[Ip-health] IP-Watch-Special Report: Will India Bend To US Pressure On IP Rights?

Thiru Balasubramaniam thiru at keionline.org
Sat Jan 31 06:32:16 PST 2015


Special Report: Will India Bend To US Pressure On IP Rights?

<http://www.ip-watch.org/author/patralekha-chatterjee/> FOR INTELLECTUAL

It is no secret that the United States has been scaling up pressure on
India to adopt intellectual property measures similar to those common in
the United States and the European Union. But to what extent does India’s
new government led by the business-friendly Narendra Modi see eye to eye
with US official position? Can India, the “pharmacy of the world”, resolve
the friction between pharmaceutical patents and access to affordable
medicines without putting off foreign investors? The vitriolic and
polarising debate surrounding these questions has got a fresh lease of life
following US President Barack Obama’s landmark three-day visit to India
this week.

While Indian and American business moguls are bullish about the future,
Indian generic drug-makers as well as health activists within and outside
India are deeply anxious about the shape of things to come.


Obama was the first US President to be the Chief Guest at India’s Republic
Day Parade on 26 January, and the first sitting US President to visit India
twice. Mr Obama and Mr Modi touched on an expansive range of issues.
Political analysts in India point to two major breakthroughs in the wake of
Mr Obama’s visit — easing of the nuclear logjam besetting the two countries
and a big push in defence cooperation. The two leaders have carved out a
highly ambitious agenda for the future in which greater economic engagement
between the two countries will play a pivotal part.

Where does intellectual property rights, a long-standing sticking-point
between the US and India, figure in the list of bilateral priorities?

Arguably it did not figure as the most contentious issue in the public
discourse during Obama’s visit to India but IP-related issues, including
piracy of films and software, were very much on the agenda. It figured
prominently during the India-US CEO Forum attended by Modi and Obama, and
has been referred to in the Joint Statement (”Shared Effort; Progress for

The joint statement looks forward “to enhancing engagement on Intellectual
Property Rights (IPR) in 2015 under the High Level Working Group on
Intellectual Property, to the mutual benefit of both the countries” and
reiterates both countries’ interest “in sharing information and best
practices on IPR issues”, and reaffirms their “commitment to stakeholders’
consultations on policy matters concerning intellectual property

Of strategic importance is also the statement’s reference to the proposed
bilateral investment treaty, viewed in industry circles as an important
building block for expanding the relationship between India and the United
States. Health activists are suspicious of the proposed treaty. They say
that it could have a detrimental impact on the flexibilities and public
interest safeguards allowed presently under TRIPS and India’s patent law.

The joint statement notes that the leaders have “instructed their officials
to assess the prospects for moving forward with high-standard bilateral
investment treaty discussions given their respective approaches.”

According to reports in the Indian media
the US President flagged his concern about India’s IPR regime during the
India-US CEO Forum.

Recent public statements from other US officials, however, suggest that the
United States is not that unhappy about the direction in which India is
moving in the realm of IP. In its Special 301 Report for 2014, the Office
of the United States Trade Representative (USTR) had placed India on its
priority watch list and scheduled an Out-of-Cycle Review (OCR) for the fall
of 2014.

In his statement
the 27 January hearing on President Obama’s Trade Policy Agenda convened by
the Senate Finance Committee, US Trade Representative Mike Froman said,
“Use of the out-of-cycle review helped to secure commitments from India in
the 2014 Trade Policy Forum on a broad range of IP issues of concerns to
the United States and its stakeholders.”

“We’ve got a good dialogue going now with the new government on
intellectual property, and we’re committed to working to achieve concrete
progress in this area,” Froman told lawmakers during the recent
congressional hearing, according to reports in the Indian media.

There are other signals as well.

Patrick Kilbride, executive director, International IP, Global Intellectual
Property Center of the US Chamber of Commerce told *Intellectual Property
Watch* that “discussions around a bilateral investment treaty (BIT) are a
signal that our respective leaders are serious about taking the US-India
relationship to a new level. This is welcome news. BITs can be an
invaluable tool for providing legal certainty for investors, a factor that
is particularly important to investors in innovative industries where
up-front research and development costs can be extremely high.”

“We believe that the United States and India will increasingly recognize
that we share the same objectives of expanding commerce to improve the
welfare of all our people. In that environment, many issues including
intellectual property may not seem as challenging as they do today,”
Kilbride added.

Sections of Indian industry are elated about the broad direction in which
things are moving.

“IPR was one of the key issues raised and discussed at the India-US CEO
Forum,” Kiran Mazumdar-Shaw, Chairman and Managing Director of Biocon Ltd,
an Indian biopharmaceutical company, told *IP-Watch*. Mazumdar-Shaw was one
of the participating CEOs in the business forums during Obama’s visit to

“The US raised concerns around counterfeiting, piracy and Pharma,” she
said. “India has taken some major steps on the IPR front. The Prime
Minister has constituted an IPR think tank under the auspices of DIPP
(Department of Industrial Policy and Promotion) with a mandate to formulate
a National IPR Policy through stakeholder consultation. A joint committee
has also been set up between the two countries to discuss and resolve key
IPR issues. The perception and reality are very different. India is highly
TRIPS-compliant and the one compulsory licence that has been granted has
followed the provisions of TRIPS in doing so. Moreover a number of CL
applications have been turned down.” [TRIPS refers to the World Trade
Organization Agreement on Trade-Related Aspects of Intellectual Property

The BioCon chief asserts that “India’s IPR Regime needs to balance the
country’s needs of affordable access whilst providing IPR protection.”

“There are many MNCs guilty of ‘patent squatting’ by not marketing patented
drugs and denying patients access to life saving drugs,” Mazumdar-Shaw
continued. “On the other hand, Gilead Pharma has introduced a very
innovative ‘Open Licence’ model for its blockbuster hepatitis C drug Sovaldi
allows access to their patents on the payment of a modest royalty. The
model also allows its licensees to market its path-breaking Hep C drug to
90 developing world markets thus enabling affordable access to this
life-saving drug in India and the developing world. As an innovator, I am
in favour of a regime that provides patent protection. However, I am also
of the view that we must guard against the issue of frivolous patents.”

Ranjana Smetacek, Director General, Organisation of Pharmaceutical
Producers of India (OPPI), which represents multinational pharmaceutical
companies told *Intellectual Property Watch*that following on from Prime
Minister Modi’s September visit to the US and subsequent discussion on IP
rights under the India-US Trade Policy Forum in November, “the recent visit
by US President to India enhances the ongoing engagement between the two
countries on IPR. The proposed High Level Working Group on IP will mutually
benefit both countries.”

India’s generic drug makers view the evolving IPR landscape in India from a
very different perspective.

D G Shah, Secretary General of the Indian Pharmaceutical Alliance (IPA),
says he is deeply concerned about the Indian government conceding “patent
linkage” and “data exclusivity” to please what he describes as “a vocal
section of the US pharmaceutical industry.” The reference is to two of the
most contentious issues in the India-US conversation about IP.

”This could happen very fast, impacting access to medicines,” he told
Intellectual Property Watch. “These concessions may not wait for the
bilateral investment treaty.”

A note furnished by the IPA to the Indian side of the Indo-US CEO Forum
ahead of President Obama’s visit to India ( which *IP-Watch* has accessed)
flags concerns of India’s generic drug makers.

The background brief argued: “Firstly, they are using the US regime as
benchmark to evaluate India’s IP regime. But India has never agreed to
conform to the US standards. India has accepted international standards as
embodied in the TRIPS Agreement. The US is a signatory to the TRIPs
Agreement. India is fully compliant with it. Hence, these concerns are

“Secondly,” it says, “a cursory glance at patents granted in various fields
including pharmaceuticals, from 1 January 2005 to 10 October 2014 show that
82% of patents granted are to foreign companies. Thus, it would be
incorrect to say that India does not recognize patents or it discriminates
against foreign companies. They argue that protection and enforcement is
inadequate in India. This is not true. India has adequate laws for
protection and an independent judiciary for the enforcement of IP.”

Anand Grover, Director of the Delhi-based Lawyers Collective and a former
United Nations Special Rapporteur on the right to health, said: “There are
indications that the Indian government is changing its stand and taking a
favourable view to the US-demand for data exclusivity and patent linkage.
What is most troubling is that this move would only benefit foreign MNCs,
leaving Indian generics in the lurch and risking the health of millions of
patients in the bargain.”

A letter to the US President
on the eve of his visit to India by health activists around the world
reiterated that India’s laws fully comply with the WTO TRIPS Agreement, and
that millions around the world depend on affordable generic medicines that
would disappear if India acceded to US proposals, including many
beneficiaries of US-funded programmes. The open letter also echoed
activists’ concern about proposals for a bilateral investment treaty with

Indian officials privately say that India is unlikely to go in for changes
in the patents law in the immediate future. However, there is speculation
in Delhi about the possibility of changes through administrative rules. At
this point, there is no official confirmation on whether this is likely,
and how. Given the sensitivity of the issues, the controversy is not going

“Lawmaking through rule-making can be legally challenged,” Médecins Sans
Frontières (MSF) Access Campaign’s Leena Menghaney told *Intellectual
Property Watch*.

“The US model BIT [bilateral investment treaty] of 2012 is very clear to
the extent that it contains provisions investor-state arbitration. This
allows private actors to challenge India’s IPR measures. So even if BITs do
not go beyond the common minimum standards of the TRIPS agreement, the very
fact that intellectual property is treated as investment and by binding
such BITs to TRIPS standards itself can lead to a host of legal challenges.
Primarily, even while member states of the World Trade Organization may not
be interested in bringing disputes against other member states, BITs can be
used to bring disputes in investor-state arbitration. But as scholars
working in this area have pointed out, there is not so much in common among
what US and India think about the utility of BITs. How far India will
concede to US demands needs to be seen. I wouldn’t speculate at this
moment,” Yogesh Pai, Assistant Professor of Law at the National law
University, Delhi, told *Intellectual Property Watch*.

“Until we don’t tinker with the fundamentals of policy and the legislations
per se, I don’t think there is much that can be done to harm the balanced
system that Indian patent regime envisages. For example, look at the case
of Sofosbuvir
The government cannot meddle where the law is there. But wherever there is
administrative discretion without proper guidance in the law/rules, there
are surely changes that are bound to happen. This I wouldn’t see as a
radical shift but would call it as policy manoeuvring,” said Pai.

The denial of a patent to pharmaceutical company Gilead for the hepatitis C
drug Sofosbuvir is cited as “an example of how important India’s law is to
encouraging price-lowering generic competition,” in a MSF statement
(Gilead has since appealed the patent office decision.)

Pharma companies both in the United States and in India are eagerly
watching to see what happens next in India’s IP eco-system. So are health

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