Legal Forum: Patents Pending - Pharmaceutical Executive

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Legal Forum: Patents Pending
India's new patent law is politically unpopular and still needs Parliament's confirmation. But it's shaping the future.


Pharmaceutical Executive


For example, TRIPS has allowed other developing nations to delay before extending blanket patentability to pharmaceutical compounds. India, presumably, could have done the same but chose not to. Particular categories of drugs necessary in environments where there are high HIV rates and other endemic problems could have been exempted from patentability. The current legislation doesn't appear to be fully sensitive to those concerns. So there is the perception that the government is taking a pro-Western, pro-investment angle, and that offends local sentiment, particularly in a country where the average annual income is still in the hundreds of dollars per year range—that's equivalent to the cost of taking one of these drugs for one month.

As a result, there will likely be some modifications before the new patent law is fully enacted. AIDS drugs will probably attract considerable attention. That is partly because some 5.1 million Indians are infected with HIV, according to the country's National AIDS Control Organization.

But there is another side of the issue, which has not escaped the attention of AIDS activists: India's generic versions of on-patent anti-retroviral (ARV) drugs are a vital part of AIDS treatment throughout the developing world. The new patent law threatens to cut off the supply. (The new law does have a compulsory license provision that would in effect override patents in a medical emergency. But it is not clear how or whether the government intends to use compulsory licensing in relation to AIDS drugs.) It is possible that we will see Indian pharmaceutical companies set up independent offshore subsidiaries to supply copies of patent-protected drugs to developing markets, but it is too soon to tell. In any event revenue from such subsidiaries may have to remain outside of India.

Why not take advantage of some of the carve-outs offered by TRIPS? It appears that what the government wanted was a strong piece of legislation from which they could work: It's easier to write additional carve-outs to satisfy special-interest groups later in the game than it is to start from the exceptions and keep moving.

It's a bargaining tactic any parent knows: If you tell a child, "You can't have any candy today," he understands that. He might try to argue, but your starting position is strong. If instead you say, "You can have one piece of chocolate, no more than two ounces," pretty soon you're negotiating what kind of candy bar he can have and whether it's four or two ounces.

Full Membership Pharma companies will, of course, want to add India to the list of countries in which they patent future products. In most cases they will also want to go back and apply for Indian patents on drugs patented since the cut-off date of 1995, if its international filings allow such a reach-back. It appears that India's patent officials plan to wait and see what the final legislation looks like and are not currently accepting patent applications under the decree.

As a practical matter it will be very straightforward for companies to begin filing in India. After all, pharma companies have been filing patents in India for years—just not product patents for drugs. Typically, when a pharma company files a US patent, it also files with the Patent Cooperation Treaty (PCT), an entity to which a hundred or more countries belong. The PCT application serves as a place holder for all member countries—including India. Once there is an enacted law in India, the company can take its US application and refile it in India, the way it would do with any other nonprohibited technology.

India today is a country that is entering its next stage of development. The boost that the country's economy has experienced from the electronics and software and pharmaceuticals sectors has been enormous. India's goal now is to leverage those early starts and use them to give the country and its economy a fuller membership in the world community.

Opposing Views India's new decree on patents is backed by at least a substantial minority, but there is strong opposition. A comprehensive version of the case against the law is contained in "Report of the Fourth Peoples' Commission on Review of Legislations Amending Patents Act 1970," created by a commission chaired by former prime minister Shri. I.K. Gujral (and available at http://www.gcaipa.org/). Here are some highlights ťON POWER: "The conferring of monopoly rights over intellectual output . . . has the additional dimension of . . . ensuring that the third world economies, even the large ones among them which are capable of doing otherwise, remain technologically dependent on the first world." ťON THE OLD LAW: "The 1970 Patents Act, adopted after years of deliberations . . . was hailed as a model Act not only in other third world countries but among progressive intellectuals in the first world itself. With its denial of product patents in certain sensitive sectors of economy, its provisions for compulsory licensing, its fixing of the patent term at seven years for three particular sectors, and a host of other measures, it succeeded to a great extent in providing a balance between the presumed need for some monopoly rights for ushering in inventions, and the interests of the people." ťON TRIPS: "The TRIPS Agreement did not represent some sort of an 'ideal' or 'optimum' regime. It represented nothing intrinsically sacrosanct, only an imposition reflecting, in the last analysis, the unequal bargaining strengths of the participants in the Uruguay Round."

Nagendra Setty is a partner with the law firm Jones Day. He can be reached at (404) 581-8560 or
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