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India’s trade-related aspects of Intellectual Property Rights compliant pharmaceutical patent laws: what lessons for India and other developing countries?

Jae Sundaram*

Law School, University of Buckingham, Buckingham, UK

India’s trade-related aspects of Intellectual Property Rights (TRIPS) compliant Patent (Amendment) Act 2005 saw the transformation of its laws from a process patent regime to a product patent regime. The amendments have had a direct impact on India’s generic drugs manufacturing sector, which was developed through the process patent regime introduced under the 1970 Act. The knock-on effect will soon be felt both domestically and globally, as a number of developing countries have come to rely strongly on Indian generics. This article seeks to study the effectiveness of the Act of 2005, and if it can be seen as an instance of success of the TRIPS provisions in Articles 7 and 8 read along with the Doha Declaration. It will be queried if developing countries in the World Trade Organization can possibly benefit from the model set-up by India for the issuance of compulsory licenses, and to check the practice of ‘evergreening’ by pharmaceutical patent holders. Recent decisions from the Indian judiciary and the quasi-judicial authorities, along with the procedures and policies put in place will be used to carry out the study.

Keywords: TRIPS; India; patents; compulsory-licensing; evergreening; generics

1. Introduction

India passed the Patent (Amendment) Act of 2005 to bring its patent laws in line with the trade-related aspects of Intellectual Property Rights (TRIPS) Agreement’s agenda of extending international intellectual property protection to patent right holders, who were mostly from developed countries. India through the implementation of the TRIPS Agree- ment was constrained to give up on its process patent regime, which was originally intro- duced in 1970 to develop its generic drug manufacturing market and to create better access to medicines. The introduction of the new patent laws witnesses a radical shift in Indian policies on pharmaceutical and chemical patenting. Taking the TRIPS compliance exercise as an opportunity, India has firmed up on its compulsory licensing laws, introduced direct provisions on ‘exhaustion of patent rights,’ ‘pre-grant’ and ‘post-grant’ opposition, and has most importantly introduced provisions to check the practice of evergreening. It can be argued that the patent law regime introduced in India demonstrates how developing countries can utilize the TRIPS flexibilities to introduce laws to suit the requirements of its own health care policies.

© 2014 Taylor & Francis

*Email: [email protected]

Information & Communications Technology Law, 2014 Vol. 23, No. 1, 1–30, http://dx.doi.org/10.1080/13600834.2014.891310

The decision to change the patent laws gains in importance, as India is one of the fastest growing pharmaceutical markets, with some writers referring to it as the ‘pharmacy of the developing world.’ The jurisprudence from the courts on the Amended Act of 2005 is still nascent; but one can still infer, from the decisions of Indian courts and quasi-judicial auth- orities, the strong stance taken by India on patent evergreening, the use of pre-grant and post-grant opposition, and compulsory licensing. Although there is clear judicial precedent, emerging from developed countries like the USA and UK where evergreening is scorned upon, it is India that has taken the first step in introducing legislative measures to check the practice of evergreening. A combined reading of the amended laws, the provisions of the TRIPS Agreement and the recent judicial and quasi-judicial renderings from India present an interesting area for study. They seem to suggest that developing countries can operate the TRIPS flexibility to deal with national emergencies, as access to patented medi- cines become unaffordable and reliance is more on generic medicines.

2. Indian patent laws

Indian patent laws are steeped in its colonial past, as it was under British rule for close to 200 years, between 1757 and 1947.1 This period saw the introduction of the common law in India, and importantly the first legislation on patent rights in 1856, which was primarily designed to serve the interest of British patent holders. It is safe to assume that any legis- lative attempts to codify a practice of granting patents began in India only during the British rule and in particular from the nineteenth century.2 The Indian patent laws can be broadly categorized under two heads, namely ‘pre-independent India’ and ‘post-independent India.’3 The legislative history of pre-independent India’s patent laws is well chronicled,4

and the current study will focus on patent laws passed in India from the post-independent period, leading up to its amendment in 2005.

2.1. Post-independence

At the time of independence from British rule, India was predominantly an agrarian society, with over two-thirds of its population living in rural areas. Access to medicines was scarce, and much limited to the affluent, due to a lack of indigenous production of drugs,5 and for

1India was under the British East India Company Rule from 1757 until the transfer of power to the British Crown in 1858, and later Queen Victoria was proclaimed Empress of India in 1876. The British rule, referred to as ‘British Raj’ came to an end in August 1947. The region referred to as ‘British India’ also included the modern day states of India, Pakistan, Nepal, Bangladesh and other countries. 2Legislative attempts began with the first legislation under British rule on the subject, and the Indian Patent Act was passed in 1856. Roundabout the same time, power was completely transferred to the Crown from the British East India Company. 3The modern history of Indian patent laws can be brought within three categories, namely pre-legis- lation period, the period of exclusive privileges and the period of patents. DN Choudhary, Evolution of Patent Laws: Developing Countries Perspective (Capital Law House, 2006) 13. 4TV Garde, ‘India’ in P Goldstein and J Strauss (eds), Intellectual Property in Asia: Law, Economics, History and Politics (Springer, 2009). For a detailed legislative history of the Indian Patent Act, see generally, JM Mueller, ‘The Tiger Awakens: The Tumultuous Transformation of India’s Patent System and the Rise of Indian Pharmaceutical Innovation’ (2007) 68 U Pitt L Rev 491. 5Choudhary (n 3) 9–10. See also ‘First Five Year Plan’ promulgated by India, where one of the objec- tives sought to be achieved was identified as improvement of ‘ … standard of living of the people by

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want of a proper health care system. India’s industry sector was weak, and was only con- tributing to a mere quarter of the national income.6 Post-independent India’s pharmaceutical industry was still largely controlled by multinational pharmaceutical corporations, with 8 of the 10 pharmaceutical companies controlled by foreign interests and holding nearly all of the pharmaceutical patents.7 The indigenous pharmaceutical companies felt the growing need for change, as in their view the patent system in place was not capable of ensuring effective use of patent rights to promote industrial growth and development in India.8

In 1948 the government of India appointed the Patent Enquiry Committee, which was tasked with reviewing the Patents and Designs Act 1911, and to advice on any changes.9 In 1950, three years after gaining independence, India adopted its first written constitution,10

and officially became a republic. The policies contained in the constitution were designed to give the State the ownership and control of key community resources.11 It is to be noted here that India’s second five-year plan had industrialization at the heart of the agenda with the objective of achieving self-reliance.12 In April 1950, the committee headed by Justice Bakshi Tek Chand,13 submitted a report, recommending a series of changes, includ- ing the introduction of compulsory licensing, and the creation of a more stable legal frame- work to tackle the abuse of patents.14 In 1953, based on the recommendations of the

efficient exploitation of the resources of the country.’ Government of India, Planning Commission <http://planningcommission.nic.in/plans/planrel/fiveyr/default.html> accessed 5 September 2013. 6Garde (n 4) 55. 7P Wilson and A Rao, ‘India’s Role in Global Health R&D’ Center for Global Health R&D Policy Assessment (2012) 47 <http://healthresearchpolicy.org/assessments/india%E2%80%99s-role- global-health-rd> accessed 2 November 2013; Garde (n 45) 57. See also (n 5), ‘First Five Year Plan’ Chapter 32 entitled ‘Health,’ where one of the priorities mentioned was achieving ‘ … self sufficiency in drugs and equipment.’ The plan clearly identified the need for ‘ … a co- ordinated programme of development of the pharmaceutical industry.’ 8Garde (n 4) 59. 9Dr YK Hamied, ‘Indian Pharma Industry: Decades of Struggle and Achievements’ (2 April 2005) 3 <http://www.arvindguptatoys.com/arvindgupta/avra-hamied.pdf> accessed 12 September 2013. The author states that prior to World War II, there was no basic drug manufacturer in India, and that in post-independent India, the key sectors of agriculture, medicine and education, were prioritized for heavy investment in order to achieve self-reliance and self-sufficiency. 10Although India gained independence from British rule on 15 August 1947, it had the status of a ‘Dominion’ until 1950, with George VI as head of state, and Earl Mountbatten as Governor General. The Indian Constitution adopted in 1950 is seen as the longest written constitution of any sovereign nation in the world, containing 444 articles, 22 parts and 12 schedules. See generally G Austin, The Indian Constitution: Cornerstone of a Nation (OUP, 1999), where the author observes the Indian Constitution as being a document primarily aimed at furthering the objective of social revolution. 11The foundations of the policy are to be found in the Directives on State Policy in the Indian Con- stitution, which states that ‘the ownership and control of the material resources of the community are so distributed as best to subserve the common good.’ Constitution of India, Part IV, Art. 39(b). See also Garde (n 4) 55. 12Garde (n 4) 57. The model presented by Mr Prasanta Chandra Mohalonobis for India’s second five year plan had a nationalist approach to industrialization, with an argument for self-reliance over foreign manufactured goods. 13Justice Tek Chand a retired judge from the High Court of Calcutta headed the Patents Enquiry Com- mittee (also known as Tek Chand Committee) between 1948 and 1950. 14The committee filed a 216 page report. It recommended that the Patents Act should contain pro- visions to ensure that food and medicine, surgical and curative devices were made available to the public at the cheapest price possible while giving reasonable compensation to the patentee. See also Choudhary (n 3) 10. The committee relied on some of the findings of the Swan Committee report which was constituted by the Board of Trade in the UK; S Banerji, ‘The Indian Intellectual

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committee, a bill was tabled before lower house of the parliament, which was to lapse due to the dissolution of the lower house.15

2.2. Justice Ayyangar Committee

In 1957, a decade after independence, the Government of India appointed yet another com- mittee, headed by Justice N. Rajagopala Ayyangar, to review the adequacy of the Indian patent system. This committee known as Justice Ayyangar Committee presented its report in September 1959.16 The report was in two parts, with the first part dealing in general aspects of patent laws and containing recommendations, and the second part pre- senting comments on the lapsed bill of 1953 and suggesting improvements.17 Some of the views expressed by this committee on how food patenting and pharmaceutical inven- tions can affect accessibility to medicines, and on compulsory licensing continued to form part of the debates before the World Trade Organization (WTO) in the run up to the signing of the TRIPS Agreement.18

The Ayyangar Committee’s report which is seen as being central to the creation of patent laws in post-independent India, recommended that India deviate from the patent pol- icies of industrialized countries,19 and proposed radical changes to the then existing Indian patent laws.20 The committee observed that the high cost of drugs in post-independent India resulted directly from the monopoly exercised by foreign-based pharmaceutical companies over drug production in India. It was of the view that food and medicines, which are impor- tant in daily life and vital for the health and well being of the community, should be made available to the public at a reasonable price, and hence strongly recommended against the granting of product patents for food and medicines.21 The rationale behind the recommen- dation for a process patent regime stemmed from the premise that the recognition of the ‘process of production’ would accelerate research in developing alternative processes, leading to increased diversity of products at competitive prices.22 For the purposes of indus- trial advancement the Ayyangar Committee favoured the ‘process’ rather than ‘product’

Property Regime and the TRIPs Agreement’ in C Long (ed), Intellectual Property Rights in Emerging Markets (American Enterprise Institute Press, 2000) 63. 15Controller General of Patents, Designs and Trade Marks, India, Manual of Patent Practice and Pro- cedure (3rd edn, 2008) 8. 16A Report on the Revision of the Law in India Relating to Patents for Inventions (September 1959) <http://spicyip.com/wp-content/uploads/2013/10/ayyangar_committee_report.pdf> accessed 13 October 2013. See also AD Damodaran, ‘Indian Patent Law in the Post-TRIPS Decade: S&T Policy Appraisal’ (September 2008) 13 Journal of Intellectual Property Rights 415; Choudhary (n 3) 13. 17Controller General of Patents, Designs and Trade Marks, India (n 15) 10. 18S Ragavan, ‘Of the Inequals of the Uruguay Round’ (2006) 10 Marq Intell Prop L Rev 273, 282. The TRIPS Council’s task was to enable local industrialization in least developed nations, and the Ayyangar Committee Report which also advocated self-reliance can be seen as a useful resource in that pursuit. 19Ibid. 20S Narayanan, Patent Law (4th edn Eastern Law House, 2006) 6. See also Ragavan (n 18) 281, where the author observes that the report, as modified by the Report of the Joint Committee of Parliament in 1966, forms the backbone of the Indian patent system. 21Ragavan (n 18) 285. 22Ragavan (n 18) 285–86.

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protection for chemicals in India.23 The Committee noted that in countries where restric- tions were placed on the patents for chemical inventions by confining patentability to the invented processes, there was a similar or even greater restriction on the grant of patents to inventions in relation to articles of food and medicine. This was to be expected, as most of the pharmaceutical preparations were the products of chemical processes.24

Around the same time, the pharmaceutical industry in India was also campaigning for changes to be brought to the patent laws, as it strongly believed that the Patents Act 1911 was not fit for purpose and had to be completely changed.25

2.3. Indian Patent Act 1970

India’s first post-colonial legislation on patents, the Indian Patent Act 1970 came into force on 20 April 1972. The objectives of the Act were, to boost the Indian economic growth through indigenous technology development, to make the fruits of technological innovations to be accessible for public purposes (particularly in public health), to protect domestic enterprise, and to meet the constitutional obligations of the State under the fundamental rights guaranteed to the citizens of the country.26 The Patent Act 1970 was hailed by the United Nations Conference on Trade and Development (UNCTAD) and some developing countries as a progressive statute.27

The Act of 1970 recognized both process and product patents, but the latter was not available for food, medicine, or drugs or substance produced by chemical processes, and also redefined the working of the patents.28 The two key features of the Act were the intro- duction of ‘process patents’ for inventions relating to food, medicine and chemical entities, and the shortening of the term of patent protection for pharmaceutical patents.29 Under the Act of 1970 the term of process patent protection over food, drug, and medical inventions

23Under the German Patent Law of 1877, where patentability was restricted to novel chemical pro- cesses, a stimulated research with regard to alternative methods for producing the same product was witnessed. The rise of the German chemical industry dated from 1877, and in the course of a period of 30 years, it witnessed tremendous growth and came to occupy the foremost position in Europe. See also Choudhary (n 3) 26–27. 24Choudhary (n 3) 27. 25In 1961, the Indian Drug Manufacturers Association (IDMA) was formed for the purpose of boost- ing the national pharmaceutical industry. The organization campaigned for the amendment of the patent laws then prevailing in India. See generally, Hamied (n 9). 26Choudhary (n 3) 37. The objectives of the Act were in line with the State Policy contained in the Constitution of India which provided in Article 39 that

… State shall, in particular, direct its policy towards securing (a) … (b) that the ownership and control of the material resources of the community are so distributed as best to serve the common good; and (c) that the operation of the economic system does not result in the concen- tration of wealth and means of production to the common detriment.

27Ibid 40. See also, FM Scherer and J Watal, ‘Post-TRIPS Options for Access to Medicines in Devel- oping Countries’ (2001) Commission on Macroeconomics and Health Working Paper Series, Paper No. WG4:1, 4 <http://library.cphs.chula.ac.th/Ebooks/HealthCareFinancing/WG4/Paper%20No.% 20WG4_1.pdf> accessed 16 September 2013. Many of today’s developed countries excluded pharma- ceutical products from patent protection until quite recently. Germany excluded pharmaceutical product patents until 1968, Italy until 1978, Spain until 1992, Portugal until 1992, Finland until 1995, Iceland until 1997, Switzerland until 1977 and Norway until 1997. 28Controller General of Patents, Designs and Trade Marks, India (n 15) 10. 29Ibid 11.

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was limited to five years. In essence, the process patent regime defined under s.5(1) of the Patent Act 1970 protected the method through which the product was arrived at, i.e. the process of making the product, and excluded the protection of the end-product.30 It was, therefore, perfectly possible for several manufacturers to simultaneously hold a process patent for identical products.

The process patent regime under the Act of 1970 aided the Indian pharmaceutical compa- nies to manufacture genericdrugs using expired patents.The Act alsointroduced an automatic right to license (compulsory license) in the case of life-saving drugs. This safeguard along with the Drug Price Control Order 1970, which put a cap on the maximum price that could be charged, ensured that life-saving drugs were available at a reasonable price in India.31

The process patent framework also enabled indigenous pharmaceutical companies to produce drugs at an affordable cost. The growth of the Indian generic pharmaceutical industry is largely attributed to the Indian Patents Act of 1970. It is also to be observed that the number of patent applications filed during the operation of the Act remained stagnant,32 and it is argu- able that it did not contribute to any major innovation in the pharmaceutical sector.

The Indian drug manufacturers, aided by the 1970 Act, were able to develop alternate processes for production of life-saving drugs. The domestic pharmaceutical industry in India developed over a relatively short period of time, making India self-sufficient in the production of basic drugs covering major therapeutic groups.33 As a result, drug prices in India ranged from 5 to 30 times lower than in countries where ‘product patent’ was in place. The three decades that followed, saw India emerge as a globally recognized producer of low-priced generic drugs.34 India is currently the leading exporter of generic antiretro- viral drugs (ARVs) to other developing and least developed countries (LDCs), which is used in the treatment of HIV/AIDS.35 The Indian Patents Act, 1970 is viewed by some

30The Patents Act of 1970, s.5(1) reads as follows: In the case of inventions – (a) claiming substances intended for use, or capable of being used, as food or as medicine or drug, or, (b) relating to substances prepared or produced by chemical processes (including alloys, optical glass, semi-conductors and inter-metallic compounds), no patent shall be granted in respect of claims for the substance them- selves, but claims for the methods or processes of manufacture shall be patentable. 31India introduced drug price control measures during the Chinese conflict in 1962, amidst fears that it could escalate prices of essential drugs. These measures were taken with a view to making access to medicines affordable within the country. The Drug Price Control Order, introduced in 1970, imposed an indirect control on the profitability of pharmaceutical industries. M Das and SK Basu, ‘Drug Price Control in India: “The Past and the Present”’ (2012) 03 NSHM Journal of Pharmacy and Healthcare Management 41–47, 41. See also, R Govindaraj and G Chellaraj, ‘The Indian Pharmaceutical Sector: Issues and Options for Health Sector Reform’ (September 2002) World Bank Discussion Paper No. 437 <https://openknowledge.worldbank.org/bitstream/handle/10986/15231/multi0page.pdf? sequence=1> accessed 18 September 2013. The authors observe that ‘ … the objective of the Indian Government regarding pharmaceuticals have remained the same: promotion of the domestic industry and ensuring adequate access to good quality drugs.’ 32Damodaran (n 16) 415. 33Choudhary (n 3) 40. 34Mueller (n 4) 514–516. See also Cherri Grace, ‘Update on China and India, and Access to Medi- cines’ (2005) DFID Briefing Paper No. 8 <http://www.heart-resources.org/wp-content/uploads/2012/ 09/Update-on-China-an-India-and-Access-to-Medicines.pdf> accessed 18 September 2013. By 2004, India was supplying 22% of the world’s generic drugs and a significant amount of the vaccines to the developing world. 35B Waning, E Diedrichsen and S Moon, ‘A Lifeline to Treatment: The Role of Indian Generic Man- ufacturers in Supplying Antiretroviral Medicines to Developing Countries’ (2010) Journal of Inter- national AIDS Society <http://www.biomedcentral.com/content/pdf/1758-2652-13-35.pdf> accessed 5 September 2013.

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as a landmark in the history of industrial development in India, and by some others as having a negative effect to innovation in the country.36

3. WTO membership, TRIPS negotiation and compliance

The WTO, which is a rules-based organization, was established in January 1995. The TRIPS Agreement is one of the covered agreements of the WTO, and along with the agreements on trade in goods, and trade in services, constitutes the three pillars on which the organization operates. The TRIPS Agreement is seen as one of the most con- troversial components of the WTO system, due to its far-reaching implications on inter- national intellectual property rights protection. It covers a wide range of intellectual property rights protection, from copyrights and trademarks, to patent rights and trade secrets. The Agreement obligates countries to grant product patents for a period of 20 years in all fields of technology, including pharmaceuticals.37 The TRIPS Agreement sets out the minimum standards for the protection of intellectual property, including patents for pharmaceuticals. It requires all member states to establish legal and adminis- trative procedures at the domestic level to ensure effective protection to patent holders (both domestic and international) for their intellectual property rights, and also the appro- priate mechanism for redress in the event that their rights are infringed. member states failing to embody these standards into their national laws or to give effect to them may be challenged by the trading partners before the WTO following the dispute settlement procedures.

3.1. India’s role in the TRIPS negotiation

The negotiations on the TRIPS Agreement were conducted during the long running Uruguay Round between 1986 and 1994.38 Prior to these negotiations on the TRIPS Agree- ment, intellectual property rights were principally regulated at the international level by a number of treaties administered by the World Intellectual Property Organization (WIPO), which included the Paris Convention on Industrial Property and the Berne Convention on Literary and Artistic Works.39 The negotiations on TRIPS Agreement came about at a time when there was a deadlock between developed and less developed countries over the revision of the Paris Convention for the Protection of Industrial Property before the

36JO Lanjouw, ‘The Introduction of Pharmaceutical Product Patent in India – Heartless Exploitation of the Poor and Suffering’ (1997) NBER Working Paper No. W6366, 3–4 <http://www.nber.org/ papers/w6366> accessed 15 September 2013. The author opines that the 1970 legislation weakened intellectual property protection available in India, particularly to pharmaceutical innovations. In the author’s view the pharmaceutical product innovations, as well as those for food and agrochemicals, became un-patentable, allowing innovations patented elsewhere to be freely copied and marketed in India. 37The TRIPS Agreement also contains flexibilities, including grant of compulsory licenses, and allow- ance of parallel imports. CM Correa, ‘Intellectual Property Rights and Inequalities in Health Out- comes’ in Ronald Labonté and others (eds), Globalization and Health: Pathways, Evidence and Policy (Routledge, 2009) 265. 38The Uruguay Round was the eighth round of multilateral trade negotiations, and took over seven years to complete. WTO, ‘The Uruguay Round’ <http://www.wto.org/english/thewto_e/whatis_e/ tif_e/fact5_e.htm> accessed 12 September 2013. 39UNCTAD-ICTSD, Resource Book on TRIPS and Development (UNCTAD-ICTSD, 2005) 3.

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WIPO.40 Close to 50 developing countries that sought membership at the WTO, were not granting patent monopolies for drugs at the time the Uruguay round of negotiations were taking place.41

India was a vocal opponent of the initiative to include intellectual property rights in the General Agreement on Tariffs and Trade (GATT) system, and was seen as the voice of the developing countries at the TRIPS negotiations. In July 1989, it submitted a detailed paper elaborating the developing country perspective on the negotiations.42 India, along with Brazil, Argentina and other developing countries, strongly criticized the proposal on the grounds that the GATT mandate did not allow for the discussion of substantive issues on intellectual property, and it was only the WIPO that had the institutional competence to discuss such issues.43 The Indian position was debated extensively at the negotiations,44

but towards the end of 1989 and the beginning of 1990 almost all developing countries had changed their position. The shift came about due the coercive strategies adopted by the USA, and as a result India found itself isolated in the negotiations.45 During the same period, India had sought assistance from the International Monetary Fund (IMF), to address depletion in its foreign currency reserves which had brought it to the brink of an economic crisis. It is worth pointing out that the USA was the chief benefactor of the IMF at that time and heavily influenced any outcomes.46 Due to a combination of its weak financial position and potential trade losses with the USA, India relaxed its opposition to the TRIPS Agreement at the negotiations.47 With India agreeing to accede to the TRIPS

40The 1980s and 1990s saw the shift in the administration of international intellectual property rights from the WIPO to the GATT through the lobbying of transnational corporations (TNCs). The TNCs were convinced that renegotiation of the Paris Convention under the aegis of the WIPO will never give them the level of protection they sought. See also, PK Yu, ‘Currents and Crosscurrents in the International Intellectual Property Regime’ (2004) 38(1) Loy LA L Rev 323, 357–358. 41CM Correa, ‘Patent Rights’ in CM Correa and AA Yusuf (eds), Intellectual Property and Inter- national Trade: The TRIPS Agreement (2nd edn, Kluwer, 2008) 227, 229. 42UNCTAD-ICTSD (n 39) 6. 43J Watal, Intellectual Property Rights in the WTO and Developing Countries (Kluwer Law Inter- national, 2001) 21. See generally P Drahos, ‘Developing Countries and International Intellectual Property Standard-Setting’ (2002) UK IPR Commission Study Paper 8 <http://www. iprcommission.org/papers/pdfs/study_papers/sp8_drahos_study.pdf> accessed 2 October 2013. 44UNCTAD-ICTSD (n 39) 7. India had all along argued that any principle or standard relating to IPRs should be carefully tested against the needs of developing countries, and that it would be inappropriate to focus the discussions on the protection of the monopoly rights of the owners of intellectual property, when almost 99% of the patents were owned by industrialized nations. It also stressed that substantive standards on intellectual property were more in the realm of socio-economic, industrial and techno- logical development, especially in the case of developing countries. It urged that the group focus on restrictive and anti-competitive practices of the owners of IPR and evolve standards and principles for their elimination to avoid distortion of trade. 45RC Bird and DR Cahoy, ‘The Emerging BRIC Economies: Lessons from Intellectual Property Negotiation and Enforcement’ (2007) 5 Nw. J. Tech. & Intell. Prop. 1 400, 403–404. See also Watal (n 43). For a detailed account of the TRIPS negotiations, see DJ Gervais, ‘Intellectual Property, Trade & Development: The State of Play’ (2005) 74(2) Fordham L Rev 505. 46GK Foster, ‘Opposing Forces in a Revolution in International Patent Protection: The U.S. and India in the Uruguay Round and Its Aftermath’ (1998) 3 UCLA J Int’l L & Foreign Aff 283, 316. See also generally, Drahos (n 43). The author argues that developing nations had comparatively far less influ- ence on outcomes in the international intellectual property standard-settings, at both pre-TRIPS and post-TRIPS negotiations. The author attributes the weak position of the developing nations to the use of coercive tactics by the USA and European Union (EU), who had all along stressed the need for excessively high global standards on intellectual property protection. 47Foster (n 46) 317.

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Agreement, any opposition from the developing countries on the inclusion of intellectual property rights protection into the WTO’s covered agreements came to an end.

Following concerns raised by African groups and supported by other developing countries, the Council for TRIPS48 agreed to deal specifically with the relationship between the TRIPS Agreement and public health. Developing countries had argued that the TRIPS Agreement did not limit their sovereign powers when addressing health crises such as HIV/AIDS, but on the other hand the USA and Switzerland argued that the only flexibility afforded by the Agreement was its staggered implementation in some cases. There was a growing concern amongst the developing countries that patent rules might restrict access to affordable medicines for their citizens, and also impede their efforts to control diseases of public health importance, including HIV/AIDS, tuberculosis and malaria. In June 2001, for the first time, the Council for TRIPS systematically considered the relationship between public health and TRIPS.49

The Doha Declaration on TRIPS and Public Health (the Doha Declaration) made on November 2001, helped in resolving the above concerns and other divergent perspectives and views held by the member states on the application and ambit of the TRIPS Agree- ment.50 The concerns raised by India and other developing countries51 regarding the impli- cations of the TRIPS Agreement on public health were reflected in the adoption of the Doha Declaration on the TRIPS Agreement and Public Health. WTO members also adopted a special Ministerial Declaration at the WTO Ministerial Conference in Doha to clarify ambi- guities between the need for governments to apply the principles of public health and the terms of the Agreement on TRIPS. One of the key issues emphasized in the Doha Declara- tion was that the provisions of the TRIPS Agreement should ‘be read in the light of the object and purpose of the Agreement as expressed, in particular, in its objectives and prin- ciples.’52 The Doha Declaration proclaimed that each member had the right to grant com- pulsory licenses, and to determine the grounds for the grant and also what constituted a national emergency.

To some degree the economic liberalization policy introduced in the early 1990s can be seen as one of the factors in India relaxing its robust opposition to the inclusion of intellec- tual property rights within the ambit of the WTO.53 India’s accession to the TRIPS Agree- ment, and its move from being a process patent regime to a product patent regime was viewed by some54 in India as a clear departure from the vision the founders had of a free

48The Council for TRIPS is charged with the monitoring of WTO members’ compliance with their obligations under TRIPS. The legal basis for the establishment of the Council is found in Article IV.5 of the WTO Agreement, which stipulates that the Council ‘shall oversee the functioning’ of TRIPS Agreement. See also UNCTAD-ICTSD (n 39) 739. 49The World Health Assembly had in 1996 examined the relationship between public health and the TRIPS Agreement, as it was mandated to report on the impact of the work of the WTO with respect to national drug policies and essential drugs. This was addressed in a resolution on the Revised Drug Strategy, Resolution WHA49.14 (25 May 1996). 50JT Gathii, ‘The Legal Status of Doha Declaration on TRIPS and Public Health under the Vienna Convention on the Law of Treaties’ (Spring 2002) Harv JL & Tech 292, 293. 51The developing countries were well supported by the NGOs during the negotiations. Drahos (n 43) 26–28. 52Doha Declaration on the TRIPS Agreement and Public Health <http://www.wto.org/english/ thewto_e/minist_e/min01_e/mindecl_trips_e.pdf> accessed 12 October 2013. 53VK Unni, ‘Indian Patent Law and TRIPS: Redrawing the Flexibility Framework’ (2011) 25 Global Business & Development Law Journal 323, 330. 54One of the strong critics of the TRIPS Agreement was Justice VR Krishna Iyer, a former judge of the Supreme Court of India and a panel member of the People’s Commission on GATT, which filed its

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India. The action was strongly criticized, as it was first viewed as being in violation of the fundamental rights guaranteed under Constitution of India, and second, the TRIPS Agree- ment valued and prioritized the economic gains of patent holders living in faraway countries, ahead of the millions who would suffer from non-availability of affordable medi- cines.55 This was not just about India, but also about other developing and least developed Countries that relied strongly on the generic drugs produced by Indian drugs manufacturers.

3.2. TRIPS compliance

The accession to TRIPS Agreement mandated India to carry out fundamental changes to its existing intellectual property laws, especially in relation to patents.56 India was to change its patent laws to recognize product patents and move away from process patents. Following the transitional arrangement provisions in the TRIPS Agreement, India was not required to comply with the product patent requirements of TRIPS until 2005,57 while least developed Countries were given an extension up to 1 January 2016 by the TRIPS Council, which met in 2002. Nevertheless, India as per Art 70.8(a) was mandated to create a ‘mailbox’ for the filing of patent applications that would be examined when changes to the law were made and came into effect in 2005.58 The mailbox facility set up by India following the Appellate Body’s report,59 allowed for the filing of pharmaceutical product patent applications pending the introduction of changes to the Patent Act of 1970.

The TRIPS Agreement also required the grant of exclusive marketing rights (EMRs) for mailbox applications60 that met specific conditions during the transitional period.

report in 1996. He was of the strong view that the act of signing the TRIPS Agreement would be ultra vires the Constitution of India. BK Keayla, ‘TRIPS Patent System and Doha Declaration: Implemen- tation Process by India’ (2004) RGICS Working Paper Series No. 45, 3 <http://www.rgics.org/pdf1/ wpn-45.pdf> accessed 10 October 2013. 55Justice VR Krishna Iyer, ‘Human Health and Patent Law’ Frontline 17(21) (14–27 October 2000) <http://www.frontline.in/static/html/fl1721/17210790.htm> accessed 15 October 2013. 56The TRIPS Agreement obligates all WTO members to make available a 20-year patent protection for novel, non-obvious and useful inventions, whether products or processes. Although the obli- gations under the TRIPS Agreement relate to all the areas of intellectual properties identified by the Agreement, it was the obligation relating to patents that required the most changes as far as India was concerned. S Raghavan, ‘Patent Amendments in India in the Wake of TRIPS’ CASRIP Newsletter (Winter 2001) 1 <http://www.law.ou.edu/faculty/facfiles/CASRIP.pdf> accessed 18 Sep- tember 2013. 57TRIPS Agreement, Articles 65(2) and 65(4), in certain cases, allow delaying the application of the provisions on product patents to such areas of technology for an additional period of five years. See also L Chung, ‘Use of Paragraph 6 System for Access to Medicines’ (2010) 36 NCJ Int’l L & Com Reg 137, 174. 58TRIPS Agreement, Art 70.8(a), requires developing countries to set up a ‘mailbox’ system during the transitional period. 59As India failed to formally enact the ‘mailbox’ regime into law, the US resorted to the WTO’s dispute resolution mechanism. WTO, India-Patent Protection for Pharmaceutical and Agricultural Chemical Products –Report of the Appellate Body (19 December 1997) WT/DS50/AB/R, where India was directed to set up the ‘mailbox.’ Following the report of the Appellate Body, the ‘mailbox’ was implemented by the Patents (Amendment) Act, 1999, No. 17, Acts of Parliament, 1999, ss.2 and 3. India also took other steps towards complying with TRIPS requirements in 2002, when it extended a 20-year term to all patents, reversed the burden of proof in process infringement cases, and introduced for the first time a definition of ‘inventive step.’ The Patents (Amendment) Act, 2003, No. 38, Acts of Parliament, 2003, ss.27 and 43, 3(f). 60KG Narendranath, ‘Patent Mailbox Opens, Pfizer Is Top Applicant’ The Financial Express (21 March 2005) <http://www.financialexpress.com/old/fe_full_story.php?contend_id=8578> accessed

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Under Article 70.9, if the products featured in the mailbox applications were granted patent, and had also obtained marketing approval in any of the WTO member countries, then India was obligated to grant a five year EMRs before the patent on the product was either granted or rejected in India.61 In March 1999, India passed the Patents (Amendment) Act 1999,62 to implement the mailbox procedure as per Article 65(4) of the TRIPS Agree- ment. The 1999 Act was given retroactive effect from 1 January 1995 to facilitate receipt of patent applications for pharmaceutical and agro-chemical products under the mailbox procedure.

A second amendment to the 1970 Act was made in 2002, which introduced a 20 year patent term,63 reversed the burden of proof for process patent infringement, and also modi- fied the compulsory licensing requirements.64 The passing of the 2002 Amendment Act also concluded India’s accession to the Paris Convention for the Protection of Industrial Property 1883, and the Patent Co-operation Treaty 1970. The combined effect meant that the India had to follow the national treatment principles laid down in the Paris Con- vention and also grant a 12 month priority period for foreign applicants who had previously filed a patent application in their home countries.65 One of the notable changes brought about by the 2002 amendment was the grounds for seeking compulsory license of pharma- ceutical patents. Broadly, a compulsory license can be sought in the case of non-working of the patented work after three years of sealing of the patent, in the event of a national emer- gency (through a government notification), or in certain cases where patents are essential for the efficient working of other patented inventions.66 In conclusion it can be stated that the 2002 Amendment laid the groundwork for the passing of the Patent (Amendment) Act 2005.

4. The Amendment Act 2005

The membership of the WTO was expected to spur the economic growth of a nation, and India was doing as much as possible to create an environment to achieve this goal and bring in foreign investment. To this end, and to meet the obligation as a WTO member,

14 October 2013. Around 9000 mailbox applications were filed during the transition period, of which 84% originated from multinational corporations, with Pfizer coming first. Indian submissions totalled for 1406, including 1300 in the pharmaceutical sector. Applications from the USA topped the list, fol- lowed by India, Germany and the UK. 61TRIPS Agreement, Art 70(9) requires the grant of EMRs in certain cases following the setting up of the ‘mailbox’ provision under Art 70(8). See also B Dhar and KM Gopakumar, ‘Effect of Product Patents on the Indian Pharmaceutical Industry’ Centre for WTO Studies, Indian Institute of Foreign Trade (2008) 6 <http://wtocentre.iift.ac.in/Papers/3.pdf> accessed 19 October 2013. 62The Patents (Amendment) Act 1999, No. 17, Acts of Parliament, India (1999) <http://www.wipo. int/edocs/lexdocs/laws/en/in/in030en.pdf> accessed 14 October 2013. 63Prior to the 2002 Amendment, pharmaceutical process patents issued under the 1970 Act lasted for a period of five years from sealing, or seven years from the date of the patent, whichever was less. 64The Patents (Amendment) Act 2002, No. 38, Acts of Parliament, India, 2002 <http://www.wipo.int/ wipolex/en/text.jsp?file_id=207496> accessed 14 October 2013. 65Article 2, and Article 4(C)(1) (Paris Convention for the Protection of Industrial Property 1883, as amended on 28 September 1979) <http://www.wipo.int/export/sites/www/treaties/en/ip/paris/pdf/ trtdocs_wo020.pdf> accessed 15 October 2013. 66Sections 84, 92 and 91 respectively of the Patents (Amendment) Act 2002, No. 38, Acts of Parlia- ment, India (2002) <http://www.wipo.int/wipolex/en/text.jsp?file_id=207496> accessed 14 October 2013.

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India was to pass the Patent (Amendment) Act 2005.67 This Amendment Act was pre- ceded by a presidential ordinance in 2004.68 The efforts to make changes to the patent laws generated much controversy even in the discussion stages,69 both in India and abroad, as the action of the Indian Government was seen as overzealous in some quar- ters.70 The NGOs and the World Health Organization (WHO) in particular, were con- cerned about the plight of the HIV/AIDS sufferers in the least developed Countries and those who were strongly reliant on Indian generic drugs.71 On the one hand India was bound by its obligations to WTO, the international body facilitating negotiations in world trade, and on the other hand it was strongly urged by a UN Special Envoy to ensure that India’s new patent laws did not harm the supply of generic drugs to the devel- oping countries.72

The picture that emerged at that time was a collage of worry, expectation and disbelief, as it was generally perceived that any action taken to change the patent regime other than a process patent will have a long lasting impact on India and its generic drug producers, on pharmaceutical patents around the world, and most importantly on millions of sufferers of HIV/AIDS living in the least developed Countries,73 who were heavily reliant on India’s generic ARVs. There was also a growing feeling that the Indian government was working on a TRIPS compliant patent legislation that could potentially jeopardize access to medicines for many poor patients in the developing world. Against this backdrop, India passed the Patent (Amendment) Act 2005, to bring its patent laws in line with the TRIPS Agreement, while bearing in mind its unwritten commitment to the developing countries and least developed Countries that almost exclusively relied on its generic drugs to do battle with the scourge of HIV/AIDS. The 2005 Amendment Act, contains a wider framework for compulsory licensing, incorporates procedures governing both ‘pre- grant’ and ‘post-grant’ opposition to patent applications, contains provisions on ‘patentable subject matter’ and ‘exhaustion of patent rights,’ and most importantly witnesses the setting up of an ‘inventive step’ for patentability into the patent regime.

67See statement of Kamal Nath, the then India Union Minister of Commerce & Industry, on the Ordi- nance Relating to Patens (Third) Amendment, Press Information Bureau, Government of India (27 December 2004) <http://pib.nic.in/newsite/erelease.aspx?relid=6074> accessed 15 October 2013. 68The Patents (Amendment) Ordinance, 2004, Ordinance No. 7, India <http://lawmin.nic.in/Patents% 20Amendment%20Ordinance%202004.pdf> accessed 15 October 2013. 69R Ramesh, ‘Cheap AIDS Drugs under Threat’ The Guardian UK (London 23 March 2005) <http:// www.theguardian.com/world/2005/mar/23/india.aids1?INTCMP=SRCH> accessed 13 October 2013. 70See, letter from Achmat Dangor, Director of Advocacy, Communication and Leadership for UNAIDS, to Kamal Nath, the then Minister of Commerce and Industry of India on the Amendments to the Patents Act under Debate (23 February 2005) <http://www.cptech.org/ip/health/c/india/ unaids02232005.html> accessed 15 October 2013. 71See Letter from UN Special Envoys for HIV/AIDS to the then Prime Minister and President of India on the Amendments to the Patents Act under Debate (11 March 2005), where India’s efforts and role in promoting access to essential medicines is referred to as being crucial <http://www.cptech.org/ip/ health/c/india/unaids03112005.html> accessed 15 October 2013. 72Ibid. 73See Letter from Jim Yong Kim, HIV/AIDS Director of the World Health Organization to Dr A Ramadoss, the then Minister of Health and Family Welfare of India (17 December 2004) <http:// www.cptech.org/ip/health/c/india/who12172004.html> accessed 15 October 2013.

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4.1. Compulsory licensing

The discussion on the issue of compulsory license became more intense in the 1990s with the HIV/AIDS crisis. The population that is most affected from the crises live in developing and least developed countries, where generic ARVs are seen as the only answer, as patented drugs for the treatment of the disease are absolutely unaffordable. Currently, India is the leading exporter of generic ARVs in the world.74 Patent protection is cited as one of the reasons for the limited availability and affordability of medication for the treatment of HIV/AIDS.75 Compulsory licensing of patented drugs is said to be one of the essential pillars of the patent system, and found in international conventions,76 that enables the access to essential medicines in times of need. It is well recognized that compulsory licences play an important role in preventing abuse of patent rights that may arise, when a patent holder, using its statutory rights, tries to pre-empt entry of competitors.77

The Doha Declaration states that every WTO member has ‘the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted.’78

As mentioned earlier, the Amendment Act 2005 contains a much liberal framework for the grant of compulsory license, and the Indian government preserved the original provisions of the 1970 Patents Act regarding compulsory licensing for use within India.79 Similar pro- visions on compulsory licensing have also been introduced into Brazilian legislation.80

Under s.84 of the Act, an application for compulsory license is sustainable three years from the grant of a patent, upon successfully satisfying the condition that the ‘reasonable requirements of the public with respect to the patented invention have not been satisfied,’ that ‘the patented invention is not available to the public at a reasonable price,’ and lastly the patented invention is not worked in the territory of India.81 The circumstances for ‘reason- able requirements of the public’ would arise if the patent holder refuses to grant a licence on reasonable terms. This refusal, in turn, can affect the development of new trade or industry

74Waning and others (n 35). 75Ibid. 76Article 5A of the Paris Convention for the Protection of Industrial Property provides for the signa- tories to the Convention to have the right ‘to take legislative measures providing for the grant of com- pulsory licenses to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent, for example, failure to work.’ Under Art 5A ‘failure to work,’ or ‘insufficient working’ of a patent would tantamount to abuse of the patent rights, and can be seen as giving raise to grounds for the grant of compulsory license. GHC Bodenhausen, Guide to the Application of the Paris Convention for the Protection of Industrial Property (WIPO Publication, 2007) 67–73. See also Article 31, TRIPS Agreement (‘Other Use Without Authorization of Rights of Holder’) and Article 30, TRIPS Agreement (‘Exceptions to Rights Conferred’). The Doha Declaration, seen as a corollary to the TRIPS Agreement, proclaims that each member had the right to grant compulsory licenses. 77Dhar and Gopakumar (n 61) 15. See also S Barnes, Note, ‘Pharmaceutical Patents and TRIPS: A Comparison of India and South Africa’ (2003) 91 Ky LJ 911, 922. 78Doha Declaration on the TRIPS Agreement and Public Health (n 52). 79See Indian Patents (Amendment) Act 1999. Sections 84, 86, 89, 92 and 93 of the Patents Act govern domestic compulsory licenses, which remains largely unchanged by the Amendment Act of 2005. See also Waning and others (n 35). 80See generally Articles 68–74, Chapter VIII, Section III, Law No. 9.279 of 14 May 1996, to Regulate Rights and Obligations Relating to Industrial Property (Brazilian Laws), which provides for the grant of compulsory licences under various circumstances. It is worth mentioning that Brazil used the threat of compulsory licenses on the patent for Glivec (marketed in the USA as Gleevec) to obtain a price discount of more than 65%. 81The Act contains a list of instances where the reasonable requirements of the public shall be deemed to be unsatisfied. See ss.84(1)–(6) of The Patents Act, No. 39 of 1970, India Code (1995) <http:// www.wipo.int/wipolex/en/text.jsp?file_id=128092> accessed 1 November 2013.

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in the country, the establishment or development of commercial activities in India, and the development of the export market for a patented article manufactured in India.82

Some NGOs have raised concerns about the three-year lock-in period prescribed under s.86(6) for lodging an application for the grant of compulsory license. Their concerns relate to the plight of HIV/AIDS sufferers living in developing and least developed countries, who were fast developing resistance to first-generation ARV drugs, and therefore will be in need of second and third-generation drugs in a short time. These second and third-generation drugs are mostly under patent, and going by s.84(6) will not be available for compulsory licensing for three years.83 The Indian Government in its Amendment Act 2005 expanded the opportunities to obtain compulsory licences for export of patented pharmaceuticals to least developed Countries. The new Act confers on the government the powers to grant a compulsory license in circumstances involving national health emergencies,84 and it also provides the mechanisms to manufacture and export patented medicines to other countries that do not have the necessary infrastructure to manufacture drugs.85

From a reading of the relevant provisions on compulsory licensing, it is clear that the Indian Government and the Controller of Patents are vested with sweeping powers to grant compulsory licenses in suitable cases. Before the grant of any compulsory license the concerned authority is required to take into account additional factors such as, the nature of the invention and the measures already taken by the patentee or licensee to make full use of the invention, the ability of the applicant to work the invention to the public advantage, the capacity of the applicant to undertake the risk in providing capital and working the invention, and the efforts made by the applicant to obtain a licence from patentee on reasonable terms and conditions and that such efforts were not successful within a reasonable period.86

Some commentators are sceptical about these provisions. In their view the procedural requirements are too onerous and could result in delays, as it is not clear if the grant of a compulsory license would be automatic if a patentee refuses to issue a voluntary license on reasonable terms, as the grounds for determination of anti-competitive practices in India have not been spelt out clearly either in the Patents Act, or in the Indian Competition Act 2002.87 It can be said that the Amendment Act 2005, through its provisions, protects India’s existing generics drugs industry, as a patentee cannot possibly bring a patent infrin- gement action against a generic manufacturer who has been producing a patented product prior to 2005, and who also continues to manufacture the product on the date of the patent grant. Some writers have criticized this as essentially being a ‘compulsory

82Dhar and Gopakumar (n 61) 16. 83D Jain and JJ Darrow, ‘An Exploration of Compulsory Licensing as an Effective Policy Tool for Antiretroviral Drugs in India’ Health Matrix (2013) 23(2) Journal of Law-Medicine 438–439 <http://law.case.edu/journals/HealthMatrix/Documents/23HealthMatrix2.Darrow.pdf> accessed 2 November 2013. 84The Patents (Amendment) Act, 2005 s.55 (updating s.92A). 85Ibid. The new s.92A titled ‘Compulsory License for Export of Patented Pharmaceutical Products in Certain Exceptional Circumstances’ expressly provides for the manufacture of essential medicines in response to public health crises. Section 92A(1) enjoins that the importing country must have ‘insuf- ficient’ or ‘no manufacturing’ capacity, and allows for the importation of patented pharmaceutical pro- ducts from India. 86Dhar and Gopakumar (n 61) 16–17. 87Dhar and Gopakumar (n 61) 17; Jain and Darrow (n 83) 439; see also KM Gopakumar, ‘Product Patents and Access to Medicines in India: A Critical Review of the Implementation of TRIPS Patent Regime’ (2010) 3(2) The Law and Development Review 325, 340–341 (Article11).

14 J. Sundaram

license’ granted to the generics producers.88 Since the introduction of the new laws in 2005, the offices of the Controller of Patents, having offices in the four major cities in India, have been inundated with applications from overseas corporations. During the same period there had been a number of applications received from Indian generic drugs manufacturers for grant of compulsory license. In this regard, a couple of decisions made by the authorities in India in recent months are taken up for study as they present con- trasting pictures.

4.1.1. Natco v. Bayer

Sorafenib Tosylate is a drug used in the treatment of liver and kidney cancer. The patent holder, Bayer Corporation was marketing the drug under the trade name of Nexavar. Bayer Corporation, extended its patent application for Sorafenib Tosylate to India in 2001, and the registration was granted in March 2008. Further, the Indian authorities granted Bayer regulatory approval for marketing the drug under the trade name Nexavar in India in 2008. In July 2011, Natco Pharmaceuticals Ltd., an Indian generics manufacturer lodged its application for the grant of compulsory license to manufacture Nexavar.89 This was seen by some industry experts as a strategic move by Natco, as there were pending infringement actions against Natco, brought by Bayer. Natco argued that Bayer’s patented drug, Nexavar, had not been made available to the public at a reasonably affordable price, and that the reasonable requirements of the public had not been met. It was also Natco’s case that Bayer failed to work the patent in India within the specified three-year period, as it was still importing the drug into the country although it had a manufacturing unit in India, which in turn resulted in an unaffordable price being charged for the drug in India.

It was Bayer’s case that a ‘reasonably affordable price’ should be calculated with refer- ence to the public as well as the patentee and the price of the patented drugs has to be suffi- cient to support future drug development. Further, ‘working’ in relation to patents in India meant supplying the drug to the Indian market on a commercial scale, that the relatively small market demand for Nexavar did not justify the manufacture of the product in India, and that Bayer was providing the drug only to 2% of the estimated number of patients in India. The Controller of Patents considered the fact that Bayer had not at all sold the medicine Nexavar in India in 2008, and only sold very small quantities in 2009 and 2010. The Controller of Patents found that all the necessary grounds prescribed under s.84 of the Indian Patents Act for the grant of a compulsory licence were met, as Bayer did not meet the reasonable requirements of the public with respect to the patented drug Nexavar, that Bayer’s pricing of the drug was exorbitant and did not constitute a ‘reason- ably affordable’ price, and that Bayer could not be said to have complied with the ‘working’

88R Chodock ‘TRIPS: Transformation of the Indian Patent System and Its Effect on the Indian Pharmaceutical Sector’ No. 2 ABA (Fall 2005) (4) The Scitech Letter 4, 6 <http://www.paulweiss. com/media/1825664/00000001.pdf> accessed 2 November 2013; AK Hason and JE Shimotake, ‘Recent Developments in Patent Rights for Pharmaceuticals in China and India’ (2006) 18 Pace Int’l L Rev 303, 313–14. 89Prior to lodging the above application, Natco Pharmaceuticals had filed applications for grant of compulsory license under s.92A of the Indian Patent Act for two cancer drugs, namely, Suninat and Tarceva as early as 2007. Suninat and Tarceva are patented to Pfizer and Roche, respectively. Natco intended to manufacture and export them to Nepal, but later withdrew its application for grant of compulsory license.

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requirements under the Indian Patent Act, as it did not manufacture the drug Nexavar in India.90

On 9 March 2012, the first compulsory licence was granted by the Indian Controller of Patents at Mumbai, on the application taken out by Natco to manufacture and sell a generic version of the drug Nexavar. The drug manufactured under the compulsory license by Natco, was to cost nearly 30 times lower than that was being charged by the patent holder Bayer Corporation, and Natco was to pay Bayer a quarterly royalty at 6% of the net sales of the drug. Bayer Corporation challenged the decision of the Controller of Patents before the Intellectual Property Appeal Board (IPAB), Chennai. The IPAB in its jud- gement dated 14 September 2012, confirming the order of the Controller of Patents, held that Bayer did not satisfy the reasonable requirement of the public and that the drug was not made available at a reasonably affordable price. Bayer has since challenged the decision of the IPAB before the High Court in Mumbai. The Controller’s observations on ‘local working’ by Bayer on the drug Nexavar will prove controversial, as almost 90% of the drugs patented in India to multinationals are not manufactured in India, and could be sus- ceptible to compulsory license.91 Worthy of noting is the fact that compulsory license was granted on an application taken out by a third party and not by the government, and all parties concerned were heard following the principles and procedures set out under the TRIPS compliant Indian patent legislation.92

Some have expressed the view it is possible that India might be in violation of the non- discrimination principle mandated under Article 27(1) TRIPS,93 and others have opined that going by WTO decision in the Canada – Patent Protection of Pharmaceutical Pro- ducts94 the action is unlikely to constitute any violation.95 In the aftermath of the IPAB’s decision in the above case, there are signs that patent holding multinationals are forging alli- ances with local manufacturers in India, as they view voluntary licensing to local partners under mutually agreeable terms as an effective way to avoid compulsory licensing and also at the same time expand their market presence in the region.96 The swiftness with which the

90In the proceedings Bayer argued that Cipla, another Indian generic drugs manufacturer, had been marketing a generic version of Nexavar in India at a much lower price since April–May 2010, such that no objection regarding the medicine’s availability could be legitimately raised. However, the Controller noted that Bayer had commenced infringement proceedings against Cipla, and thus the sales carried out by an alleged infringer should not be taken into account to support Bayer’s position. 91S Basheer, ‘India’s First Compulsory License: Patents vs. Public Health?’ IP Osgoode (2 April 2012) <http://www.iposgoode.ca/2012/04/india%E2%80%99s-first-compulsory-license-patents-vs- public-health/> accessed 23 October 2013. 92The decision was welcomed by Médecins Sans Frontières (MSF), as it demonstrated that new patented drugs can be produced by generic makers at a fraction of the price. MSF Press Release <http://www.doctorswithoutborders.org/press/release_print.cfm?id=5816> accessed 5 November 2013. 93E Bonadio, ‘Compulsory Licensing of Patents: The Bayer/Natco Case’ (2012) (10) Eur IP Rev 719, 720. 94WTO, ‘Canada – Patent Protection of Pharmaceutical Products – Report of the Panel’ (17 March 2000) WT/DS114/R. 95Basheer (n 91). The author also argues that TRIPS is premised on the promise of technology transfer to developing countries, and that a local working provision is geared towards encouraging such tech- nology transfer. 96Some of the alliances referred to here are marketing arrangements and does not include technology transfer to local manufacturing units. See CH Unnikrishnan, ‘Compulsory License May Spur More Voluntary Licensing Deals’ Livemint (24 January 2013) <http://www.livemint.com/Home-Page/

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multinational pharmaceutical corporations have reacted to the decision to avoid any further losses to their patent rights and market share is remarkable.

4.1.2. BDR Pharmaceuticals v. Bristol-Myers Squibb

Dasatinib which is used in the treatment of chronic myeloid leukemia (CML) is mar- keted by the patent holder Bristol-Myers Squibb (hereafter Bristol-Myers) under the brand name Sprycel. In March 2013, the Mumbai-based BDR Pharmaceuticals (here- after BDR) filed an application under s.84 of the Indian Patent Act before the Control- ler of Patents, Mumbai for the grant of compulsory license to manufacture a generic version of the drug Dasatinib. BDR argued that the drug had received ‘orphan drug designation’97 in the USA, Europe and Switzerland, and that it had the capacity to manufacture and supply the drugs in India. It was also contended by BDR that its efforts to engage the patentee in a dialogue for the purposes of securing a grant of a voluntary license were fruitless, and hence it was constrained to approach the Con- troller of Patents with an application for grant of compulsory license for the drug Dasa- tinib. The patentee Bristol-Myers, in contrast, was able to demonstrate that it did respond in time to the applicant’s request for voluntary license and sought additional information regarding BDR’s capabilities, intent, etc., but did not receive any response from the applicant.

The Controller of Patents concluded that the applicant BDR failed to satisfy the requirements for grant of a compulsory license under s.84 of the Indian Patent Act. The Controller of Patents observed that the stage to make a decision on the merits of the case presented under s.84 had not arrived yet, as the applicant deliberately refrained from engaging in any kind of dialogue with the patentee for the purposes of securing the grant of a voluntary license, and also the applicant did not follow the scheme of law and the procedure mandated for the grant of a compulsory license under s.84 of the Indian Patent Act.

To the patentee Bristol-Myers, the decision is a relief, as it did not lose any revenue on its patent, but is a big disappointment to millions of patients suffering from CML, as the drug will not be accessible due its very high price. In India, a month’s dose of the drug costs about Rs 100,000, and BDR’s application for compulsory license was based on the premise that it will be able to sell a month’s dose of the drug for a mere Rs 8100. In sharp contrast to the response to the decision made in the Natco v. Bayer case, which was received with shock by multinational drug manufacturers operating in India, the decision in the BDR v. Bristol-Myers case was received in muted silence. The above two applications for grant of compulsory licenses were made under s.84 of the Indian Patent Act. The decision demonstrates that Indian authorities are keen to interpret the law in the light of its true purport, and compulsory licence will not be granted on all applications.

f0R9060osU7bENFNwlnx5O/Compulsory-licences-may-spur-more-voluntary-licensing-deals.html> accessed 23 October 2013. 97Orphan drugs are used in the treatment of patients with rare diseases. The term orphan drug is used both in US and EU legislations to describe a drug that is indicated for a rare disease, or ‘orphan disease.’ Under the US Orphan Drug Act, ‘orphan drug’ designation is accorded if the drug is intended to treat a condition affecting fewer than 200,000 of the population in the USA, or which will not be profitable within seven years following approval by the Food and Drug Administration (FDA). In the EU it is intended to treat a disease affecting fewer than 5 per 10,000 of the population.

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4.1.3. Other developments

In February 2013, while the above applications for the grant of compulsory licenses were pending, the Department of Industrial Policy and Promotion (DIPP) sought details from the Indian Health Ministry regarding three medicines sold by Roche and Bristol-Myers Squibb. The drugs in question were Trastuzumab, Ixabepilone and Dasatinib, which are expensive and unaffordable, and used in the treatment of cancer.98 As a follow up, in August 2013, the DIPP has had further discussions with the Drug Controller General of India (DCGI) on whether marketing approval had been sought for the above drugs by generic drug makers, as it was considering a health ministry proposal for issuing a compulsory license for Trastuzumab under s.92 of the Indian Patent Act.99 Section 92(1) of the Patent Act vests discretionary powers on the Indian Government to issue a compulsory licence in cir- cumstances of national emergency, extreme urgency, or in case of public non-commercial use. Any decisions taken by the DIPP in this regard will have a major impact on the generics pharmaceutical industry in India and the accessibility to medicines for cancer treatment.

The requirement of the statute is that the grant of the compulsory licence must be ‘necessary’ for such purposes mentioned, and the same is to be followed by a declaration by notification in the Official Gazette.100 According to s.117A of the Patents Act, the noti- fication under s.92 may be challenged at the Intellectual Property Appellate Board (IPAB), and in addition, it may also be challenged at the High Court. The grant of a compulsory license by the government under s.92 of the Act differs from a grant under s.84 of the Act by the Controller of Patents, as the government can under s.92, issue a compulsory license if in its view there existed a national emergency. Proceedings falling under s.92 do not follow the same procedural rigours of s.84, and is less time consuming.

In a separate development, the Swiss drug manufacturer Roche decided not to seek extension of its patent for the cancer drug Herceptin in India, which expired in May 2013, thereby paving the way for generic drug makers to manufacture the drug.101

Roche had come under severe pressure from the Indian Government to cut the prices of key anti-cancer drugs as it is beyond the reach of a large number of cancer patients. It is pertinent to mention that Biocon-Mylan, Reliance Life Sciences and BDR are some of the companies who are currently working on a copy of the cancer drug Herceptin in India.102

4.1.3.1. Criticism. The procedure laid down for the grant of compulsory license under the new laws is cumbersome and long drawn, with no time limit specified in the Act or the Rules for the disposal of an application. Lack of clarity in this regard could see the

98Press Trust of India, ‘DIPP Seeks Details of 3 Cancer Drugs for Compulsory Licensing’ The Econ- omic Times (21 February 2013) <http://articles.economictimes.indiatimes.com/2013-02-21/news/ 37221846_1_nexavar-drug-dasatinib-trastuzumab> accessed 14 October 2013. 99S Das, ‘DIPP May Seek Information from DCGI to Manufacture Generic Version of Roche’s Anti- Cancer Drug’ The Economic Times (6 August 2013) <http://articles.economictimes.indiatimes.com/ 2013-08-06/news/41131672_1_compulsory-licence-trastuzumab-leena-menghaney> accessed 14 October 2013. 100Sections 84, 92 and 91, respectively, of he Patents (Amendment) Act 2002, No. 38, Acts of Parlia- ment, India (2002) <http://www.wipo.int/wipolex/en/text.jsp?file_id=207496> accessed 14 October 2013. 101D Rajagopal, ‘Swiss Drug Major Roche to Drop Anti-Cancer Drug Herceptin Patent in India’ The Economic Times (16 August 2013) <http://articles.economictimes.indiatimes.com/2013-08-16/news/ 41417840_1_major-roche-herceptin-patent-office> accessed 14 October 2013. 102Ibid.

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compulsory license provision becoming redundant and unusable for the purposes for which it was incorporated into the Act. Further, the Act does not fully utilize the TRIPS flexibil- ities, as any final decision regarding the use of a patented invention under compulsory license can be challenged in a court of law and an injunction sought to prevent the use of a patented invention.103 Under Article 44 of the TRIPS Agreement there is no obligation on the part of a Member State to provide for the remedy of injunction against government use. The practices in the USA and UK, in this regard are different and less cumbersome, as the governments in both countries can take over the patented invention without seeking a license or engage in lengthy negotiations with the patent holder. The only remedy available is for the patent holder to sue the government for compensation, and not for an injunc- tion.104 Some commentators opine that India, with public sector pharmaceutical industry, should strengthen the government use provisions in its Patent Act105 and remove any uncertainties.

4.1.3.2. Question. The question that comes to haunt us is, if such grant of compulsory licenses will in any way fail to provide incentives to innovate in India, and drive away inter- national corporations from India. Critics of the compulsory license regime have always argued that grant of compulsory license discourages innovation. Issuing of patent is strongly predicated on the premise that it encourages innovation by offering a limited mon- opoly to the patentee, which presents the argument that compulsory licenses will kill off innovation. There is no strong empirical evidence to suggest that compulsory licences do have a negative effect on innovation.106 In contrast, the studies available only indicate that compulsory licenses do not have any significant demonstrable effect on the rate and pace of innovation.107 There are also others who seriously question the efficacy of the com- pulsory licensing system under the TRIPS Agreement, which they think has not helped in achieving the goal of access to affordable medicines.108 For now, the evidence seems to suggest that grant of compulsory license does not affect innovation in the Indian pharma- ceutical sector which is dominated by generic manufacturers.

4.2. Pre-grant and post-grant opposition

Section 25 of the Patent (Amendment) Act 2005 provides for pre-grant opposition109 of patents in India. Under this provision any third party can challenge the application for grant of patent. Section 25(1) lists 11 grounds for lodging a pre-grant opposition and chal- lenge the grant of a frivolous or invalid patent. The introduction of pre-grant and post-grant

103Gopakumar (n 87) 341. 104CM Correa, ‘Intellectual Property Rights and the Use of Compulsory Licenses: Options for Devel- oping Countries’ (1999) Trade-Related Agenda, Development & Equity, South Centre, Working Paper No. 5, 14 <http://www.iatp.org/files/Intellectual_Property_Rights_and_the_Use_of_Co.pdf> accessed 15 October 2013. 105Basheer (n 95). 106Ibid. 107C Chien, ‘Cheap Drugs at What Price to Innovation: Does Compulsory Licensing of Pharmaceu- ticals Hurt Innovation?’ (2003) 18 Berkeley Tech LJ 853, 896–907. 108K Paas, ‘Compulsory Licensing Under the TRIPS Agreement – A Cruel Taunt for Developing Countries?’ (2009) 31(12) Eur IP Rev 609–613. 109See generally, S Tripathi, ‘Pre-Grant Oppositions and Refusal of Grant’ (1 June 2013) <http:// papers.ssrn.com/sol3/papers.cfm?abstract_id=2273074> accessed 22 October 2013.

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opposition under the amended patent laws is viewed by some developed countries as a con- troversial step, as it slows down the grant of patents.

The Patent (Amendment) Act 2005 also provides for taking out a post-grant opposition within one year from the date of publication of the grant of patent, and the same can be viewed as a second-window of opportunity for lodging any opposition.110 Under this pro- vision any ‘interested person’ may give notice of opposition to the Controller in the pre- scribed manner on any of the grounds mentioned in s.25 of the Patent (Amendment) Act 2005. The grounds for both pre-grant and post-grant opposition are identical, and there is nothing in the Act to preclude a pre-grant opponent from subsequently filing a post- grant opposition on the same patent.

4.2.1. Criticism

The opposition at the pre-grant stage is more by way of representation as opposed to notice of opposition, and further, there is no scope for an appeal against the decision of the Con- troller on any pre-grant opposition.111 The only remedy that is open to the aggrieved party in such circumstances is to seek judicial review under the Constitution of India,112 which can be a lengthy procedure allowing the patent holder to enjoy a wrongful monopoly during the pendency of such proceedings before the court. Some generic drugs manufac- turers and public interest groups have utilized the pre-grant provisions to prevent frivolous patents, but the provision still remains under utilized due to barriers in accessing infor- mation.113 Denial of access to, or non-disclosure of information on pending applications pose serious threat as the Indian Patent Office does not publish full details of pending appli- cations. It is important to clarify this provision, especially when India has introduced measures to check the practice of patent evergreening. The Novartis case which is discussed in the next section of this article arose out of pre-grant oppositions lodged by generic drugs manufacturers and NGOs.

4.3. Patentability and patent evergreening

The Justice Ayyangar Committee report had recommended114 the introduction of process patents into the patent laws in India. The recommendations were based on a detailed, in- depth study of post-independent India’s economic and social conditions, and the need to develop a self-reliant and self-sufficient nation. After close to 35 years,115 India has

110Article 99 of the European Patent Convention (EPC) allows for an opposition to be filed by any person within nine months of the publication of the grant of the European Patent (EP) in the European Patent Bulletin (EPB). Any opposition lodged applies to the EP patent in all contracting States where the EP patent has effect. The USA has a provision for re-examination to challenge the validity of a granted patent. Here again, the re-examination procedure can be invoked by any person at any time during the period of enforceability of a patent. The US re-examination procedures are detailed and fall under two categories, namely, ex parte re-examination and inter partes re-examination. 111Gopakumar (n 87) 345. However, it is to be pointed that the Madras High Court allowed Novartis to challenge the order passed by the Controller under the pre-grant procedure before the Intellectual Property Appellate Board (IPAB). 112Judicial review is available under Article 226 before the High Court under its ‘extraordinary orig- inal jurisdiction’ in individual states, and under Article 32 before the Supreme Court of India. 113Gopakumar (n 87) 346. 114A Report on the Revision of the Law in India Relating to Patents for Inventions (n 16). 115The Patent Act 1970 came into force on 20 April 1972.

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moved towards a product patent system, which embraces the opposite of what was rec- ommended by Justice Ayyangar Committee in 1959. One of the important changes made to the laws is the introduction of ‘patent eligibility’ under s.3(d). This provision prohibits the grant of patents on derivatives of known substances, unless such derivatives display sig- nificantly enhanced efficacy. Section 3(d) spells out such instances which will not be viewed as an ‘invention’ under the Act. The text of s.3(d) reads as follows:

(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 process results in a new product or employs at least one new reactant.

Explanation: For the purposes of this clause, salts, esters, ethers, polymorphs, metab- olites, pure form, particle size, isomers, mixtures of isomers, complexes, combicountries and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy.

Section 3(d) is aimed at denying patent for trivial modifications on existing patents and preventing the practice of ‘evergreening.’ The expression evergreening116 is used to identify the practice of obtaining multiple patents that cover different aspects of the same product, and is also known variously as ‘stockpiling,’ ‘life-cycle management,’ ‘patent- layering,’ and ‘line-extension.’ Evergreening in effect, refers to the attempts by pharma- ceutical patent owners to extend the term of patents they already hold through modified forms of the same drug, new delivery systems and new uses for the drug,117 and scho- lars have expressed serious concerns about the practice.118 Pharmaceutical companies resort to the practice with a view to maximizing on the monopoly period enjoyed by the patented drug.119 Multiple patenting of known substances, or evergreening, consider- ably delays and poses a threat for the legal entry of generics into the market, and can successfully prevent competition in the pharmaceutical market. Some from the pharma- ceutical industry believe that the term ‘evergreening’ is pejorative and is misleading.120

When India set up the ‘mailbox’ under the transitional arrangements,121 it received close to 9000 applications, and a number of the overseas applications lodged by multinational corporations through the system could be said to fall under the above category of ‘evergreening.’122

116LJ Glasgow, ‘Stretching the Limits of Intellectual Property Rights: Has the Pharmaceutical Indus- try Gone Too Far?’ (2001) 41 IDEA 227. The author analyses how pharmaceutical companies are able to lengthen the patent life of drugs to obtain an exclusive market share. 117JM Mueller and DS Chisum, ‘Enabling Patent Law’s Inherent Anticipation Doctrine’ (2008) 45(4) Hous L Rev 1101, 1106–1107; R Feldman, ‘Rethinking Rights in Biospace’ (2006) 79 S Cal L Rev 1, 30. 118JO Lanjouw, ‘A New Global Patent Regime for Diseases: US and International Legal Issues’ (2002) 16 Harv JL & Tech 85, 94–95. Here, the author defines the practise of ‘evergreening’ resorted to by pharmaceutical corporations. 119ME Furrow, ‘Pharmaceutical Patent Life-Cycle Management after KSR v. Teleflex’ (2008) 63 Food & Drug LJ 274. 120GlaxoSmithKline, Evergreening (August 2011) <http://www.gsk.com/content/dam/gsk/globals/ documents/pdf/GSK-and-evergreening.pdf> accessed 15 November 2013. 121The Patents (Amendment) Act 1999 (n 62). 122Dhar and Gopakumar (n 61) 8–9. The authors refer to the practice of granting patents to incremen- tally modified drugs (IMDs) in the USA, and how an overwhelming majority of the applications received through the ‘mailbox’ set up by India would be falling under the IMDs category.

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India’s pharmaceutical industry, being strongly driven by generic drugs manufacturers, required a strict patentability criterion to ensure the early entry of generics into the market. The introduction of s.3(d) was seen as the answer, as it aims to both increase the threshold limit of patentability criteria and also exclude certain types of inventions from the ambit of the Patent Act. This section seeks to disallow the patenting of a known substance unless it results in an enhancement of the efficacy of that substance, and can be viewed as a bold legislative step to curb the practice of ‘evergreening.’123 Importantly, s.3(d) applies to both pharmaceutical patents and chemical patents.

The section encourages sequential developments of existing products or technologies that help bring in improved products to the market, as opposed to evergreening which can be seen as the improper extension of patent monopoly of a pharmaceutical product.124 It is the first step in bringing about a fundamental shift in the way pharma- ceutical patent applications are to be scrutinized henceforth, in India. Judicial precedent has been set in the USA125 and the UK,126 both common law countries and holding a number of pharmaceutical patents, to discourage the practice of evergreening within their jurisdictions. Introduction of s.3(d) into the patent laws can be viewed as a definitive leg- islative measure taken by India to tackle ‘evergreening.’ Interestingly, the USA topped the list of pharmaceutical patent applications lodged when India set up the ‘mailbox’ under the transitional arrangement, with the UK coming fourth in the list behind Germany.127 It is worth mentioning here that a number of applications received from multinationals through the ‘mailbox’ can be seen as attempts at ‘evergreening’ of existing patents.128

4.3.1. Novartis – Glivec Saga

In 1993, Novartis AG (hereinafter Novartis) filed a patent in the USA covering the free base129 imatinib and other pharmaceutically acceptable salts. Later, Novartis derived the drug Glivec, which is the beta-crystalline form of imatinib mesylat. This drug is known to make chronic myeloid leukaemia (CML) a manageable disease by controlling cellular

123R Sen and A Ramanujan, ‘Pruning the Evergreen Tree or Tripping up Over TRIPS? Section 3(d) of the Indian Patents Act 1970’ (2010) 41 Int’l Rev of Intell Prop & Competition L 170, 186. 124Incremental innovations are not the same as evergreening, and s.3(d) draws a distinction between the two. S Basheer, Limiting the Scope of Pharmaceutical Patents and Micro-organisms: A TRIPS Compatibility Review (Intellectual Property Institute, 2005) 47–49. 125The courts in the USA rely on the doctrine of inherent anticipation to deal with instances of ‘patent evergreening,’ which was demonstrated in the judgement handed down by the Court of Appeals for the Federal Circuit (CAFC) in Schering Corp. v Geneva Pharm., Inc. (Fed Cir 2003) 339 F.3d 1373. Also, the U.S. Hatch-Waxman Act 1984 provides for financial incentives, and encourages generic firms to identify and challenge improperly issued secondary patents. That said, the provisions of the Hatch-Waxman Act, cannot be equated to the Indian Patent Act, which also provides for pre-grant opposition under the 2005 amendment. 126The courts in the UK follow similar principles to discourage patent ‘evergreening.’ See the Court of Appeal decision in Les Laboratoires Servier v Apotex Inc [2008] EWCA Civ 445. The court while dismissing the appeal held that Servier’s patent was invalid for lack of novelty and obviousness, and Lord Justice Jacob observed that ‘It is the sort of patent which can give the patent system a bad name … The only solution to this type of undesirable patent is a rapid and efficient method for obtaining its revocation. Then it can be got rid of before it does too much harm to the public interest.’ 127Narendranath (n 60). 128Dhar and Gopakumar (n 61) 8–9. 129The expression ‘free base’ is commonly used in organic chemistry and pharmaceutical research to describe the ‘deprotonated’ amine form of a chemical compound. It refers to the pure basic form of an amine, as opposed to the salt form.

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action that allows the cancer to grow. Although it does not cure the disease, it is seen as a step forward in the treatment of cancer. Novartis also marketed Glivec in the USA under the trade name Gleevec.

Novartis lodged its application for a patent in India through the ‘mailbox’ on 17 July 1998, andalsoappliedforanEMR.130 With the grantoftheEMR in2003,theconsumersinIndia saw a 10-fold increase in the price of Glivec. Novartis’ patent application for Glivec faced severe opposition from Indian generic manufacturers (against who Novartis had filed infringement suits) and the NGO, Cancer Patients Aid Association (CPAA). The main grounds for opposi- tion were that the application lacked novelty, it did not demonstrate any significant ‘efficacy’ under s.3(d), it did not have any obviousness, and it also had a wrongful priority. The opposi- tion could be heard at a stage prior to the grant of patent, as the 2005 Amendment Act had pro- vided for a ‘pre-grant’ opposition131 on any application for the issue of a patent. On 8 March 2006, agreeing with the arguments of the opposition to the patent, the Assistant Controller of Patents rejected the application taken out by Novartis holding that the new version of Glivec was not sufficiently different from the old unprotected version to warrant a patent. Novartis filed two petitions before the Madras High Court, seeking to reverse the decision of the Assist- ant Controller of Patent and to declare that s.3(d) of the Amendment Act was unconstitutional and in violation of India’s obligation under the TRIPS Agreement. Pending proceedings the Government constituted the Intellectual Property Appellate Board (IPAB),132 and the first of the petitions mentioned above was transferred to the IPAB.

Novartis also argued that s.3(d) violated Article 14133 of the Constitution of India as it vested unbridled powers on the patent Controller, leading to discriminatory results. The second of the petition mentioned above, challenging the TRIPS compliance and the consti- tutional validity of s.3(d) was heard by the Madras High Court. The court by judgement dated 6 August 2007 held that the provision in question was not in violation of article 14 of the Constitution of India134 and did not confer the Controller of Patents with uncon- trolled powers. The court held that it did not have the jurisdiction to decide on the compli- ance of a domestic Indian law to that of an International Treaty, and refused to grant a declaratory relief to Novartis. Accordingly, the court declined to deal with the issue if s.3 (d) of the Indian Patent Act was consistent with Article 27 of the TRIPS Agreement. The court also observed that the government had a constitutional duty to provide good health care to its citizens through access to medicines, and for that purpose there should be suitable legislative measures in place to prevent the practice of ‘evergreening,’ which has a negative impact on the availability of affordable medicines. The petition challenging the decision of the Controller of patents dealing with patentability of Glivec was heard by the IPAB, at Chennai, which also ruled against Novartis.135

130Narendranath (n 60). 131The Patents (Amendment) Act 2005, s.23, which replaced the old ss.25(1) and 25(2). India is one of the few countries which provide for a pre-grant as well as post-grant opposition proceedings. 132Notification No. 12/15/2006-IPR-III, dated 3 April 2007, issued by the Ministry of Commerce & Industry, under the Patents (Amendment) Act (s.117G), which authorized for all pending appeals before the High Courts to be transferred to the Appellate Board (IPAB) <http://ipindia.nic.in/ipr/ patent/gazetteofindia_apr2007.pdf> accessed 4 November 2013. 133Article 14, of the Constitution of India deals with the principles of equality before law, and postu- lates that the State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. 134Novartis Ag v Union of India and Others [2007] 4 MLJ 1153. 135Judgement of the IPAB in Novartis Ag v Union of India & Others [26 June 2009] <http://www. ipab.tn.nic.in/Orders/100-2009.htm> accessed 5 November 2013.

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Novartis was granted special leave to appeal against the above decisions to the Supreme Court of India. A total of five appeals were lodged, and on 1 April 2013, the Supreme Court of India delivered its detailed judgement on the matter.136 The Supreme Court ruled that imatinib mesylate was a known substance since 1994 and does not qualify as an ‘invention’ in terms of clause (j) and (ja) of s.2(1).137 Further, it also held that the beta-crystalline form does not satisfy the requirements of the criterion set under s.3(d). The court concluded that s.3(d) was meant to create a ‘second tier of qualifying standards’ for chemical substances to combat ‘any attempt at repetitive patenting or extension of the patent term on spurious grounds.’ Most importantly the Supreme Court interpreted efficacy to mean therapeutic effi- cacy.138 Here, the Supreme Court was linking patenting to therapeutic benefit, or more pre- cisely net benefits to society, thereby highlighting the relevance of specific conditions prevalent in a country for deciding the appropriate patent regime.139 The court rejected the appeal, as in its view Novartis could not demonstrate that the new form of the known substance was capable of enhancing the therapeutic efficacy of the drug. When Novartis made its application through the ‘mailbox,’ it was not required to make out a case for therapeutic benefit as s.3(d) was non-existent, and was only to be introduced later in 2005. Nevertheless, when Novartis was given the opportunity to produce evidence to demonstrate the therapeutic efficacy of beta-crystalline at the ‘pre-grant opposition’ stage, it did not do so as there was no study carried out and available to that effect.140

Novartis also argued that its research and development had to be recouped and hence the high price for the drug.141 What is interesting is the patent that was at issue before the Indian Supreme Court was also the target of a Hatch-Waxman challenge in the USA in 2007,142 and Novartis did not appear to have litigated in response to this challenge, suggesting that it accepted the patent as questionable even in the USA.143

The Supreme Court’s rejection of Novartis’ application means that generic drug makers can continue to sell copies of the drug at an affordable price in India. While Novartis has, natu- rally, not welcomed the decision, the Indian public, the health economists, and other interest groups have all welcomed the decision and view it as a landmark judgement. The Novartis case, through its legal debate on s.3(d) has brought into sharp focus the rights of a sovereign

136Judgement of the Indian Supreme Court Novartis Ag v Union of India & Others [1 April 2013] <http://judis.nic.in/supremecourt/imgs1.aspx?filename=40212> accessed 5 November 2013. 137The Patents (Amendment) Act 2005, s.2(1)(ja) defines inventive step as ‘ … a feature of an inven- tion that involves technical advance as compared to the existing knowledge or having economic sig- nificance or both and that makes the invention not obvious to a person skilled in the art.’ 138A Grover, ‘Analysing the Supreme Court Judgment’ (10 August 2013) XLVIII(32) Economic & Political Weekly 46, 48. 139S Chaudhuri, ‘The Larger Implications of the Novartis-Glivec Judgment’ (April 2013) XLVIII(17) Economic & Political Weekly 10, 11. 140Novartis opted to file a number of affidavits before the Intellectual Property Appellate Board (IPAB), Chennai, to prove the efficacy of beta-crystalline, instead of presenting any clinical studies to that effect. 141J Love, ‘R&D Costs for Gleevec’ Knowledge Ecology International (3 April 2013) <http://www. keionline.org/node/1697> accessed 18 November 2013. The author argues that Novartis was ably supported by significant contributions from philanthropic sources in the USA, while only spending a fraction on the R&D for the development of ‘Gleevec’ or Glivec. 142B Sampath and others, ‘Challenges to India’s Pharmaceutical Patent Laws’ (30 July 2012) 337 (6093) Science 414–415 <http://personal.lse.ac.uk/shadlen/Science,%20July2012.pdf> accessed 3 November 2013. See also ParagraphFour.com ‘Gleevec (Imatinib) Tablets’ <http://www. paragraphfour.com> accessed 4 October 2013. 143Ibid 142.

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country to build safeguards into its patent laws for protecting public interest, and also on the issue of access to affordable medicines, which is vital for the realization of health as a human right.144 Thejudgement links the key question of patenting with net benefits to society, thereby highlighting therelevance ofspecific conditions prevailing in a countryfor deciding theappro- priate patent regime to adopt.145 The Supreme Court was unequivocal in stating that the purpose of s.3(d) was to prevent the practice of evergreening.146 The case will also be seen as a legacy of the TRIPS Agreement and its flawed vision for the creation of a globally harmo- nized intellectual property protection.147 Some writers opine that the Novartis case will reach the WTO’s dispute settlement system in some form,148 although Switzerland, Novartis’s home country seems not so keen in raising a dispute.149

4.3.1.1. Criticism. Although s.3(d) is aimed at preventing the practice of evergreening, the scheme of the Act does not completely rule out the possibility of evergreening of patents.150

The definitions on the criteria of patentability and exclusions of patentability provide scope for pharmaceutical companies to work their way around s.3(d) and obtain patents for known substances.151 Empirical evidence also suggests that the Indian Patent Office may have failed to carry out strict scrutiny of patent applications and unwittingly granted patents to known substance,152 which demonstrates a weakness on the procedural side. The USA–India Business Chamber has criticized s.3(d) as capable of barring inventions that may otherwise meet the requirement of patentability and considered truly inventive. It has further stated that the removal of s.3(d) from the Amended Act would allow all incremental innovations to undergoexamination and be treated in the same manner regardless of industry or field of tech- nology.153 Much criticism had also flown from the USA on India’s new patent laws, especially aimed at s.3(d),154 whereas, there are others who recognize India’s new patent laws as a model for developing countries to embrace on the use of the TRIPS

144R Chandra, ‘The Role of National Laws in Reconciling Constitutional Right to Health with TRIPS Obligations: An Examination of the Glivec Patent Case in India’ in Thomas Pogge and others (eds) Incentives for Global Public Health: Patent Law and Access to Essential Medicines (Cambridge Uni- versity Press, 2010) 381, 389. 145Chaudhuri (n 139) 12. 146Judgement of the Indian Supreme Court Novartis Ag v Union of India & Others (n 136) paragraphs 100–102. 147D Rangnekar, ‘The Supreme Court Judgment: Lawmaking in the South’ (10 August 2013) XLVIII (32) Economic & Political Weekly 39. 148ZL Turrill, ‘Finding the Patent Balance: The Novartis Glivec Case and the TRIPS Compliance of India’s Section 3(d) Efficacy Standard’ (2013) 44 Geo J Int’l L 1555, 1566. 149E Silverman, ‘Swiss Government Won’t Go to Bat for Novartis’ Pharmalive (7 August 2007) <http://www.pharmalive.com/swiss-govt-wont-go-bat-novartis> accessed 19 October 2013. 150KM Gopakumar, ‘The Need to Curb Patents of Known Substances’ (10 August 2013) XLVIII(32) Economic & Political Weekly 56. In the author’s estimation close to 3500 product patents have been granted by the Indian Patent Office between 2007 and 2010, and in the author’s view many of these patents are likely to have been granted in violation of s.3(d). The author also advocates a review of all these patents in the light of the Supreme Court judgement in the Novartis case. 151Gopakumar (n 103) 335. 152Ibid 338; see also Gopakumar (n 150). 153White & Case and DUA Consulting, ‘The Value of Incremental Pharmaceutical Innovations – Benefits for Indian Patients and Indian Business’ Report prepared for US-India Business Council (June 2009) 17 <http://www.indiaenvironmentportal.org.in/files/USIBCIncrementalInnovationReportFinal.pdf> accessed 19 October 2013. 154The U.S. Trade Representative cites s.3(d) of the Indian Patent Act as one of the reasons to keep India on its ‘priority watch list’ of countries whose intellectual property regimes are of concern. See

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flexibilities.155 In summary the introduction of s.3(d) is a positive step taken by the Indian law makers to tackle the menace of ‘evergreening’ practiced by pharmaceutical patent holders.156

4.3.1.2. Questions. The Indian Supreme Court in the course of delivering the judgement in the Novartis case observed that it did not wish the Indian patent laws to

...develop on lines where the scope of the patent is determined not on intrinsic worth of the invention but by the artful drafting of its claims, and where patents are traded as a commodity not for production and marketing of the patented products but to search for someone who may be sued for infringement of the patent.

Thisobservationwasobviouslyaimedatthemoderndaypracticesofmultinationalpharma- ceutical corporations. The questions that need answering are, not only about the Indian patent laws, but also about the actions of multinational corporations who, well supported by their national governments (through lobbying), have sought to exploit new and emerging patent legislationsinthepost-TRIPSeratotheiradvantage,andalsotheactionsofdevelopedcountries in exerting pressure on developing countries to change their laws and policies on intellectual property rights,157 which continues to have a devastating impact on access to affordable medi- cines. This leads us to the next, inevitable question, for how long will WTO permit developed countries to negotiate on access to medicines with intellectual property rights?

4.4. Exhaustion of patent rights and parallel imports

India took advantage of the TRIPS flexibility to introduce a few key provisions into its patent laws which included, amongst others, the exhaustion of patent rights and parallel importation. India viewed this as an important step as it had emerged as a key player in pro- ducing and exporting generic drugs with the introduction of process patents under the 1970 Act. The TRIPS Agreement allows member states to determine the scope and extent of exhaustion of patent rights. Article 28(6) of the TRIPS Agreement states that ‘This right [i.e., the right of importation], like all other rights conferred under this Agreement in respect of the use, sale, importation or other distribution of goods, is subject to the pro- visions of Article 6.’ In turn, Article 6 of the TRIPS Agreement postulates that ‘nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual prop- erty rights.’ Article 5(d) of the Doha Declaration provides that

the effect of the provisions of TRIPS Agreement that are relevant to the exhaustion of intellec- tual property rights is to leave each member free to establish its own regime for such exhaustion without challenge, subject to the MFN and national treatment …

Office of the U.S. Trade Representative, Special 301 Reports 2010–2012 (USTR, Washington DC, 2012) <http://www.keionline.org/ustr/special301> accessed 15 November 2013. 155UNAIDS, DOHA+10 TRIPS Flexibilities and Access to Antiretroviral Therapy: Lessons from the Past, Opportunities for the Future (UNAIDS Technical Brief, Geneva, 2011) <http://www.unaids.org/ en/media/unaids/contentassets/documents/unaidspublication/2011/JC2260_DOHA+10TRIPS_en. pdf> accessed 3 November 2013. 156Sampath and others (n 142). 157C Grace, ‘The Effect of Changing Intellectual Property on Pharmaceutical Industry Prospects in India and China: Considerations for Access to Medicines’ Report for DFID Health Systems Resource Centre (2004) 35 <http://www.who.int/hiv/amds/Grace2China.pdf> accessed 2 October 2013.

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In other words the TRIPS Agreement does not pose any restrictions on the appli- cation of the doctrine of exhaustion in domestic patent laws, despite dissenting views.158

The Indian Patent Amendment Act recognizes and implements the principle of inter- national exhaustion of patent rights. This principle imposes certain limits on the patentee’s exclusive rights, in that the patentee cannot control the resale or redistribution of the par- ticular product that had already been sold.159 Under this provision, once a patented product has been sold with the patentee’s approval outside India, the subsequent importa- tion of that same patented item into India will not amount to infringement of the Indian patent.160 This principle is recognized in countries like, India, Japan, Taiwan, Kenya, Andean Group Countries, Australia and New Zealand, but not recognized in a number of other jurisdictions like the USA, European Union (EU), Brazil and China.161 The pro- vision was first introduced under s.107(A)(b) of the Patents (Amendment) Act 2002, which provided that the ‘ … importation of patented products by any person from a person who is duly authorized by the patentee to sell or distribute the product, shall not be considered as an infringement of patent rights.’ It was considered restrictive in scope, and was amended by the Patents (Amendment) Act 2005, which states that ‘impor- tation of patented products by any person from a person who is duly authorized under the law to produce and sell or distribute the product, shall not be considered as an infringe- ment of patent rights.’162

Parallel imports, which are but a natural corollary of the doctrine of exhaustion, helps in the increased allocation of products at the lowest possible price. It is likened to compulsory licenses and can act as an important device to discipline the markets and to induce suppliers to commercialize their pharmaceutical products on reasonable conditions.163 Some writers even opine that parallel imports through compulsory licenses may in some cases be the only way to gain access to affordable medicine, especially when the TRIPS agreement is fully implemented.164 Recognition of parallel imports can be seen as an emerging trend amongst developing countries that have proceeded to introduce an express statutory provision incorporating international exhaustion of patent rights into their national laws with the aim of ensuring their citizens’ access to lower-cost medicines.165

158The U.S. delegation to the Council for TRIPS, which met in June 2001, was of the firm view that Article 6 neither allowed WTO members to avail themselves of dispute settlement in relation to ques- tions involving parallel imports, nor authorize parallel imports (Delegation of the United States, Council for TRIPS Meeting of June 1822, 2001, JOB(01)/97/Add.5, Council for TRIPS, June 28, 2001). See also CM Correa, ‘The TRIPS Agreement and Developing Countries’ in PJ Macrory and others (eds), The World Trade Organisation: Legal, Economic and Political Analysis Vol. II (Springer 2005) 447. 159The doctrine of exhaustion is also referred to as the first sale doctrine. 160S Basheer and M Kochupillai, ‘Exhausting Patent Rights in India: Parallel Imports and TRIPS Compliance’ (2008) 13 Journal of Intellectual Property Rights 486, 487–488. 161In the absence of any legislation on the subject, all imports are likely to be subject to the patent owner’s exclusive rights. 162The Patents (Amendment) Act 2005, No. 15 section 58, Acts of Parliament 2005 (India) <http:// ipindia.nic.in/ipr/patent/patent_2005.pdf> accessed 13 October 2013. 163Correa (n 158) 449. 164Ibid. 165J Wise, ‘Access to AIDS Medicines Stumbles on Trade Rules’ (2006) 84 World Health Organiz- ation Bulletin 342–344 <http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2627352/pdf/16710536. pdf> accessed 15 October 2013.

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4.4.1. Pitfalls

The new patent regime introduced under the Amendment Act 2005 gives India the necessary legal framework to protect its patent system from practice of patent ‘evergreen- ing,’ and also expands the scope of granting compulsory licenses in the event of any emer- gencies. Before the introduction of the TRIPS compliant patent laws into its legislation, there were intense debates in the Indian parliament and in other forums across the country, which demonstrated the elaborate democratic process the proposals went through. If the new patent laws are to work to India’s benefit, it will have to address a few shortcomings in the new legislation, the accompanying procedures, and in the national drugs policy.

In 2002, in anticipation of the new patent laws, India introduced a Pharmaceutical Policy166 aimed at improvement of incentives for research and development within the Indian pharmaceutical industry to achieve sustainable growth.167 This policy proposed the reduction of the number of drugs under price control, but came to be stayed through a Supreme Court order.168 The price control mechanism is one of the flexibilities available under the TRIPS Agreement to ensure access to medicines,169 and every devel- oping country should make use of it to make access to medicines affordable. India announced a revised National Pharmaceutical Pricing Policy (NPPP) in November 2012, which sought to cap the price of 348 drugs.170 The NPPP and the Drugs (Prices Control) Order 2013 have now come to be challenged before the Supreme Court by the All India Drug Action Network (AIDAN).171 This drug price control policy could see yet another revision in the months to come. India cannot afford to indulge in arbitrary drug price policies if it were to take full advantage of the TRIPS flexibilities and implement the new patent laws. Since the passing of the new patent laws in 2005, India has witnessed the acquisition of a number of generic pharmaceutical companies by multinational corporations. These acquisitions do not bode well for India and other developing countries, as they undermine the future availability of affordable medicines and as well as the effective use of the WTO TRIPS flexibilities, including pre-grant oppo- sition and compulsory license under the new Act. A study carried out by the India’s Par- liamentary Standing Committee on Commerce recommended a blanket ban172 on the

166Section 11 of the Indian Pharmaceutical Policy 2002 states clearly that the span of price control over drugs and pharmaceuticals would be reduced substantially <http://nppaindia.nic.in/may-2002/ policy-02.html> accessed 22 October 2013. 167See generally, M Das and SK Basu, ‘Drug Price Control in India: “The Past and the Present”’ (Feb- ruary 2012) 03 NSHM Journal of Pharmacy and Healthcare Management 41–47. The authors chart the pricing policy trend in the Indian pharmaceutical sector since the early 1960s up to the introduc- tion of the National Pharmaceutical Price Policy in 2011. 168The Supreme Court of India, by Order dated 2 May 2003, stayed the policy from being implemented. The Supreme Court also directed the Indian Government ‘ … to consider and formulate appropriate cri- teria for ensuring essential and life-saving drugs not to fall out of price control.’ 169Gopakumar (n 103) 352. 170N Prusty, ‘India Approves to Cap Prices of 348 Drugs’ Reuters India (23 November 2012) <http:// in.reuters.com/article/2012/11/22/india-drugs-pharma-policy-idINDEE8AL09T20121122> accessed 2 November 2013. 171PTI, ‘SC to Examine Pharma Pricing Policy, Order on Drug Control’ Indian Express (7 August 2013) <http://www.indianexpress.com/news/sc-to-examine-pharma-pricing-policy-order-on-drug- control/1152032/0> accessed 12 November 2013. 172Rajya Sabha, Parliament of India, ‘One Hundred and Tenth Report on FDI in Pharmaceutical Sector’ (August 2011) <http://164.100.47.5/newcommittee/reports/EnglishCommittees/Committee %20on%20Commerce/110.pdf> accessed 4 January 2014.

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acquisition173 of Indian pharmaceutical companies by multinational corporations. The Com- mittee noted that the multinational corporations have encroached upon the Indian generic industry base, and was unanimous in its view in seeking a ban on Foreign Direct Investment (FDI) in the existing pharmaceutical sector.

A number of external factors too can be identified as posing threats to the full implemen- tation of the new patent laws. The USA, in particular, has been critical of the new patent laws introduced in India. The US Trade Representative (USTR) has repeatedly identified India’s introduction of s.3(d) as the reason for putting it on the priority watch list,174 which can be viewed as a tactic adopted by the USA to exert pressure on India to change its patent laws. It is interesting, as the USA has the Hatch-Waxman Act within its patent legislation, which aims to produce a similar result as s.3(d), but albeit at a later stage. The USA and EU have through the incorporation of TRIPS plus provisions in Regional Trade Agreements (RTAs)175 preserved the practice of evergreening for their multinationals in other jurisdictions. India is party toover 25 Free Trade Agreements (FTAs),and is currently engaged innegotiating FTAs with Japan and the EU. It is understood that the EU has demanded extended terms of patent protection from India, which could potentially undermine India’s efforts in putting an end to the practice of evergreening. It is abundantly clear that TRIPS plus provisions in RTAsandFTAscanposeamajorchallengetoIndiainthefullrealizationofitsTRIPScompliant patent laws, and India may be pressurized during negotiations to let evergreening through its backdoor.176 The USA with other key trading partners have negotiated the ‘secretive’ Anti- Counterfeiting Trade Agreement (ACTA),177 which, if ratified can undermine India’s new patent laws besides seriously harming India’s position as a generic manufacturer of drugs.178

5. Conclusion

Through the new patent law framework, India has once again demonstrated it can take the lead role in presenting a patent law regime which can serve as a useful model for other

173India introduced changes to its FDI policy relating to the pharmaceutical sector in 2011, which allowed 100% FDI in both new and existing pharmaceutical business. 174Office of the U.S. Trade Representative (n 154). 175RTAs and FTAs have facilitated international trade prior to the advent of the WTO, and to some degree also facilitated regional integration. Although RTAs and FTAs potentially undermine the prin- ciples of the WTO, it is not prohibited under the rules. As of 31 July 2013, some 575 notifications of RTAs have been received by the WTO, of which, 379 were in force. See ‘Regional Trade Agreements’ World Trade Organization <http://www.wto.org/english/tratop_e/region_e/region_e.htm> accessed 22 January 2014. 176Gopakumar (n 150) 59. The author is of the view that Bilateral Investment Treaties (BITs) may prevent India from the taking effective measures to curb patents on known substances, and advocates the removal of intellectual property rights from the definition of investments. 177The ACTA is a plurilateral agreement, initiated by the USA and Japan in 2006. The agreement signed in October 2011, seeks to establish an international standard for intellectual property rights enforcement through an international legal framework targeting counterfeit goods, and most impor- tantly generic medicines. If ratified, this agreement will see the creation of a separate governing body outside the WTO, WIPO and UN for the purposes of enforcement. Most strikingly, developing nations, least developed countries (LDCs), civil society groups and the general public were clearly excluded from the negotiation process. See generally, PK Yu, ‘Six Secret (and Now Open) Fears of ACTA’ (2011) SMU L Rev 975. The author is critical of the ACTA and expresses the view that the agreement militates against domestic legislative reforms. 178See generally, Médecins Sans Frontières, ‘A Blank Cheque for Abuse: The ACTA and Its Impact on Access to Medicines’ MSF Briefing Document (February 2012) <http://www.msfaccess.org/sites/ default/files/MSF_assets/Access/Docs/Access_Briefing_ACTABlankCheque_ENG_2012.pdf> accessed 10 October 2013.

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developing countries to emulate.179 Since its introduction in 2005, the patent law provisions have been frequently invoked by multinational pharmaceutical companies seeking the grant of patents, and on such other occasions by generic drugs manufacturers and NGOs seeking the pre-grant and post-grant opposition, and for grant of compulsory licenses. The decisions taken serve as a stark warning on the bumpy road ahead for the multinationals seeking to extend the life span of patents through evergreening, and also to the Indian generic pharma- ceutical industry seeking grant of compulsory licenses. It also serves as a reminder to the other developing countries that are heavily reliant on the Indian generic ARVs for the treat- ment of HIV/AIDS, on the difficulties of obtaining a compulsory license. The interpretation of s.3(d) of the Patent Act by the Indian Supreme Court in the Novartis case demonstrates the unequivocal position taken by India to protect its own patent jurisdiction from being subjected to abuse by multinational pharmaceutical companies through the practice of ever- greening. The Supreme Court judgement sets the boundaries on granting patents and on the practice of patent evergreening, and is to be viewed as a benchmark.

Some writers have expressed the view that the patenting trend prevalent in developed countries is not in the interest of the consumers,180 which makes medicines unaffordable, and have suggested developing countries to follow in the footsteps of India by introducing similar provisions as s.3(d) into their patent legislations to make medicines more affordable.181

The provision as incorporated by the Indian legislation may suit India’s requirements, as it has a robust judiciary to interpret the provisions justly in the light of the objectives of the amend- ment, and it also boasts of a good infrastructure for manufacturing generics drugs. Besides, India does not face the same problems as other developing countries and LDCs in the knowl- edge economy. At this point, the judgement of the Indian Supreme Court can only be seen as a result of the first of the few battles to come on Indian patent laws, and the Indian court rooms will not be the only domain where they will be played out.

India’s decision to introduce a product patent regime into its laws in 1970, on the back of the Justice Ayyangar Committee Report,182 was a reformative measure, as it was in response to internal factors, i.e. the socio-economic conditions then prevailing in the country. This measure not only helped India in achieving a greater degree of self-sufficiency in access to medicines through generics drug manufacturing, but also was to help other developing countries in the fight against HIV/AIDS in the years to follow. In sharp contrast, the introduction of the product patent system in 2005 can only be seen as a response to external factors, i.e. TRIPS compliance, and can become counterproductive to India’s inter- ests and that of other developing countries who rely on it for generic drugs supply, if not administered properly. The problems identified in the Justice Ayyangar Committee report, especially on access to medicines, have not been fully addressed and the reasons for the introduction of process patent in the 1970s have not been fully realized, but India, nevertheless has moved towards a new patent law regime. This transformation in India will be felt around the globe,183 and it will have to be seen how India endeavours to maintain its stance in the face of stiff challenges from developed countries and multina- tional pharmaceutical patent holders.

179UNAIDS (n 155). 180Chaudhuri (n 139). The author is critical of the trend prevalent in developed nations like the USAwhere in the name of innovation ‘mindless patenting’ takes place much against the interest of the consumer. This model in his view is followed by a number of developing countries either willingly or unwillingly. 181Ibid. 182A Report on the Revision of the Law in India Relating to Patents for Inventions (n 16). 183Mueller (n 4).

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