[Ip-health] June 2015: WTO secretariat reports on India's Section 3(d) and compulsory licensing provisions - WTO Trade Policy Review - India

Thiru Balasubramaniam thiru at keionline.org
Tue Jun 2 06:45:54 PDT 2015


June 2015: WTO reports on India's Section 3(d) and compulsory licensing
provisions - WTO Trade Policy Review - India


http://keionline.org/node/2237

Submitted by thiru on 2. June 2015 - 15:29

On 2 June 2015 and 4 June 2015, the World Trade Organization (WTO) is
conducting a trade policy review of India. All members of the WTO are
subject to review under the Trade Policy Review Mechanism (TPRM). The TPRM
takes place in the "Trade Policy Review Body which is actually the WTO
General Council — comprising the WTO’s full membership — operating under
special rules and procedures" (Source: WTO, Trade Policy Reviews: Brief
Introduction).

During a previous trade policy review of India in September 2011, WTO
members asked India questions relating to patents and pharmaceuticals
including such topics as compulsory licensing, exhaustion, patentability
criteria and the protection of test data. The official minutes and the
record of questions and answers posed by WTO members at this current review
are expected to be published by the WTO 6 weeks from now (perhaps in the
middle of July 2015).

In preparation for India's sixth trade policy review, the WTO secretariat
prepared a report on India (WT/TPR/S/313) and published it on 28 April
2015. Pages 84 to 98 of the WTO secretariat report provides a concise
summary of India's current intellectual property regime.

On Section 3(d) , the report of the WTO secretariat noted,

"3.215. There have been several important developments in the period since
the last Review in the implementation of India's patent law. An important
provision, namely Section 3(d), was interpreted by the Supreme Court in
April 2013 in the context of Novartis A.G. vs. Union of India and Others.

3.216. The Supreme Court of India in its judgement said that there was no
doubt that the amendment/addition made in Section 3(d) was meant especially
to deal with chemical substances, and more particularly pharmaceutical
products. "The amended portion of Section 3(d) clearly sets up a second
tier of qualifying standards for chemical substances/pharmaceutical
products in order to leave the door open for true and genuine inventions
but, at the same time, to check any attempt at repetitive patenting or
extension of the patent term on spurious grounds." Further it was said that
"efficacy" should be understood as "therapeutic efficacy", which must be
judged "strictly and narrowly". In paragraph 190 of the judgement, the
Court held that "in whichever way Section 3(d) may be viewed, whether as
setting up the standards of "patentability" or as an extension of the
definition of "invention", it must be held that on the basis of the
materials brought before this Court, the subject product, that is, the beta
crystalline form of Imatinib Mesylate, fails the test of Section 3(d), too,
of the Act." The Supreme Court has also clarified that the test of Section
3(d) of the Act does not bar patent protection for all incremental
inventions of chemical and pharmaceutical substances.

3.217. It would appear that the recent rejection of one of the patent
applications filed in India on a breakthrough innovative product to treat
Hepatitis C, a disease that is widely prevalent in India, was on the
grounds that, while the claims may be both novel and inventive, they do not
prove significant enhancement of "therapeutic" efficacy and hence are not
in line with of Section 3(d) of the Indian patent law."

On compulsory licensing, the WTO report described the following,

"3.218. Another important development in the area of patents since the last
Review is the issuance in March 2012 of India's first and only compulsory
licence so far. This was on a patented anti-cancer medicine called
sorafenib Tosylate. The Controller General of Patents, Designs and Trade
Marks issued a compulsory licence under Section 84 of the Patents Act
deciding that the reasonable requirements have not been satisfied with
respect to the patented invention; the patented invention is not available
to the public at a reasonable price; and that the patented invention has
not been worked in the territory of India as required by the law. The
compulsory licence was issued with 6% royalty to be paid to the patent
owner. Upon appeal to the IPAB, the royalty was increased to 7% without
changing either the decision to grant a compulsory licence or any other
conditions of this licence. In July 2014, the Mumbai High Court upheld the
earlier order of the IPAB. In December 2014, the Supreme Court refused to
admit the appellant's special leave petition.173 India has not issued any
other compulsory licence since even though two more applications for such
licences have been received by the Controller General of Patents, Designs
and Trademarks in the fiscal years 2011/12 and 2012/13.174 The Controller
General of Patents, Designs and Trademarks received another application
filed by M/s. BDR Pharma seeking issue of a Compulsory Licence under
Section 84 of the Patents Act; it was turned down on the grounds that
sufficient efforts had not been made by the company to seek a voluntary
licence from the patentee.

3.219. India has implemented the special compulsory licence regime for
exports following the adoption of the Decision on the Implementation of
Paragraph 6 of the Doha Declaration in August 2003. Section 92A of the
Indian law states that a compulsory licence shall be available for
manufacture and export of patented pharmaceutical products to any country
having insufficient or no manufacturing capacity in the pharmaceutical
sector that need them to address public health problems. One condition is
that the importing country should have issued a compulsory licence or, by
notification or otherwise, allowed the importation of these products from
India. No special rules have been put into place to implement Section 92A.
It is not entirely clear how India intends to address the issue of
safeguards against diversion that are part of both the August 2003 decision
and the subsequent Protocol Amending the TRIPS Agreement that proposes to
transpose the decision into the text of TRIPS Agreement in a new provision,
Article 31bis. However, Section 92A(2) states that the compulsory licence
is to be granted solely for manufacture and export of the concerned
pharmaceutical product, as per the terms and conditions specified by the
Controller General of Patents, Designs and Trademarks in the decision
granting the compulsory licence, which must be published. This may be
viewed as ensuring transparency and appropriate safeguards.

3.225. In the context of intellectual property and climate change, a
subject under discussion in the TRIPS Council since March 2013, India's
National Manufacturing Policy of 2012 states in paragraphs 4.4.1 to 4.4.3
that: on occasion, a company may be unable to access the latest patented
green technology, which can substantially reduce its carbon footprint,
because of its inability to obtain a voluntary licence from the patent
holder. This could arise for two reasons. First, the cost of obtaining such
voluntary licence could be a barrier for the company. Second, the patent
holder could be unwilling to part with the licence, or it is not available
at reasonable rates or it is not being worked in India (Section 4.4.1); to
address the first issue, the Technology Acquisition and Development Fund
(TADF) will also function as an autonomous patent pool and licensing
agency. It will purchase IP rights to inventions from patent holders. Any
company that wants to use the IP to produce or develop products can seek a
licence from the pool against the payment of royalties. This company may
then produce the product for use in specified geographical areas subject to
meeting agreed quality standards. The TADF would reserve the right to
license more than one company for a particular patent (Section 4.4.2); and
to address the second issue, the Fund will have the option to approach the
Government for issue of a compulsory licence for the technology which is
not being provided by the patent holder at reasonable rates or is not being
worked in India to meet the domestic demand in a satisfactory manner. Such
compulsory licences will be issued only within the provisions of TRIPS.
Reasonable royalty will be paid to the patent holder (Section 4.4.3)."



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