February 08, 2015

Who Will Benefit from Changes in Our IP Regime?

Dinesh Abrol

DURING Barack Obama’s visit to India, one of the important promises Prime Minister Modi made to the US President was related to the conflict between US and India on intellectual property rights (IPR). The Joint Indo-US statement is unambiguous about whose interests matter most to the BJP government. In the name of making the country’s IPR regime investor friendly, the Modi government is promising to meet the US demands that the previous governments were unwilling to accept. So far, India’s publicly stated position was that there is no need to change the intellectual property (IP) regime. India had earlier chosen to use the flexibilities available in the WTO TRIPS Agreement to protect the national interest and had no intention to give in to the demands of US companies. While remaining TRIPS compliant, India has used the flexibilities available to protect the rights of Indian citizens and industry in the fields of health, agriculture and information technology. But intentions of the BJP government are quite different.

The Joint Indo-US Statement – “Shared Effort, Progress for All” -- released at the conclusion of Modi-Obama meet in New Delhi last month states, “Recognizing the progress made in constructive engagement on Intellectual Property under the last round of the India-US Trade Policy Forum held in November, 2014, the Leaders also looked forward to enhancing engagement on Intellectual Property Rights (IPRs) in 2015 under the High Level Working Group on Intellectual Property, to the mutual benefit of both the countries”. The statement, however, is completely silent on what is that “mutual benefit of both the countries”. But the promise made to the US Administration by the Modi government is that India is looking forward to enhanced engagement with the US on IPRs in 2015.

During the CEO Forum in later part of the Obama visit, Modi went further and reassured the CEOs of US companies that “India is ready to accept suggestions made by a joint working group with the US on intellectual property rights.” President Obama also made no secret of the intentions that the US has, and said, “We need to incentivise trade rather than stifle. We need to be transparent, consistent and protective of intellectual property rights.”  The joint working group on intellectual property was established as part of the India-United States Trade Policy Forum at the conclusion of Modi’s state visit to the US last year.

Immediately afterwards, activists had made it clear to the BJP government that there was no justification to grant the joint working group on intellectual property the decision-making power. They had pointed out that it is totally inappropriate for the government to discuss bilateral subject of intellectual property which should be considered at the forum of multilateral trade and investment negotiations because India will have the support of many more developing countries on the issues being raised by the US. The US government should take its case on India’s IP regime to the World Trade Organization (WTO) dispute settlement mechanism like it did at in 1996 at the time of the United Front government. In fact, the Modi government was cautioned by the National Working Group on Patent Laws that the establishment of a bilateral mechanism in the form of joint working group is an ingression of sovereign policy space.

In April 2014, the Special 301 Report (an annual review of the global state of IPR protection and enforcement by the United State Trade Representative) had classified India as a “priority watch list country”. Separately, the European Union has been pitching for a special IPR dispensation for pharmaceutical companies from the bloc under the proposed India-EU free trade pact. Earlier, the Indian government had clearly said that the Special 301 process is an extraterritorial application of the domestic law of a country and is not tenable under the overall WTO regime. The Special 301 report flagged concerns over Section 3(d) of India’s Patents Act and compulsory licensing. It is no secret that US-based pharmaceutical companies and the Obama Administration wants the Indian government to dismantle Section 3(d) of the Indian Patents Act, which prohibits patenting of new forms, formulations and dosage forms unless they show significant enhancements of therapeutic efficacy.

After the US companies challenged this section in our Supreme Court it was clearly upheld in the case of Gleevac, a medicine for cancer. Novratis wanted to continue to charge the Indian patients higher prices for the drug. Again just two weeks ago, this same anti-ever-greening provision was used to deny a patent on Gilead’s Hepatitis C medicine sofosbuvir sold by Gilead as Solvadi, potentially saving India and the developing world hundreds of millions of dollars in treatment costs. The power of this high-level IP working group cannot be higher than the Constitutional schemes of India. The US also wants India to abandon the use of compulsory licensing, which is permitted by the TRIPS Agreements and provides the guarantee against the companies not working their patents in India.

One of the most important associations known very well for representing the Indian drug industry with the government went this week public on its internal understanding that the Modi government is beginning to weaken its opposition to data exclusivity and patent linkage. The US companies have been pressurising India for quite some time to accept these two demands to which the government of India was so far opposed. Data exclusivity is known to create monopoly protection for test data submitted to regulatory authorities, which can make it effectively impossible for generic companies to gain marketing approval for their therapeutically equivalent and much cheaper medicines. Similarly, patent linkage provision is known to prevent registration of generic drug whenever the innovator company asserts that it has a patent that it might be infringed by the generic product.

While the US and its pharmaceutical companies claim an express link between stronger IP and more investments, the truth on this claim is again quite different. Available economic and policy-making evidence on the impact of stronger IP on development, foreign direct investment, technology transfer and even overseas research & development and innovation is quite clear that at least the claimed stronger IP benefits do not hold for pharmaceuticals. But even after her meeting with US Commerce Secretary Penny Pritzker, our Commerce and Industries Minister Nirmala Sitharaman told the media that “we have invited the Americans to look at the draft policy (on IPR) and give their inputs. We will then see what we can do with it.” Such pronouncements indicate that the government is embarking on a process of surrender to the US government.

India’s intellectual property regime which the US companies have decried as FDI-unfriendly, weak and restrictive can see changes being made on the basis of American inputs. Intentions of the Modi government are also reflected in the IPR policy draft issued only a month ago. The Department of Industrial Policy and Promotion (DIPP) has been promising to the US that it is going to bring out a liberal and comprehensive IPR policy within next six months. Since the BJP government is relying on a think tank of experts which has patent lawyers and the convener of FICCI committee on IP as members to keep itself informed about the latest IPR issues as well as to help it handle them proactively anything can happen on the front of IPR issue.

Strict vigilance of the activists and parliamentarians on the matter is needed. We should also ask why the Indian government is not willing to issue any more compulsory licenses. The people of this country are paying a heavy price when they have to rely on imports for the procurement of patented medicines in several therapeutic groups, ranging from cancer to diabetes. The US wants the government to make modifications to India’s Patents Act with regard to the following:

-               Dilution of patentability criteria, including those enshrined in Section 3(d) of the Indian Patents Act

-               Limitations to the use of compulsory licensing for access to patented medicines through generic production

-               Prohibition of the use of pre- and post-grant oppositions that are currently being used to challenge fraudulent patent claims by foreign MNCs

-               Strengthening of IP enforcement, so that the Indian judicial system would police and secure the patent rights of foreign entities

-               Introduction of ‘data exclusivity’ and ‘patent linkage’ provision, extending patent monopolies and delaying the entry of generics

Tremendous pressure is expected to be exerted through the Joint Indo-US working group on intellectual property in the coming six months. Not only would the Modi Government have to be prevented from carrying out any amendment to the Indian Patents Act but it also must be stopped from undertaking changes to grant concessions to the US corporate giants through the backdoor of the amendments to the Drugs and Cosmetics Act.