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FROM PROCESS TO PRODUCT PATENTS: MAJOR CHANGES IN INDIA’S PATENT REGIME

Author: Anubhav Jindal, Pursuing B.A.,LL.B. from Ideal Institute of Management and Technology, Karkardooma


Introduction

It is said that knowledge is power and money. In the modern era, Intellectual Property is one such knowledge. It is the creation of the Human mind although hidden, it is capable of accumulating an enormous amount of wealth. In Gramophone Company of India Ltd v. Birendra Bahadur Pandey[1], the SC has observed that Intellectual Properties are the brainchild of the authors, the fruits of the labors, and therefore considered to be their property. Intellectual property can be classified into various categories, some of which are as follows:

  1. Patents

  2. Copyright

  3. Trade Marks

  4. Industrial Designs

  5. Geographical Indications (GI)

The term “patent” originates from the word “patere” which means, “to lay open” i.e for public inspection. It is an exclusive right granted for an invention. Section 2(1)(m) of the Indian Patent Act,1970[2] (hereinafter referred to as the act) defines a patent as, “a patent for any invention granted under this act”. The person to whom the patent is granted is known as the “patentee”. The term “patentee” is defined under Section 2(1)(p) as “the person for the time being entered on the register as the grantee or the proprietor of the patent”. The first recorded patent for an industrial invention was granted in 1421 in Florence to the architect and engineer Filippo Brunelleschi. The patent gave him a three-year monopoly on the manufacture of a barge with hoisting gear used to transport marble[3].


The objective of the patent law is to make sure that the patentee can gain a commercial advantage out of his invention. Invention must:

  1. Be related to process or product.

  2. Be new.

  3. Involve an inventive step.

  4. Be capable of industrial application.

  5. Should not fall under sections 3 and 4 of the 1970 act.[4]


Brief history

The first legislation relating to patents in India was act VI of 1856 on the protection of inventions based on the British Patent Law of 1852. It granted exclusive privileges to the inventors of new manufacturers for 14 years. The act was subsequently repealed in 1857 because it had been enacted without the approval of the British crown. In 1859 Fresh legislation for granting “exclusive privileges” was it as Act XV of 1859. The Act of 1859 was consolidated in 1872 to provide protection relating to designs. It was renamed “The Patterns and Designs Protection Act” under the Act XIII of 1872. The act of 1872 was further amended in 1883 (XVI of 1883) to introduce a new provision to protect the novelty of the invention.


The Indian Patents and Design Act,1911 (Act II of 1911) replaced all the previous acts. This act was further amended in 1920. Several other amendments were made in 1930. These amendments include the grant of secret patents, patent of addition, use of the invention by government, etc. To provide for filing of the provisional specification and submission of complete specification within nine months were incorporated in the year 1945.


In 1957, the Government of India appointed Justice N. RajagopalaAyyangar Committee to examine the question of revision of the Patent Law and advise the government accordingly. The committee recommended the retention of the Patent System, despite its shortcomings.Various changes were recommended by this report which formed the basis of the patents bill,1965. The patents bill,1965 was introduced in the Lok sabha in September 1965 and was again amended in 1967. Later, a joint parliamentary committee was formed and on the final recommendation of the committee, the patents act,1970 was passed. Though the act was passed in 1970, major provisions came into force in April 1972. Further amendments were made in this act:

  1. The first amendment permitted the filing of product patent applications in the areas of medications, pharmaceuticals, and agrochemicals, but such patents were not allowed under the second amendment. However, such applications were only to be considered after December 31, 2004. In the meanwhile, the applicants may be granted Exclusive Marketing Rights (EMR) to sell or distribute certain items in India if certain conditions are met.

  2. The second amendment to the 1970 Act was made through the Patents (Amendment) Act, 2002 (Act 38 0f 2002). This Act came into force on 20 th May 2003 with the introduction of the new Patent Rules, 2003 by replacing the earlier Patents Rules, 1972.

  3. The third amendment to the Patents Act 1970 was introduced through the Patents (Amendment) Ordinance, 2004 w.e.f. 1 st January 2005. This Ordinance was later replaced by the Patents (Amendment) Act 2005 (Act 15 Of 2005 ). [5]


Changes made in the old law

In the act of 1970 only process patents were granted, which means that the process/method used in making the requisite product/article was granted the patent right and not the final product. Under process patent, some other person could produce the same product by making slight variations in the process. The implication would be that this will result in more than one producer of the same product. The defect in process patent is that it provides for less protection to the original inventor as competitors can make the same product by making slight variations/modifications in the process without any investment.


The Patents Act, 2005 brought the concept of “product patent”, which means that now the final product could also be patented for 20 years. In a product patent, an exclusive right is given to the manufacturer and no other person can claim the same. This gives a higher level of protection to the patent holder as there will not be any competitors.


India being a signatory to the WTO’s TRIPS (The Agreement on Trade-Related Aspects of Intellectual Property Rights) had to adopt the granting of product patent which was not provided earlier.


Changes in the Pharmaceuticals Industry

After the amendment under the 1970 act and granting of a process patent, there are considerable changes that have occurred, especially in the pharmaceuticals industry. Earlier, the Indian pharmaceuticals industry by using the process of reverse engineering produced various generic drugs which were already patented. These generic drugs were supplied to various underdeveloped and developing countries at a very low price. The product patent will no longer enable the Indian pharmaceuticals industry to manufacture these generic medicines/drugs at the same affordable price for export as well as for sales in the Indian region.


Generic drugs are much cheaper than original branded drugs because the same drug molecule is used. These generic drugs are cheap because the manufacturers of the same do not have to go through the drug development process. But, after the introduction of product patents, the Indian pharmaceuticals industry will no longer be able to produce the same and have to incur huge development costs. Therefore, India should either be allowed the process of reverse engineering or should transform its technique to produce affordable drugs/medicines.


E.g. "Shanvac", a recombinant DNA vaccine for Hepatitis B, indigenously developed by Shanta Biotech of India is being supplied to UNICEF for 50 cents per dose, whereas the same vaccine was being sold for the US $ 15 per dose[6]. After the Amendment in Patent Act, India will no longer be able to supply generic drugs at the same affordable price.


One of the major advantages of product-patent is that countries including India who are signatory to WTO’s TRIPS agreement, which earlier focused mainly on global scale diseases and ignored tropical diseases such as malaria, will now spend time and money to develop drugs/medicines related to tropical diseases as they are much cheaper than those for global scale diseases.


Compulsory Licensing

Licensing is an important part of intellectual property. Before we go further into the concept of licensing, let us first know the difference between assignment and license. An assignment is a transfer of ownership in right to the assignee, whereas, a license is permission to do something in respect of the work. For example, when a license is granted for circulation of a commodity/product, then the assignee can only circulate the product/commodity concerned, whereas, in the case of assignment, the assignee can also act about other things which are related to the circulation.


The grant of compulsory licensing under the amended Patent Act has been in question for a long time. Some of the members believe that compulsory license should be granted only in exceptional cases, whereas, others want the licensing to be made compulsory. Though India lost the battle against the product patents in medicines, it scored an important victory i.e. compulsory licensing. A provision whereby member countries would retain the right to issue a compulsory license to domestic firms for a patented medicine if the patent holder did not provide the medicine at an affordable price.


According to the Indian Patents Act, an application for a compulsory license can only be filed three years after the patent is granted, unless extraordinary circumstances such as a national emergency or grave emergency can be cited to justify granting a license sooner. The following are the three broad justifications for granting forced licenses:

  1. Reasonable requirements of the public concerning the patented invention have not been satisfied

  2. The patented invention is not available to the public at a reasonably affordable price, and

  3. The patented invention is not worked in the territory of India. The Patents Act sets out the circumstances under which “reasonable requirements of the public” would not have been met[7].


But while the above-mentioned conditions for the grant of compulsory licenses can be seen to be facilitating the grant of the licenses, the Act also stipulates that the relevant authority has to take into consideration four additional factors before the licenses can be granted. These are:

  1. The nature of the invention, the time which has elapsed since the sealing of the patent, and the measures are already taken by the patentee or any licensees to make full use of the invention

  2. The ability of the applicant to work the invention to the public advantage;

  3. The capacity of the applicant to undertake the risk in providing capital and working the invention, and

  4. The efforts made by the applicant to obtain a license from the patentee on reasonable terms and conditions and that such efforts were not successful within a reasonable period.[8]


In the product patent regime, i.e. in the pre-1970 phase, only five applications were made for the grant of compulsory licenses. Of these, licenses were granted in only two cases and refused in one case. In the two remaining cases, the applications were eventually withdrawn. [9]


Future of the generic producers

As a result of the modification to the Patent Act, only product patents are recognized, not process patents, and Indian pharmaceutical companies are no longer able to utilize reverse engineering to make the identical generic drug/medicine with minor differences. The interests of generic producers are protected by Section 11A of the Patents Act of 1970. "The patent holder shall only be entitled to receive reasonable royalty from such enterprises that have made a significant investment and were producing and marketing the concerned product" before January 1, 2005, and "which continue to manufacture the product covered by the patent on the date of grant of the patent," it says. Furthermore, it is stated that "no infringement proceedings against these firms shall be instituted." Although this provision is likely to help generic makers, it would have to deal with several unknowns.


Other significant amendments

  1. Patentability of computer programs.

  2. No more “Exclusive Marketing Rights” and “Mail Box Applications”.

  3. Representations can be made opposing the grant of a patent (known in India as pre-grant opposition).


Conclusion

Two key features facilitated the growth of the generic industry in India.

  1. First, only process patents were allowed for chemical entities, including pharmaceuticals.

  2. Second, the term of patent protection was made shorter for pharmaceutical patents.


The Patent Act, 1970, amended in 2005 made significant changes in India’s patent regime. The actual owner of the invention will now be protected against his competitors as he has put his skill, labor, time, and money as against those who were merely making slight modifications in the process and were able to earn huge wealth. As far as the pharmaceutical industry is concerned, India still has a long way to go. It has to spend a huge amount of money, time, and labor to produce these generic drugs/medicines at a low cost.


The process patent regime enabled the generic manufacturers to develop alternative processes for products that were already on the market. The TRIPS-consistent patent regime brought with it uncertainties for the generic manufacturers for their ability to reverse engineer products would be limited to a considerable extent.


[1]AIR 1984 SC 667: (1984) 2 SCC 534: (1984) 2 ECC 142: 1984 UJ (SC) 475: 1984 Cur Civ LJ 292: 1984 SCC (Cri) 313: (1984) 1 Comp LJ 362 [2] The Indian Patent Act,1970 [3]https://www.britannica.com/topic/patent [4] The Indian Patent Act,1970 [5]https://ipindia.gov.in/history-of-indian-patent-system.htm [6]https://www.mondaq.com/india/patent/262416/the-trickle-down-effect-of-product-patent-in-india-and-on-the-developing-world [7] The Patents Act,1970 [8]https://baadalsg.inflibnet.ac.in/bitstream/10603/137841/12/12_chapter%205.pdf [9]https://ipindia.gov.in/history-of-indian-patent-system.htm