[Ip-health] The Lancet: India's patent laws under pressure

Reshma Ramachandran reshmagar at gmail.com
Tue Sep 11 07:23:12 PDT 2012

patent laws under pressure
Peter Roderick<http://www.thelancet.com/search/results?fieldName=Authors&searchTerm=Peter+Roderick>
, Prof Allyson M
 Pending cases against India's patent laws threaten public health and
misinterpret international intellectual property agreements, say Peter
Roderick and Allyson M Pollock.
The effect of the international harmonisation of patent laws is in the
spotlight this month as global pharmaceutical giants Bayer and Novartis'
legal challenges to key provisions of India's Patents Act come to a head.
India's Intellectual Property Appellate Board is reported to have reserved
its decision last week after hearing Bayer's appeal, backed by the USA,
against the first compulsory licence granted in India earlier this year to
the generic producer Natco (panel
The Obama Administration has been consistent in its efforts to stop
compulsory licences, with the Deputy Director of the US Patent and
Trademark Office describing the granting of this licence as the “most
egregious” example of anti-TRIPS (Agreement on Trade-Related Aspects of
Intellectual Property Rights) behaviour. Meanwhile, the Indian Supreme
Court is due on Sept 11 to finally hear Novartis' sustained legal challenge
to India's rejection in 2006 of the company's patent application for Glivec.
Panel 1
The battle over sorafenib
Sorafenib tosylate (Nexavar) was invented by Bayer in the 1990s and
launched in 2005 for the treatment of advanced kidney and liver cancer. By
2008, Bayer had obtained an Indian patent, as well as import and marketing
approval, and launched the drug. In early 2010, Cipla began selling a
generic version of the drug in India. In December, 2010, Natco, another
Indian generic producer, wrote to Bayer requesting a voluntary licence to
sell the drug. It seems that Bayer did not reply to Natco's request. In
April, 2011, Natco received a licence from the Drug Controller General of
India to manufacture the drug in bulk and for marketing it in tablet form,
and in July, 2011, applied for a compulsory licence. The licence was
granted in March, 2012, with a 6% royalty awarded to Bayer. Bayer was
charging about US$5039 (INR 280 420) per month for the drug, Cipla about
$539 (INR 30 000—but is reported to have since dropped this amount to about
$123 (INR 6840), and the Natco licence authorises about $158 (INR 8800) per
month. Bayer's worldwide sales of the drug from 2006—10 were $2·99 billion.
In India in 2011, Bayer only sold 593 boxes—reaching on its own admission
only 2% of eligible patients—compared with Cipla's 4686 boxes. In Natco's
view, 70 000 boxes are needed annually.
Source: The information in this panel is mainly taken from the decision of
the Indian Controller of Patents, in Natco versus Bayer, March 9, 2012.
Current internet exchange rates have been used to convert amounts in Indian
rupees to US dollars.
Also in September, chief negotiators from the European Union (EU) and India
are due to meet to “take stock” of talks which have dragged on for 5 years
to finalise a Free Trade Agreement, which would reportedly extend patent
protection in the country beyond that agreed at the World Trade
Organization (WTO).
This month therefore presents an opportune moment to consider the
compatibility of key aspects of India's patent laws with its obligations
under the TRIPS Agreement, made at the WTO in 1994 to harmonise
international patent protection.
 TRIPS obligations
The harmonising TRIPS Agreement sets out minimum standards of protection
for patents and other forms of intellectual property and general principles
for domestic enforcement procedures, as well as making disputes between
countries over intellectual property subject to the WTO's dispute
settlement procedures. One of its most far-reaching requirements for many
countries was mandatory patentability of pharmaceutical products. India,
which had previously only allowed patents for pharmaceutical processes,
amended its 1970 Patents Act three times—in 1999, 2002, and 2005—to comply
with its TRIPS obligations.
In theory, several lawful opportunities exist for developing countries to
minimise the impact of TRIPS on access to medicines. Taking advantage of
them in practice, however, requires political will, legal expertise, and
administrative effort. For example, countries are entitled to pay close
attention to the preconditions for patent availability; to the permitted
criteria and categories for excluding patentability; to the disclosure
requirements of applicants; and to the discretions expressly granted in
these connections. And they can set limited exceptions to the exclusive
rights conferred by a patent. For example, the WTO dispute panel rejected
the EU's challenge to Canada's pro-generics law which allowed third parties
without the patent holder's consent “to make, construct, use or sell the
patented invention solely for uses reasonably related to the development
and submission of information required” for marketing approval.
If a patent has been lawfully granted, Article 31 of the TRIPS Agreement
allows countries to authorise non-exclusive, non-assignable use of the
subject matter of a patent, predominantly for the supply of the domestic
market, subject to adequately remunerating the holder. Authorisation is
subject to several further conditions, including scope and duration, and is
also subject to prior negotiation attempts to get a voluntary licence.
However, the grounds for such authorisations are not set out in Article 31.
Use by governments or by third parties authorised by governments, are
recognised examples of use without the patent holder's consent. These uses
often take the legal form of a compulsory licence, a traditional and widely
applied limitation on the monopoly power of patents that has been traced
back to the Patent Congress held at Vienna's World Fair in 1873. The Paris
Convention for the Protection of Industrial Property 1883 (as revised and
amended), which is binding for TRIPS signatories, also states that
countries have the right to make laws allowing for compulsory licences “to
prevent the abuses which might result from the exercise of the exclusive
rights conferred by the patent, for example, failure to work”.
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Indian activists protesting against the Novartis patent case
Under section 84 of the Indian Patents Act 1970 (amended twice post-TRIPS),
3 years after a patent has been granted, an application for a compulsory
licence can be made on one of three grounds: that the reasonable
requirements of the public with respect to the patented invention have not
been satisfied; or that the patented invention is not available to the
public at a reasonably affordable price; or that the patented invention is
not worked in the territory of India. In the Bayer case, India's Controller
of Patents was satisfied on each of the three grounds.
Section 84 of the Indian Patent Act seems to be entirely compliant with the
TRIPS Agreement. The grounds on which a compulsory licence may be granted
are not specified in the TRIPS Agreement, as emphasised by the 2001 Doha
Declaration on the TRIPS Agreement and Public Health, paragraph 5(b) of
which states that “Each Member has the right to grant compulsory licences
and the freedom to determine the grounds upon which such licences are
granted”. And, as Nuno Pires de Carvalho, director of the IP and
Competition Policy Division at the World Intellectual Property
Organisation, states: “WTO Members that are Paris Union Members have been
authorised for over one century to grant compulsory licences on grounds of
a lack of working, regardless of the technological field of the patents in
question. They have since been fully aware that compulsory licences might
also be granted in the area of public health, and especially in situations
of crisis.”
The US seems though to be taking issue with the Indian Controller of
Patent's view that “worked in the territory of India” means “manufactured
to a reasonable extent in India”. Even if this interpretation was either
wrong in principle or not supported by the evidence, both of the other
grounds in section 84 are met, and only one ground is needed for a
compulsory licence application. As well as being a well established basis
for granting compulsory licences, “failure to work” was established by a
famous US case nearly 70 years ago to be abusive when the patented article
is important for public health purposes.
It might be that there are concerns that the licence has been granted
without any suggestion of an urgent public health emergency being underway,
but there is no support in Article 31 of the TRIPS Agreement for
restricting licensing to such a situation. Of course, such a situation
could merit such a licence, but the only relevance of such an emergency in
Article 31 is to allow waiver of the precondition of first making
reasonable efforts for a reasonable time to get a voluntary agreement.
 The Novartis case
At stake in the Novartis challenge is section 3(d) of the Indian Patents
Act, a provision aimed at preventing “low quality” or “secondary” patents
for drugs that do not demonstrate enhanced efficacy (panel
Panel 2
Section 3(d) of the Indian Patents Act 1970, as amended
3. The following are not inventions within the meaning of this Act…
(d) the mere discovery of a new form of a known substance which does not
result in the enhancement of the known efficacy of that substance or the
mere discovery of any new property or new use for a known substance or of
the mere use of a known process, machine or apparatus unless such known
process results in a new product or employs at least one new reactant.
Explanation. For the purposes of this clause, salts, esters, ethers,
polymorphs, metabolites, pure form, particle size, isomers, mixtures of
isomers, complexes, combinations and other derivatives of known substance
shall be considered to be the same substance, unless they differ
significantly in properties with regard to efficacy.
The company's antileukaemia drug Glivec—containing a β crystalline form of
imatinib, a methanesulfonate salt—was refused a patent in January, 2006,
based largely on this provision. Since then, the company has been engaged
in several substantive and procedural challenges, before the Madras High
Court, the Intellectual Property Appellate Board, and now the Supreme
Court, all aimed at reversing the 2006 decision (panel
So far, it has failed in its arguments that section 3(d) violates Article
27(1) of the TRIPS Agreement and Article 14 of the Indian Constitution for
being vague and arbitrary.
Panel 3
Timeline of Glivec's legal history in India
July 17, 1998: Novartis applies for a patent for “Crystal Modification of a
N-Phenyl-2-Pyrimidineamine derivative, processes for its manufacture and
its use”, application No.1602/MAS/1998
May—July 2005: Cancer Patients Aid Association, Natco, Cipla, Ranbaxy, and
Hetro file representations opposing the application
Jan 25, 2006: the Assistant Controller of Patents and Designs refuses the
application, after hearings. Novartis subsequently challenges the refusal
in the Madras High Court
April 2, 2007: the provisions of the Patents Act relating to appeals to the
Intellectual Property Appellate Board (IPAB) are brought into effect, with
the then Controller General of Patents, Designs and Trade Marks—Shri S
Chandrasekaran—appointed as the Board's Technical Member (Patents)
July 20, 2007: the IPAB rejects a challenge by Novartis to Chandrasekaran
sitting on its appeal, ruling that the appeal should be heard by the IPAB
Chairman and Technical Member (Patents). Novartis had argued that this
individual should not sit on its appeal as he had been the chief Controller
of Patents when the Glivec patent application was refused in 2006
Aug 6, 2007: the Madras High Court rejects Novartis' arguments that section
3(d) of the Patents Act is not compliant with TRIPS and the Indian
Nov 13, 2007: the Madras High Court upholds Novartis' challenge to the
IPAB's decision not to remove Chandrasekaran from the appeal, ordering the
IPAB to constitute a special bench consisting of the Chairman and the
Vice-Chairman—neither of whom are technical experts—to hear the appeal
Jan 28, 2008: the Indian Supreme Court rules that the appeal hearing should
not proceed before an IPAB constituted as required by the Madras High
Court, following a challenge brought by Natco, arguing that the
particularly technical nature of the issues in the Glivec appeal require a
technical expert
Oct 1, 2008: the Indian Supreme Court rules that the IPAB hearing the
Glivec appeal must include a technical expert, namely Shri P C Chakraborti,
Deputy Controller of Patents and Designs
Dec 24, 2008: the appeal hearing concludes before the IPAB, consisting of
the Chairman (Shri Z Negi) with Shri P C Chakraborti as Technical Member
June 26, 2009: the IPAB rejects Novartis' appeal
Sept 11, 2012: Supreme Court hearing scheduled
Source: IPAB decision, June 26, 2009; judgment of the Madras High Court in
Novartis AG versus Union of India, Aug 6, 2007; US Department of State
cables released by Wikileaks, available here:
http://keionline.org/node/1253 (accessed
Aug 23, 2012); Supreme Court Order, Aug 22, 2012, available here:
http://courtnic.nic.in/supremecourt/qrydisp.asp (accessed Aug 29, 2012).
Section 3(d) is particularly important since many secondary patents have
been granted in India following the inconsistent application of this
provision, according to the UN Development Programme (UNDP). Its review
also found that “in interpreting the meaning of ‘efficacy’ in Section 3(d),
an extremely high standard applies; an ‘advantageous property’ is not the
same as efficacy and ‘new forms’ that result in advantageous properties
with respect to bioavailability, stability, etc, are not patentable”.
Article 27 of TRIPS generally mandates patentability where inventions are
new, involve an inventive step (or are non-obvious), and are capable of
industrial application (or are useful). Provisions such as section
3(d)—which has also, for example, been adopted in the Philippines—are
examples of how countries can approach interpretation of each of these
three preconditions of patentability. It is difficult to see the public
interest in granting patents for minor modifications, which are not of
improved public health benefit. In the context of the proliferation of drug
patents—between 2005—11, 4064 Indian patents have been granted for
pharmaceutical products, with a further 12 689 applications
pending—ensuring patents are only granted for genuinely new and useful
products, seems eminently sensible. Section 3(d)'s limited integration of
efficacy considerations, more traditionally seen in drug-marketing laws, is
a sound and long-overdue attempt to rectify the low level of proof of real
utility that mars patent regimes. The provision goes some modest way to
counteract the conclusion of UNDP's 5-year review of post-TRIPS experience
in the country that “little has changed to dispute the conventional wisdom
that developing countries should not grant product patent protection in
pharmaceuticals. They are already paying the cost of high prices of patent
protected products without having seen the supposed concomitant
technological benefits”.
In trying to limit compulsory licences and avoid efficacy tests on
products, the Bayer and Novartis cases are seeking to undermine public
health considerations aimed at improving access and therapeutic advantage.
The TRIPS Agreement does not limit the grounds on which compulsory licences
can be granted, and does not prevent patent applicants from having to
demonstrate enhanced efficacy for their allegedly new and useful
inventions. There are many problems facing access to and rational use of
medicines in India but the provisions within the country's patent laws, if
more extensively and properly applied, should help rather than hinder such
access. India's laws and experiences could provide a useful example for
low-income and middle-income countries worldwide.
 For the *UNDP report* see
Roderick is a barrister and a Senior Research Fellow at the Centre for
Primary Care and Public Health, Queen Mary, University of London, working
on the Accessing Medicines in Africa and South Asia (AMASA) research
project funded by the European Union's Framework Programme 7,
Allyson M Pollock, Centre for Primary Care and Public Health, Queen Mary,
University of London, is a co-principal investigator on AMASA
Reshma Ramachandran
PharmFree Fellow, American Medical Student Association
Warren Alpert School of Medicine at Brown University '15
m: 786-271-1531

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