Critique of the Patent (Amendment) Act 2005

[Guest guest]

A critical view of the new Indian Patent (Amendment) Act 2005

On 23 March 2005 the Patent (Amendment) Bill 2005 was passed by the Rajya Sabha

(Upper House). There has been very little public debate around the Bill to

determine the effects of the amendments that have been made.

Several amendments have been made to the Ordinance (the new Patent Bill 2005).

However, many of these fail to address the serious concerns of the issues

relating to access to medicines.

From the text that has been made available, the following provides a critique of

the key issues of the new law which were voted on and the potential impact:

Expansion of the Scope of Patentability:

TRIPS does not define the basic criteria of patents viz. novelty, inventive step

and industrial application. Further, the only obligation under TRIPS Agreement

is to protect pharmaceutical products. As a result implementing countries have

the option to limit the patent protection only to a new chemical entity.

However, according to latest reports data shows that there are 8926 applications

pending for examination in the mailbox in India, the vast majority by U.S and

E.U multinational pharmaceutical companies. However, only 274 new chemical

entities received marketing approvals from the US FDA between 1995-2003. This is

a clear indication that many of the applications in the mailbox are patenting of

products with frivolous or marginal changes and, therefore, fall outside of the

requirement of protection required for patents by TRIPS.

The clauses in the Bill to limit the scope of patentability are extremely

ambiguous and full of technical loopholes which allow for ‘evergreening’.

Ideally the law should clearly limit patent protection to ‘new chemical

entities’.

Some of the key issues relating to the scope of patentability are given below.

Inventive Step :

The Bill provides the following definition of what is required of a patent

application to meet the inventive step criteria:

“a feature of an invention that involves technical advance as compared to the

existing knowledge or having economic significance or both that makes the

invention not obvious to a person skilled in the art”.

The above provision arguably broadens the existing provision to the benefit of

patent holders and is ambiguous to the extent that it allows for two criteria

for meeting an inventive step. As it stands, to meet an inventive step criteria

the patentee will either have to show that the invention includes a ‘technical

advance’ or has economic significance, or both.

The provision should have required the applicant to comply with both

requirements for an inventive step, namely “existing knowledge and having

economic significance” and delete the term “or both”. Otherwise, the requirement

of technical advance is compromised and diluted by the fact that a patent could

be simply granted on economic significance alone. Economic significance alone,

cannot determine the inventive step of a patentable invention.

Pharmaceutical substance:

The amendment currently describes “Pharmaceutical substance” as “any new entity

involving one or more inventive steps”.

As it stands, the provision is too broad as it allows all types of

pharmaceutical substances. The term “chemical” ought to have been inserted so as

to read “any new chemical entity”.

Inventions not patentable:

Section 3(d) has been amended to read:

“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 the mere use of a known

process, machine or apparatus unless such known process results in a new product

or employs at least employs one new reactant”.

The use of the phrase “which does not result in the enhancement of the known

efficacy” is ambiguous, too broad and potentially allows for new forms of

existing substances to become patented. For example, “result in enhancement of

efficacy” could be a minor amendment to an existing invention to in order to get

around the provision as it stands.

In addition, the new Act retains the word “mere” which potentially causes

ambiguities within the provision.

Also, the explanation supporting the above provision provides:

“Salts, esters, ethers, polymorphs, metabolites, pure form, particle size,

isomers, mixtures of isomers, complexes, combinations and other derivatives of

known substance shall be considered to be the same substance, unless they differ

significantly in properties with regard to efficacy”.

The phrase “unless they differ significantly in properties with regard to

efficacy” is not necessary and offers an entry point in favour of the patentee,

thus leading to excessive litigation. For example, certain properties are never

known or are clear at the time of application in the claim so one would not know

how they differ, thus leaving any recourse to opposition.

The definition of pharmaceutical substance is not linked to the provisions

relation to the exclusion for patents and, therefore, stands alone. Furthermore,

the inventive step requirement has been severely diluted. As a result, section

3(d) allows ‘evergreening’.

Immunity to ongoing generic production:

The Bill permits generic manufacturers to continue producing generic version of

new drugs which are in the mailbox. However, this only applies where the generic

producer has made a significant investment provided they were producing and

marketing the generic version prior to 1 January 2005. However, the generic

companies are required to pay the patent holder a reasonable royalty.

The question of “significant investment” poses a threat of potential

infringement suits as the generic producer would have to clearly show that it

has made what would be considered a significant investment in producing and

marketing the generic drugs. With respect to the ‘reasonable royalty’ it creates

the problem of excessive demands from the patent holder and litigation. The

reasonable royalty rate should have been fixed at a particular percentage, the

norm being 4%.

For example in that in South Africa, Glaxo Kline demanded a royalty of 25

% before the courts intervened.

Pre-grant Opposition:

The amendment has restored the ability for any member of the public to oppose

patent applications before its grant. The grounds for bringing an opposition

remain as before and provide recourse to challenging frivolous and legally

invalid patents.

However, the effectiveness of the opposition process depends upon the access to

information on the mailbox applications. The Patent Office in 2005 has issued a

notification in its official journal that inventions either filed or claiming

priority on 30 July 2003 have been deemed to have been published. However, there

no actual physical publications available. This lack of publication takes away

the possibility of accessing information relating to the patent application and

the ability to oppose the same.

Publication:

The Bill amends Section 11A of the Patents Act which prescribes the initial

publication requirement. After the publication the applicant shall have the

rights as if patent for the invention had been granted on the date of

publication of the application. However, no infringement proceeding is

permissible until the grant of patent. This means that one can get the privilege

of patent from the date of publication i.e. even before filing the request for

the examination of application. Lastly the Bill refers to the publication of an

application, but fails make the publication of the complete specification

available to the public. This will greatly hamper opposition proceedings (see

above).

Compulsory Licences:

The effective and efficient issuance of compulsory licences is imperative to

curb the abuse of patent rights by the patentee. The amendment has only made

cosmetic changes to quicken the process of dealing with an application for a

compulsory licence in section 84(6) to the extent that where the applicant has

made efforts to obtain a licence from the patentee on reasonable terms and

conditions and such efforts have not been successful within a reasonable period,

the Controller can now interpret ‘reasonable period’ to mean a period not

ordinarily exceeding 6 months.

However, the amendment does not remove the existing requirement that only after

three years after the grant of a patent, (unless there is a national emergency,

which has never been used) can a person make an application to the Controller

for the grant of a compulsory licence. Therefore, in total the request for a

compulsory licence does not have to be considered for at least 3 years and 6

months from the date of the grant of the patent. Furthermore, one also has to

take into the account that the Bill fails to provide a timeline within which the

Controller must deal with compulsory licence application once made. Therefore,

this could lead to a further delay before any licence can be issued as it is

well known that MNC pharmaceuticals often refuse to deal with requests for

compulsory licenses or demand high royalties.

With respect to exporting drugs to a country which makes a request for a generic

drug, the amendment no longer requires the importing country to issue a

compulsory licence. However, one question that arises is whether the procedure

for the grant of the compulsory licence for the domestic market (under section

84(6) discussed above) will also be the same for compulsory licenses for export.

It is quite possible to argue the procedure both ways, therefore, potentially

delaying urgent new drugs that a developing or least developing country may

require.

The Act further fails to provide the safeguard available within Article 44 of

TRIPS, which effectively allows Member States to limit remedies to remuneration

that would be available to the patent holder where third parties are authorised

by the Government, without the authorization of the right holder, to use the

patented good rather than issue an injunction.

Discretionary powers of the patent office: The Ordinance took away the

limitations imposed by the Act, and made it discretionary of the Patent Office

by virtue of the Rules. As a result, the patent office can now tamper with the

various time lines by amending the Rules as and when they choose. Under the

amended ordinance, 7 types of time limits will be determined by the office

through the Rules and not by the statute. The excessive and unbridled

delegation to the Patent Office is further increased by the following provision:

‘the central government may, if it is satisfied that circumstances exist, which

render it practically not possible to comply with such condition of previous

publication, dispenses with such compliance”. As a result, the public will not

be given an opportunity to offer its comments to the Rules before it being

amended.

Quick Examination: As per the Ordinance the time frame for making the

examination report is left to the Rules. The new Rules provide a period 1-month

for the examination report to be issued following the application. This period

was previously 18 months period.

This is likely to create immense pressure on the Indian Patent Office as there

will not be enough examiners to deal thoroughly with the flood of applications

which is likely to occur, thus resulting in improperly examined and legally

invalid patents. Indeed, as the U.S Federal Trade Commission report mentioned in

its 2003 report “the increasing rate of 10% of patent applications each year is

causing examiners only having 8 to 25 hours to read, understand, search for

prior art and evaluate the patentability of the applications”. The Indian Patent

Office does not have the infrastructure for research, access to information and

capacity to face the challenge that the new Act will bring.

Rule Making Powers:

The Act takes away the limitations imposed by the Act, and makes it a matter of

discretion for the Patent Office by virtue of the Rules. As a result, the patent

office can now tamper with the various time lines by amending the Rules as and

when it requires. Under the amended ordinance, 7 types of time limit will be

determined by the office through the Rules and not by statute. The excessive

and unbridled delegation to the Office is further increased by the following

provision: ‘the central government may, if it is satisfied that circumstances

exist, which render it practically not possible to comply with such condition of

previous publication, dispenses with such compliance”. As a result, the public

will not be given an opportunity to offer its comments to the Rules before it

being amended.

Access to Medicine and Treatment Campaign (AMTC)

Alternative Law Forum

Lawyers Collective

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