Abstract
The patent regime as it stands today resulted from the efforts of the developed countries, especially the United States, which was pivotal in ensuring the global implementation of the Trade Related Intellectual Property Rights (TRIPS). This blog post aims to highlight that TRIPS emanated from the commercial agenda of corporations in the developed countries rather than as an instrument for promoting social or economic welfare. Furthermore, when it suits the socioeconomic welfare of the developed countries, they expect assistance from the very generic manufacturing industries (in the developing countries) that they (developed countries) otherwise sought to destroy. India must, therefore, continue to have an intellectual property environment that is nourishing of its generic pharmaceutical infrastructure and overall development.
1. TRIPS: Backstory
Today, patents are hailed as the harbingers of economic prosperity. However, it might be noted
that none of the developed countries had strong patent regimes while their economies were
developing. This is because a strong intellectual property (IP) regime encourages monopolization
which is inimical to creativity and growth. In the first 100 years of its development, in order to
prioritize it’s development,the United States (US) refused to respect international IP.
This is because strong IP laws follow economic development rather than being a pre-requisite for it. By the 1980s, the multinational corporations in developed countries looked for markets in different territories whilesimultaneously trying to clamp down on any mass produced and unauthorized copies of their products. These industries made a hue and cry with emotive portrayals of theft. The officials in these countries were aware that the backbone of their economies laid with the industrialists and hence paid heed to these appeals. Pfizer, a pharmaceutical company, was one of the first corporations in the US to become trans-national and it was threatened by the generic manufacturing potential in the developing countries. The same led the charge to incorporate stronger international IP protection.
The US corporations utilized the Advisory Committee on Trade Policy and Negotiations(ACTPN), – which linked the commercial world to the US Policy -tobring IP protection intothe limelight in all aspects of economic policy. For example, the World Bank directors would inquire about IP protection before casting votes.From the ACTPN grew the Intellectual Property Committee (IPC), which comprised of 13 major corporations, and aimed at pushing IP into theGeneral Agreement on Trade and Tariffs (GATT) round of the multi-lateral trade negotiations. In this way, the agenda of the corporations fused with the narrative of the global agenda and the requirement for stronger IP protection.
A consequence of this pressure was that, theSection 301 of the Trade Act, 1974, in the US, was amended to authorize the President, to take action against, and remove, any policy/practice/act thatobfuscates US commerce, especially in the realm of IP. The US began using Section 301 to threaten countries into altering their IP laws via the threat of sanctions and ensuing bilateral negotiations. Essentially, the US unilaterally gave itself the power to interfere in the legislation and policy of other countries. Emboldened by the success of Section 301, the US introduced the Special Section 301 in the Omnibus Foreign Trade and Competitiveness Act. The Special Section 301 enabled the United States Trade Representative (USTR) to place countries that did not effectively protect the US’ IPR on a priority watchlist after which bilateral negotiations would be used to browbeat the target country into protecting US’ IPR. India was placed on this watchlist for havinginadequate patent protection. However, a tete-a-tete with each country would be arduous and a global multi-pronged approach would have been preferable. Furthermore, World Intellectual Property Organization (WIPO) had proven toothless owing to the absence of concrete rules for domestic enforcement. Owing to the numerical advantage that the developing countries possessed, the developed countries were at a disadvantage when it came to decision making in WIPO. In addition to this, WIPO was disadvantageous as a forum for IP protection, because sanctions could not be imposed by WIPO.
One, therefore, finds that, over time, pressure increased from the developed countries to haveIPlaws enforced by GATT. Both the 1982 Ministerial Work Program and the Expert Group appointed at the 40th GATT session in 1984advocated GATT as a forum for IP. This eventually culminated in the ministers of GATT meeting in Marrakesh on 12-15th April 1994 to conclude the Uruguay Round of Multilateral Trade negotiations. Peter Drahos (2010) in his article, IP World- Made by TNC Inc., observed that Pfizer played a crucial role in the Uruguay Round to protect its multinational interests from the threat of the generic pharmaceutical capabilities of the developing countries. Drahos (2002) in his article,Negotiating Intellectual Property Rights: Between Coercion and Dialogue, mentioned how the developing countriesacted in an exclusionary manner with all major decisions being taken at informal gatherings that only included the Quad (US, Europe, Japan, and Canada). He went on observe that the discussions had thetransparency of a one-way mirror since none of the components of democratic bargaining were followed. During this round, 144 countries became signatories to the Final Act and Agreement establishing the World Trade Organization (WTO). The TRIPS agreement was annexed to the WTO Agreement. Thus, by annexing such a pivotal agreement to the WTO Agreement, the signatories automatically became bound by TRIPS. Furthermore, TRIPS now came within the ambit of trade and sanctions could be imposed regarding the same.
The interplay of strategy and politics here was telling. It is noteworthy more so in light of the fact that the developed countries themselves had weak IP laws in the initial stages of their development was as it was widely believed that strong IP laws are destructive to the growth of a developing country. Martin Khor’s (2002) remarks in Rethinking Intellectual Property Rights i.e., that had the developed countries had to adhere to the minimum standards set by TRIPS (when the same countries were still developing). It is doubtful that many of them would have attained the levels of technology and industrialization that they’d achieved ; is significant in light of this brazen pursuit by the same developed countries to overwhelm the developing countries with stronger IP protection laws. Agrawal and Saibaba (2001) in theirarticle, TRIPSand India’s Pharmaceutical Industry, viewed TRIPS as an attempt to recolonize the developing countries.
The basis of the WTO inherently contradicts the basis of IP. Though IP promotes monopolization and monopolization restricts trade, yetIP was placed under the ambit of the WTO. This was to utilize the WTO’s ability to direct trade sanctions if IP laws were defaulted upon by other countries. The intention was clearly to resort to arm-twisting by creating deprivation in one realm (trade) to bring about results in another (IP). Another reason why the WTO is not suitable for IP rightsis because it deals with trade and trade is, in essence, a private enterprise. Hence, private interests dominate the WTO,thereby preventing the entire scope of IP rights from being appreciated. Piccoto (2002) in his article,Defending Public Interest in TRIPS and the WTO, stated that had TRIPS not been imposed, then more coercive and stringent bilateral conditions would have been imposed. This effort at reconciling the imposition of TRIPS is unconvincing because TRIPS was only the minimal requirement that was introduced and the actions of the developed countries, to enter into bilateral treaties,demanding higher IP protection has continued.
While the pushback against TRIPs by the developing countries came via the Doha Development Agenda and the Doha Declaration on TRIPS and Public Health, accompanied by anaggressive development agenda being pushed at the WIPO, India nonetheless incorporated TRIPS within its domestic legislation in the form of thePatents (Amendment) Act, 2005.
2. Negative Impact of TRIPS on Developing Countries: India
India inherited its patent regime from the British in the form of the Indian Patents and Designs
Act, 1911. This was overhauled on the basis of the suggestions put forward by the Ayyangar
Committee (1959) titled “Report on the Revision of the Patents Law.” The Committee felt that the interests of the country would be best served “by confining patentability to the processes by which the products are obtained and to deny patents to the products”.In other words, this would mean to grant process patents instead of product patents. This view was premised upon a study of German, Dutch, and English law at the time as well as an understanding of the developed countries such as Brazil, Mexico, Poland, China, and the like. It was evident that the regimes in these countries had only moved towards product patents at the later stage of development. The laws of IP were, therefore, to act as tools for economic development. In light of these recommendations, the Patents Act, 1970 (1970 Act) came about. This meant that other industries could manufacture the same product so long as they did not use the same process. This, in turn,encouraged competition and ensured that the cost of the medications remained low. In addition to this,the Indian government imposed price controls.
Article 27.1 of the TRIPS agreement mandated compulsory product patents to be granted for
pharmaceutical patents and process patents for the same would no longer suffice.TRIPS
permitted countries like India a 10-year period for transitioning and this, as mentioned in the
preceding section, eventually led to the Patents (Amendment) Act, 2005. India was warned by
the Joint United Nations Programme on HIV/AIDS (UNAIDS), World Health Organization
(WHO), and the then French Prime Minister Jacques Chirac that it must balance the protection
of patents under TRIPSwith ensuring the affordability of medication. There was astrong
resistance to this step, with an eminent jurist, Justice V.K Krishna Iyer, even declaring that this
was an attack on Article 14 (equality before law), 19(1)(g) (right to any trade or business), and 21
(right to life), all for the sake of assuaging the multinational corporations, with nothing in sight being done for public interest. So much was the controversy that the Indian governmentwasforced to meet its TRIPS obligation via passing an Ordinance.
A detrimental symptom of TRIPS has been the practice of evergreening. Evergreening comprises of tactics for prolonging the monopoly over a patentby delaying its release into thegeneric market. It includes tactics such as frequent patent infringement suits, introduction of new formulations of the drug just before the patent expires (and the generic formulations are about to be released), andmultiple other similar strategies. In such cases, the so-called “new” product is almost identical to the previous product and it has no therapeutic improvement.
With the advent of product patents, the cost of medication shot up owing to greater market monopoly which, in turn,deterred competition. Rao and Guru (2003) in their book,Understanding TRIPS: Managing Knowledge in Developing Countries, noted that, in Pakistan, owing to the product patents, multinational corporations charged Ratnidine at 400% over the market price making it 17.55 times costlier than in India. Such prices keep medicines out of the reach of the majority of the population in a developing country andadversely affect accessibility.
These high pharmaceutical prices have interfered with therealization of human rights especially
the Right to Health which mandates access to medication. This is all the more glaring in light of many of the signatories to the TRIPS agreement also ratifying the International Covenant on Economic, Social and Cultural Rights (ICESR). It could be argued that the Right to Health falls within the category of “hierarchically superior norms,” in which case, as per Article 103 of the United Nations (UN) Charter and jus cogens law — which views the UN treaty above all treaties —the Right to Life takes precedence over IP Rights. What is shocking is that there is even need for a discussion that a life of a person isworth more than a commercial agenda!
It is ludicrous that stealing IP is more important than depriving a person of affordable medication.
Fortunately, India’s judiciary remained steadfast in protecting the Right to Health of its citizens. InKhet Mazdoor Samiti v. State of West Bengal and Ors., Parmanand Katara v. Union of India, andBandhua Mukti Morcha v. Union of India, the Right to Health was considered a fundamental aspect of the Right to Life. InLaxmi Mandal v. Deen Dayal Harinagar Hospital, the Delhi High Court reiterated India’s obligations to ensure free healthcare for its citizens under the ICESR and the Right to Life.
In order to tackle these issues, India made use of the flexibilities provided in TRIPS, i.e,Article
7 and 8. While the TRIPS agreement mentions novelty, inventive step, and industrial application,it does not define these terms. This provided countries such as India the liberty to construe these terms as widely or as narrowly as required. Furthermore, the Commission of Intellectual Property Rightshas clarified that developing countries ought to encourage their generic industries and do not need to adopt the same IP protections standards as their developed
counterparts. Leena Menghaney inDrop the Case: Campaigning Against Novartis had rightly stated that it is important for developing countries to decide about what should or should not be granted a patent.
India, therefore, tried to carry out the suggested balancing act by tilting certain provisions under
the 1970 Act in favour of the patent holder. Furthermore, India attempted to adopt a uniformly higher standard for patentability to ensure that only genuinely new chemicals were granted
patentability.The former was carried out by broadening the definitions such as, inter alia,
“inventive step” (to include technical advance OR economic significance) and “pharmaceutical
substance” (to mean “any new entity” rather than specifying that it ought to be a chemical
entity). The latter was ensured by inserting Section 3(d) of the 1970 Act which declared the
inventions that will not be granted a patent. Section 3(d) basically stated that an improvement of
an already known substance which neither improves nor enhances its therapeutic efficacy will be
denied a patent. In other words, unless the improvement is not therapeutically significant,
another patentwill not be granted. Section 3(d) was, therefore, meant to act as a bulwark
against evergreening and the attempt by multinational corporations to keep the prices of
medicine high.
The reception of the developed countries to Section 3(d) and India’s attempt to arrest evergreening played out in Novartis Ag v. Union of India. The facts were that Novartis had applied for the patent of imatinib mesylate in beta crystalline form claiming that it was new as it was easier to store and process. In the patent application, it was written that the pharmacological effects were the same as freebase imatinib. The patent was denied by the Assistance Controller of Patent and Designs. The matter came before the Intellectual Property Appellate Board
(IPAB) and the Madras High Court. Finally, it reached the Supreme Court which held that
Section 3(d) was inserted to prevent evergreening in order to incorporate stricter standards of
patentability with regard to medicines. The Court held that imatinib mesylate was a known
substance whose pharmacological properties were already mentioned in medical journals and that it hadfailed the test put forward by Section 3(d). Thebench finally held that an invention in the case of pharmaceuticals must pass Section 2(1)(j) (“invention”), Section 2(1)(ja) (“inventive step”), and Section 3(d) of the 1970 Act read with its explanations.
3. Post COVID-19 Pandemic Developments
The abovementioned Novartis Ag decision welcomed the hysteria of the developed nations. India
was viewed as possessing a “deteriorating innovation environment” and a “protectionist regime
that harms US creators” in light of its actions in denying certain patents and permitting its
generic industries to manufacture the same medicines at a much lower price. In May 2013, the
US administration blacklisted India in retaliation for India allowing the generic production of
certain pharmaceuticals. It is clear that, with the same brushstroke, the developed world wishes
to utilize patents to keep medicine prices high and to deal a lethal blow to the generic
pharmaceutical industries.
Unexpectedly, the COVID-19 pandemic broke out globally by 2020. The developed countries
suffered massive casualties and deaths as they had inadequate infrastructure to manufacture
medicines to treat COVID-19 at the magnitude that was required. This was ironic in light of the
recent Congressional testimony of 29 October 2019, where Dr. Janet Woodcock, Director of the
Centre for Drug Evaluation and Research (CDER) at the Food and Drug Administration (FDA)
did not provide a clear answer on the extent to which the US was dependent on medications
from India and China (these countries manufactured the Active Pharmaceutical Ingredient).
Post the COVID-19 pandemic, the developed countries did avolte-face and relied upon the
same industry that they sought to destroy, to save them, thereby paving the way for India’s
generic pharmaceutical industry to step in. The FDA’s ban on India’s exports of
hydroxychloroquine (imposed in 2014, ostensibly owing to problems in quality control)
was suddenly lifted on 23 March 2020 when the US realized that the same might be an essential
medication for battling COVID-19. Companies such as Merck partnered with Indian generic
drug makers such as Cipla and Sun pharmaceuticals, to ensure adequate production capacity.
Suddenly, selectively, India was no longer considered an anathema to innovation by US
multinational corporations.
4. Conclusion
The self-serving agenda of the developed nations is, therefore, writ-large, be it in the origin and
implementation of TRIPS, the response to India’s Supreme Court’s Novartis Agdecision, the
imposition on export bans, and, post-TRIPs, the US lifting these bans when it benefits the same.
India must, therefore, continue to navigate based on policies and domestic laws that are most
suitable for encouraging its development just as the developed nations had done in their earlier
stages of development. Only then can India’s generic pharmaceutical industry continue to benefit
India and the rest of the world.
Disclaimer
This article represents the views of the author. It does not in any way represent the views of
TKC Partners LLP nor IJPIEL.
About the Author
Shriya Misra is currently Partner (litigation), TKC Partners LLP. She primarily works in the
realm of IP, property matters, consumer law and arbitration. She has a double masters from the
School of Oriental and African Studies (SOAS) and the University of Oxford. In her spare time
she is an equestrian.
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Managing Editor: Naman Anand
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