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Mashelkar Report on IP Rights Version II: Wrong Again

The fi rst report of the Mashelkar Committee on patent issues was accused of plagiarism and the committee was asked by the government to rexamine its recommendations. The second report of this committee poses a different set of problems. This article argues that the revised recommendations are not warranted by the TRIPs agreement of the World Trade Organisation, that they are not supported by the weight of academic opinion and that the conclusions do not rest on any reasonable assessment of national interest in pharmaceutical policy.

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Mashelkar Report on IP Rights Version II: Wrong Again

Sudhir Krishnaswamy

pharmaceutical substances only to a new chemical entity or to a new medical entity may prima facie amount to ‘excluding a fi eld of technology’ even when they satisfy the basic requirements of patentability8 (emphasis added).

The TEG was invited to consider the

The first report of the Mashelkar Committee on patent issues was accused of plagiarism and the committee was asked by the government to rexamine its recommendations. The second report of this committee poses a different set of problems. This article argues that the revised recommendations are not warranted by the TRIPs agreement of the World Trade Organisation, that they are not supported by the weight of academic opinion and that the conclusions do not rest on any reasonable assessment of national interest in pharmaceutical policy.

This paper was written with the diligent and resourceful assistance provided by Rohan Sahai, a student at West Bengal National University of Juridical Sciences.

Sudhir Krishnaswamy (skrishnaswamy @nujs.edu) is at the WBNUJS, Kolkata.

Economic & Political Weekly

EPW
december 26, 2009

T
he government’s acceptance of the second version of the Technical Expert Group report (hereafter TEG report) headed by R A Mashelkar has been followed by a shrill sustained campaign that seeks to assert the truth of the report’s claims by merely proclaiming it from every available forum.1 Any criticism of the report is met with a strong chorus of denunciation usually ascribing poor intellectual abilities,2 bad motives,3 Orwellian sophistry4 or all of these.5 This campaign has assumed Goebbelsian proportions and poses a grave risk to rational and empirically grounded public policy formulation. I have commented elsewhere on the dangerous implications for public policymaking that the process adopted by the fi rst TEG report represents.6 In this essay, I respond to the TEG’s Second Report and argue: first, that its recommendations are not warranted by the World Trade Organisation’s (WTO) agreement on the Trade-Related Aspects of Intellectual Property Rights (TRIPs); second, that it is not supported by the weight of academic opinion; and third, that these conclusions do not rest on any reasonable assessment of the national interest in pharmaceutical policy. The key question before the TEG was: whether it would be TRIPS compatible to limit the grant of patents for pharmaceutical substances to new chemical entities or to new medical entities involving one or more inventive steps?7 (emphasis added).

The Committee’s conclusion on the key question before it was that:

Article 27 of TRIPS, which deals explicitly with the issue of patentability, inter alia, states that ‘Member States may not exclude any field of technology from patentability as a whole and they may not discriminate as to the fields of technology, the place of innovation’, etc. Reading this obligation in the light of the overall purpose of the Agreement, it appears that linking the grant of patents for

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TRIPs compatibility of particular “limitations” that may be imposed on patents on pharmaceutical substances. The TEG report addresses the terms of reference as a proposal for a “statutory exclusion” of a field of technology which fails to comply with Article 27. The “prima facie” conclusion by the TEG which equates “limitations” with “exclusions” is unsupported and leads the TEG to make a category mistake. The TEG repeatedly speaks in terms of a “proposed statutory exclusion” while the terms of reference are concerned with limitations. This category mistake offers significant rhetorical support to the TEG’s conclusions as it evokes the language of Article 27 which prohibits “exclusions”. Moreover, the conflation of limitations on patentability with exclusions from patentability occludes from view the available policy flexibility inherent in the TRIPs agreement. In this essay, I will address the terms of reference on its own terms: as a “proposed limitation on patentability” and thereby address the policy issues before the TEG in clearer terms.

The TEG clarifies that the report does not take a view on the compatibility of Section 3(d) of the Patents Act, 1970 (hereafter the Act) with the TRIPs agreement.9 However, for the TEG’s clarification to be more than a dodge it should clarify that its conclusions have no bearing on the vires of Section 3(d). As the TEG was not presented with a draft section, clause or rule to be introduced into domestic patent law it did not test any precise legal formula. The TEG assessed whether particular limitations on patentability of pharmaceutical substances is TRIPs compatible and concludes that such limitations are not compliant. Section 3(d) is an existing statutory limitation which is different from the proposed limitation in at least two respects: first, the main part of Section 3(d) is not confined to pharmaceutical substances while the Explanation certainly is. The

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proposed statutory limitation relates only to pharmaceutical substances; second, Section 3(d) requires that inventions must display “enhancement of the known effi cacy” of that substance while the proposed limitation seeks to restrict pharmaceutical patents to new chemical entities and new medical entities. Hence, the TEG’s conclusions with respect to the permissible limitations on the patentability for pharmaceutical substances should have a direct bearing on the compatibility of the Explanation to Section 3(d) with the TRIPs agreement. Hence, it is important, for the TEG and the commentators who have propped up the report not to equivocate on this important issue by side-stepping it. Instead they should clarify why their conclusions on the proposed limitations have no effect on Section 3(d). If not, an awful lot of public resources have been spent on the TEG without clarifying the compatibility of Indian patent law with the TRIPs agreement and outlining the policy options before government.

In order to explore the policy options for pharmaceutical patents available under the TRIPs agreement I will engage with TEG report’s arguments and conclusions and the interpretation of some key provisions of the TRIPs agreement 1994 (Articles 7, 8, and 27) and the Doha Declaration. However, there is one preliminary difficulty in responding to the TEG report on its own terms. The narrative in the TEG report closely mirrors the arguments rehearsed, sources cited and conclusions proposed in a report commissioned by the Intellectual Property Institute (hereinafter the IPI report10), a United Kingdombased charitable organisation and fi nancially supported by INTERPAT, a Swiss Association of major European, Japanese and US-based pharmaceutical companies, submitted to them. It invariably cites the same authorities in the same order and if anything abridges the arguments in the IPI report. There is no new argument presented in TEG report barring a small section on the national interest. Ironically, this spark of originality in the TEG report is not the area of expertise for which the members of the group were selected! As the TEG report’s excessive reliance, and its acolytes constant elision between the TEG report and IPI report suggests, the IPI report is the “True Fake”. Hence, in this essay I will to the extent possible respond to the fuller arguments presented in the IPI report.

1 Article 27 of TRIPs

In this section I will consider the scope and effect of Article 27. The IPI report concludes that proposed limitation on patentability does not comply with Article 27 of the TRIPs agreement for three reasons: it is barred by the express words of Article 27; it is unsupported by existing state practice; and, it goes against the negotiating history of the TRIPs agreement. In this section I will respond to each of these arguments though not in the same order. Further, I will explore two issues germane to the terms of reference of the TEG: namely, whether the proposed limitation may be rephrased to more effectively secure compliance with the TRIPs agreement and to situate the debate on policy options with respect to pharmaceutical substances against the background of patent law reform more generally.

The IPI report relies on a useful distinction between “patent eligibility” and “patentability” used by David Vaver.11 While the former deals with the scope of patentable subject matter susceptible to a patent grant, the latter is concerned with the tests that any invention must satisfy before a patent is granted. This is a relatively uncontested distinction that most IP lawyers would be familiar with. Article 27.1 sets out the key patent eligibility and patentability criteria. Articles 27.2 and

27.3 spell out exclusions from patentable subject matter or thereby refi ne the patent eligibility criteria. The second sentence in Article 27.1 further qualifi es the patent eligibility criterion by requiring that “patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology...” Hence, the nondiscrimination requirement seems to restrict member states policy options with respect to patent eligibility and considerable freedom is retained with respect to patentability criteria.

The critical issue which requires careful consideration is whether the proposed limitation is a patent eligibility criterion or a patentability criterion. The IPI report

december 26, 2009

anticipates that the proposed limitation may be construed as a patent eligibility or a patentability criterion and concludes that in either case it would violate Article 27.12 In this essay I will argue that the proposed limitation should be construed as a patentability criterion and further that even if it is considered to be a patent eligibility criterion it complies with Article 27.

1.1 Proposed Limitation

I begin by reviewing the proposed limitation to assess whether it is properly understood as a patent eligibility or patentability criterion. The proposal seeks to “limit the grant of patent for pharmaceutical substance to new chemical entity or to new medical entity involving one or more inventive steps”. There are two key e lements in this proposal: first, the selection of “pharmaceutical substance” as a kind of invention and second, the test of “new”ness that requires one or more inventive steps.

“Pharmaceutical substance” seems to mark out the kind of invention to be subject to the proposed patentability criteria. However, this is not a subject matter or patent eligibility restriction per se. Article 27 elaborates on the patent eligibility criteria using the phrase “fields of technology”. Is “pharmaceutical substance” a “fi eld of technology”? The most elementary knowledge of the contemporary means by which pharmaceutical substances are produced will force one to acknowledge that these substances are the result of complicated methods of produ ction including technology in the field of chemistry, biotechnology or nanotechnology. In that sense “pharmaceutical substance” relates to several fields of technology. However, it may be suggested that while the latter are fields of knowledge we must approach Article 27’s use of the phrase “fi elds of technology” to include the cluster of knowledge and techniques that relate to a particular industry. The drafting history and the cases decided by the WTO Dispute Settlement Panel do not clarify the phrase “fields of technology”. Hence, it is possible for states to argue that the phrase “pharmaceutical substance” does not relate to “fields of technology” and therefore is not a patent eligibility criterion. Even if states are successful at showing

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the proposed limitation to be one that relates to patentability criteria it does not automatically mean that it is TRIPs compliant. In section 1.6 below I examine the issues of TRIPs compatibility of the proposed limitation if it is understood as a patentability criterion.

I begin the arguments relating to TRIPs compliance by assuming that pharmaceutical substance does refer to a patent eligibility criterion – this is by far the stronger argument in the IPI and TEG reports and deserves the strongest response. I will argue that the proposed limitation may nevertheless be supported in three ways: first, by arguing that even if pharmaceutical substance is equivalent to a fi eld of technology it does not violate the nondiscrimination principle; second, by suggesting that the phrase “pharmaceutical substance” be replaced by the phrase “public health” which is certainly not a reference to a field of technology; third, by briefly arguing that India should seize the opportunity for patent reform and put in place a uniformly higher standard of patentability for all inventions.

1.2 Non-Discrimination

The first, and perhaps the strongest argument, in the TEG report and the IPI report for the rejection of the proposed limitation is that it fails the test of non-discrimination in Article 27.1 of the TRIPs agreement. The TEG report reviews the effect of Article 27 non-discrimination requirement in the light of the Canada Pharmaceuticals Case.13 Further, it surveys the impact of Articles 7 and 8 and concludes that they permit very limited exceptions. Finally, the report concludes that the

Doha Declaration cannot override the express provisions of the TRIPS provisions, and any flexibilities therein have to be interpreted within the overall confi nes of TRIPS, which, as has been explained, rules out any ‘statutory exclusion’ from patentability of entire class of inventions.14

The WTO Dispute Settlement Body decided the Canada Patent Protection of Pharmaceuticals case in 2000 prior to the Doha Declaration. In this decision the stockpiling and regulatory exceptions in Canadian domestic law were challenged as violations of Article 30 of the TRIPs agreement. The panel concluded that the

Economic & Political Weekly

EPW
december 26, 2009

regulatory exception satisfied the requirements of Article 30 but the stockpiling exception failed this test. While the particular reasons for the decision are not directly relevant to the proposed limitation before the TEG, the relationship between Article 27.1 and Article 30 with respect to the non-discrimination principle is critical to the conclusions of the report.

The panel decision in the Canada Pharmaceuticals Case made a nuanced distinction between “discrimination” and “differentiation” in these terms:

The ordinary meaning of the word discriminate is potentially broader than these more specifi c definitions (referring to national treatment and most favoured nation principle). It certainly extends beyond the concept of differential treatment. It is a normative term, pejorative in connotation referring to results of the unjustified imposition of differentially disadvantageous treatment.15

This distinction between differentiation and discrimination is one that is familiar to most students of equality doctrine in constitutional law. It is not enough to show that a state makes a distinction between two parties. One needs to go further to show that such discrimination is morally invidious, does not secure any reasonable purpose and is not justifi able by legitimate state aims.16 The Canada panel embraces this view of discrimination and observes: “that Article 27 does not prohibit bona fide exceptions to deal with problems that exist only in certain product areas”.17

Surprisingly, the TEG and IPI report which otherwise relies heavily on the Canada case fails to cite the sentence quoted above from the Canada Pharmaceuticals Case. This omission is a signifi cant error as it has the direct implications on the compatibility of the proposed limitation of pharmaceutical substances – i e, a bona fide exception to deal with problems in certain product areas. To the extent that this observation by the panel has persuasive force in subsequent decisions it firmly settles the application of Article 27 non-discrimination to the present proposed limitation. Hence, the conclusion by the IPI report, and following it, the TEG report that the Canada Pharmaceuticals Case does not allow for differentiation between fields of technology as this would per se be discriminatory runs against

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the very text of the panel decision. It is noteworthy that this decision was reached even before the Doha Declaration.

While adjudging the legitimate purposes that a state may pursue while designing a technology conscious model of patent law any dispute resolution panel will need to determine the range of bona fide purposes which are nondiscriminatory. The TEG rightly concludes that Doha cannot “override” the express provisions of the TRIPs agreement. However, this is not equivalent to the claim that the Doha declaration has no impact on the TRIPs agreement. Phrases like “discrimination” and “fields of technology” under-determine the range of conditions to which they apply. Any person interpreting the TRIPs agreement would have to utilise a range of materials beyond the express words of the agreement. The Doha Declaration stands in a special relationship with the TRIPs agreement as it is a ministerial declaration by the highest political entity in the WTO system, and it emphasises the need to protect public health while implementing the TRIPs agreement. Hence, while deciding whether “differentiation” between fields of technology amounts to discrimination it is relevant to consider whether “compelling public interests are satisfi ed”.18 The Doha Declaration at the very least confers a superior normative status on public health as one such compelling state interest which states may legitimately pursue. The TEG and IPI mistakenly assume that in order to support the proposed limitation the Doha Declaration must be understood to effectively amend Article 27 to introduce a new exception. It is sufficient to support the proposed limitation through an interpretation of Article

27.1 non-discrimination requirement and the Doha Declaration will play a signifi cant role. At this stage it is useful to assess whether academic writings on the TRIPs agreement suggest otherwise.

1.3 Curious Case of Carlos Correa

Some of the discussion about the TEG report has centred on the report’s reliance on some academic sources, particularly the extracts from the work of Carlos Correa.19 Correa is a professor of law and director of the Centre for Interdisciplinary Studies on Industrial Property and Economics Law at

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the University of Buenos Aires. The TEG report follows the IPI report in citing Correa to support its conclusions. In order to appreciate this controversy one must recognise that Correa is renowned in intellectual and policy circles for his dedicated work in reconciling the demands of intellectual property with the promotion of public health over the last two decades. Hence, this reliance on Correa’s work is not merely one that rests on Correa’s good reasons but also one that borrows from his good reputation. When viewed in this light the use of Correa’s work is strategic and misrepresents his views.

The extract from Correa relied upon by the Committee reads as follows:

Literally interpreted, Article 27.1 does not permit the exclusion from patentability of medicines in general or, arguably, of specifi c groups thereof. Under this interpretation, WTO members could not exclude from patentability even the ‘essential medicines’ listed by the World Health Organisation (WHO).20

This extract is from a report commissioned by the South Centre titled “Integrating Public Health Concerns into Patent Legislation in Developing Countries” which seeks to guide policymakers on how they may achieve public health objectives in a TRIPs consistent manner. This extract from Correa’s report suggests that Article 27.1 prohibits exclusions of medicines in general, or of specific groups thereof. In the TEG report much turns on the interpretation of the phrase “of specifi c groups thereof”.

The IPI report and the TEG report conclude that Correa’s reference to the bar of “exclusion” of “specific groups” of medicines applies to the proposed “limitation” with respect to pharmaceutical substances that fail to satisfy the new novelty requirements. A careful reading of Correa’s report makes it abundantly clear that the policy options he was considering were completely different from the policy questions before the TEG. Correa’s report concludes that if a WTO member excluded from patentability, all drugs to cure cancer, which is a “specific group” of medicines, it would be hit by the provisions of Article 27.1 as it requires all inventions to be patentable amounts and would amount to discrimination as to the fi eld of technology – the field of technology here being drugs for the treatment of cancer. The second limb of Correa’s argument about discrimination is neither necessary nor relevant to the conclusions in that report. As the p olicy proposal being considered in his report was the mandatory “exclusion” from patentability of a “specifi c group” of medicines it offends the Article 27 requirement that all inventions barring permissible exclusions should be patentable. Further, this 2000 report does not develop the distinction between discrimination and differentiation available in his later work and considered in the section above.

In any event, it will no longer be satisfactory to quibble over an interpretation of the excerpted portions of Correa’s text. Presently, the TEG report moves from this excerpt to the unsupported conclusion that it applies to the proposed limitation. If the TEG report seeks to extend his observations to apply to these new policy questions it must present good reasons to do so. Moreover, Correa has clarified that his observations in the report were “misinterpreted” by the TEG report.21 He suggests that the terms of reference of the TEG report deal with a proposal for limitations to be imposed on patentability of pharma ceutical substances which poses very different questions to a carte blanche exclusion of pharmaceutical patents considered in his earlier report. Further, in his more recent work he concludes that a nuanced approach to distinguishing the patentability standards for pharmaceutical patents is TRIPs compliant. The erroneous interpretation of Correa by the TEG becomes clear when the following extract from a later work is taken into consideration:

...Member countries are free to determine whether they want a system under which a myriad of incremental innovations are patentable, or one aimed at rewarding more substantive departures from the prior art.22

Additionally, while discussing the issues that should have been covered in the Doha Declaration, Correa has pointed out that the declaration did not refer to the room left to WTO members to determine the patentability standards in ways that p revent patenting strategies aiming at expanding or temporally extending the protection conferred in the pharmaceutical fi eld.23

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Therefore, if anything, Correa’s published work taken together has actually left the question regarding patentability of incremental innovations in pharmaceuticals open with an inclination towards its exclusion. The reliance placed by the TEG on the South Centre report and the conclusions thereof are ill-founded. From the discussion above one is forced to conclude the TEG report’s use of the Correa’s work is at the very least curious as it fails to refer to his more recent and directly relevant work, and at its worst selective and therefore strategically misrepresents his work on this subject.

1.4 Public Health

The TEG while reviewing the proposed limitation was not presented with a draft section or clause to be introduced into domestic law. Hence, it had the opportunity to consider whether a limitation phrased in different terms would achieve the same policy objectives. In this section I will examine whether a limitation phrased in terms of “public health” would avoid some of the problems associated with the present proposal. It is implicit within the Doha Declaration that differentiation in patent rules may be necessary to protect public health. The singling out of public health, and in particular pharmaceuticals (paragraphs 6 and 7), as an issue needing special attention in TRIPs implementation constitutes recognition that public healthrelated patents deserve to be treated d ifferently from other patents. The issue that needs clarification is the kinds of diffe rentiations that patent rules may legitimately make.

The French patent law24 provides an interesting example of a patent law that differentiates de jure on the treatment of pharmaceutical products on public health grounds. It provides that:

Where the interest of public health demand, patents granted for medicines or for processes for obtaining medicines, for products necessary in obtaining such medicines or for processes for manufacturing such products may be subject to ex officio licences in accordance with Article L 613-16 in the event of such medicines being made available to the public in insufficient quantity or quality or at (abnormally high prices) by order of the Minister responsible for industrial property at the request of the Minister responsible for health.25

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While this provision in French law relates to licensing of patents, the enjoyment of patent rights is also covered by the non-discrimination requirement in Article 27.1.26 However, as public health is not a “field of technology”, but a problem area that may be addressed with products originating in different technological fields, such as equipment, software, diagnostic kits, medicines, and a large variety of devices used for medical treatment it is not struck by the non-discrimination rule. Further, it gives evidence of state practice in the interpretation of Article 27 which the IPI report claims, does not exist.27 In the next section we provide further evidence of de facto discrimination in patent standards between fields of technology while discussing patentability standards.

1.5 Patentability Standards

Patent lawyers speak of “newness” while discussing two patentability criteria – n ovelty and non-obviousness. The Patents Act 1970 uses this language at several points. It speaks of “new” inventions in section 2(1)(l), and describes inventions to be a “new” product or process in section 2(1)(j). These invocations of the word “new” all relate to patentability criteria and have no bearing on patentable subject matter. Hence, there is no doubt that the force of the proposed limitation is with respect to the patentability criteria. I have suggested earlier that the nondiscrimination aspect of Article 27 relates only to the patent eligibility criterion. If it is argued the non-discrimination should be applied to the patentability criteria as well then several jurisdictions would fail this test.

We may illustrate this claim with one instance of de facto discrimination among inventions in a well developed patent jurisdiction – namely, the United States. Dan Burk and Mark Lemley argue that

in biotechnology cases the federal circuit has bent over backwards to fi nd biotechnological inventions non-obvious, even if the prior art demonstrates a clear plan for producing the invention. On the other hand, the court has imposed stringent enablement and written description requirements on biotechnology patents that do not show up in other disciplines. In computer software cases the situation is reversed. The Federal Circuit has essentially excused software inventions

Economic & Political Weekly

EPW
december 26, 2009

from compliance with the enablement and

best mode requirements, but has done so in a

way that raises serious questions about how

stringently it will read the non-obviousness

requirements. As a practical matter it appears

that while patent law is technology neutral in

theory it is technology specific in application

(emphasis added).28

If the above assessment of the technology specific character of US patent jurisprudence is accurate it gives us evidence of the de facto technological differentiation in the application of patent law. This is not surprising as any sophisticated student of patent law quickly learns that beneath the analytical rubric within which patent law is understood, various such distinctions are commonplace. It would be perverse to conclude that the effect of the TRIPs agreement is to rob patent law of its nuanced historical moorings. Hence, if the proposed limitation is taken to relate to patentability criteria, then it is unlikely that TRIPs will be interpreted in a fashion that would render a majority of existing patent law doctrine and application non-compliant. In any event, even if the non-discrimination test applies to patentability criteria it must also fail the “discrimination” test discussed above, to be declared non-compliant with TRIPs which as I have argued is an unlikely outcome.

1.6 Negotiating History

The last argument we will consider on the interpretation of Article 27.1 nondiscrimination is that relating to negotiating history. In public international law one may take recourse to preparatory materials when the text of a treaty is ambiguous, obscure or unreasonable.29 The IPI report relies on the negotiating history of the TRIPs agreement to claim that member states cannot unilaterally read in other exceptions to the general rule in Article 27.1 other than those stated in the two subsequent paragraphs of the provision. The report points out that an alternative draft providing for exclusion from patent protection of certain products or processes on grounds such as public interest, etc, was rejected during the negotiations,30 and concludes that no further exceptions than those expressly provided can be made by the parties. It is not the argument in this essay that the

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proposed limitation derogates from the principles in Article 27.1 or carves out an exception to this rule. I argue that the proposed limitation flows from the distinction between “discrimination” prohibited by Article 27.1 and bona fi de “differentiation” which relies on the interpretation of Article 27.1 by the Dispute Settlement Panel. As it is clear that the proposed limitation merely provides a higher standard of patentability for a certain class of substances, and is not a complete exclusion per se there is no question of it going against the negotiating history. Presently, no evidence is available to show that such differentiations too, were rejected during the negotiations. Even if such evidence were to be produced the pronouncements of the dispute settlement panel suggest that the requirements of discrimination in Article 27.1 are relatively settled.31 Hence, the argument from negotiating history is not as strong as it is made out to be in the IPI report as it misunderstands the force of the proposed limitation. To the extent that negotiating history is relevant it has to show that Article 27.1 permits no differentiation between fi elds of technology and that it overrides existing state practice and the interpretation of the treaty by the Dispute Settlement Panel in the Canada case.

1.7 Patent Law Reform

One of the weaknesses of the debate on Section 3(d) and the Mashelkar report is that it fails to locate the concern with the impact of patents on public health within the current trends in the academic literature on patent law reform more generally. In the last decade there has been rigorous analysis of the role of patent law and a critical assessment of its performance. The works of Jaffe and Lerner,32 Bessen and Meurer33 and Burk and Lemley34 on patent law in the US make out a comprehensive case for reform. While this is not the appropriate place for a comprehensive review of these proposals and to examine whether the Indian situation mirrors that in the US, I will highlight some important conclusions which may be drawn from one of these works.

Bessen and Meurer point out that patent law “fails” to work as a predictable property right as it does not give adequate

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“notice” to third parties. This “notice failure” arises among other reasons due to the filing of vague and incomplete s pecifications, continuation applications and the adoption of low standards of nonobviousness. This research recommends that patent law reform remedy these defects by inter alia adopting clear and significantly higher non-obviousness standards. There is nothing in the TRIPs agreement which prohibits the adoption of such a uniformly higher standard for what must count as an invention capable of being patentable.35 The debate on pharmaceutical patents in India should be located within these wider intellectual currents. Instead of rejecting higher novelty standards for pharmaceutical patents, there may well be some merit adopting heightened standards of n ovelty in all fields of technology. By locating the debate on pharmaceutical patent debate within the larger debate on patent law reform would allow for a thorough engagement with the fundamental concerns in patent law without the rancour generated by special interest lobbying on piecemeal reform.

2 Evergreening and National Interest

In the sections above I have argued that the proposed limitation considered by the TEG in its report is TRIPs compliant for various reasons. However, the TEG report concludes with a short section that does not strictly relate to the terms of reference on TRIPs compliance. The TEG report concludes that the proposed limitation may still not be prudent on a careful consideration of the “national interest”. This is a curious departure for the TEG as consideration of the “national interest” does not lie within their domain of expertise – if the government wanted to know what pharmaceutical patent strategy would best promote the national interest there is no doubt that they would have constituted a different “expert” group. Nor surprisingly, the weakest arguments in the TEG report are to be found in this section.

The overwhelming public concern with the TEG report has been driven by public health advocates who fear that pharmaceutical companies will extend patent protection on drugs for longer periods relying on trivial and insignifi cant modifi cations to existing patented drugs. The TEG heard several stakeholders including domestic pharmaceutical companies and seems to conclude that this industry will benefi t with a patent model that grants patents for “incremental innovation”. In this part of the essay, I will briefly review the TEG’s report and evidence offered in support of each of these public policy concerns and argue that the government should act to prevent clearly demonstrated harms and not embrace empirically unsubstantiated claims on the role of incremental innovation.

The TEG does recognise that “every effort must be made to prevent the practice of ‘evergreening’ often used by some of the pharma companies”36 but recommends that this should be done by the patent office and not through the proposed limitation. The TEG concludes that

The Indian patent office has the full authority under law and practice to determine what is patentable and what would constitute only a trivial change with no signifi cant additional improvements or inventive steps involving benefits. Such authority should be used to prevent ‘evergreening’, rather than to introduce an arguable concept in the light of the foregoing discussion above of ‘statutory exclusion’ of incremental innovations from the scope of patentability.37

The TEG report suggests that evergreening should be prevented by the Indian Patent Offi ce by disallowing claims based on “trivial” changes. This simply means that the Patent Office should exercise due care and diligence while examining the claim for “inventiveness” or “non-obviousness”, so as to ensure that no frivolous patents are granted.

This response to the public health crisis is disingenuous in two respects. First, the practices of evergreening adopted by the global pharmaceutical industry has now been well documented and acknowledged by academic literature38 as well as government reports respectively.39 Given that such practices exist and there is evidence that they have a demonstrable impact on the cost and ability to access healthcare they are relevant to any assessment of the national interest. However, the TEG does not investigate the vast literature available on evergreening of patents. Instead it focuses on the need to provide incentives

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to support scanty evidence of domestic pharmaceutical industry’s capacity to secure patents for “incremental i nnovation”. This section of the report relies on a table of recent patents applied for and secured by domestic industry. The report recognises that no tangible economic rewards have yet been secured through these patents. It observes that

these molecules are in early stages of evaluation and entry and success in the marketplace is still awaited. Overall, it seems, that at least as of now, restricting patentability to just NCEs would mean that most of the pharmaceutical product patents would be owned by MNCs.40

The absence of economic returns from incremental innovation noted by the TEG is compounded by the changing character of the domestic pharmaceutical industry. The largest chunk of patents in the table presented by the TEG were secured by Ranbaxy which is no longer a domestic pharmaceutical company. Hence, our ability to calculate benefit to the domestic pharma industry stands on weak data and fails to account for the dynamic character of “domestic industry”. Further, the report does not assess whether MNC pharmaceutical companies are also likely to benefit from a patent regime where incremental innovation is incentivised through the grant of patents. If so, the TEG should assess the likely impact on the access and availability of healthcare. In the face of a relatively certain threat to public health and an amorphous prospective benefit to the domestic pharma industry it is surprising that the TEG concluded that the national interest required the government to abandon the proposed limitation.

The second response to the public health problem takes a curious view of what it means for domestic law to be TRIPs compliant. Is it only legislation that must satisfy the TRIPs standard or should executive practice and judicial decisions substantially comply? If the TEG is right that a limitation would not be TRIPs compliant then it must surely follow that any administrative device that would have a similar effect would also fail the compatibility test! Hence, it would be proper to conclude that the TEG report does not propose any administrative order that resembles

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the proposed limitation. In fact the TEG report does not propose any particular administrative order at all. It merely suggests that the patent office should apply existing standards of patentability strictly to ensure that only non-trivial inventions secure patent protection. However, this proposal fails to recognise that the problem of evergreening arises from existing patent office practice applying the existing patent standards. The proposal for excluding such trivial patents responds to the problems with existing practice and seeks to have a signal effect on industry actors and the recalcitrant bureaucracy to ensure that the high standards of patentability are maintained. Hence, the TEG report’s suggestion of managing the problem of evergreening in the executive domain has demonstrably failed. The TEG was constituted to consider means of remedying this failure and not merely reiterating it.

3 Conclusions

The TEG process and its reports have generated a significant public reaction over the last two years. Ordinarily higher levels of public engagement with policymaking should be taken to signify a deep democratic engagement. However, the discourse around the TEG and its reports cannot lead one to such a sanguine conclusion. This discourse is marred by immature and irresponsible name calling and the attribution of incompetence or bad motives to all those who sought to question the TEG’s process or its conclusions. Further, such rancour often supplants the measured reasoned public discourse that any deliberative democrat would propose as the best model of public reasoning. As a minor participant in this public discourse, I have scrupulously avoided any reference to persons or their motives, and have attempted to review publicly available materials in an even-handed manner. In this essay, I seek to contribute to this discourse by offering reasoned argument in support of my conclusion that the TEG report is wrong in several respects. I certainly hope that to the extent that my conclusions are mistaken they are for mistakes of reasoning and evidence which are demonstrable with no reference to motives or interests.

Notes

1 See Shamnad Basheer, “Encouraging Patent Innovation”, The Mint, 27 August 2009, available at http://www.livemint.com/2009/08/27205615/ Encouraging-drug-innovation.html?h=B (visited on 1 September 2009) and various posts on www. spicyipindia.blogspot.com (visited on 1 September 2009).

2 See Comment on Correa’s clarifi cation, available at http://spicyipindia.blogspot.com/2009/08/ mashelkar-committee-on-patents-and-.html (visited on 1 September 2009).

3 See Comment on Business Standard, available at http://spicyipindia.blogspot.com/2009/08/correa -controversy-dump-mashelkar-or.html (visited on 1 September 2009).

4 See Comment on Economic Times opinion editorial, available at http://spicyipindia.blogspot.com/2009/09/re-clarifying-aims-and-conclusions-of.html (visited on 10 October 2009).

5 See Comment on Malaysian NGO, available at http://spicyipindia.blogspot.com/2009/08/. mashelkar-vs-correa-is-malaysian-ngo.html (visited on 1 September 2009).

6 S Krishnaswamy, Interest Group Capture, available at http://timesofi ndia.indiatimes.com/OPINION/ Editorial/Interest_group_capture/article show/ 1769984.cms (visited on 1 September 2009).

7 R A Mashelkar et al, Report of the Technical Expert Group on Patent Law Issues, Ministry of Commerce and Industry, 2009 (Revised), Para 1.3. In this essay I do not respond to the second question before the TEG on the patentability of micro-organisms.

8 Ibid, Para 4.1. 9 Ibid, Para 4.5. 10 Shamnad Basheer, Limiting the Patentability of Pharmaceutical Inventions and Micro-organisms: A TRIPS Compatibility Review, Intellectual Property Institute, 2005. 11 David Vaver, Invention in Patent Law: A Review and a Modest Proposal, 11(3) Intl, J L & IT 287

(2003) as cited in ibid, 14-15.

12 IPI report, Supra, Note 9, 15.

13 Canada – Patent Protection of Pharmaceutical Products, WTO Document WT/DS114/R, of 17 March 2000.

14 TEG report, Supra, Note 6, Para 5.29.

15 Canada Pharmaceuticals Case, Supra, Note 12, Para 7.94.

16 For a similar analysis in the context of Article 27 of the TRIPs agreement see Graeme B Dinwoodie and Rochelle C Drefuss, Diversifying Without Discriminating: Complying with the Mandates of the TRIPS Agreement, (2007) 13 Michigan Telecommunications and Technology Law Review 445, available at http://www.mmttlr.org/volthirteen/ dinwoodie&dreyfus.pdf as cited in Daniel Gervais, The TRIPS Agreement: Drafting History and Analysis, 3rd (ed.) (London: Sweet & Maxwell), 2008, 358.

17 Canada Pharmaceuticals Case, Supra, Note 12, Para 7.92.

18 Daniel Gervais, The TRIPS Agreement: Drafting History and Analysis, 3rd (ed.), Sweet & Maxwell, 2008, 358.

19 See Comment on Correa’s clarifi cation available at http://spicyipindia.blogspot.com/2009/08/ mashelkar-committee-on-patents-and-.html (visited on 1 September 2009).

20 Carlos Correa, Integrating Public Health Concerns into Patent Legislation in Developing Countries, South Centre, Geneva, 2000, 11, available at http://apps.who.int/medicinedocs/collect/medicinedocs/ pdf/ h2963e/ h2963e.pdf (visited on 31 August 2009).

21 See Joe C Mathew, Mashelkar Report Runs into Fresh Controversy, Business Standard, 21 August 2009, New Delhi, available at http://www.business-standard.com/india/news/mashelkar-reportruns-into-fresh-controversy/367674/ (visited on 1 September 2009).

22 Carlos Correa, Guidelines for the Examination of Pharmaceutical Products, ICTSD-UNCTAD, 2007, 13 available at http://ictsd.net/down loads/2008 /06/correa_patentability20guidelines.pdf (visited on 31 August 2009).

23 Carlos Correa, Trends in Drug Patenting: Case Studies, Buenos Aires, Corregiddor, 2001 as cited in Carlos Correa, Implications of the Doha Declaration on the TRIPs Agreement and Public Health, World Health Organisation, WHO/EDM/PAR/ 2002.3, 2002, 46.

24 See for a further discussion, Carlos Correa, Implications of the Doha Declaration on the TRIPs Agreement and Public Health, World Health Organisation, WHO/EDM/PAR/2002.3, 42.

25 France: Industrial Property (Part II), Code (Consolidation), 01/07/1992 (18/12/1996), No 92-597 (No 96-1106), Art L, 613-16.

26 Canada Pharmaceuticals Case, Supra, Note 12, Para 7.91.

27 IPI report, Supra, Note 9, 27.

28 Lemley and Burk as cited in Daniel Gervais, The TRIPS Agreement: Drafting History and Analysis, 3rd (ed.) (London: Sweet & Maxwell), 2008, 359.

29 Vienna Convention on the Law of Treaties 1969, Article 32.

30 IPI report, Supra, Note 9, 22.

31 See generally, David Palmeter and Petros C Mavroidis, The WTO Legal System: Sources of Law, 92 Am J Int’l, L 398 (1998).

32 Adam B Jaffe and Josh Lerner, Innovation and Its Discontents: How Our Broken Patent System Is Endangering Innovation and Progress, and What to Do About It (Princeton: Princeton University Press), 2004.

33 James Bessen and Michael J Meurer, Patent Failure: How Judges, Bureaucrats and Lawyers Put Innovators at Risk (Princeton: Princeton University Press), 2008.

34 Dan L Burk and Mark A Lemley, The Patent Crisis: And How the Courts Can Solve It (Chicago: The University of Chicago Press), 2009.

35 Bessen and Meurer, Supra, Note 32.

36 TEG report, Supra, Note 6, Para 5.30

37 Ibid, Para 5.30. Also see discussion in Paras 5.12-5.29.

38 Aaron S Kessellheim, “Intellectual Property Policy in the Pharmaceutical Sciences: The Effect of Inappropriate Patents and Market Exclusivity Extensions on the Healthcare System”, Vol 9(3), AAPS Journal Article, 33 (2007).

39 European Patent Offi ce, Scenarios for the Future, 2007, 77 available at http://documents.epo.org/ projects/babylon/eponet.nsf/0/63A726D28B5 89B5BC12572DB00597683/$File/EPO_scenarios_bookmarked.pdf (visited on 1 September 2009).

40 TEG report, Supra, Note 6, Para 5.33.

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Economic & Political Weekly

EPW
december 26, 2009 vol xliv no 52

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