Disquiet over a new regime

Print edition : December 19, 1998

The Government is all set to rush through Parliament the Patents Act Amendment Bill, marking a transition to an international regime of intellectual property rights with profound implications for India.

FOR India, the subversion of the parliamentary process to accede to a new world trade order under the World Trade Organisation (WTO) was the hallmark of the entire process of negotiations under the Uruguay Round of GATT (General Agreement on Tariffs and Trade). The centrepiece of this was the new international system of protecting intellectual property rights (IPRs), called TRIPS (Trade-Related Intellectual Property Rights), which mandates granting of product patents in all fields. The same tendency to subvert the democratic process continues to be in evidence as the country transits to an international IPR regime that will have profound implications for domestic industrial and research and development capabilities.

Under Article 70.8 of TRIPS, an amendment to the Indian Patents Act, 1970 is mandated so that applications for product patents for inventions in pharmaceutical and agricultural chemical (P&AC) fields can be filed from January 1, 1995 (this is not allowed under the Act in its present form) - the so-called 'mail box' provision. Product patents against these applications have to be granted or rejected on or before January 2005 as per the patentability criteria of a TRIPS-compatible amended Act. The patents will be effective for a period of 20 years from the date of application. In the interim, as per Article 70.9 of TRIPS, the country has to give exclusive marketing rights (EMRs) for a period of five years to those patent applicants who demand EMRs after satisfying four basic conditions - the so-called 'pipeline protection' provision pending grant of formal patent protection.

The unseemly and hasty Cabinet decision on November 23, after a November 18 meeting failed to arrive at a consensus on the issue, to adopt the route of EMRs in transiting to a full product patent regime, appears all set to be concretised in the form of the Patents Act Amendment Bill, 1998, which is to be introduced in Parliament in the third week of December. Trade in the area of P&AC is largely controlled by big multinationals, and given the huge Indian market the stakes involved in getting the new regime in place in India are very high.

The reason given by the Government is that it is committed to making the Indian Patents Act, 1970 TRIPS-compatible by April 1999 in the light of a verdict against India in the Dispute Settlement Panel (DSP) of the WTO on complaints of TRIPS non-compliance filed by the United States and the European Community (Frontline, December 18, 1998). Given that the Budget session of Parliament would provide the Government enough time to act on the bill before that date, the compulsion to push it through in the current session amidst mounting opposition seems unconvincing. Moreover, considering that the report of the Parliamentary Standing Committee under Dr. Ashok Mitra constituted on June 5, 1998 to look into the issues related to India's commitments to the WTO was awaited, the interpretation that the move to push through the bill was aimed at undermining the parliamentary process becomes inevitable. Significantly, the committee's report was tabled in Parliament on December 4.

THE Narasimha Rao Government issued an ordinance on December 31, 1994, on the eve of the WTO Treaty taking effect, from January 1, 1995, enforcing amendments to the Indian Patents Act.

The bill to convert the ordinance into an Act, called the Patents (Amendment) Act, 1995, failed to pass muster in the Rajya Sabha after the lower House adopted it, and the ordinance lapsed when the Lok Sabha was dissolved on May 10, 1996. The filing of cases by the U.S. and the E.C. in 1996 followed the ordinance's provisions - the mechanism for granting EMRs and the 'mail box' facility to receive patent applications from January 1, 1995 - becoming legally invalid with no subsequent legislative provision being provided. However, as has been submitted by the Indian Government to the DSP, the 'mail box' provision has been administratively operational and as of January 31, 1998, 2,212 applications have been received and none of them has been rejected. According to the convener of the National Working Group on Patent Laws (NWGPL), B.K. Keayla, nearly 3,000 applications have been received so far in the 'mail box' for pipeline protection.

All indications from parliamentarians are that the draft bill would be virtually the same as the one introduced in 1995. The implication of this is clear. Although the Bharatiya Janata Party had opposed the bill in 1995 along with the Left, the latest move is obviously driven by political expediency. As the 1995 bill has not been altered substantially, the Congress(I) would have no option but to support the passage of the bill in its present form. Obviously, the rest of the Opposition cannot block the bill. There is a growing opinion among experts against granting EMRs because EMRs confer monopoly of the worst kind on the right holder, albeit for a period of five years. First, the EMR holder cannot be obliged to produce the product domestically, nor can any domestic producer be enabled to produce the product over which an EMR is held. In short, there is no provision for examining an EMR application as is the case with a patent application. An EMR applicant "shall be granted" EMR if he or she merely meets the following criteria: 1.That patent application has been filed in respect of that product in another member-country of the WTO after January 1, 1995; 2. That the other WTO member has granted the patent; 3. That the other member has approved the marketing of the product; and 4. That India has approved the marketing of the product.

"Marketing approval" would only require that basic data (on environmental impact, toxicity and so on) be provided. Therefore, even if the patent application were to be rejected between January 2000 and January 2005 for not meeting the patentability criteria under the amended Act, it would have enjoyed an exclusive (monopolistic, by definition) marketing right until the date of rejection. The patentability criteria in another WTO member-country, say St. Lucia, need not necessarily be the same as in India. According to the American Pharmaceutical Manufacturers Association, PhRMA, in 1996 the U.S. Food and Drug Administration approved a "record" number of 53 new drugs and increased its approval of new biologics from two products to nine. Indeed, the president of the Organisation of Pharmaceutical Producers of India (OPPI), the association dominated by multinationals, posited before the Parliamentary Standing Committee (1993-94) that only between 15 and 20 molecules are introduced each year internationally.

If this be the case, it is clear that most of the 3,000-odd applications for patents must be for formulations, or for frivolous claims that in reality would not be patentable. So if EMRs are claimed for these, the Indian Government would be forced to grant them because patents for these could have been obtained after January 1995 in some country where the examination is not stringent. It is also of interest to note that, although no application for an EMR has yet been received, the number of applications for "market approvals" with the Drug Controllers of the States and Centre has grown suddenly. Since 1995, about 300 such gazette notifications have been issued which means a substantial number of these could be securing EMRs.

Three separate points of view were aired before the parliamentary committee: at one end is the view that, given that India had right from the beginning expressed reservations about the transitional arrangement enshrined in Articles 70.8 and 70.9, it should continue to maintain that the issue be referred to the Ministerial Conference of the WTO scheduled to meet in 1999 to review the organisation's experiences since its inception. At the other end is the fatalistic acceptance of the patents regime and a fear of the adverse impact of possible retaliation by developed countries. Votaries of this view want the Government to amend the Patents Act immediately to grant EMRs.

Falling between the two positions is a point of view, which has apparently been expressed by a number of witnesses, that the Government should agree to the introduction of product patents across the board and at the same time explore the windows available to developing countries under Articles 7 and 8 of the Treaty to protect public and national interest. These provisions, it is argued, could be translated to provide Compulsory Licensing and Licence of Right provisions in the amended Patents Act.

ALMOST concurrently, a non-governmental effort by the NWGPL to initiate a public debate on the issue, in the form of a Quick First Report of People's Commission on Intellectual Property Rights (PCIPR), was released on December 9 in New Delhi. The PCIPR was set up by the NWGPL on October 22. According to Keayla, it was set up because the Government had ignored the Working Group's pleas and failed to set up a National Commission to examine the issues relating to IPRs and to work out an approach towards conforming to the TRIPS Agreement. The members of the People's Commission included eminent persons such as Justice V.R. Krishna Iyer, physicist Professor Yash Pal, economist Prabhat Patnaik and agricultural scientist Professor S.K. Sinha.

The Quick First Report discussed the impending moves to amend the Patents Act and echoed the concerns of the parliamentary committee that the country was being rushed into a situation, which had very serious implications for the people, without an informed national debate. "If Parliament is to get stampeded into enacting legislation because the executive has committed itself to such legislation, then the latter is encroaching upon the powers of the former. It is the case of the executive serving the legislature with a fait accompli," the Commission observed. Cautioning Parliament against granting EMRs, it pointed out that most developing countries had chosen not to follow the EMR route but rather the patents route with appropriate safeguards such as compulsory licensing provisions. Apparently, only Pakistan, Tunisia and Morocco have chosen the EMR route.

While the Commission rejected outright the EMR option, the report emphasised the fact that there were avenues available to choose an appropriate strategy of approaching the TRIPS Agreement. It outlined two such. The first one argues that the Agreement demands only the availability of a mechanism for receiving applications for product patents legally. This calls for a simple amendment to the Indian Patents Act, which will make product patents allowable for P&AC products by April 19, 1999 and retain the rest of the 1970 Act mutatis mutandis so that applications received have legal sanctity. This alone (namely, a legal provision for 'mail box' facility) is demanded of by Article 70.8, it is argued.

Before examination of the applicants begins on January 1, 2000, a comprehensive piece of legislation that incorporates suitable provisions can be promulgated even if they are not TRIPS-compatible at present. The Government ensure that these provisions are made part of TRIPS during the Review Conference. The date from which patents will be granted need not be spelt out right away; it could be any date after January 2000, on the basis of the amended Act. The tenability of this package is argued on the basis of the precedents set by Brazil, Argentina and China (which, although not formally a WTO member, has TRIPS-compatible law under a bilateral understanding with the U.S.). All of them have introduced product patents and none has introduced an EMR. Their amended laws provide for compulsory licensing, which entail that if a patentee does not work the patent by producing in the country, and if some other manufacturer wishes to produce the same domestically, the patentee should grant permission on payment of a reasonable and mutually agreed fee, failing which the state has the authority to grant a licence and fix the magnitude of compensation to the patentee.

Advocates of the second strategy argue that the choice between an EMR and a product patent is actually no choice. It is pointed out that the so-called windows under Articles 7 and 8 are too general because Article 8 explicitly states that any promotion of public interest and prevention of abuse of IPRs has to be done in a manner that is "consistent with the provisions of the Agreement". This amounts to a Catch-22 situation because it is these very provisions that are against public interest. To be consistent with the Agreement, crucial sections of the Indian Patents Act, which have protected the country's national interests till now, will have to abandoned, it is argued.

In the light of the divergent opinions, both the parliamentary committee and the Commission have strongly urged that a piece of legislation that can adversely impact on public interest should not be rushed through. They have urged that the widest possible publicity be given to the three points of views and the final decision be made only after a thorough discussion in Parliament. "The present practice of reaching decisions, away from the glare of public discussion and almost surreptitiously, should henceforth be discouraged," the parliamentary committee observes.

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