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LAW MANTRA THINK BEYOND OTHERS

(National Monthly Journal, I.S.S.N 2321 6417)





POSSIBLE EFFECT OF TRIPS ON PATENTS IN INDIA
Introduction
As well said by the Thomas Jefferson , If nature has made any one thing less susceptible than
all others of exclusive property, it is the action of thinking power called an idea
1
. Technological
advancement in the modern scenario have not even left this untouched even they are being
commercialized and converted in the form of Intellectual Property. Developed Countries who
were having ample of resources in their hand were the one who created environment for
protecting Intellectual Property as there existed possibility of Lucrative profits . Thus a need was
felt to protect and patent this idea. This led to the occurrence of the rat race between the various
companies for increasing the ambit of R&D activities and inventing the new products.
Perseverance on the part of the developed countries started to strengthen the IPR protection
2
.
This led to various Conventions and finally it emerged in the form of Trade Related Intellectual
Property Rights or the TRIPS agreement
3
. As the vanguard for protection of human ingenuity,
creativity, innovation and enterprise; intellectual property rights have been elevated to a
venerable position. The indubitable intendment of IPRs is further fortified in the state of the art
knowledge driven economies, which burgeon on innovation, industrial and enterprise progress.
Due to rapid advancement in technology the goods graced with IPR can be pirated very easily it
thus started creating fear in the mind of exporters .Thus they toil to bulwark their goods from
unwarranted intrusion and imitation in importing countries. Differential treatment of it also leads
to ludicrous results.

1
V.R.Krishna Iyer, Off the Bench
2
Watal, J. (2000). Access to Essential Medicines in Developing Countries: Does the WTO TRIPS Agreement
Hinder It? Science, Technology and Innovation Discussion Paper No. 8, Center for International Development,
Harvard University, Cambridge, MA, USA.
3
Daniel Gervais, The TRIPS Agreement- Drafting History and analysis, 3
rd
Edition, 2008.



In order to meet such situations and to ensure that IPRs do not obliterate free trade, the TRIPS
provides for minimum standards of IP protection. All the members of the WTO are under an
obligation to abide by the provisions of TRIPS. India as a member of WTO accustomed the
discrepancies existing among the TRIPS and law of land. India has to abide because of its
commitment under TRIPS to provide mechanism for ensuring access to the medicine at the
affordable prices. The critical issue was the reintroduction of the product patent regime and the
limitations that this change has imposed on its ability to produce technologies through reverse
engineering
4
. It was widely held that the future prospects of the industry hinged critically on the
ability of the policy markers to exploit the flexibilities that existed in the framework provided by
the Agreement on TRIPS. In this context TRIPS represent a move in the opposite direction. Its
possible effect cannot be ascertain with certainty. Thus, the objective of the present paper is to
provide some insight on the above issue, by examining the possible effects of TRIPS on Patent in
India.

2. Indian Patent Regime - Pre TRIPS and Post TRIPS Position
Patent law in India had its origins in the patent system introduced by Great Britain,
5
which ruled
India for almost a century
6
. The story of patents in India dates back to the first Indian patent law
- which was enacted in 1856 and modeled on the same lines as the British Patent Act of 1852. A
proper institution and authority for the administration of patents, however, was not established
until the appointment of the Controller of Industrial Patents and Designs by the Indian Patents
and Designs Act in 1911
7
. Under the 1911 Act, a new drug was patentable, provided the process
of manufacturing was described. A patentee could prevent others from producing a new patented
drug by describing all the known and possible processes and, hence, effectively enjoyed product
patent rights.

4
Narayan P., Intellectual Property Law ,Eastern Law House, Calcutta (2
nd
Edition,1997).
5
Rajesh Sagar, Introduction of Exclusive Privileges/Patents in Colonial India: Why and for Whose Benefit, 2
INTELL. PROP. Q. 164, 166 (2007).
6
Denis Judd, The Lion and The Tiger : The Rise and Fall of British Ra, 1600-1947, 14-27 (2004).
7
History of Indian Patent System, Intellectual Property India, para. 3, http://www.ipindia.nic.in/ipr/
PatentHistory.htm



In 1959 the Government of India appointed the Justice Rajagopala -Ayyangar Committee to
suggest revisions to the patent law
8
. In 1965, based on this report, a bill was introduced, but this
bill lapsed in 1965 and again in 1966. This bill was re -introduced in 1967 and eventually passed
as the Indian Patent Act of 1970. The rules based on this act were passed in 1971 and the act
along with the rules came into force in 1972.

The Patents Act, 1970
The Patents Act, 1970 by permitting a patentee to patent only one process, abolished the product
patent regime which prevailed under the Act of 1911. In pursuance of its domestic interests,
India did not provide for product patents for pharmaceutical and agricultural chemical
inventions
9
. But with the coming of TRIPs, IP laws had to be amended and the Indian Patents
Act, 1970 underwent substantial changes.
Compliance with the TRIPs requirements has taken substantial time in India. In its journey
towards TRIPs compliance, India was involved in the mailbox dispute (1997), and in the
ensuing years, the Indian Patent Act, 1970 was amended in tandem with the TRIPs agreement.
Apart from the mailbox dispute under the WTO, India was also confronted with the gigantic task
of meeting domestic concerns. There was vociferous opposition by the Indian pharmaceutical
industry against the proposed amendments in line with TRIPs requirements.
Indias Patents (Amendment) Act, 1999
Ultimately enacted in March 1999, Indias Patents (Amendment) Act, 1999, formally
implemented the mailbox procedure for patent applications claiming pharmaceutical and agro-
chemical products and made it retroactive to January 1, 1995. The 1999 Act also formally
implemented EMRs
10
. Mailbox applications went into a symbolic black box, not to be taken
out for examination nor even published by the Indian Patent Office until on or after January 1,
2005.

8
N. Rajagopala A yyangar, Report on the Revision of the Patent Law (1959).42.
9
Santanu Mukherjee, The Journey of Indian Patent Law Towards TRIPs Compliance, 35 Intl Rev.Intell. Prop. &
Competition L. 125, 128-29 (2004).
10
The Patents (Amendment) Act, 1999, No. 17 sec. 24(B)(1)(a)-(b), Acts of Parliament, 1999 (India), available at
http://ipindia.nic.in/ipr/patent/patact_99.PDF.



This amendment introduced Chapter IVA dealing with exclusive marketing rights. The
amendments under Section 24A (1) mandated the Controller to refer every application seeking
an EMR to an examiner to see whether it is was an invention for which a patent could be granted
under Section 3 and 4 (and not under Section 5 which previously excluded drugs etc). Section
24B(1)(b) authorized the grant of an EMR for five years for inventions made in India on or after
January 1, 1995 and for which a claim for process patent had already been made, and granted. In
the case of substances that could be used as medicines or drugs, Section 24B(2) provided that
prior publication or use, before the filing of the claim for patent by the applicant either in India
or in a convention country, will not constitute EMR infringement.
The 2002 Amendment -
The second of the three amending acts in the evolution of Indias patent laws towards TRIPS
compliance was the Patents (Amendment) Act, 2002, which took effect June 25, 2002. The 2002
Act implemented a number of important changes, but most significant was the extension of
patent term to twenty years
11
. Prior to this amendment, Indian process patents lasted only for the
shorter of five years from sealing or seven years from the date of the patent, while the term of all
other types of patents (e.g., mechanical devices) was fourteen years from the date of the patent
12
.
The Patents (Amendment) Act, 2002, implemented a myriad of other changes intended to bring
Indias patents law into accord with the TRIPS Agreement, including new definitions of
invention and inventive step
13
, new exclusions from patentable subject matter, a new burden
of proof provision for cases of process patent infringement, and a revised compulsory licensing
framework Due to the shifting burden of proof from plaintiff to defendant, a manufacturer will
be required to provide the details of the manufacturing process to rebut the presumption of the
infringement of a process patent. Also, a change has been brought about in the regime of
compulsory licensing for a non working patent. It can now be granted even if the patented

11
The Patents (Amendment) Act, 2002, No. 38 sec. 2, Acts of Parliament, 2002 (India), available at
http://www.ipindia.nic.in/ipr/patent/patentg.pdf (amending section 53). This was mandated by Article 33 of the
TRIPS Agreement.
12
The Patents Act, No. 39 of 1970, INDIA CODE sec. 53(1) (1998).
13
The Patents (Amendment) Act, 2002, No. 38 sec. 3, Acts of Parliament, 2002 (India), available at
http://www.ipindia.nic.in/ipr/patent/patentg.pdf (amending section 2(1), (j) and adding sections 2(1), (ja)).



invention is not working in India
14
. Other grounds for issuing it include national emergency,
public non commercial use which may arise, or is required as the case may be, including public
health crisis relating to AIDS, HIV, tuberculosis, malaria or other epidemics.
The 2005 Amendment -
The last step in Indias implementation of the changes required to make its patent law TRIPS
compliant happened by way of the 2005 amendment. Through this amendment, Indian law, for
the first time since 1970, allowed patent protection to substances capable of being used as
pharmaceuticals, food, and agro-chemicals
15
. The 2005 amendment was preceded by a
presidential ordinance in 2004. After its promulgation, there were intense debates about the
scope of various provisions, but the Indian Parliament enacted the 2005 amendment after making
changes in the ordinance
16
. The 2005 amendments contain many controversial features that have
caused many disputes. They include elaborate provisions concerning what is and is not
considered patentable subject matter
17
, a new definition of the inventive step criterion of
patentability
18
, procedures governing both pre- and post-grant opposition
19
, and a more liberal
framework for compulsory licensing
20
.






14
The Patents (Amendment) Act, 1999, No. 17 sec. 87, Acts of Parliament, 1999 (India), available at
http://ipindia.nic.in/ipr/patent/patact_99.PDF; see The Patents (Amendment) Act, 2002, No. 38, Acts of Parliament,
2002 (India), available at http://www.ipindia.nic.in/ipr/patent/patentg.pdf (abolishing section 87 of the Patents
(Amendment) Act of 1999); see also M. B. RAO & MANJULA GURU, PATENT LAW IN INDIA 251 (2010).
15
The Patents (Amendment) Act, 2005, No. 15 sec. 3, Acts of Parliament, 2005 (India), available at
http://ipindia.nic.in/ipr/patent/patent_2005.pdf (deleting section 5 of the 1970 Law which prohibited product patents
on the said substances).
16
The Patents (Amendment) Ordinance, 2004, No. 7, Acts of Parliament, 2004 (India), available at
http://lawmin.nic.in/Patents%20Amendment%20Ordinance%202004.pdf.
17
These changes inserted by substituting Section 3(d) of the 1970 Law with a new definition. The Patents
(Amendment) Act, 2005, No. 15 sec. 2, Acts of Parliament, 2005 (India), available at http://ipindia.
nic.in/ipr/patent/patent_2005.pdf.
18
These changes inserted by substituting section 2 (ja) of the 1970 Law with a new definition.
19
These changes inserted by substituting Sections 25 and 26 with a new definition. Id. at sec. 23.
20
These changes inserted by adding Section 92A to the 1970 Law. Id. at sec. 55.



3 . Effect and Implications of TRIPS in India
Access to Medicines
Although the 2005 Act make significant changes but the most controversial provision is the
introduction of product patents for pharmaceutical inventions. This can led adverse impact on
important drugs and consequently steep rise in drug prices The available TRIPS flexibilities
have not been exploited appropriately and that adequate safeguards have not been built in to
ensure an affordable supply of medicines.
Compulsory Licensing
As mentioned earlier, the provision of two new grounds for compulsory licensing (one in respect
of exports to countries that lack manufacturing capabilities and the other in respect of the
manufacture of drugs
21
that are the subject matter of mailbox applications) would go a long way
towards ensuring that local industry can continue to manufacture at a cost lower than the
innovative drug company
22
. However, despite these new grounds, the new regime has done little
to ease the administrative and procedural bottlenecks that constrained the invocation of
compulsory licensing provisions under the old regime.
Burden of Proof
Ordinarily, in a case of infringement of a patent, the burden lies on the party so claiming i.e. the
plaintiff. However, in order to further prevent and prohibit reverse engineering techniques, the
TRIPS has made provisions for shifting the burden from the plaintiff to the defendant. This
means that in a case of infringement of a process patent it is for the defendant to prove the
process to obtain an identical product is different from the patented process.
Retrospective Damages
Section 11A(7) provides that patentees are entitled to claim damages retrospectively from the
date of publication of their patent applications. The Act, however, provides that such
retrospective rights under section 11A do not apply to pharmaceutical mailbox applications. This

21
The Patents Act, No. 39 of 1970, INDIA CODE (1995) Sec. 84(1)-(6), available at http://indiacode.nic.in. The
Patents Act also includes a list of instances where the reasonable requirements of the public shall be deemed to be
unsatisfied.
22
The Patents (Amendment) Act, 2005 sec. 55 (updating 92A).



result, coupled with the fact that the twenty-year patent monopoly term runs from the date of the
mailbox application and not from the date of grant, will reduce the strength of drug patents that
fructify from mailbox applications, a consequence likely to benefit the continued production of
generics at low prices. Therefore, the failure to grant retrospective remedies to mailbox
applications, coupled with making them automatically susceptible to compulsory licensing
provisions, will ensure that the supply of existing generic drugs at affordable prices is not unduly
hampered. To a limited extent, generic manufacturers could also avail of the research exemption
and the wide Bolar provision in section 107A.
Reverse Engineering
According to Article 27 of the TRIPS Agreement, all member countries have to grant patents in
all fields of technologies, whether products or processes earlier some developing countries
granted only process patent, including India, which allowed for Reverse Engineering to create
the product through a different process
23
. In this way they were able to foster indigenous
technology that would generate local, no cost products for domestic markets. In time, some
countries were able to parlay this advantage into the international sphere as well

The Patentability Threshold
The question of whether the new regime will have an impact on access to new drugs is more
vexed. This will depend significantly upon the scope of patentability of pharmaceutical
inventions. Notwithstanding calls by civil society to restrict the patentability of pharmaceutical
inventions to only new chemical entities (NCEs), no such express limitations were introduced.
However, this does not automatically mean that all such substances (including new chemical
entities, formulations, new drug delivery systems etc) will merit patent protection. Rather, the
more rigorous requirements for inventive step introduced by the 2005 Act and the expansive
new use exclusion could help in curbing new grants.
Patent Protection
The TRIPS Agreement extends the scope of patent protection to both products and processes. It
would therefore be possible to apply for patent rights over products for 20 years, and thereafter,

23
Cornish W.R, Intellectual Property, Sweet and Maxwell, London,1989,p.205



further periods of 20 years each could be applied for products covered by patented processes.
Some experts also caution that the 20-year protection can also be abused to extend the monopoly
through process patents as well as patents on usage form, dosage form and combination form
24
.
In the US for example, patents have been taken on new combinations of drugs even when the
product patent on the basic drug the active ingredient - has long expired
25
. Monopoly
protection would be extended through minor changes to the existing medicines where the
product patents have expired.
Opposition Mechanism
Apart from this, the robust opposition mechanism (pre-grant and post-grant) could be leveraged
to filter out frivolous patents.
Price Control/Competition Regime
Fears that the price of patented pharmaceutical inventions may spiral also fail to take into
account price control mechanisms and the newly instituted competition regime in India
26
.
Spurring an Innovation Culture in India
The multinational pharmaceutical industry argues that a product patent regime is essential for
encouraging R&D in new drugs and catapulting the domestic industry into the innovative drug
sphere
27
. It needs to be noted however that basic reverse engineering skills (organic chemistry
skills) are different from the skills required to arrive at new drugs (medicinal chemistry skills)
28
.
Besides, the costs of researching upon and introducing a new drug into the market are colossal. It
therefore remains to be seen whether incentives through a patent regime will achieve the desired
results and whether Indian companies will be able to compete with global multinational
companies on this turf.

24
Lanjouw J. O.,Intellectual Property And The Availability Of Pharmaceuticals In Poor Countries, Center for
Global Development Working Paper No. 5, 2002.
25
Lall Sanjaya, (2003) Indicators of the relative importance of IPRs in developing countries, Forthcoming in
Research Policy.
26
Chaudhuri Sudip., 'TRIPs agreement and Amendment of Patents Act in India'. Economic and Political Weekly
Vol. 37, No. 32, 3354-3360.2002
27
National Institute of Science Technology and Development Studies (NISTADS). Indian patenting activity in
international and domestic patent system-: contemporary scenario. New Delhi: Office of the Principal Scientific
Adviser to the Government of India; 2005.
28
Lanjouw, J.O. and Cockburn, I. M., New Pills For Poor People? Empirical Evidence After GATT, World
Development, Vol. 29, No. 2, pp. 265-289.2001



4. Conclusion
From such a blurred scenario it is utmost arduous task to predict the future of the Indian
pharmaceutical industry under the new regime of intellectual property rights and its relationship
with international trade. Though certain trends can be highlighted in this context. Firstly, despite
of the fact that the market structure of Indian Pharmaceutical Companies is not oligopolistic even
though it will have to face stiff competition in the international scenario .This can also continue
in long run if we take a glance at the trends in research and development .Therefore, Indian
companies can either go for collaboration or concentrate on producing and marketing generic
drugs. This conclusion is based on a realistic assumption which takes into account the poor
research and market penetration strategies of Indian companies. On the other hand it is unlikely
that global pharma will consider India as the base for exploring new drug thus it can only
become an assembly point for some of the drugs.
After India consented to become a founding member of WTO and acceded to the TRIPS
Agreement the product patent regime was introduced after a gap of 35 years. The
implementation of TRIPS worldwide tightening of national IPR systems hence a big step in the
opposite direction.The Pharma industry will foresee worst effect of TRIPS in the form of ceasing
of imitation.Now it has to concentrate on basic research. In absence of patent for new product the
companies will be unable to offer new drugs to customer.It may also lead to closing of number of
units .Its compliance has even posed some challenges to the pharma industry: such as the
industry feels that the TRIPS in its present form, is inclined towards developed nations and
multinational pharmaceutical firms .Right to trade also comes in conflict with it.Not only this it
also violates the human right and act as a clout on ability of the industry to slot in sustainable
development. It may be inferred that TRIPS is not likely to have significant effect on incentive
for creation of innovatives. The object of the agreement aimed at harmonizing IP related laws
and regulation is not implemented fully,
The precarious point is the concern about the position that the Indian government need to take
regarding TRIPS and its so called effect on the pharmaceutical sector. This issue must be
approached from both economic and political point of view. In this regard the government is left
with the two options. Either to introduce an effective mechanism on availability ,price and access
of essential drugs or to develop facilities for introducing new drugs. This can help in catering to



the needs of the country. Global businesses do not have any interest in developing tropical drugs.
Given its traditional medicinal plant base, India can take a leading position in developing,
producing and exporting those drugs. The drug policy of the government has to be a pro-active
one to take advantage of the TRIPs regime. Compatibility between the above-mentioned two
options serves as a base for rational and need-based drug policy.
By- Kiran Kachhawaha, (Student) CNLU, Patna