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The 21st century is shaping up to be India’s boom time. In the latest step toward a world-class economy, India has significantly updated its patent law. Raj S. Dav�, a D.C. partner at Morrison & Foerster, is a longtime observer of India’s IP climate. Under the auspices of George Washington University Law School’s India Project, he organized an international delegation of patent judges and experts to visit India this past January. Shamnad Basheer is an associate at the University of Oxford’s Intellectual Property Research Center. IP Managing Editor Elizabeth Engdahl recently discussed India’s patent law with Dav� and Basheer.
Q. Why has India chosen to rewrite its patent law now? A. India has had a patent law for over a century�since 1856. However, the law from 1970 to 2004 was essentially a reactionary response to over 200 years of British colonial rule. When India gained independence in 1947, its leaders felt that India’s laws, framed under British rule, required change to bring them in line with the swadeshi (economic nationalism) movement and local aspirations. The Indian government appointed two committees to review the patent system. These committees found that 80 to 90 percent of Indian patents were held by foreigners and more than 90 percent were not “worked” in India (meaning they were used only to exclude others, but products within the scope of the patents were not made in India). The committees asserted that the system was being exploited by foreigners to achieve monopolistic control over the market. (Keep in mind the strong influence of the Soviet Union on many Third World nations during this period.) Medicines in particular were arguably unaffordable to the general populace. These reports led to an extensive debate in the Indian Parliament that finally resulted in the Patents Act of 1970. It was, with some important exceptions, a copy of the English Patent Act of 1949. Those exceptions were critical to creating a system far weaker than the corresponding English law. Indian law had a long list of unpatentable subject matter, including atomic-energy-related innovations, inventions contrary to public health, scientific principles, new uses of old compounds, agricultural or horticultural methods, and medical and surgical processes. Methods or processes of manufacture were patentable, but not the product, including compounds useful as food, medicine, drugs, and substances prepared or produced by chemical processes (including alloys, optical glass, semiconductors, and inter-metallic compounds). Some of these restrictions have been relaxed by the new law, in an attempt to make Indian patent law compliant with the Agreement on Trade-Related Aspects of Intellectual Property Rights of 1994. Still, there is doubt if the law is fully TRIPS-compliant. Q. Can you describe the new patent law? What specific changes does it make? A. Despite vigorous opposition from various quarters, the Patents (Amendment) Act was finally passed by both houses of Parliament and received presidential assent on April 6. The change that drew the most attention�to an extent never before witnessed in the annals of intellectual property lawmaking in India�was the introduction of pharmaceutical patents and the consequent threat to India’s internationally renowned generics industry. The final version of the law attempts to balance the competing concerns of a variety of stakeholders, including the domestic generics industry, the domestic research and development community, multinational pharmaceutical companies, nongovernmental organizations worried about access to medicines, the media (including The New York Times, which repeatedly published editorials on why India should not pass the law because it would hurt access to AIDS drugs in Africa), and, last but certainly not least, intellectual property lawyers. The new law allows product patents in the area of pharmaceutical and other chemical inventions for a term of 20 years. Other changes include: •

Inventive-step test: A critical change has been made to the definition of “inventive step,” which now reads: “a feature of an invention that involves technical advance as compared to the existing knowledge or having economic significance or both and that makes the invention not obvious to the person skilled in the art.” To the basic determination that an inventive step is “not obvious,” the additional requirement of a “technical advance” or “economic significance” of some sort has been added. Writing to us in March, Judge Randall Rader of the U.S. Court of Appeals for the Federal Circuit expressed some concern: “The purpose of the inventive-step test itself is to determine whether an invention sufficiently advances the technical arts to warrant an exclusive right. By placing the �sufficient technical advance’ test in addition to the regular �sufficient advance’ test, the new standard could be making inventive step very difficult to achieve.” • Pre-grant and post-grant opposition: The new law modifies the existing pre-grant opposition process to allow any person to file representations and demand a hearing opposing a patent as soon as the application is published. The representations may include evidence to prove that the invention is not patentable. A pre-grant opposition has to be filed within six months of the publication of the patent application. In addition, the new law allows post-grant opposition, to be filed within one year from the publication of the patent grant. • Compulsory licensing: There have been major changes in this area, both substantive and procedural. The biggest substantive change is a new ground for compulsory licensing. India had amended its patent regime in 1999 to provide that applications claiming pharmaceutical inventions would be put away “in a mailbox” and examined in 2005. The new law provides that in the case of such “mailbox applications,” an automatic compulsory license will be granted to those generics companies that were producing the said drug prior to 2005 and who continue to produce the drug after the issue of the patent. Such license is subject to payment of a reasonable royalty. However, no specific guideline has been laid down to determine what is “reasonable,” and this term is likely to lead to some dispute. Many doubt whether the royalty will be reasonable enough for the new law to have teeth. If the royalty is less than reasonable, as we suspect it will be, then the new law might not really remedy the problems with the old law, even though this change might make Indian patent law TRIPS-compliant. As for the procedural change, a compulsory licensing application in most cases can be entertained only if negotiations toward a voluntary license have not “borne fruit” within a reasonable time period. In order to prevent patentees from dragging on voluntary negotiations, the new law caps such “reasonable” time period at six months. In order to incorporate the World Trade Organization’s 2001 Doha Declaration, the new law also provides a compulsory license to generics-makers to enable exports of pharmaceutical products to countries that have no manufacturing capacity of their own or that otherwise allowed imports of the patented drugs from India. While compulsory licenses may still be granted, however, India has never actually granted one. • Bolar exception: The so-called Bolar provision of the 1970 act excludes from patent infringement liability the act of making, using, or selling a patented invention for the purpose of obtaining information to be submitted to a regulatory authority. The 2005 law has expanded this provision to include even the act of importing the patented invention for such purposes. This, no doubt, will aid generics companies, which have had a good ride until now and will be looking to exploit all possible defenses to mitigate the adverse effects of patent protection. • Parallel imports: The 1970 act provided that it was not an infringement to import a patented product if such import was from an exporter who was duly authorized by the patentee to sell or distribute the product. The new law makes such import easier by dispensing with authorization from the patentee�it provides that the exporter need only be authorized under the law. • No-objection certificate: This provision states that prior to filing a patent application abroad, an Indian resident must obtain the permission of the Controller General of Patents, Designs & Trademarks, unless such person first files in India and then files in the foreign jurisdiction at least six weeks later. Q. Apparently some changes were seriously considered that didn’t make it into the final law. What were they? A. Two other changes included in the Presidential Ordinance of 2004 were not enacted this year:

Software patentability: Last year’s ordinance provided that software with a “technical application” to industry or when “combined with hardware” would be patentable. Owing to vigorous opposition from civil society and the free-software movement, this provision was removed. The earlier position under the 1970 act that a “computer program per se” is not patentable prevails. The key concern here would be that the per se exclusion had led to conflicting interpretations, with some patent examiners already granting patents to software that was combined with hardware or that demonstrated a technical application. At the very least, the ordinance provision would have paved the way for a consistent stand. Perhaps a set of examination guidelines could now make for this sort of consistency. • New-use patents: The 1970 act provided that a “new use for a known substance” would not be considered as an invention. The 2004 ordinance amended this provision to exclude only the “mere” new use. Owing to protests that the word “mere” would permit a wide range of new uses to be patented, this word was removed in the 2005 law. Instead, the new law expands on this exception by excluding “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.” It also goes on to state (via an explanation to the section) that salts, esters, esthers, polymorphs, metabolites, etc. shall be considered as the same substance unless they “differ significantly in properties with regard to efficacy.” Insofar as TRIPS compliance is concerned, it would appear that the section on “new use” departs from TRIPS. Thus, there may be litigation at the WTO. Q. You noted the New York Times editorials. Many people have expressed concern that this new law will undermine India’s vibrant generics industry, especially in the area of AIDS drugs. Do you share their concerns? A. We do not share these concerns. Instead, we agree with Dr. Ananda Chakrabarty, the named party in the Supreme Court decision Diamond v. Chakrabarty, which ruled that “anything under the sun that is made by man” is patentable. Dr. Chakrabarty wrote to The New York Times in March that in the absence of product patents: “Indian scientists had no incentives to produce new products and thus innovation never took roots. India is known for making generics and software but not for innovations. As India recognizes product patents, Indian scientists will have incentives to innovate and protect their innovations so that the copying culture will change.” Q. In addition to the new patent law, what else needs to be done to bring India’s patent system up to speed? A. At this point, India has done the right thing�to pass the law. With its passage, India is substantially TRIPS-compliant and has a law that provides patent protection for products, too. However, there has been a 35-year hiatus with virtually no patent law. Thus, India’s next big challenge will be to implement and enforce the new law. India needs to educate and train patent examiners and patent attorneys. This requires a few Indian universities to have specialized intellectual property departments or centers like the ones at George Washington University in Washington, D.C., and Max Planck in Munich. India also needs to train judges to decide complex patent cases. Q. Earlier this year, Judge Rader suggested that India should establish specialized patent courts, presumably not unlike the Federal Circuit itself. Is that idea being considered? A. Everything in India moves at an elephant’s pace�at least it seems so from abroad. It is not clear whether Judge Rader’s idea is being considered (but it has taken years for the adoption of a similar idea in Japan). It might take some time and more convincing for the Indian government and judiciary to consider the idea. To further promote this goal, the India Project will be taking a delegation of U.S. and European judges (including Judge Rader and Judge Barbara Rothstein, director of the U.S. Federal Judicial Center) and chief patent counsel next year to the National Judicial Academy of India, the premier institute for training Indian judges.

Raj S. Dav� is a partner in the D.C. office of Morrison & Foerster and co-chair of the nanotechnology and materials patent group. He specializes in patent prosecutions, opinions, interferences, and litigation. Shamnad Basheer is an associate at the University of Oxford’s Intellectual Property Research Center.

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