Express Pharma

A Clash of IPR Cultures

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India’s recently released national IPR policy has spurred fresh sparring between various lobbies. As international pressure to fall in line mounts, will ‘Creative India, Innovative India’ remain a slogan? By Viveka Roychowdhury

A few minutes into his speech to the US Congress on June 8, Prime Minister Narendra Modi took a tongue in cheek dig at his host. He pointed out that India had not yet claimed intellectual property rights (IPRs) on yoga, even though yoga has over 30 million practitioners in the US, with “more more Americans bending for yoga than to throw a curve ball.”

PM Modi’s quip may have been in a lighter vein, but no one missed the potent message. His address was less than a month after the approval and release of India’s national IPR policy on May 12 . Under the slogan, ‘Creative India; Innovative India’, the 29-page document seeks to be ‘an all-encompassing IPR Policy (that) will promote a holistic and conducive ecosystem to catalyse the full potential of intellectual property for India’s economic growth and socio-cultural development, while protecting public interest. The rationale for the National IPR Policy lies in the need to create awareness about the importance of IPRs as a marketable financial asset and economic tool.’

The timing of the release made it very obvious that it was an attempt to ensure that PM Modi could show progress on this thorny issue. Reactions from representatives of various US lobbies have been cautiously optimistic but they are clearly waiting for India to walk the talk and follow through.

For instance, a statement from Patrick Kilbride, Executive Director of International Intellectual Property, at the US Chamber of Commerce’s Global Intellectual Property Center (GIPC) said they hoped that the announcement is a precursor to the concrete, structural changes that are necessary if India is to implement a strong IP-led innovation model. Welcoming the (Indian)  government’s understanding that India’s innovative economy requires effective IP protection, they hoped this commitment will lead to ‘decisive legal reforms.’

Spelling out their expectations further, the GIPC statement says that India must provide enhanced certainty for the rights of innovators in line with international best practice. “We will be carefully reviewing this policy to determine whether this document creates the foundation for such steps. Regardless, IP will continue to be a central issue for any discussions between India and the international business community.” This is a clear indication that the India’s policy makers will have to do much more on this front.

Not innovative enough?

Critics within India have roundly panned the national IPR policy, possibly because expectations were high that it would be a landmark in the nation’s IP history. Criticising it as ‘an IP policy with no innovation’, Shamnad Basheer, founder of legal blog site Spicy IP and honorary research professor of intellectual property law at Nirma University, wrote that it is a ‘sheer pity that none of that abundant creative energy (that the policy refers to) made it to this policy document, rendering it rather dreary.’

Basheer was part of the first think-tank put together by the government to formulate an  IPR policy for the nation. Even though this think tank was  summarily disbanded, he has had a ring side view of the IPR policy making process at various stages. His editorial in a national daily pointed out various flaws in the policy which was finally released, describing it as a policy ‘beset with banality, dogged by dogma, rife with ridiculous assertions, lacking in any credible empirical support, and written in language that, at best, mimics a masterful memo from one babu to another.’

Senior policy makers in India have been keen to reiterate the country’s commitment to remaining the pharmacy of the world. At a panel discussion on the sidelines of the UN High Level Meeting on HIV/ AIDS in early June, Health Minister JP Nadda stated, “India is committed to maintaining TRIPS flexibilities to ensure access to affordable medicines.” Finance minister Arun Jaitley too was compelled to specify that compulsory licensing (CL) in public interest to meet contingencies, and Section 3(d) of the Indian Patents Act would stay, even though the released policy talks of an overhaul.

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Krishna Sarma

But critics find a flaw in these statements. Krishna Sarma, Managing Partner, Corporate Law Group (CLG) points out that affordable medicines does not necessarily mean access is enhanced. Further, “a plethora of policy interventions including increase of the percentage of GDP spend on healthcare, novel financing schemes and deepening and spread of health insurance cover are required to address the problem at hand,” says Sarma. CLG has represented national and international trade associations like the US -based Pharmaceutical Research and Manufacturers of America (PhRMA) and multinational companies in areas like pharmaceuticals, biotechnology, among other sectors.

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Prof. Sankar Sundaram

However, Professor Sankar Sundaram, Professor of Pharmaceutical Sciences, JSS University feels that India’s current stance will work to the country’s advantage in the long run. “While there may not be any short-term changes in the incentivation and encouragement of the pharma sector, whether TRIPS flexibilities are included or excluded, in the long-term, (this stance) would definitely compel indigenous drug discovery, exclusively catering to the needs of treating tropical diseases.”

Hopes for relief …

The OPPI’s position on the National IPR Policy is along the same lines, welcoming the release of the “long-awaited National IPR Policy”, and recognises the intent to foster a culture of innovation. “We hope that the policy will lead to an interpretation of the Indian Patent Act that respects innovation, encourages research and facilitates effective enforcement mechanisms,” says Kanchana TK, Director General, OPPI.

The OPPI statement also expresses disappointment that while a previous draft recognised the need for patent cases to be adjudicated expeditiously, this policy does not cover the earlier recommendation of specialised benches in the High Courts of Bombay, Calcutta, Delhi and Madras, neither does it suggest designated district level IP courts.

The need for specialised patent benches and cutting down timelines is one common area of concern, where both the critics and cautious wellwishers of the national IPR policy agree on, The lack of such mechanisms creates bottlenecks and adds to the timelines. If the publicly stated intent of Nirmala Sitharaman, Commerce and Industry minister is to cut the waiting period for trademark and patent registrations which currently stretches beyond a year, to just a month by 2017, then the policy should have reflected this.

Sarma points out that earlier drafts of the National IPR Policy (of December 19, 2014 and April 18, 2015) recommended the establishment of such specialised patent benches. The need for such benches and fast decisions is crucial as pharma patents have   limited validity. Secondly, such cases required an understanding of science and other technical issues. The final policy has “simply recommended adjudication of IP disputes through commercial courts … (which) does not provide for creation of specialised patent benches and does not ameliorate the situation existing from before,” says Sarma.

Both sides agree that such courts are vital. Sundaram, who is a Registered Patent agent (IN/PA-666) in the Indian Intellectual Property Office (IPO) and has reportedly drafted more than 15 patents in this field, reasons that specialised patent courts, along the lines of the US, the EU and Japan, would make acceptance/ rejection easier in the case of complex patent suits, involving especially, a patent’s validity.

But the assumption that members of the judiciary with a background in related fields like lifesciences, chemistry, etc would necessarily give more acceptable judgements depends on perception. For instance, Basheer of Spicy IP blogged about what he thinks are flaws in Deputy Controller of Patents & Designs Dr Rajesh Dixit’s recent decision to award a patent to Gilead for Sovaldi/sofosbuvir. He concedes that the Deputy Controller might meet some of the criteria on the technical expertise front, as he has a chemistry background and reading the decision also suggested that he had some degree of proficiency in the underlying science but questions his knowledge of the law and his powers of reasoning. Basheer acknowledges that he is perhaps being too harsh on the Deputy Controller and hopes that “with more such cases thrown his way and with more legal/ judicial training, we will see better from him in the future.” (For more: http://spicyip.com/2016/05/the-sovaldi-saga-a-novel-non-obvious-standard.html) The timing of this judgement, on May 9, just days before the approval and release of the national IPR policy, also suggests other pressures at play.

… a distant dream?

Given the number of vacancies at various levels of India’s IP regulatory systems, specialised benches would seem like a distant dream. Critics allege that while the national IPR policy is well intended, it is the implementation that is weak, thanks to the lack of human resources, etc. Time delays are also cited as a miscarriage of justice.

Sundaram counters these charges saying that much is already being done by the Department of Industrial Policy and Promotion (DIPP) by way of recruitment of additional work-force to examine filed patent applications. He estimates that the newly added IPR work – force would certainly reduce the time frame involved in a patent application’s acceptance or rejection, in the near future.

He also makes the point that as patent rights conferred are exclusive in nature, the scope of implementation, especially those measures related to a patent’s infringement, rests with the patentee himself/ herself, which in turn calls for a well-informed patentee, with good resources. His reasoning puts the defence of IPR on patent holders rather than the policy per se.

Sarma highlights three other major areas where the national IPR policy could have done a lot more. The national IPR policy fails to address the present disconnect between the IPOs and the Central Drug Standard Control Organisation (CDSCO) and state FDAs. Though the policy (Clause 4.20.1) has “rightly recommended formalising a coordination mechanism between the National Biodiversity Authority (NBA), IPOs and departments like AYUSH in order to facilitate harmonious implementation of mandates of each of the agencies and statutes, … it is conspicuous by its silence on providing a similar coordination mechanism between IPOs that grant patents and the CDSCO)/ state FDAs that grant marketing/ manufacturing approvals to drugs.”

Explaining the consequences of this disconnect, Sarma says, “Today a situation exists whereby despite there being subsisting and valid patents covering a product, the CDSCO/ state FDAs issue marketing and manufacturing licenses to the patent holder and subsequent applicants. The same can only be possible with the establishment of a streamlined drug regulatory process which is fair, equitable and transparent and works harmoniously and in close coordination with IPOs.” The national IPR policy does in fact recommend enhanced coordination between various agencies as a step to strengthen enforcement mechanisms for better protection of IP rights, but is silent on providing a coordination mechanism.

The data exclusivity dilemma

Protection of regulatory data  has been another flashpoint. “While the policy identifies trade secrets as one of the areas of study and research for future policy development which is indeed heartening, we wanted to point flag that for the life sciences sector, the protection of trade secrets will become meaningful when the laws are amended to provide protection for (the) regulatory dossier which includes not just per se protection but also is premised on not being relied upon by the regulatory authorities and competitors thereby giving unfair commercial gains to third parties. We sincerely hope that the policy enables development of law that is in consonance with TRIPS Article 39 including Article 39.3 and international best practices,” says Sarma.

On this, Sundaram is clearly on the other side of the fence. He recommends against committing to data exclusivity provisions, which although not IP rights by themselves, auger for the non – disclosure of valuable clinical data which he finds “ethically questionable”.

The fourth major concern raised by Sarma is that the national IPR policy delves into issues that go beyond the realm of IPRs, like for instance steps to reduce dependency on active pharmaceutical ingredients (API) imports and incentivising manufacture of APIs in India; revitalising public sector undertakings in healthcare sector (Clause 5.10.); measures against attempts to treat generic drugs as spurious or counterfeit (clause 6.2). She opines that such recommendations in the policy are extraneous issues and would send “mixed signals to all stakeholders”.

And the next round goes to …

The national IPR policy is being seen as just the first small step in the right direction and pressure to do more is beginning to mount. While one camp views IPRs as key to insuring access to better medicines and similar gains in other sectors, the other see this IP maximalist position as a barrier, given India’s socio-cultural-economic realities. While the first wants more clarity on the exact mechanisms, the second would prefer a case by case interpretation, based on the merits of each case. This approach has in fact proved to also benefit MNC companies. Gilead is the most recent beneficiary, for the IPO’s May 9 decision on Sovaldi/ sofosbuvir which reversed a patent rejection of 2015.

Sarma hopes that the Indian government looks at implementing the provisions stated in the policy. These include upping the ante on IP awareness, bringing administration of IPR under DIPP, creating the Office of the Controller of IPRs, creating the Cell for IPR Promotion and Management (CIPAM) under the aegis of DIPP to facilitate promotion, creation and commercialisation of IP assets and so on. The main thrust of the policy seems to be towards facilitating innovation and generation and commercialisation of IPRs at all levels and linking of “Creative India; Innovative India” campaign proposed under the policy with other national initiatives such as ‘Make in India’, ‘Digital India’, ‘Skill India’, ‘Start Up India’, ‘Smart Cities’ and other new initiatives in the future.

Sundaram of JSS University takes a contrarian view, likening India’s current position to that of European countries immediately after World War II when all ammunition producing chemicals had to be converted to usable fertilisers or else face closure. Alluding to the need to change strategy in tune with current realities, he says, “In my opinion, indigenous drug-discovery needs to be incentivised, especially for those diseases, which are prevalent in our country. For this, the current reverse-engineering work-force, which is ample in our country now, should be immediately siphoned to drug-discovery labs, which need an urgent set-up.”

He recommends that the top priority of India’s government should be to set up screening-facilities for various tropical diseases, where drugs can be validated and brought to the people of our country, with collaboration between chemistry and pharmacology teams. If the government does not act now, then he warns that our chemical-engineering work-force would simply vanish.

Global pressures

Pressure to fall in line comes from various initiatives. For instance, India was ranked second last, 37th out of 38 countries, for its IPR environment in the annual IP index conducted by GIPC and released by the United States Chamber of Commerce (USCC) this February. Indonesia, Nigeria, Ukraine and Vietnam were ranked better than India. In the same vein, India remained on the US Trade Representative’s (USTR) Priority Watch List this year as well.

Industry observers point out that these barbs will slowly lose their sting. For instance, the USTR added Switzerland to the Watch List this year, so one might conclude that India is in good company. While Switzerland is generally a strong partner on IP issues, the USTR report stated that copyright holders have essentially been prevented from enforcing their rights against online infringers and the country has become an increasingly popular host country for infringing websites. The same report also announces out of cycle reviews (OCRs) for Colombia, Pakistan, Tajikistan, and Spain to promote engagement and progress on specific IPR opportunities and challenges identified in this year’s review, a situation that India went through in 2014.

There is also concern that IPR issues have negatively impacted investment inflows into the pharma sector in India. According to a KPMG report released this June, titled ‘India-US Trade – A formidable economic force’, enforcement issues around IP protection, due to the usage of CL in the past, has shaken investors’ confidence. The report hails the the new IPR policy as a welcome step towards legislation related to IP laws in India and terms it ‘a balanced approach towards innovation and public health.’ While the new IPR policy is expected to help in effective protection of patents that can encourage MNCs to launch their products in India and further boost trade between India and the US, the report cautions that to further boost trade, the country needs stronger protection of patents for pharma MNCs i.e. patent linkage, patent-term extension and data exclusivity.

There is no doubt that India’s national IPR policy will be the battleground for many more skirmishes. Will India continue to defend Section 3(d), resist TRIPS plus conditions and remain the pharmacy of the world? Or will it choose another path?

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