India

INTRODUCTION

Intellectual Property refers to the creations of the human mind while intellectual property rights simply refer to those rights that protect creations of the human mind. These rights are vital in giving the inventors faith that their invention is protected. A similar problem with competitive pressure relates to third-party imitation including the use of techniques like reverse engineering especially within contexts like the pharmaceutical industry. Patents are legal rights provided to inventors to offer them exclusive control of their inventions and still provide penalties for infringement. Indian Patent Act, enacted in 1970 replacing the Colonial Patents and Designs Act of 1911, was also highly favourable for domestic entrepreneurs by providing a process patent regime and cutting the patent period to five years.

However, as the competition from abroad intensified, the changes were required. Through the formation of the World Trade Organisation (WTO) and the introduction of the Trade-Related Intellectual Property Rights (TRIPS) agreement that came in effect from January 1995, member countries were obliged to adhere to its laws. This limited the local firm in developing proprietary processes and extended the patent period to 20 years, which affected the intended Indian pharmaceutical industry. To align with TRIPS, India made two key amendments: that reluctantly endowed the ability to patent microorganisms and non-biological processes and introduced product patents for medicine. The first amendment was brought in January 2000 while the second amendment was brought in January 2005.

SECTION 3(D) OF THE PATENT ACT

It is necessary to indicate that at the initial stage, the General Agreement on Tariffs and Trade (GATT) never aimed to include the topic of the protection of intellectual property. Yet, during the Uruguay Round and with the formation of WTO along with the incorporation of the TRIPS agreement, the member countries were compelled to protect the pharmaceutical patents, though the "least developed countries" are not bound to do it. In the transition period between 1995 and 2005 applications had to be accepted and officially put in a 'mailbox', to be dealt with later. India which was one of the most vocal critics of the TRIPS agreement during the Uruguay round most particularly opposed pharmaceutical patenting.

Article 65.4 of TRIPS gave developing countries an extension of five years for those that did not have product patent protection before. India changed its legal system of patents three times, in 1999, 2002, and 2005 to correspond with the TRIPS standards. On the occasion of the transition period, India notified Exclusive Marketing Rights (EMRs) to fill the gap until complete TRIPS compliance is achieved. India used the whole interim period and postponed the implementation of pharmaceutical patenting until 2005 to accept applications following the mailbox since 1999.

Thus, the last change of the Indian Patent Act in 2005 included Section 3(d), which allowed only secondary patents in case of proven enhancement of the product's efficacy. Section 3(d) was specifically been designed to put a halt to 'evergreening', something that firms employ by making tweaks to their existing drugs to gain additional patent protection. The section holds that inventions that represent new forms of known substances cannot be patented if the new substances do not demonstrate better efficacy and the known substances include its derivatives such as esters, ethers, and polymorphs.

Section 3(d) was brought into operation in a famous litigation regarding Novartis which attempted to get a patent for its cancer-fighting drug Glivec in India in 1998. The Indian Patent Office refused the application based on prior publication followed by non-compliance to Section 3(d). Novartis contested the Section 3(d) policy claiming that it contravened the TRIPS deal and the Indian constitution as it was both nebulous and erratic. However, the Indian Supreme Court decided to dismiss the petition on the ground of jurisdiction that it had no prerogative to deliberate on specifics of international treaties while agreeing with the validity of Section 3(d) saying that it did not contradict the Constitution or the TRIPS Agreement's flexibility.

The Court said that as per Article 7 of TRIPS, member countries may adopt measures that are necessary to promote the social and economic welfare of their people, and as stated in Article 1 of the treaty, members have flexibility in translating the provisions of TRIPS. The High Court of Madras while elaborating the rule of Section 3(d) held that it intended to control evergreening and thereby deliver inexpensive life-saving medicines in compliance with the constitutional mandate of the government to secure the health of the citizens.

The Intellectual Property Appellate Board (IPAB) elaborated that the modified Section 3(d) insisted on greater creativity which would mean that what may be patented in other parts, may not be patented in India. The Hon'ble Supreme Court considered Novartis's patent claim under section 2(1)(j) and 2(1)(a) of the Patents Act analysing whether the drug comes under the ambit of a new product and an inventiveness. Thus, Novartis's drug did not satisfy the objectives of novelty and inventiveness and the application was dismissed under Section 3(d).

This case demonstrates India's willingness to curb the evergreening process as well as protect the true novelty inventions while extending them patent protection, consideration of public health impotent to proprietary rights.

COMPULSORY LICENSING

The main rationale behind the system of compulsory licensing in India is to meet public opinion and public health concerns. According to the Patent Act, it permits licensing only after three years from the date of grant of the patent, and even in this case, it is only under conditions of extreme necessity or national emergencies or situations of extreme urgency. Section 84 of the Patent Act sets out the circumstances, under which the possibility of compulsory licensing is allowed, namely, the failure to meet certain demands for the patented invention, the failure to provide the patented invention to the Indian public at a reasonable cost, and the non-commercial use of the patented invention in India. A patent may only be licensed compulsorily if compensation of equal value to the authorization is paid to the patent holder based on proven economic value.

The conference held in Doha in 2001, requests that compulsory licensing is not against the TRIPS agreement. The members argued that TRIPS was not meant to hinder member countries from adopting measures that could protect people's health and enhance access to medicines for all. The declaration also recognized each member's ability to set the terms for compulsory licensing and establish the circumstances that permit the exercise of such authority.

India specifically applied this mechanism after the implementation of the TRIPS mechanism in the well-known Bayer v Natco case in 2012. Pharma and healthcare major, Bayer Corporation, which is an American subsidiary of the German organisation. Bayer is the owner of the patent of an anticancer drug which is very costly and not easily available in India. The problem arose when a local generic firm Nacto Pharma Ltd. offered to manufacture the drug at significantly lower Rs 8,000 per month's supply than the Bayer which charged Rs 2,80,000/month and applied for a compulsory license. The Controller of Patents accorded the non-exclusive compulsory license to Natco as Bayer did not make this vital drug available to people at reasonable rates. The Nacto was to pay Bayer a royalty of 6% of the net sales of the drug.

This case illustrated how compulsory licensing applies to the realities of the Indian market to require affordable prices for necessary medical treatments, pointing out India's obligation to global agreements such as TRIPS.

EFFECTS OF CHANGES ON PATENT LAW

In the wake of the patent revolution of the pharmaceutical industry in 2005, there was a need to encourage competition and at the same time safety of patients. The new product patent regime substituted the process patent way and hence there was the possibility of formation of monopolies in the market. In India, dealing with monopolies is very important and is dealt under the Competition Law adopted in 2002. It treats matters such as mergers, collusion, and other conduct in the market that may trigger high drug costs. Intellectual property rights and market competition are two areas that need to be in harmony so that justice for the welfare of society and affordable prices of medicines can be served.

CONCLUSION

The Indian pharma industry is one of the top exporters of drugs. After the TRIPS agreement, essential factors such as Research and Development (R&D) and export intensity have helped to improve the sector drastically. This factor is directly related to the growth of the local generic industry which due to the Patent Act 1970 was allowed only for processes and not products and thus the generic firms could sell the patented drugs at cheaper rates. The Act also cut the range of the duration of the patent to five years.

However, due to the signing of the TRIPS agreement, changes were on the cards, and, product patents along with an increase in the number of years of patents to 20, affected the local generic players. Such effects were managed by the Indian government using two provisions of the TRIPS deal to their advantage. First, the new Section 3(d) was enacted to stop patents to drugs making insignificant changes to the existing drugs to delay or bar firms that came up with original drugs from retaining a competitive edge through 'evergreening' patents. This measure was expected to eliminate monopolistic trends and guarantee the market's diversification.

Second, a Compulsory Licensing system for any company outside India or the companies exploiting the patents by selling drugs at very high costs was also introduced. It guarantees that some vital medicines are available to the populace at affordable prices. Such measures have further strengthened India's leadership as the third-largest pharmaceutical sector in the world by volume, in a way, continues to strike a very fine balance between protecting patent rights on the one hand while, on the other hand, asserting competition and affordable market conditions.

REFERENCES

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The Evolution Of Patent Law In The Pharmaceutical Industry

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