Saturday, July 01, 2006

Exclusive Marketing Rights — The importance of opposition proceedings

This article was published in The Hindu Business Line on Friday, Jun 30, 2006.

No Patent Office, howsoever well-equipped, can keep pace with the rapid strides at which science grows and technology proliferates. The knowledge should essentially come from the competitors who have expertise in that particular field of technology. The grant of EMR, the proceedings for infringement and rejection of patent application have raised uncomfortable issues.

A string of infringement actions and two contradicting High Court decisions later, the Controller of Patents has rejected the application for the grant of patent to Gleevac, a life-saving anti-cancer drug manufactured by Novartis.

It was pointed out in these columns (`Exclusive Marketing Rights — a monopoly without a right', Business Line, March 20, 2004) that the EMR (Exclusive Marketing Rights) holder, pending the processing of its patent application, would get a free hand to exclusively market the product without any competition .

On January 25, 2006, the Controller of Patents refused to proceed with the patent application for the above drug pursuant to opposition proceedings initiated by the competitors.

As apprehended, with the rejection of patent application, the foundation on which the EMR was granted stands demolished, leaving questions on what happens when the law provides for a monopoly in the present, anticipating a right that may or may not be granted in the future.

The grant of EMR, the interim proceedings for infringement before the High Courts and the eventual rejection of patent application have raised uncomfortable issues with disconcerting regularity.

Even before the cries against granting a patent-like right without following a patent-like procedure could die down, the incongruity of differing interim reliefs, one by the Madras High Court and the other by the Bombay High Court, on the same set of facts, fuelled a further furore.

The rejection of the patent application was no less tumultuous. Consider the following three issues to understand how the first-ever contested case on pharmaceutical patents in the post-WTO era has been handled.

Why did not the preliminary examination before the grant of EMR reveal what the Controller had determined later with regard to patentability of the invention?

One of the grounds for rejecting the patent application was that the drug was not an invention under Section 3(d) of the Patents Act, 1970. Section 24A of the Act (now omitted) empowered the Controller to refer the patent application to an examiner for making a report on whether the said invention came under the excluded category of inventions detailed in Sections 3 and 4 of the Act.

Ideally, the examination under Section 24A should have revealed that the drug was not a patentable invention under Section 3(d) and it was only a new form of a known substance as held later by the Controller. This lapse could be directly attributed to the lack of opposition procedure before the grant of EMR.

Why did not the courts look into the arguments with regard to validity of the invention, raised by the defendants in the infringement suits? True, the courts are not obliged to look into the validity of a grant at the interim stage. But where the grant was based on a summary procedure devoid of any opposition mechanism and where the courts have been urged with details of invalidity, the courts could have considered the issue of validity as a preliminary issue (the Bombay High Court did consider the issue of validity is some detail).

Ironically, the patent application has now been rejected by the Controller on the same ground on which a revocation was prayed for before the High Courts.

Why did not the Patent Office determine, in the first instance, that the conditions for the grant of EMR were not satisfied?

No EMR would have been granted if the basic conditions for the grant were not satisfied. In the opposition proceedings before the Controller it was alleged that the application filed in India on July 17, 1998, as a convention application, claimed Swiss priority, when Switzerland was not a convention country on that date.

The Controller agreed with the merit in the above contention. This raises critical questions about the information supplied at the time of application. More so, the allegation that the EMR holder had misled the Patent Office was specifically raised before the Bombay High Court.

Every patent discloses information about the area in which the invention is claimed. The patent system — a term that signifies the conglomeration of all the patents granted, pending applications and information disclosed through patents or otherwise amounting to prior art — can itself be considered as an information bureau providing scientific and technological information to the world at large. Opponents to a patent play the crucial role of supplying information that is not available to the Patent Office.

The summary nature of the grant of EMR appears to be the root cause for the above anomalies. To begin with, the nature of grant of the EMR was summary, discreet, discretionary and without any redress mechanism for opposition of such a grant. The summary nature ensured that the entire process was accomplished quickly without the fanfare of publication and the opposition that usually followed it.

Patent Offices are often criticised for incompetence and blamed for granting patents for things that ought not to be granted. No Patent Office, howsoever well-equipped, can keep pace with the rapid strides at which science grows and technology proliferates. The knowledge about an earlier invention or a disclosure should essentially come from the competitors who have expertise in that particular field of technology.

The procedure of opposition by peers is a process devised to overcome the information-scarcity that may affect the Patent Office.

As the EMR episode illustrates, taking away the process of opposition and advocating summary procedure for rights that confer a monopoly (like patents and EMRs) can create an imbalance in patent information and affect competition.

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