Advantage India

The passing of the Patents (Second Amendment) Bill, 2002, by both Houses of Parliament is one more step towards complete compliance with the trips Agreement (Agreement on Trade Related Aspects of Intellectual Property Rights). However, further amendments would have to be incorporated to completely comply with trips provisions, since the bill does not provide for a patent regime for drugs, pharmaceuticals and agro-chemicals. India has time until January 1, 2005 to comply with this requirement of trips.

The Bill does comply with the trips Agreement insofar as:

The duration of the term of patent has been extended to 20 years for all process and product patents as are patentable under the existing Act (section 53) as well as those included in the present bill;

The scope of patentable inventions has been widened to include microorganisms and software;

The deposit of biological materials has also been included in compliance with the Budapest Treaty;

The bill has also relaxed the compulsory licensing (cl) requirements to the advantage of the domestic industry;

The inclusion of provisions that provide for obtaining regulatory approvals for patented drugs even during the duration of the patent;

Pharma companies have been allowed to import patented drugs from the authorised/licenced distributor of the patentee from anywhere in the world without changing the brand name;

The burden of proof in cases pertaining to infringement of process patents has been reversed and placed on the defendant.

There appears to be two different reactions to the present bill, though. The exclusion of product patents for drugs, pharmaceuticals and agro-chemicals in the bill is contrary to the expectations of both Indian and foreign pharmaceutical majors investing heavily in r&d. On the other hand, the large generic drug industry in India remains unaffected, since only about 10 per cent of the medicines in the world are under patent protection. In fact, none of the 279 drugs listed in the 1996 National Essential Drugs list released by the government is patent-protected.

There is yet another group within the industry, which is opposed to the introduction of a product patent regime, and is attempting to whip up public support by raising arguments about monopolistic practices leading to uncontrolled price rise.

The industry has accepted the inevitability of product patent regime from 2005 and is, therefore, trying its best to garner maximum advantage from the government even within a product patent regime. The bill as a whole augurs well for the pharmaceuticals industry.

The extension of the period of protection to all patents is of tremendous benefit to Indian patent holders. Similarly, the inclusion of microorganisms as a patentable subject matter would have a positive impact on the pharmaceuticals sector, which is investing heavily in r&d.

The relaxation of cl provisions, such as: the removal of the three-year restriction after the grant of the patent for the purposes of applying for cl; specifying the diseases for which cl shall be applicable (aids, hepatitis, tuberculosis, malaria and other epidemics), and the removal of the criteria of inadequate availability will make it far easier for the pharmaceutical industry to market patented drugs at affordable prices.

Allowing the pharmaceutical industry to commence with r&d and clinical testing, and to obtain regulatory approvals for patented drugs even during the duration of the patent is another welcome step. It enables non-patentees to commercially launch generics immediately on the expiry of the patent.

Similarly, permitting parallel importation of patented drugs enables the pharmaceuticals sector to take advantage of competitive price differentials in various countries bringing our norms at par with global practices.

Patentees seeking to enforce process patents would find it easier to do so since the burden of proof is now on the defendant to establish non-infringement.

Today, our pharmaceutical industry has moved into the r&d mode from the reverse engineering mode. Besides, it is in our interest to provide the necessary incentive to foreign companies to introduce new drugs in the Indian market. Although we still have time until January 1, 2005, an early implementation of the product patent laws would be only prove advantageous to India.

Praveen Anand is partner, Anand and Anand, known for its work on patents