Journal of Intellectual Property Rights Vol 9, May 2004, pp 226-241

WTO-TRIPS Obligations and Amendments in India: A Critical Stocktaking†

K D Raju* Amity Institute of Global Legal Education and Research, E-25, Defence Colony, New Delhi 110 024 Received 22 February 2004;revised 6 April 2004

Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement was one of the most contentious issues in the Uruguay Round of multilateral trade negotiations, which was concluded in 1994 at Marrakech. The commitments under the TRIPS Agreement compelled In- dia to amend its patent regime in 1999, 2002 and 2003 (the Amendment Bill lapsed due to the dissolution of the present Lok Sabha). This paper examines the amendments in the Indian pat- ent system in consequence of TRIPS Agreement, and Indian reaction to the same in substantial and procedural levels. India opted for the setting up of a ‘mail box’ and has taken Exclusive Marketing Rights (EMR) route for the transitional period. The second section analyses the im- plications of transitional period and to suggest further options available to India. It also looks into the new provisions included in the (Amendment) Bill 2003. This paper, based on a review of amendments to the Indian law, concludes that the Indian patents regime is inadequate to meet the challenges posed by the TRIPS Agreement. It also puts forward some suggestions to improve the patent regime in the country as a whole.

Keywords: TRIPS Agreement, Patent amendment, Mailbox and EMR

The GATT was originally conceived in the most contentious issues in the Uruguay early post-war years. The purpose was to Round (UR) of multilateral trade negotia- establish a legal framework for` interna- tions, which was concluded among 125 tional trade in goods. In the beginning, in- nations, including India, in April 1994 at tellectual property protection was outside Marrakech. Almost a decade after coming the GATT agenda, but it did take notice of into effect, the TRIPS Agreement remains a intellectual property protection in Article controversial but forceful legacy of the UR IX1 and Article XX.2 The Agreement on trade agreements.4 However, the Agree- Trade- Related Aspects of Intellectual ment leaves considerable room to deal with Property Rights (TRIPS)3 was one of the the national level issues, such as the defini- tion of an invention, exception to exclusive ______rights, compulsory licensing, etc. The † The views expressed in this paper are personal TRIPS Agreement provides a three-stage and should not be attributed to the institutions which the author is associated with. time frame for developing countries to *E-mail: [email protected] comply with its obligations. They are: RAJU: WTO-TRIPS OBLIGATIONS AND PATENT AMENDMENTS IN INDIA 227

1. Introduction of a ‘mailbox’ facil- 2. Trade Marks Act, 1999 ity starting from 1995 to receive 3. Designs Act, 2000 product patent application in the field of pharmaceuticals till 31 4. Copyright (Amendment) Act, December 2004. An Exclusive 1999 Marketing Rights (EMRs) for a 5. Protection of Plant Varieties and period of five years or till the Farmers’ Rights Act, 2001 product patent is granted or pat- ent application is rejected. 6. Geographical Indications of Goods (Registration and Protec- 2. Other rights related to rights of tion) Act, 1999 patentee, term of patent protec- tion, compulsory licensing, rever- 7. Semiconductor Integrated Cir- sal of burden of proof, etc., are to cuits Layout Designs Act, 2000 be complied with by 1 January This stocktaking acquires special sig- 2000. nificance in the wake of the US putting 3. Introduction of product patent India in the priority watch list under protection in all fields of technol- ‘Special 301’6 provision of the Trade Act, ogy from 1January 2005 includ- alleging poor intellectual property protec- ing food, drugs, pharmaceuticals tion in India.7 The US pharmaceutical and chemicals. industry alleges that it currently loses India has complied with most of the more than $ 1.7 billion annually because obligations and the remaining will be ful- of India’s insufficient intellectual prop- 8 filled with the passing of Patent erty protection. The western perspective (Amendment) Bill 2003.5 The TRIPS of the Agreement is that, “Intellectual Agreement covers seven major IPR areas, property has become one of the most viz., patent, copyrights and related rights, valuable assets of a large and growing , geographical indications, in- number of domestic and international 9 dustrial designs, layout designs (topogra- corporations.” phies) of integrated circuits, and protec- tion of undisclosed information. India TRIPS Agreement and Patents made a series of amendments to its exist- (Amendment) Act, 2002: A Compara- ing laws and enacted new legislations in tive Analysis consonance with the TRIPS commit- ments. They are: The Concept of Invention Article 27(1) of the TRIPS Agree- 1. Patents (Amendment) Act, 2002 ment provides that: and Patents (Amendment) Bill ⎯Patents shall be available for any in- 2003 (lapsed due to the dissolu- ventions, whether product or process, in tion of the Lok Sabha). all fields of technology; and 228 J INTELLEC PROP RIGHTS, MAY 2004

⎯Patent rights shall be enjoyable without or contrary to public order or morality or discrimination in the field of technology. which causes serious prejudice to human, The TRIPS Agreement does not spec- animal or plant life or health or to the en- ify what an ‘invention’ is; national laws vironment, is also not patentable. Mere can define this concept according to the arrangement, rearrangement or duplica- standards generally applied. But all these tion of a known device cannot be pat- are subject to normal tests of novelty and ented.13 Mere discovery of a scientific inventiveness capable of industrial appli- principle or the formulation of an abstract cation. theory or “discovery of any living thing There is no obligation under the TRIPS or non-living substance occurring in na- Agreement to adopt an expansive concept ture” is not acceptable. of ‘invention.’ While implementing Arti- The new clause (j)14 excludes plants cle 27(1), each country should carefully and animals other than micro-organisms consider the economic, legal and ethical in whole or any part thereof including aspects involved in the patenting of living seeds, varieties and species and essen- materials or certain types thereof. tially biological processes for production There is no uniform definition avail- or propagation of plants and animals. able which relates to the distinction be- Sub-section (k) excludes a mathematical, tween ‘invention’ and ‘discovery.’ Ac- business method, computer program or cording to the basic principles of patent algorithms. Sub-section (l) excludes “a law, the former is patentable and the latter literary, dramatic, musical or artistic work is not. A ‘discovery’ is commonly con- or any other aesthetic creation whatsoever sidered to mean the mere recognition of includes cinematographic works and tele- what already exists. It means that India vision productions. Sub-section (m) ex- can legitimately follow a definition of cludes ‘a mere scheme or rule or method invention that broadly excludes materials of performing mental act or method of pre-existing in nature. For instance, Ar- playing game.” Presentation of informa- gentine patents law excludes from the tion and topography are included in sub- concept of invention “any kind of living sections (n) and (o). Traditional knowl- materials or substance already existing in edge or traditionally known component is nature” (Article 6g).10 excluded from patenting. This provision Indian Practice and Exceptions to Patentability may adequately check the piracy of huge The Indian Patents (Amendment) Act, Indian traditional knowledge in the 11 2002 defines an ‘invention.’ Section 3 sphere of Ayurvedic medicines. of the Act enumerates what are not ‘in- In addition to what is not an ‘inven- ventions’ and those inventions, which are tion’, national laws can establish excep- not patentable. An invention that is frivo- tions to the patentability of invention that lous or contrary to well-established natu- would otherwise be protectable. There ral laws cannot be patentable.12 An inven- are three permissible exceptions to the tion intended to commercial exploitation basic rule on patentability.15 Broad ex- RAJU: WTO-TRIPS OBLIGATIONS AND PATENT AMENDMENTS IN INDIA 229

emptions from patentability remain, to tended use or commercial exploitation of protect public order or morality, prevent which could be contrary to law or moral- environmental deterioration and protect ity or which causes serious prejudice to animal, human or plant life. This is an human, animal or plant life or health or to area where India can enjoy some room to environment.”

manoeuvre. The same applies to thera- A few judicial decisions are also avail- peutic and surgical methods for treatment able for considering the determination of of humans or animals.16 invention. An “invention is the act or op- The controversial exemptions are in eration of finding out something new; the Article 27 (3) (b) for biotechnological process of contriving and producing inventions. It exempts plants and ani- something not previously known or exist- mals, essentially biological processes for ing, by the exercise of independent inves- the production of plants and animals. The tigation and experiment.”20 TRIPS Agreement permits the patenting Section 2(8) of the Patents and Designs of micro-organisms and non-biological Act, 1911, defines ‘invention’ as any and microbiological processes Nowadays, manner of new manufacture and includes biotechnology has become one of the an improvement and allied invention. most significant areas of innovative in- Unlike the Patents Act, 1970, the 1911 ventions like cloning. In principle, patents Act does not specify the requirement of must be provided for micro-organisms being useful in the definition of ‘inven- and biotechnological inventions.17 But at tion.’ But the courts were always of the the same time, the ethical, economic and view that a patentable invention, apart legal implications of allowing the patent- from being a new manufacture, must also ing of plants and animals, even if geneti- be useful.”21 cally modified, strongly indicate that all Without violating the TRIPS provi- patents on life-forms and living processes sions, the Indian courts can interpret what should be rejected from inclusion in is contrary to morality or what are the TRIPS.18 kinds of commercial exploitations that can

The concept of ‘microorganism’ is ex- cause serious prejudice to human or ani- tensively interpreted under the TRIPS mal or plant life. Like the TRIPS provi- Agreement. Patenting of it is permitted sions, Indian law also does not precisely as applicable only to genetically modified enumerate what is opposed to public pol- microorganisms and not to those existing icy. It is for the Indian courts and authori- in nature This concept should be inter- ties to interpret and consider each case preted, however, in accordance with the separately and fix the standards. scientific concept that may be adopted by national legislation; a ‘microorganism’ is Criteria of Patentability a member of any of the following catego- Article 27(1) of TRIPS Agreement ries: bacteria, fungi, algae, protozoa or provides that patents shall be granted to viruses.19 The newly-introduced section protect inventions, which are “new, in- 3(b) excludes “inventions primary or in- volve an inventive step and are capable of 230 J INTELLEC PROP RIGHTS, MAY 2004

industrial application.” The Agreement any useful, practical activity as distinct allows Member countries to interpret ‘in- from purely intellectual or aesthetic activ- ventive step’ as synonymous with ‘non- ity, and does not necessarily imply the obviousness’.22 Similarly, a country can use of a machine or the manufacture of an consider treating ‘capable of industrial article. application’ as synonymous with ‘useful- An ‘invention’ within the meaning of ness.’ The latter concept is looking the Act is an invention for a manner of somewhat broader, since it would allow new manufacture that is in some way as- even the patentability of purely experi- sociated with trade and commerce, mean- mental inventions. Other options to be ing traffic in goods, i.e. exchange of considered relates to the concept of ‘prior commodities for money or other com- art’ which may be defined more or less modities.24 broadly, and to the processes that are not The entire definition is dependent on novel but which use or produce a novel or associated with the word ‘manufac- product. ture’ which denotes: (i) either a thing Where the invention has not been made which is useful for its own sake and properly described and will not function vendible as such, or (ii) means an engine in the way claimed by the applicants, the or instrument to be employed either in the opponents succeed even when they fail to making of some previously known article establish “prior publication” as well as or in some useful propose or extending to “prior public knowledge” and, therefore, new process to be carried on by known the application for grant of patent is liable implements or elements acting upon to be rejected.23 known substances and ultimately produc- ing some other known substance, but Indian Position Section 2 (1)(j) of the Act defines in- producing it in a cheaper or more expedi- tious manner, or of a better or more use- vention as follows, “a new product or 25 process involving an inventive step and ful kind. capable of industrial application.” Ac- The interpretation of ‘inventive step’ cording to section 2 (1)(ac), which ex- as ‘non-obviousness’ in Article 27(1) of plains “capable of industrial application, TRIPS Agreement and the consequent in relation to an invention, means that the Indian provision in Section 2(1)(ja) pro- invention is capable of being made or vides that “inventive step” means a fea- used in any kind of industry.” ture that makes the invention not obvious The interpretation of the words “capa- to a person skilled in the art. This defini- ble of industrial application” is also sub- tion is ambiguous and holds many impli- cations for India. ject to judicial scrutiny. An invention, in order to be patentable, must be capable of Rights Conferred on the ‘Patentee’ being made or used in some kind of in- Article 28 of TRIPS Agreement set dustry. Hence, ‘industry’ should be un- forth the rights that a patent should confer derstood in its broadest sense as including on its titleholder by referring to the two RAJU: WTO-TRIPS OBLIGATIONS AND PATENT AMENDMENTS IN INDIA 231

traditional categories of inventions, prod- In these circumstances, as rightly ob- ucts and process. Here, an option is open served by Jayashree Watal “it would be to exclude the extension of protection to difficult to imagine what an importer the product if the latter is excluded from would do with patented products if he patentability (e.g., plants or animals, in- could not sell or distribute them.”26 Sec- ventions contrary to ordre public, etc.). tion 84 (7) retained in the new Act, also This is to avoid an indirect ‘product by sets out the grounds and conditions of process’ protection that would nullify the compulsory licences, makes it clear that exclusion from protection. The right of the importation of the patented article or patentees are included in the newly cre- substance made by a patented process is ated Section 48 (a) and (b) of the Act; the not allowed to such licences as it could rights are limited by a proviso ‘provided constitute infringement of the patentees’ that the product obtained is not a product rights. in respect of which no patent shall be granted under this Act’. This is com- Compulsory Licensing pletely in consonance with the TRIPS The basic objective of granting patent provision. is to encourage inventions and to secure According to Article 6, nothing in the that the inventions are worked in India on TRIPS Agreement shall be used to ad- a commercial scale, and to the fullest ex- dress the issue of exhaustion for the pur- tent under reasonable terms without de- pose of dispute settlement. This means lay. They are not granted merely to en- that a member cannot approach the Dis- able patentees to enjoy a monopoly for pute Settlement Body of the WTO, on the the importation of the patented article. basis that another member provides for Article 31 of the TRIPs Agreement ‘on international exhaustion of a patent. other use without the authorization of the India can consider an option, which right holder’ contains a detailed set of provides for an international exhaustion conditions for the granting of compulsory of rights, in order to allow ‘parallel im- licence. The TRIPS Agreement refers to ports’ of legitimate products from any five possible specific grounds for the country and ensure the availability of the granting of compulsory licences. These product on a competitive basis. The basic are refusal to deal, emergency and ex- concept behind this principle is that once treme urgency, anti-competitive practices, a product has been legitimately intro- non-commercial use, and dependent pat- duced in the market, the rights of the pat- ents. The stringent conditions are really entee are exhausted, since the patentee for the actual use of the patent and not on has already exercised his rights. the grant of compulsory licences. The recognition of the international It is noted that in some cases, for in- exhaustion in the TRIPS Agreement may stance, in emergency and public-non- be seen as logically reflecting the global- commercial use, there is no need to have ization of the economy. This option is a previously requested voluntary licence not explicitly included in the Indian Act. as required by article 31(b) of the Agree- 232 J INTELLEC PROP RIGHTS, MAY 2004

ment. Moreover, in the case of public Act and the Controller of Patents is em- non-commercial use, the patent holder powered to grant as well as revoke com- may be informed after the use of the in- pulsory licences. Under section 84, an vention. applicant can at any time after expiration The TRIPS Agreement also allows of three years from the date of sealing of compulsory licences in case of lack of or a patent, apply to the Controller of Pat- insufficient working. Article 27(1) of the ents on any of the grounds provided in the Agreement stipulates that ‘patent rights Act. Sufficient safeguards are provided shall be enjoyable without discrimination in section 89, which mentions the general whether the products are imported or lo- purpose and objective of granting com- cally produced.’27 It has been interpreted pulsory licence. as a prohibition of any obligation to lo- cally execute a patented invention. This is Transitional Period and Implication subject to many criticisms. A possible for India option is to provide in line with article 8.1 The Patents Act, 1970,was amended in of the TRIPS Agreement for qualified 1999 and also in 200229 with a view to cases of lack of working. fulfilling India’s obligations under Arti- Under compulsory licensing, the pat- cles 70(8) and 70(9) of the TRIPS entee will be able to hold and use produc- Agreement. It was also influenced by the tion of his invention down to the level of WTO Dispute Settlement Panel’s adverse maximum profit. But even if it is a mo- ruling against India, following complaints nopolistic right for 20 years, many coun- made by the US and the European Union tries want to qualify it for political objec- that India has failed to meet its commit- tives, such as local working of the inven- ments under Articles 70(8) and 70(9) of tion or protection of consumer interests.28 the Agreement.30 The transition period

of 10 years started from the establishment The Indian government reiterated its of WTO in 1995 is going to get over position that since the enactment of the soon. This part of the study analyses the Patents Act, 1970 there have been no in- implications of transitional period and stances of misuse of the provision related what would be the strategy for the future to compulsory licensing in India. How- negotiations. ever, the foreign companies are sceptical that once the product patent regime Requirements under Articles 70 (8) and 70 (9) of comes into place, the Government could TRIPS potentially misuse the same. It is true Article 65(2) of the TRIPS Agreement that 80 per cent of the patents granted in allows developing countries a transitional India are owned by foreign multination- period of four years with effect from als. It is better to wait and see rather than January 1995, to implement the provi- speculate on apprehensions. sions of the TRIPS Agreement as a Compulsory licences are provided in whole. But article 65 (4) of the Agree- chapter XVI from sections 82 to 94 of the ment provides for an exception to this RAJU: WTO-TRIPS OBLIGATIONS AND PATENT AMENDMENTS IN INDIA 233

general transition period. Under this pro- ing approval in that country or until a vision, if a developing country has not product patent is granted or rejected, permitted product patent to any class of whichever is shorter. It means India products under its law as on January should receive patent applications for 1995, it can take another five more years pharmaceuticals and agro-chemicals from to amend its law to provide product pat- 1 January 1995 and that exclusive mar- ents to those classes of products. There- keting rights should be granted to an ap- fore, India has availed a transitional pe- plicant, who applies for those rights. riod of 10 years, up to December 31of The following criteria are to be ful- 2004, to amend its law to extend product filled for granting EMR: patents to food, pharmaceutical products, ⎯ A product patent has been granted agrochemicals, microorganisms and in any WTO country seeds. Articles 70(8) and 70(9) of the TRIPS ⎯ A patent application has been Agreement place a limitation on the tran- filed in any WTO country on or sition periods allowed under Articles after January 1995 65(2) and 65(4) of the Agreement in re- spect of pharmaceuticals and agrochemi- ⎯ Marketing approval has ob- cals. Article 70(8) establishes ‘mailbox’ tained in that country mechanism and article 70(9) provides for ⎯ An application for a product pat- ‘exclusive marketing rights (EMR)’ to the ent should have been filed in applicants. India on or after January 1995

Mailbox under the mailbox facility under Article 70(8) read with articles 65(2) article 70(8). and (4) of TRIPS obliges all the countries The Mailbox Dispute in WTO that do not provide product patents for The US and EU complained to the pharmaceuticals and agrochemicals as on WTO Dispute Settlement Body (DSB) January 1995 in accordance with article regarding the absence of either patent 27, to provide means for the acceptance protection for pharmaceutical and agricul- of applications for product patents. Such tural chemical products or formal systems applications are to be examined only from in India that permit the filing of patent the date of January 2005; till then the ap- applications for pharmaceutical and agri- plications are kept in a ‘mailbox.’31 The cultural chemical products and that pro- mailbox system mandates such a facility vide for the grant of exclusive marketing for the interim period or until the product rights for such products.32 patent facility is introduced. India argued that:

Exclusive Marketing Rights (EMR) Obligations arising under international According to article 70(9) of TRIPS agreements or treaties are not, by their Agreement during the transitional period, own force, binding in Indian domestic EMR is to be granted for a period of five law. Appropriate legislative or execu- years from the date of obtaining market- tive action has to be taken for bringing 234 J INTELLEC PROP RIGHTS, MAY 2004

them into force. Although not self- The real implication of Articles 70(8) executing under Indian law, implemen- and 70(9) is that in respect of pharmaceu- tation of a treaty does not require fresh ticals and agrochemical products for legislative or executive action if exist- which product applications were filed on ing administrative regulations or statu- or after January 1995, Indian companies tory or constitutional provisions permit will not have the freedom that they had the implementation of the treaty in enjoyed under the earlier Patents Act of question. The Indian courts may con- 1970, to produce and market those prod- strue, in this context, statutory or con- ucts in India or elsewhere without any stitutional provisions that pre-exist a legal restrictions.36 treaty obligation in order to render Indian drugs industry feels that the in- them consistent with such a treaty ob- troduction of the EMR facility would de- ligation.33 stroy the local industry and the multilat- But the Panel ruled that India has not eral pharmaceutical giants will take over complied with its obligations under arti- the domestic market. The net result cle 70(8)(a) as: would be the increase in price of medi- cines, which cannot be affordable to the 1. It has failed to establish a sound common man in India.37 The general legal basis for adequately pre- trend is that, there are three to five years serving novelty and priority vis- of gap in introduction of a new-patented à-vis applications for product drug in the world market and its subse- patents in respect of pharmaceu- quent introduction in Indian market. The tical and agricultural chemical consequence is that people in India have inventions during the transitional to wait for that particular drug even when period it is available in the world market.38 2. It has failed to establish a system Article XX of the GATT recognizes for the grant of exclusive market- “the importance of the sovereign nation ing rights.34 being able to promote health interests, India appealed to the Appellate Body even if contrary to its general obligations (AB) of WTO on the ruling. But the AB under the WTO agreements.”39 upheld the findings of the Panel.35 After The product patent system has now be- the decision, India was forced to amend come an accepted norm even in most of its Patents Act in 1999 to avoid trade the developing countries. Thailand sanctions. Thus, the Patents (Amend- amended its patents act in 1992 to pro- ment) Act ,1999 was passed in December vide product patents in food, pharmaceu- 1999 and to include more procedural as- tical and chemical sectors. China also pects it was amended again in 2002. amended its patent law in 1992 for pro- Presently, the government is planning to viding product patents in the above sec- further amend it to include the product tors; China was not even a member of patent system. WTO at that time. Turkey, Brazil, Argen- RAJU: WTO-TRIPS OBLIGATIONS AND PATENT AMENDMENTS IN INDIA 235

tina and other Latin American countries the application without waiting for the have opted to introduce product patents transitional period. by amending their patent laws. Another important issue in the field of EMR is the applicability of compulsory EMR vs Product Patent licences. Compulsory licences for manu- Many scholars are arguing for intro- facturing cannot be granted in case of ducing product patent system straight EMRs, since it would not be possible to away for pharmaceuticals and agro- grant licence for rights, which have not chemicals. The rationale for introducing been conferred on the product patent ap- the product patent system may lie around plicant. the fact that the acceptance of product patent applications from 1 January 1995 Patents (Amendment) Bill 2003 itself means the de-facto introduction of It is not unforeseen that India is the product patent system for these two amending its patent laws for including products from that date onwards. product patents within the country to

Jayashree Watal observed that EMRs meet the deadline of ushering in the are at least equivalent to patents and de- product patent regime from 1 January laying legislation on product patents, for 2005. The Government introduced the Bill in the Lok Sabha on the very first day another five years, would benefit neither 41 Indian industry nor consumers.40 This is of winter session. But unfortunately the because domestic reverse engineering of a Bill was lapsed due to the dissolution of product covered by a patent application the thirteenth Lok Sabha on 6 February would take place only after the product 2004. It is expected that the new gov- appears in the world market and is con- ernment will introduce it again in near sidered successful. By the time the EMR future. or patent would be granted or about to be granted in India, the investment for such Salient Features of the New Bill reverse engineering would not be made. ⎯ The statement of objects and rea- Moreover, it will give monopoly for a sons for the Bill says, efforts have period of five years without examining been made not only to make the the patents or its contents. law TRIPS compliant but also The implications are severe for in- simplify and rationalise the pro- stance, turmeric or neem patented in US cedures governing grant of pat- or products based on Indian medicine ents so as to make the system (traditional), the EMR route would make more user- friendly. it obligatory for India to grant marketing right on any such application till 2004. ⎯ The Bill included product patent Product patent system can give thorough protection in all fields of technol- examination under the Indian Act, and the ogy as per article 27 of the TRIPS Indian can reject or accept Agreement. 236 J INTELLEC PROP RIGHTS, MAY 2004

⎯ It deleted the provision for EMR patent before grant would be no and introduced a transitional pro- longer be a legal right.42 The ear- vision for safeguarding EMR al- lier provision allows opposition ready granted. to likely granting of a patent and, legally, arbitration can be sought ⎯ Strengthening the provision with in four months after the Patent regard to national security. En- Controller makes the application larged the powers of the Appel- public. late Board with a view to extend- ing its jurisdiction to revocation ⎯ The Patent Controller is empow- of patents also. ered to dispose off the representa- tion and can go ahead with seal- ⎯ Certain provisions to harmonize ing of the patent. the Act with the Patent Co- It seemed that the Indian pharmaceuti- operation Treaty to which India is cal industry has welcomed the govern- a signatory. ment’s initiative to grant EMR.43 But the ⎯ A provision-enabling grant of MNCs fear that the new drug price con- compulsory licence for export of trol order will curtail the freedom under medicines to countries, which the EMR facility. But the moot question have insufficient, or no manufac- is whether the new order is a violation of turing capacity to meet emergent TRIPS Agreement.

public health situations. This Conclusion and Suggestions provision is in accordance with The objective of the TRIPS Agreement the truce concluded on 30 August is to enforce globally tough standards in 2003 just before the Cancun Min- respect of several forms of intellectual isterial for the implementation of property, which include patents, trade- paragraph 6 of the Doha Declara- marks, protection of undisclosed informa- tion on TRIPS and Public Health. tion, and so on. It prescribes the maxi- ⎯ The Bill also provides for simpli- mum standards that will substantially in- fying and rationalizing the proce- crease the degree of harmonization of dure and time limit with a view to intellectual property, but it does not pro- introducing flexibility and reduc- vide a uniform law. Even the protection ing processing time, which will is on a universal scale leaving consider- benefit the users. able room for national laws to define a number of important aspects. ⎯ The Bill also proposes to drop the Recently the UN Commission on Hu- present provision for ‘pre-grant man Rights in its 52nd session adopted a opposition’ and substitute it with resolution, which noted that the TRIPS ‘pre-grant representation.’ The Agreement constitutes contravention of consequence of this provision is international human rights law.44 Now, that, in future, objections to a the framework of IPRs is suited for indus- RAJU: WTO-TRIPS OBLIGATIONS AND PATENT AMENDMENTS IN INDIA 237

trialized countries. This conclusion is tively eliminate competition from generic based on their share in the world R&D pharmaceutical producers and allow for expenditure. The contribution of devel- increased prices of medicines beyond the oping countries is only four per cent. reach of even more patients in the devel- In accordance with the preamble, the oping countries.47 Developing countries main goal of the TRIPS Agreement is “to have a right to implement the TRIPS reduce distortion and impediments to in- Agreement in a way which is balanced ternational trade.” This mandate is con- and takes into account the owners of the tained in articles 7 and 8 of the Agree- novelty and also of the users, the con- ment. In fact, the Agreement catalyses sumers.48 monopolies, inhibits competition and The Indian Patents Act has been freezes the initiative of scientists and amended a number of times to comply technologies in providing cheaper and with the TRIPS Agreement. But still the better products through more and finer management of the patent regime in India processes in the developing countries. is not satisfactory. The pending patent The TRIPs Agreement, in its restrictive applications are increasing day by day. provisions, sabotages developmental ob- Recently, India constituted a Patents Ap- jectives of countries like India through pellate Tribunal with appellate jurisdic- TRIPs taboos and WTO handcuffs.45 tion on the decisions of the Patent Com- The apprehension of J H Reidman be- missioners all over the country. Even come true that, “in advocating an ‘even within the limits, there is space for India handed approach’ to international intel- to interpret each and every provision. lectual property relations, I argued that it As a nation committed to the interests would violate fundamental precepts of of its people, India has to use all options international economic law if the devel- to minimize the lethal consequences of oped countries failed to differentiate be- TRIPS regime. As a party to the Alma tween developing and least-developed Ata Declaration of 1978,49 which states countries (LDCs) when formulating the right to health as a part of fundamen- minimum standards under the TRIPS tal rights, India is committed to the cause Agreement.”46 of protecting the health of its citizens. Patents on pharmaceutical products Right to health is a fundamental right as and processes provide drug companies part of article 21 of the Indian Constitu- with monopolies over the production and tion, which ensures right to life of all per- marketing of medicines, allowing them to sons.50 This right also includes the right fix prices at high rates to maximize prof- to food, clothing and maintenance and its. The obligation under TRIPS Agree- improvement of public health. The WTO ment to implement high standards of in- Doha Ministerial Conference Declaration tellectual property protection, including on TRIPS was on a right direction to en- the minimum 20-year protection for pat- sure the availability of essential medi- ent rights and the obligation to recognize cines in developing and least developed product and process patents will effec- countries. But the attitudes of the devel- 238 J INTELLEC PROP RIGHTS, MAY 2004

oped nations like the US and those of the need to amend section 2(1)(i) of EU are in a backward direction. the Patents Act to make “new Our cultural cornerstone, the Rig-Veda chemical entity or new medical says, ‘let noble thoughts come to us from entity” alone to be patentable.51 every side.’ Patenting intellect or its ⎯ The formulations and combina- products is sacrilegious and a social out- tions of drugs, changes in dosage, rage. The west cannot claim legitimacy new use, etc., should not be pat- for a stranglehold on Indian progress, us- entable as there is no inventive ing patent rights as an iron curtain. Law step involved in it. is for life, science is for man, and the dig- nity and worth of the human person shall ⎯ The patenting of microorganisms not suffer from ‘patent servitude.’ and non-biological processes should be excluded. Similarly in Suggestions It seems that many more sections of principle, bio-technological in- the Act are to be amended to make it ventions should be made pat- user-friendly or more transparent and fea- entable. sible. The following principles of Doha ⎯ Patenting of life-form genes declaration can be included in the new should be specifically excluded. Bill: There is no such direct obligation ⎯ Implementation and interpretation to grant patenting to life forms. of TRIPS provisions for promoting ⎯ The terms such as novelty, circum- both access to existing medicines stances of national emergency and and the creation of new medicines. extreme urgency, and public non- ⎯ TRIPS Agreement should not pre- commercial use should be defined vent member governments from clearly in the Bill. protecting public health. ⎯ The working of patents through ⎯ TRIPS Agreement to be read in domestic firms should be made light of its objectives and princi- compulsory. ples. ⎯ Right to protect health as a fun- ⎯ International transfer of technol- damental right. ogy. ⎯ Right to grant compulsory li-

cences is in the present Act, but The following options can also be con- this measure is rarely invoked in sidered in the new Bill: India. In the coming years this ⎯ The recommendation of Pharma- option should be used if and ceutical Research and Develop- when needed. ment Committee headed by Dr ⎯ Sufficient safeguards should be R A Mashelkar, that there is a RAJU: WTO-TRIPS OBLIGATIONS AND PATENT AMENDMENTS IN INDIA 239

provided against the misuse of This provision can be made ap- compulsory licensing based on plicable to the transitional ar- any reasons whatsoever. rangement in India, which is TRIPS compatible. ⎯ All compulsory licences should

transfer the technology and Acknowledgement know-how related to that tech- Special thanks to Prof J K Mittal (AI- nology. GLER), Ajish P Joy and Dr Sugathan ⎯ There should be a common policy (JNU), for their support in preparation of this paper. on patents and Indian pharmaceu- tical industry. References and Notes 1 Article IX prescribes non-discrimination with ⎯ The provisions made in the Pat- respect to marks of origin ents (Amendment) Act, 2002 for 2 Article XX states in paragraph (d) that the parallel imports should be General Agreement does not prevent measurers “necessary to secure compliance” strengthened, as they are insuffi- with law or regulations relating to protection cient now. of patents, trademarks and copyrights 3 Agreement on Trade-Related Aspects of ⎯ The Member should be given Intellectual Property Rights, 15 April 1994, freedom to establish its own re- Marrakech Agreement Establishing the World gime in case of the exhaustion of Trade Organization (WTO), Annex-IC, Legal patents and no double royalty Instruments results of the Uruguay Round, Vol 1, 33 ILM, 181 (1994) should be provided for imports. 4 Okediji Ruth L R, Public welfare and the role of the WTO: Reconsidering the TRIPS ⎯ The product patent protection Agreement, Emory International Law Review, would be applicable from the date 17 (2) 2003, 819 of sealing of a patent. 5 Introduced in the Lok Sabha on 26 December 2003 ⎯ All applications (nearly 5000) 6 The “Special-301” provision grants the USTR kept in the ‘mailbox’ from a right to impose sanctions on countries with 1 January1995 would fail if the weak patent laws. Countries with inadequate IPR protection can be cited under S.301 of the subject matter has been used Omnibus Trade and Competitiveness Act anywhere in the world prior to commonly referred to as “Special-301.” This 2005. Such a provision is permit- provision authorizes the USITC to identify ted under the TRIPS also. Be- and impose trade sanctions against countries cause article 70(3) of the TRIPS that fail to provide adequate and effective protection for IPRs provides that “there shall be no 7 The Hindu, New Delhi, 3 May 2003 obligation to restore protection to 8 Bhattacharya Swapan K, TRIPS, Indian subject matter which on the date Patents (Amendment) Act and India’s Agenda of application of this agreement in the Next Ministerial Meeting at Mexico (Indian Institute of Public Administration, for the Member in question has New Delhi), 2002, p 4 fallen into the public domain.” 9 Rill James F and Schechter Mark C, 240 J INTELLEC PROP RIGHTS, MAY 2004

International antitrust and intellectual property 27 Article 27.1 provides that: Subject to the harmonisation of the interface, Law and Policy provisions of paragraphs 2 and 3, patents shall in International Business, 34 (4) 2003, 783 be available for any inventions, whether 10 Correa Carlos M, Intellectual Property Rights, products or processes, in all fields of the WTO and Developing Countries, The technology, provided that they are new, TRIPS Agreement and Policy Options (Zed involve an inventive step and are capable of Books, Malaysia), 2000 industrial application. Subject to paragraph 4 11 Amended Section 2, in sub-section (1) (j) of Article 65, paragraph 8 of Article 70 and states: ‘invention’ means a new product or paragraph 3 of this Article, patents shall be process involving an inventive step and available and patent rights enjoyable without capable of industrial application. It defines discrimination as to the place of invention, the what an inventive step also. Sub-section (ja) field of technology and whether products are states ‘inventive step’ means a feature that imported or locally produced makes the intention not obvious to a person 28 Cornish W R, Intellectual Property (Sweet & skilled in the art Maxwell, London) 1989, p 205 12 Section 3 (a) 29 The Indian Parliament passed the Patents 13 Standipack Pvt Ltd v Oswal Trading Co Ltd, (Amendment) Act, 2002 and it received the 1999 (19) PTC 479 (Del.) assent of the President on 25 June 2002 14 Inserted by Patent (Amendment) Act, 2002, 30 India patent protection for pharmaceutical and w.e.f. 20.5.2003 vide S.O.561 (E), agricultural chemical products brought by US, dt.20.5.2003 DS 50, 9th July 1996. Panel Report on 15 Article 27 (2) and (3) of TRIPS Agreement September 1997. http//: www.wto.org 16 Article 27 (3) (a) 31 S.24A of the Indian Patents (Amendment) Act, 17 Maskus Keith E, Intellectual Property Rights in 1999, this system enables the filing of patent the Global Economy (Institute of International applications for chemicals, food and drugs till Economics ,Washington), 2000, 20 2005 for India 18 Mae-Wan Ho and Terje Traavik, Why We 32 Supra note 26, India–Patent Protection for Should Reject Biotech Patents from TRIPS Pharmaceutical and Agricultural Chemical (Institute of Science in Society, UK and Products, WT/DS50, WT/DS79 Institute of Gene Ecology, Norway) p 1, 33 Panel Report in WT/DS/79, p 2 http://www.i-sis.org.uk 34 Ibid, para. 9.1 19 Coombs J, Macmillan Dictionary of Bio- 35 WTO Appellate Body Report on US Complaint chemistry, 198 Concerning Indian Patent Protection for 20 Nichols Smith V, 88 US 22 L Ed.566; Pharmaceutical and Agricultural Chemical Hollister v Mfg Co, 113 US 28 L Ed.901 Products, (October 1997), www.wto.org 21 Biswanath Prasad Radhey Shyam v Hindustan 36 Ganesan A V, Implication of the Patents Metal Industries, AIR 1982 SC 1444 (Amendment) Ordinance, 1999 (ICRIER, 22 Footnote 5 to TRIPS Agreement New Delhi, 1999) (Copy on file with the 23 Abid Kagalwala v Edgar Haddley Co (P) Ltd, author) 1984 PTC 234 (PO) 37 The related paper is available at 24 Sri Gajalakshmi Ginning Factory Ltd v CIT http://www.iprlawindia.org, See also Julio (1952) 22 ITR 502 (Mad) Nogues, ‘Patents and pharmaceutical drugs: 25 Wheeler R V (1819) 2B & Ald 345, cited in understanding the pressures on developing Bombay Agarwal Co v Ramchand AIR 1953 countries, Journal of World Trade,24 (6) 154 1990, 86 26 Watal Jayashree, Implementing the TRIPS 38 http://www.indiaonestop.com Agreement, policy option open to India, 39 Correa Carlos M, Implementing national Economic and Political Weekly, 27 September public health policies in the frame work of 1997 WTO agreements, Journal of World Trade, RAJU: WTO-TRIPS OBLIGATIONS AND PATENT AMENDMENTS IN INDIA 241

34(5), 2000, 92 Medicines: Proposals for Clarification and 40 Watal Jayashree, Pharmaceutical patents, Reform, Third World Network Briefing prices and welfare losses: A simulation study Paper, 2001, p 1 of policy options for India under the WTO 48 Correa Carlos M, TRIPS, Patents and Access TRIPS Agreement, World Economy, 23 (5) to Essential Drugs, South Centre Bulletin No 2000, 733-752 2, Geneva, Southcentre.org 41 Business Line, New Delhi, 23 December 49 The International Conference on Primary 2003 Health Care, meeting in Alma-Ata on 42 See http://www.news.helpline.com 25 September 1978. The conference 43 Shah G D, Secretary General, Indian Pharma- organized under the auspices of WHO which ceutical Alliance, www.hindubusinessline.com mainly focussed on primary healthcare 29 December 2003 called for urgent and effective national and 44 On 17 August 2000, the United Nations Sub- international action to develop and Commission on the Promotion and implement primary health care throughout Protection of Human Rights Adopted the world and particularly in developing Resolution 2000/7 entitled Intellectual countries in a spirit of technical cooperation Property Rights and Human Rights. U N and in keeping with a new international Doc. E/CN.4/Sub.2/Res/2000/7 economic order 45 Iyer Krishna V R, Frontline, 17, 14-27 50 Francis Coralie Mullin v The Administrator, October 2000 Union Territory of Delhi (1981) 2 SCR 516 46 Reidman J H, Compliance with the TRIPS 51 Some of these suggestions are already Agreement: Introduction to a scholarly proposed by B K Keayala, Convener, debate, Vanderbilt Journal of Transnational National Working Group on Patents, New Law, 29(3) 1996, 373 Delhi,www.expresspharmapulse.com 47 Oh Cecilia, TRIPS, Patents and Access to