THE INDIAN PATENT REGIME: TRIPS IMPLICATIONS

1. THE INDIAN PATENT REGIME: TRIPS IMPLICATIONS SHAMNAD BASHEER FRANK H MARKS VISITING ASSOCIATE PROFESSOR GW LAW SCHOOL Washington College of Law 19 April 2007

2. STRUCTURE • 2005: Introduction of Product Patents for pharmaceuticals • Built in safeguards to ensure generic production • Are these safeguards TRIPS compliant?

3. INDIAN PATENT HISTORY • Product patent regime in pharmaceuticals till 1970 • No industry • Imported Drugs: High Prices • 1970 Patent Regime: No product patents • Organic Chemistry Skills • World Class Generic Industry • Resistance to TRIPS • WTO Mailbox Case • EMR’s: Very Few Grants (4/15) • 2005 Patent Act with many provisions to safeguard generics

4. INDIA’S NEW PATENT REGIME • 2005 Safeguards • Patentability Criteria: Section 3(d) (Novartis Dispute) • Strong Opposition Mechanism • Public Interest Groups participating in patent oppositions • Automatic Compulsory licensing for generics • Parallel imports

5. TRIPS: FRAMEWORK FOR INTERPRETATION • Vienna convention on the law of treaties • Article 31: Ordinary meaning in context • Article 32: If not, go to negotiating history • DSB Rule • A WTO Panel cannot add to or subtract from the covered obligations • Strict literal interpretation • Article 1 • Members shall be free to determine the appropriate method of implementing the provisions of this Agreement within their own legal system and practice.

6. THE GLEEVEC EXAMPLE LATER DISCOVERED BETA CRYSTALLINE FORM (1997) MAIN MOLECULE IMATINIB MESYLATE DISCOVERED IN 1992 PATENT REJECTED Held: Mere new form with no added “efficacy”. Therefore not patentable under sec 3(d)

7. INDIAN STANDARD FOR PHARMACEUTICAL INVENTIONS • Section 3(d) excludes: • The mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance….is not patentable. • What exactly does “efficacy” mean? • Factual Dispute (whether salt is 30% more bio-available?) • Novartis challenge that section 3(d) violative of TRIPS • Art 27 of TRIPS: • Patents shall be granted to all inventions, that are new, non obvious and have industrial applicability • Non obviousness standards are left to the discretion of member states

8. DIFFERENT TESTS AROUND THE WORLD • US test: “suggestion/motivation/teaching” being re-examined in the US in KSR vs Teleflex • Pfizer vs Apotex: salt selection “obvious” • UK test: Windsurfer analysis • EU test: “Problem Solution Approach”

9. PARALLEL IMPORTS IN INDIA: TRIPS COMPATIBLE? Section 107A: No Infringement: ……importation of patented products by any person from a person who is duly authorised under the law to produce and sell or distribute the product NORMAL PARALLEL IMPORT PROVISION INDIAN PROVISION ABDUL [GENAGRA] USD 10 ABDUL (Bangladeshi Exporter) SALE PRICE: USD 15 PFIZER [VIAGRA] COST: USD 10 ANAND (Indian Importer) PRICE: USD 20 PRICE IN INDIA USD30 ANAND (USD 15)

10. PARALLEL IMPORTS • ARTICLE 6: Nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual property rights. • What is “Exhaustion”? • How Flexible is TRIPS? • “We are all aware that the text of TRIPS is a masterpiece of ambiguity, couched in the language of diplomatic compromise, resulting in a verbal tightrope walk, with a prose remarkably elastic and capable of being stretched all the way to Geneva.” • Murasoli Maran, Minister of Commerce

11. COMPULSORY LICENSING • Section 11A of Indian Patents Act • Generics can continue producing drugs if they pay a “reasonable royalty” • TRIPS compatible? • What is “reasonable” royalty? • Local working (Brazil) • Valid under Paris Convention (treated as an “abuse”) • A Good way to encourage tech-transfer? • Will CL work? • Imperial chemicals industries ltd vs. Controller general (1977)--- patent expired. • 2005 Act: voluntary negotiations to be completed within 6 months likely to be more cases in future • Likely to induce Voluntary Licensing/Reduction in Prices

12. DATA EXCLUSIVITY: ARTICLE 39.3 OF TRIPS? • Members shall protect regulatory test data against unfair commercial use. • In addition, Members shall protect such data against disclosure….

13. DATA EXCLUSIVITY? • US, EU, Australia, New Zealand and Israel • BRUSSELS DRAFT: • …..unless the person submitting the information agrees, the data may not be relied upon for the approval of competing products for a reasonable time, generally no less than five years…

14. PERMISSIVE RELIANCE • Russia, Turkey, South Africa and India • Will Article 39.1 and 2 be rendered redundant? • Member states cannot...adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility. • Appellate Body Report United States - Standards for Reformulated and Conventional Gasoline, 1996

15. COMPENSATORY LIABILITY MODEL • US Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) • Adequate remuneration to be voluntarily agreed upon by the parties • If not, arbitration. • Cost sharing approach, where the second applicant shares the cost of generating the test data with the originator.

16. POINTS TO PONDER? • New Norms? • Patentability Criteria • Compulsory Licensing • Parallel Imports • Status as IDC (Innovative Developing Country) • Doha Declaration: • More policy analysis into TRIPS? • Will an action be brought? • CL (local working) • Data Exclusivity: Article 39.3 (FTA) • Parallel Imports • Countervailing considerations • WTO rulings in favour of India on subsidies/antidumping