Product Patent Regime in the Indian Pharmaceuticals Industry

That he the inventor, ought to be both compensated and rewarded …will not be denied …it would be a gross immorality of the law to set everybody free to see (or use ) a person’s work without his consent and without giving him an equivalent. [1]

In keeping with the aforementioned, Intellectual Property Laws, particularly patents, world over are formulated with a view to uphold the basic principle of one of Moses’ Commandment – “THOU SHALL NOT STEAL”. This is on account of the fact that an inventor’s work is invaluable to the society and to deny reward and compensation to him would be grossly unfair.

Introduction

As with all forms of protection for intellectual property; the aim the patenting regime is to encourage economic and technological developments and advancement by rewarding intellectual creativity. The word patent means the exclusive privilege granted by the sovereign authority to an inventor with respect to his invention. [2] According to the UN definition, a patent is a legally enforceable right granted by countries government to its inventor. [3] The term has been defined under Section 2(m) of the Indian Patents Act, 1970 (hereinafter “the Act”).

Patent is mainly granted for product and process patent. Granting process patent means patenting the particular process or method, by which a certain product has been manufactured. In such scenarios, the end product is not patented, however, the manufacturing process is. While, product patent confers the exclusive right to patentee to prevent third parties, who do not have his consent, from the act of making, using, offering for sale, selling or importing for those purposes that product. [4] The Act earlier granted only process patent in food, medicines and chemicals but subsequently, certain amendments were made to provisions of the Act in order for India to meet its obligation under Agreement on Trade Related Aspects of Intellectual Property Rights (hereinafter “the TRIPS”) and conform to the standards as laid down by it.

India And TRIPS

India’s accession to the WTO brought obligations to implement the TRIPS, changed the conditions that had seen the Indian pharmaceutical industry take roots. [5] That is to say, compliance with the WTO regime mandates all the member countries to amend their national legislations to bring it in conformity with its provisions. Transitional periods were set for the members to introduce legislation complying with the obligations under TRIPS- for developing countries, like India, the deadline for complying with TRIPS was the year 2000 and by virtue of Article 65.4 of TRIPS, a special transitional provision of an additional five years was provided for those countries that did not grant product patents.

At the time of coming into force of TRIPS, the Act directly contravened its Article 27 as the provision requires the member countries to make patents available for any inventions, whether products or processes, in all fields of technology without discrimination, subject to the normal tests of novelty, inventiveness and industrial applicability. It is also required that patents be available and patent rights enjoyable without discrimination as to the place of invention and whether products are imported or locally produced. [6] However, it was not so in India as the product patent was not granted for all products including medicines. For the pharmaceuticals industry, the critical issue was the (re-) introduction of the product patent regime and the limitations that this change has imposed on its ability to produce technologies through reverse engineering. It was widely held that the future prospects of the industry hinged critically on the ability of the policy makers to exploit the flexibilities that existed in the framework provided by TRIPS. [7]

Amendments

In India, three amendments of 1999, 2002 and 2005 were enacted to bring the Act in conformity with the provisions of the TRIPS. The Patents (Amendment) Act, 1999 brought about two significant changes with respect to product patents in India: firstly, it introduced Exclusive Marketing Rights (ERMs), [8] and secondly, it introduced what came to be known as the ‘mailbox facility’ or ‘pipeline protection’ whereby applications for pharmaceutical and agro-chemical product patents were accepted during the ten year transition period and a filing date was assigned to each. [9] At this time there was no product patent for pharmaceuticals, they were covered by process patent only. In the case of Cadila Pharmaceuticals Ltd. v. Instacare Lab. Pvt. Ltd., [10] it was held that what is patented is the process and not the combination drug itself.

The Second Amendment brought the Act in conformity with all the substantive provisions the TRIPS, with the exception of product patent protection for pharmaceuticals as an additional transition period of five years was applicable. The key issues included re-defining patentable subject matter, extension of the term of patent protection to 20 years and amending the compulsory licensing system. [11]

The Third Amendment, the Patent (Third Amendment) Act, 2005, was the most significant one as it had made India fully TRIPS compliant by inaugurating an enforceable product patents regime under Article 65(4). [12] It repealed the controversial Section 5(1) of the Act thereby paving the way for product patents in the area of pharmaceutical and other chemical inventions. Consequently, it was feared that with the introduction of product patents for pharmaceuticals, there will be a steep rise in drug prices and an adverse impact on access to important drugs. [13]

The Amendment broadened the scope for compulsory licenses to include situations other than medical emergencies. Compulsory licenses are now available for the manufacture and export of patented pharmaceutical products to any country having ‘insufficient or no manufacturing capacity’ in the pharmaceutical sector for the concerned product to address public health problems, provided that compulsory licenses have been granted by the importing country “or such country has by notification or otherwise allowed importation of the patented pharmaceutical product from India.” [14] With this amendment dawned the era of product patents in India. The Indian Pharmaceutical Alliance (IPA) noted that it had struck a balance between the consumers’ interest and that of innovators. [15]

Further, Section 3(k) of the Act excluded “a computer programme per se” from the scope of patentability. This exclusion met with conflicting interpretations at the patent office, with some examiners granting patents to software combined with hardware or software with a demonstrable technical application of some sort. [16] The 2004 Ordinance therefore qualified this exclusion by stating that software with a “technical application” to industry or when “combined with hardware” would be patentable. [17] Owing to vigorous opposition from the free software movement, [18] this provision was removed from the Act. The earlier position under the Act that a computer programme per se is not patentable now prevails.

EMRs which provided a means for accepting patent applications for pharmaceutical products until December 31, 2004 had been revoked under the Amendment. [19]

The Amendment also modified and added certain new definitions. However, new invention [20] which has been added is a debatable feature in the Act on two counts, firstly, according to the authors the Act already had a definition of invention [21] which clearly lays down the criteria for a valid patent [22] which contains the word new, the presence of this term is sufficient for statutory and interpretative purposes and so the Amendment brings out ambiguity in the legislative intent and hence in interpretation. Secondly, the standard of novelty is not consistent throughout the Act. Section 25 of the Act provides grounds under which patents can be opposed. [23] This inconsistency means that a competitor of the patent applicant would not be able to successfully oppose a patent if the invention is known or used in any part of the world except for India.

The Amendment further amended the definition of “inventive steps” [24] in order to raise the standard for inventive step and put a check on the granting of patents with frivolous claims by having the requirement that the invention involve a ‘technical advance’ or have an ‘economic significance’ of some sort. The Act also provides a new definition for a “pharmaceutical substance” as “any new entity involving one or more inventive steps”. This definition is quite broad and definitely has bearing on determining patentability for pharmaceuticals in India.

The Amendment has also introduced certain procedural changes which have put in place a multi-layered scrutiny mechanism which the product of the applicant must undergo before being granted protection under the Act. Firstly, it has provided for the publication of patent applications. [25] Secondly, it has provided for examination of the patent application at the request of the applicant or any interested party, [26] and thereafter consideration by the Controller of the report prepared by the examiner. [27] Thirdly, it has revamped the procedure by which one could oppose the grant of a patent and provides for both pre-grant and post-grant opposition. [28] The Amendment introduced a post grant opposition mechanism for the first time. Within a year of the patent being granted, a ‘person interested’ can challenge the issued patent on grounds that are identical to the grounds available at the pre-grant opposition stage. [29] Thus, the Amendment has introduced a gruelling procedure of examination and opposition before the product of an applicant may be granted a patent under Section 43.

Judicial Pronouncements Post-Amendment

The question whether the Act is finally TRIPs compliant was put to test in the landmark case of Novartis AG v. Union of India, [30] before the Madras High Court. Patent for imatinib mesylate sold under the trade name Glivec and used for curing Leukemia was sought in India. The Controller of Patents rejected patent application holding that the subject matter of the invention was non patentable. [31] The two main issues which came up before the court were that the Act as amended in 2005 did not comply with the TRIPs agreement and that Section 3(d) of the Act was unconstitutional. According to the Controller there was no enhancement in the known efficacy of the substance and hence not patentable. On the other hand, the Drug Company Novartis argued that the product had been granted a patent in most countries and it deserved a patent protection by virtue of Article 27 of TRIPs.

After hearing the parties it was held that High Court was not the right forum to be approached as there was an alternative efficacious remedy available in the form of Dispute Settlement Body of the WTO. Moving further the court held that the amended Section 3(d) was not in violation of Article 14 of the Constitution of India and was not vague or arbitrary, and did not confer uncontrolled discretion to the Patent Controller. The Court also held that it was inserted with the sole motive of preventing the ever-greening of existing patent products or processes. The concept of ever-greening or renewing product patents by bringing in minor changes in properties or use has been recognised in other countries as well but is protected indirectly through different mechanisms. Other countries like USA have adopted legal principles like doctrine of inherent anticipation [32] , doctrine of double patenting [33] and patent misuse doctrine [34] for patenting derivatives and models like ‘purpose limited product claim’ [35] for patenting new use for patented products. [36] In the matter, the Madras High Court interpreted the term ‘efficacy’ as therapeutic efficacy. The issue is still not settled since the extent to which efficacy should be achieved for patent on derivative is not objectified and no criterion has been provided for it. [37] The matter now is pending with the Supreme Court of India.

While the Madras High Court determined the issues of jurisdiction and constitutionality, the Intellectual Property Appellate Board (IPAB) heard the appeal of Novartis on merits and by virtue of its decision dated 26th June, 2009 rejected the patent application for Gleevic, which has been granted patent protection in almost forty other countries around the world. The Board specifically observed that the grant of product patent for Gleevic would create havoc in the lives of the poor and would have a disastrous effect on the society. [38]

In the recent case of F. Hoffmann-LA Roche Ltd. v. CIPLA [39] the product patent application of the plaintiffs for ‘Erlotinib’ marketed under the name ‘Tarceva’, which was a drug used to cure metastatic non small cell lung cancer, was opposed by CIPLA which proposed to release a generic version of the same drug, ‘Erlocip’. The plaintiffs commenced action against the defendants praying that they be restrained from doing the same. The Delhi High Court refused to grant an injunction in favour of the plaintiffs. The Court held that the element of public interest was not alien to the scheme of the Act as patents are granted to make the benefit of the patented invention available at reasonably affordable prices to the public. Since, price of the plaintiff’s tablet was Rs. 3200 which was beyond the reach of many patients as opposed to defendant’s product which was priced at Rs. 1600 per tablet it was held that public interest considerations would override the rights of the patent holder.

Conclusion

The Indian Pharmaceutical industry is in fact one of the largest among the developing countries and is ranked fourth in terms of its production and thirteenth in terms of its domestic consumption. This boom in this industry has been mainly on account of the various scientific inventions and the Act which facilitated industries in gaining expertise in the process of reverse engineering.

The 2005 Amendment brought with it a fledgling entrepreneurial culture of innovation among indigenous pharmaceutical and biotechnology firms; [40] it also highlighted issues and concerns for the Indian Patent regime and the Indian pharmaceutical industry. It can be said that the new patents regime is neither the fully-westernized panacea hoped for by its pro-TRIPS advocates nor the unmitigated disaster for the Indian public predicted by its fiercest critics. [41]

Even the pharmaceutical industry is split whether the Amendment is in favour of the Indian market or not. On one hand, many companies may face hardships with respect to the generic drugs as the product patent regime will make India dependent on the multinational companies for technology and for permission to produce the patented drug. Exorbitant prices will be charged and the Indian pharmaceutical industry will become subservient to the MNC’s. Even though the domestic Research & Development intensity has improved during the later part of the 1990s, the level of investment has remained very low. [42] Thus, it is imperative that the indigenous capability with respect to R&D is developed to meet the global market demands.

On the other hand, some believe that this regime promises tremendous growth opportunities and many companies have already invested heavily on R&D ensuring they would not lag behind in the global market. There has also been diversification and investment into discovery and developing of novel drugs and healthcare products. [43] The introduction of product patents for pharmaceutical inventions and the consequent threat to an internationally renowned generic industry that has thus far ensured the supply of affordable drugs spurred widespread protests, both nationally and internationally, to an extent never before witnessed in the annals of intellectual property law making in India. With the pharmaceutical companies having been awaken from their slumber, and investment pouring in on R&D, pharma industry is just poised to grow further. Indian companies will have to examine their present strategy and strengthen their Research and Development units. Many foreign companies will outsource their research to India as India does not have scarcity of trained manpower to conduct research at lower costs compared to developed nations. [44]

The result is an Act that attempts to balance the competing interests of a variety of stakeholders, including domestic generic medicine producers, the domestic research and development community, foreign multinational pharmaceutical companies, civil society groups concerned with access to medicines and intellectual property lawyers. [45]