[Ip-health] Op-ed in The Hindu by Srividhya Ragavan and Prabha Sridevan: Seeking full disclosure on how patents are working locally through Form 27 will help promote innovation

Thiru Balasubramaniam thiru at keionline.org
Thu Apr 12 00:55:07 PDT 2018


Srividhya Ragavan
Prabha Sridevan

10 APRIL 2018 00:15 IST
UPDATED: 10 APRIL 2018 00:30 IST

Seeking full disclosure on how patents are working locally through Form 27
will help promote innovation

A new chapter on the access to medication debate in India began when
Shamnad Basheer filed a public interest litigation before the Delhi High
Court. The petition pointed out the importance of “working requirements” in
the Patents Act, 1970; the need to amend Form 27; and the lapses by
patentees in furnishing information. The importance of Form 27 on the
question of access to health cannot be underestimated. In essence, Form 27
seeks information to ensure that the patented material is adequately
supplied in India. If the supply of the patented invention does not cater
to the demands, statutorily the reasonable requirement of the public with
regard to the patented invention is deemed as not met. This will be a
ground to seek compulsory licensing of the product within India. The
underlying rationale is to protect public health.

Working requirement

Patent law grants to the patentees the privilege of enjoying a limited
monopoly in order to achieve the objective of public benefit. Thus, the
quid pro quo for getting patent monopoly is patent disclosure. As part of
the disclosures, patentees are required to disclose if they are locally
working their patented invention in exchange for the conferred benefits.
Thus, Section 83 of the Patents Act states that “patents are granted to
encourage inventions and to secure that the inventions are worked in India
on a commercial scale and to the fullest extent that is reasonably
practicable” and that the monopoly granted to the patentees is not merely
to import the invention. Historically, laws in India have considered
“working” the invention as being so crucial to the enjoyment of the
monopoly that non-working in India entitled a third party to apply for a
compulsory license.

In streamlining the local working requirement, especially in the field of
pharmaceuticals, India is in line with its international trade obligations.
The Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS) provides flexibilities and underscores the sovereign rights of
countries to weave in the ground realities of each country while honouring
their international trade commitments. Paragraph 5(2) of the Doha
Declaration outlines the right of national governments to compulsorily
license patents and the “freedom to determine the grounds upon which such
licences are granted” , including the use of grounds not explicitly
specified in Article 31 of TRIPS. Thus, lack of local working of the patent
can be grounds for granting a compulsory licence along with other grounds
such as high prices and non-supply of the patented invention locally. In
doing so, the Doha Declaration allows the exercise of sovereign rights to
define when exclusive rights could be curtailed to achieve a larger public
interest result.

Seeking local working information is part of India’s use of its sovereign
rights. The state is obligated to protect the right to life of its citizens
under Article 21, and this duty is heavier than any duty that the state may
owe the patentees. The state should ensure that patentees perform their
duties as monopoly holders. This means that the grant of patents must
contribute to the promotion of technological innovation and to the transfer
and dissemination of technology in a manner conducive to social and
economic welfare and to a balance of rights and obligations.

Currently, Form 27 requires patentees to submit a statement “regarding the
working of the patented invention on a commercial scale in India”. But as
the Form is bereft of crucial details, India’s next step is not to abjure
it, but to revise it in a way that the conditions subject to which the
patent privilege is granted are complied with. In this regard, the Indian
Patents Act (Section 146) empowers the Controller to require a patentee or
a licensee to furnish statements of how the invention has been commercially
worked in India. It also requires the patentees and every licensee to
furnish the prescribed statements regarding the invention. The Controller
also has the right to publish the information received. This is the law.
The law requires transparency and patentees and licensees should know that
they are bound by this law. In this regard, requiring licensees to make a
full disclosure of the patent working information through Form 27 would not
be considered out of the norm. The liability for non-compliance with Form
27 must be strict civil liability.

India needs to appreciate that the World Trade Organisation (WTO) rules do
not prohibit getting information on the local working. After all, TRIPS
Article 27 does not apply to this situation. The Article 27 prohibition
against discrimination based on whether the goods are locally manufactured
or imported applies to the grant of a patent and not to grounds for issuing
a compulsory license. Further, the WTO’s jurisprudence in Canada
Pharmaceuticals states that the word “discrimination” does not ban all
forms of differentiation and that it refers to “results of the unjustified
imposition of differentially disadvantageous treatment.”

Countries like India signed up to the intellectual property bandwagon to
maximise opportunities for technology transfer. Part of this exercise
involves allowing local firms to compete and improve innovation, especially
on life-saving pharmaceuticals. There is no wisdom in enacting patent laws
that mainly enable foreign companies to import into a jurisdiction, without
using it as a tool to foster scientific and technological progress at home.
Thus, disclosures under Form 27 are required as part of a national strategy
to improve innovation and further technology transfer into India, to
maintain public health and to ensure supply of pharmaceuticals nationally.

A great opportunity

The U.S. has set a precedent with its America First approach, leading to an
imposition of 25% steel tariffs. Article XXI of the General Agreement on
Tariffs and Trade that allowed the U.S. to impose the steel and aluminium
tariffs to prevent importation will also justify India’s position in
requiring local working to ensure access to medication. In any case, the
use of Section 301 of the U.S. Trade Act, 1974 to unilaterally impose trade
pressures stands on shaky legal grounds. India has been subjected to this
unwanted bullying regularly. The amendment of Form 27 presents a great
opportunity for India to reiterate the limits and limitations of the
unilateral approach, should the U.S. choose to take unilateral action.

Kaushik Sunder Rajan has rightly asserted that in a world in which the
structure of monopolistic drug development is the norm, there are
consequences for both health and democracy, since the initial rationale of
patents as a purely instrumental monopoly in public interest is subverted
and forgotten. The patent system is misconstrued as serving the patent
owner. Similarly, there is wide misconception by trade lobbyists that trade
obligations are subservient to sovereign rights. Neither of these
propositions is correct. That is why the question raised in the petition
filed by Professor Basheer is not to be lightly taken. It is not only about
the right to health but also about the state’s sovereign right to preserve
public health and duty to fulfil a Constitutional mandate.

Prabha Sridevan is a former judge of the Madras High Court and a former
Chairperson of the Intellectual Property Appellate Board; Srividhya Ragavan
is Professor, Texas A&M University School of Law

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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