition at any time after the grant of patent but before the expiry of a period of one year from the date of publication of the grant of patent. Any interested person can do this. Again the Ordinance does not prevent a person who had raised a failing opposition at the pre-grant stage to oppose the patent after its grant. There are 11 comprehensive grounds enumerated for post-grant opposition including patentability.

Thirdly, even if all efforts to oppose the grant of patent, either before or soon after the grant, fails, there exists the option of approaching the IPAB (Intellectual Property Appellate Board) under section 64 of the Act as amended by the Ordinance. Here again, any interested person may prefer a petition to the Appellate Board for revoking a patent on any of the 17 grounds enumerated therein. Needless to say, patentability is one of the grounds on which the patent may be revoked.

Finally, if a competitor is found to manufacture a patented drug and the patent holder had filed a suit for infringement against the competitor, all the grounds available under section 64 for revoking a patent may be raised as a counter-claim in a suit for infringement before the High Court and the High Court, if it deems necessary, has the power to revoke a granted patent.

Compulsory licensing

Chapter XVI of the Patents Act, 1970 deals with compulsory licences. Except for the inclusion of a new section 92A, the provisions on compulsory licensing under the Act have remained untouched. The grant of compulsory licenses, even before the Ordinance came into force, was riddled with technical absurdities. Under section 84 of the Act, an application for the grant of compulsory licence can be made to the Controller of Patents only after the expiration of three years from the date of the grant of a patent. In a world where diseases spread freely beyond all geographic barriers, a monopoly to manufacture and market a life saving drug for three years can result in colossal loss of human lives. The section also requires the person making the application to set out the nature of interest and provides an opportunity for the patent holder to oppose the application. These provisions impose unwarranted difficulties in seeking a grant of a life saving drug and unnecessarily delays the process. The final say, however, remains with the Controller of Patents who shall decide the terms of the grant of compulsory licence.

The grant of compulsory licence is available only for drugs that are patented under the Act. It does not provide for compulsory licensing of drugs patented elsewhere. This loophole has been exploited by many pharmaceutical majors who now prefer to export their drugs into India and have chosen not to apply for a patent in India.

Moving ahead

The Ordinance has only brought into effect an inevitable change that India, as a founding member of the WTO, had agreed to 10 years ago. Due to India's international obligations and the possible threat of sanctions, the industry stands very little to gain in seeking for changes in the Ordinance. The industry should look at the flexibilities provided within the patent system and the WTO and devise ingenious ways to apply and interpret them. By doing so, it would be conforming its practices with the Doha Declaration on Pubic Health which allows a Member Country to interpret and implement TRIPS Agreement in a manner supportive of its right to protect public health and to promote access to medicines for all.