IP Regime in India: A Pharma Perspective

T C James,
President – NIPO and Former Director (IPRs) – DIPP, GOI
T C James, President – NIPO and Former Director (IPRs) – DIPP, GOI weighs in on IPR scenario in India and its implication in Indian pharmaceutical sector.

Contrary to common belief, intellectual property protection is not a new concept to India. We had our first law on IPR enacted more than 160 years ago. The first Indian law on IPR was the copyright law enacted on 18th December 1847. Ten years later, the first Indian law on patent was passed in 1857.

In 1972, Patents Act 1970 came into force eliminating patent protection in India for pharmaceutical products and restricting patenting only to process. This was done with an objective to encourage the development of an indigenous Indian pharmaceutical industry and to guarantee that the Indian public had access to low-cost drugs. Pharmaceutical product patent were reintroduced in India with the Patent (amendment) Act 2005, which came into force from 1st January 2005.

Currently, India has a fairly good IPR environment which is quite consistent with its obligations under the TRIPS Agreement. We are member of most of the major international treaties like Paris convention, the Berne convention, Patent Cooperation Treaty (PCT) and so on. Our IP laws have been enacted keeping in mind the international obligation and commitment and bearing in mind the national interest as it should be. The IP regime in India complies very well with other international regimes particularly with developing countries and in certain areas like copyright, it is much more advanced than many developed countries.

Notwithstanding, we have a lingering justice delivery system with regard to IPR. The delay in approval procedure along with bureaucratic red tape put Indian IP regime in a bad light and most of the positive things have gone unnoticed. A wrong perception created that Indian IP is not doing well. Indian patent office is an international searching authority and international preliminary examining authority under the patent cooperation treaty. There are only 15 such offices worldwide.

TRIPs and Aftermath
India is an original signatory of the TRIPs agreement and one of the few countries who brought in changes in the IP regime even as TRIPs negotiation was in its nascent stage. Post TRIPs agreement, India has made its IP laws TRIPs compliant through three amendments carried out during 1999 to 2005.

In regard to product patents for pharmaceuticals, although applications were being received and also had provisions for exclusive marketing rights for pharmaceutical products for which application had been filed, under the Patents Act, it was from 1995 that granting exclusive marketing right effectively came into existance. Gleevec of Novartis, which is in news during the last few years, is one such drug which had received exclusive marketing rights. During the interregnum over 9000 mail box applications were filed. As of now, I do not envisage any further changes on account of TRIPs.

The need is to have more incentives for creativity as well as inventions and innovations. Those incentives coupled with IP protection will lead the country to a better future, where we will see that more Indian inventions and innovations get protection in India as well as outside. As of now India protects many more foreign patents than Indian one. In fact, after 2005, the percentage of domestic patents has been steadily going down. This is a worrying matter.

In the pharmaceutical sector, we need to develop on the strength that we had developed during the period from 1972 to 1995 – ie, the generic industry. To carry this forward we need to encourage more investment in R&D in this sector. The R&D is a two level approach; basic research will have to be done in universities and R&D institutions, which may result in inventions. Further innovation to bring them to the market will be done in the company R&D centres. This is the practice world over.

Towards a Better IP Regime
India has been following a fairly balanced IPR regime which takes care of the private rights of the IP owners and the public interest. What we need is more awareness among both stake holders and the general public about IPR matters. For this, we need to conduct IP awareness programmes and also introduction of IPRs in the education stream from school to university level.

IP laws should not be viewed merely from the angle of a limited number of big corporations from the particular industrial field but from a perspective of how they can contribute to national development, which includes health and education as well as agricultural and industrial development keeping in view environmental protection, conservation of biological resources.

We have not formally enunciated an IP policy and strategy. There is a need to bring out such a policy to provide more clarity and also to give a positive signal to the world about India’s commitment to IP protection. Such a policy should include topics like promotion of commercial exploitation of IP besides general IP services. Development of IP management capabilities, etc. We have to develop a culture that respects IP. It should be closely linked with innovation and technology transfer.

IP audit and valuation is an area, which is hardly paid any attention in the country. Owners of IP should be able to use it like other property such as collaterals, for taking loans, etc. Banking sector may have been geared for this.

We need to develop incubation centres for young people who have IPs in their kit.

We need to extend IPR protection to new areas like Utility Models in which India excels, particularly the rural sector. This will be a great boost to MSMEs as well as small innovators across the country. In the early stages of development, most developed countries like Germany and Japan had encouraged Utility Models. They continue to have such protection today.

We also need to provide better protection to designs and trade secrets. As of now, there is no separate law for protection of trade secrets. Both these are complementary to patent protection.

Coupled with this, we need to ensure proper ABS on the use of our biological resources, traditional knowledge and cultural expressions.

With the new government sworn in, India expects changes in its IPR policies. The BJP agenda sets forth four points with regard to IPRs. They are:
  • Create courts specially equipped to deal with IPR cases
  • Evolve a national network of specialised universities having expertise in complementary domains - like Forensics, Arbitration, IPR, International Law, etc
  • Embark on the path of IPRs and Patents in a big way
  • Create an ecosystem for multi-country and inter-disciplinary collaborative research and establish an Intellectual Property Rights Regime which maximises the incentive for generation and protection of intellectual property for all type of inventors.

I hope the IP grant infrastructure will be greatly strengthened. Human resources are quite insufficient as of now. Similarly, police and customs need to be provided adequate training and facilities to trace IP offences. Our judicial system also needs to be strengthened and facilitated in handling technical issues.

Compulsory Licensing
India has had a patent law since 1857 and during all these years, it had granted only one effective compulsory licence. Even after 2005, the Patent Office rejected two applications for compulsory licences. The one patent it had granted was for a product, which had not been produced in India or even imported in sufficient quantities. Further the price fixed by the patentee for that product was beyond the reach of as almost 99 per cent of the Indian population. When the office granted a CL for Bayer’s Nexavar (Sorafenib mesylate), to Natco which was to produce it at a monthly requirement price of ` 6800 as against Bayer’s price for the same quantity at ` 1,80,000, it also imposed a fair condition to pay a royalty of 6 per cent. The grant was transparent. Later the patentee approached the IPAB which approved the action by the Patent Office but raised the royalty to 7 per cent. I do not consider that the one single CL has had or will have any adverse impact on innovations in the pharmaceuticals.

IPR and Generic Drugs
India is one of the leading generic producers in the world, thanks to the 1970 Patents Act. The recent happenings regarding FDA ban on Indian generic drug created a bad image of the Indian pharmaceutical industry in international market. The US FDA has a strict quality and safety standard commencing from manufacturing stage. The pharma companies will definitely have to follow those standards. In fact, India should have very strict safety and quality standards in the area of medicines. Quality and safety cannot be compromised.

Generic companies have a large opportunity now. A large number of popular drugs are going off patent. Indian companies should utilise this opportunity well.

IPR and Affordable Medicine
As said above, India has a TRIPS compliant patent law which protects the exclusive rights of patent owners. At the same time, it has various provisions to ensure that such rights are not misused, particularly in a monopolistic way. These provisions include compulsory licences, use by government, etc. Besides, India follows strict standards in the grant of patents, particularly for pharmaceuticals to ensure that frivolous patents are not granted or very minor improvements are not granted a new patent when an earlier patent is about to expire.

Patent cliff is a term being used generally to refer to the possible loss in revenue of a company whose revenue in a block buster drug falls at the end of the patent term. This is because during the patent period of 20 years it has been enjoying total monopoly and after the patent period there will be competition and the prices will be dictated by the market as in other cases. Expiry of a pharma patent gives an opportunity to generic producers to get into the market on those products and the competitive pricing is very good for patients on account of both availability and affordability. It is essentially a company specific issue.

Secondary patenting is an unethical practice by many companies to obtain a patent on an existing product after making very minor or slight modifications. It must be remembered that world over the patent period was for 14 years and it was the TRIPS which extended this period to 20 years taking into account the possible delay by the patent owners to get into the market. When you are taking a so called secondary patent you are actually preventing competitors and this is very bad for patients both in developed and developing countries. It must be remembered that the companies already enjoy considerable market lead and production facilities over their generic companies which they can effectively use to garner higher revenues than their generic competitors.

Role of IPR in Forming Legal Strategies
IPRs form an important element in the strategy of any pharmaceutical company whether generic or otherwise. Those who own patents will have to take special measures to protect them as well as using them. Negotiations for licensing involve legal strategies. They may have to watch out for possible infringements and obtain injunctive relief. As for other companies, they have to ensure that no infringement takes place. At the same time, they need to monitor the patent databases to see which patents are expiring and chalk out strategies accordingly. In regard to legal strategies, they need to be ready to face any possible threat of an infringement, even if they are not infringing and accordingly take pre-emptive action. Also companies have to be on the watch out for the patent trolls strategies adopted by many companies.

Discussions are going on in the international bodies, particularly WIPO to have more harmonisation in various processes among countries. So as far as PCT is concerned, this has been a long continuous process and many changes have been brought in that have positive effects on harmonisation. However, such harmonisation should be done through the international bodies like WIPO and not through bilateral treaties.

Contact: prof.tcjames@gmail.com