Patents are granted in India under the Patents Act, 1970, for a novel article or process that results in a novel article or for novel process even if the result is an old product. An invention which is an improvement over an existing patent is entitled to a separate patent, the rights being with the new inventor for the improvement. Life of a patent in India will remain unchanged (till thePatents Act, 1970, is comprehensively amended) ie., 5 to 7 years for food and pharmaceuticals and 14 years for all other sectors, subject to renewal every year, after the second year.

2. India: What are not Patentable as Drugs or Pharmaceuticals

Neither product per se nor product by process claims are allowed. However, process for preparing an admixture which does not fall under the definition of food/medicine when the resultant has synergistic values may be claimed. Admixtures (being medical/food substances), even with a synergistic value cannot  be claimed, only process for preparing them are allowed.

Note: Food, Drugs, Germicides, Fungicides, Weedicides fall under the definition of food/medicine.

The process of preparing a pharmaceutical composition is Patentable only if the resultant has synergistic value. Other prerequisites for this are:
(a) at least two active ingredients are mixed,
(b) relative proportions or range of proportion of each ingredient and of solvent(s)/excipient(s), if any, are given
(c) experimental data to prove that synergistic results are obtained by use of proportions within the claimed ratio range and
(d) manner of admixing is defined.

• A substance obtained by a mere admixture resulting only in the aggregation of the property of the components thereof or a process for producing such substance, unless synergistic results are obtained.

• A method of agriculture or horticulture.

• Any process for the medicinal, surgical, curative, prophylactic or other treatment of human beings or any process for similar treatment of of human beings or any process for similar treatments of animals or plants to render them free of diseases or to increase their economic value or that of their product.

• Mere discovery of a new use of property of known substance or process or machine or apparatus unless such process results in a new product or employs at least one new reactant.

• Biochemical processes carried out in vivo. To be Patentable the process must be carried out in-vitro and the product must not have living cells in it.

• Patents for Method of Manufacture alone are allowed in the following cases:
  • Substances intended for use or capable of being used, as food or as medicine or drug, or insecticide or the like, and  intermediates thereof.
  • Substances prepared or produced by chemical process including alloys, optical glass, semi-conductors and inter-metallic compounds.

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• Allowing product Patents in all branches of technology.

• Uniform duration of 20 years for all Patents.
  
• Only non-exclusive compulsory licences to be granted and the Patents holder will have to  be   heard.
  
• Licences of Right provisions to be deleted.
  
• Mere importation not to be a ground for grant of compulsory licence.
  
• The procedure for determining anti-competitive practices to be defined under the  Patents Act or under the Unfair Trade Practices Act.
  
• In case of infringement, the burden of proof to rest on the alleged infringer, if the Patents relates to a process for obtaining a chemical product. In an infringement suit, court  may order the defendant to prove that the infringing product is not made by the Patented process.
  
• Pipeline protection will have to be provided from date of enforcement of GATT agreement in  respect of pharmaceutical and agro-chemical products.
  
• The scope of Patentable entities will have to include:
  
  (i) Method or process of testing
  (ii) Any treatment that enhances the value of a commercial product
  (iii) Method of increasing efficiency of an existing method or use of an article
  (iv) Micro-organisms, production of electricity and any other vendible product.
  
• It is however suggested to exclude from Patentsibility, other than micro-organisms, biological processes for the production of plants and animals.

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1. In our opinion since burden of proof in cases of infringement of chemical and drug process Patents   may be reversed, it is essential that no injunction be grantable by any Court of Law until after trial of the suit.

2. In Patents infringement matters it is deemed well established that monetary compensation is enough to make-up for the loss of infringement since no reputation is involved, and hence maintenance of separate accounts should be the only relief, if any, to be granted as an interim measure while no ex parte relief shall be grantable even for separate maintenance of accounts.

3. We also recommend

(a)  the fixation of an upper limit of Royalties/Arbitration;
(b)  compulsory licences to be granted upto 10 years if the Drug is still being imported, (as it is being done in Brazil).

4. All Research & Development expenditure relating to Patented Drugs and Processes should be tax deductable at 150% weightage.

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6. Patents revoked or facing revocation in relation to India's biodiversity

In mid 1994, the Prime Minister, Mr. P.V. Narasimha Rao's office issued a mandatory show cause notice to the Patentsee, AGRACETUS, under Section 66 of the Indian Patents Act, 1970. According to the government, "cotton, being an important national crop vital to the export economy, shouldn't be the subject matter of  a Patents." It further stated that the Patents was prejudicial to the interest of farmers, that "the effect of the Patents was not known and moreover, it was believed cotton seed oil extracted from cotton so produced or garments made thereform could be harmful when used."

The details of this Patent were as follows:

• AGRACETUS files application (No. 919C87 dated 24.11.87), for genetically engineered cotton plants and lines.
• Patents Office accepts application and grants Patents (No.168950 on 20.07.91), for a method of producing transformed cotton cells by tissue culture.
  
  Section 66 of the Indian Patents Act 1970 which deals with the revocation of a Patents in public interest, reads as follows:
  
  Where the Central Government is of the opinion that a Patents or the mode in which it is exercised is mischievous to the State or generally prejudicial to the public, it may, after giving the Patentsee an opportunity to be heard, make a declaration to that effect in the official Gazette and thereupon the Patents shall be deemed to be revoked.

It is unclear whether bio-technology patents can be granted in India under the present patent law. Though the Patent Office takes the view that bio-technology patents, especially living organisms, are not patentable, some pharmaceutical and chemical products using micro-organisms have been patented in the country. This is the second time that the Government of India has revoked a bio-technology patent on the ground that it was prejudicial to public interest, the first was in 1961, when a patent related to a hot and cold drink made from Turfy oil was revoked.

• Petition filed against W R Grace's Neem Patents in the USA
  "To Farmers in India, the neem-tree Patents represents an attack on their way of life"

A coalition of 200 organisations from 35 countries led by biotechnology critic Jeremy Rifkin, president of the Foundation on Economic Trends in Washington, is seeking to invalidate a 1992 patent on a formulation of neem pesticide held by W R Grace & Co. of Florida, USA. The key assertion of the challenge that has been filed with the US Patent & Trademark Office, is that the formulation from seeds of the neem tree, is insufficiently novel because Indians have been making versions of the neem seed pesticide for generations. "This is intellectual and biological piracy", says Vandana Shiva, one of the petitioners who is also the president of Research Foundation for Science, Technology and Natural Resource Policy in New Delhi, India.

W R GRACE says in defence of its neem patent that the patent is valid and defensible because its formulation process significantly improved the pesticide by giving it a shelf life of several years, instead of several weeks as under the traditional process.

If the Patent Office rules against the challengers, the matter could go on to a federal appeals court.

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• Reactions at the time

  *Enacted in part as the Patents (Amendment) Bill 1999 (First Amendment) giving effect to the Exclusive Marketing Rights pipeline protection provision within TRIPs.

• With the signing of the General Agreement on Tariffs and Trade (GATT) and ratifying the World Trade Organisation (WTO) agreement, India was obliged to incorporate the change from a "process" to a "product" Patents regime, but could wait for 10 years for comprehensive amendment.

On December 31, 1994, the Government of India promulgated an Ordinance relating to the Patents Act 1970, and Patents Rules, 1972. The implications were:

1. Foreign and Indian applicants could apply for product patents in India, for agro-chemical and   pharmaceutical  products.

2. Term of Patent would not change till the Indian Patents  Act, 1970 was comprehensively amended.

3. The Indian Patents Act, 1970, was amended only to the extent of this Ordinance.

4. Emphasis of the Ordinance was to provide a scheme for grant of Pipeline Protection.

5. Two applications, one for Process claims patent and the other for Product claims patent were to be filed.

6. Process claims patent applications would be examined for patentability and either a patent would be granted or, the application would  be rejected.

7. Examination of applications for grant of Product claims patents would not be taken up till December 31, 2004, or till the Patents Act was comprehensively amended.

8. Till the grant of Product patents, "Pipeline" Protection for 5 years by way of Exclusive Selling and Distribution Rights/ESDR  or Exclusive Marketing Rights/EMR would be available for new agro-chemical and pharmaceutical products. The period of 5 years would be from the date of approval granted by the Controller of  Patents in this behalf till the date of grant of Product claims patent or the date of rejection of application for its grant.

9. Application for Exclusive Selling and Distribution Rights was to be filed when the applicant was ready with the requisites for grant of the same.

10. Exclusive Selling and Distribution Rights would be granted, provided

(i)  where an invention has been made in a country other than India, and before filing such a claim, the applicant had filed an application for the same invention claiming identical article/substance in a convention country on or after January 1, 1995, and the patent had been granted in that country;
(ii)  the approval to sell or distribute the article/substance in that country as well as from the authority   specified in this behalf by the Central Government was obtained;
(iii)  and it was reported  to the Controller by the Patent  Examiner, that it was an invention not
hit by Section 3 and, not barred as an invention under Section 4 (Inventions relating to Atomic Energy) of the Patents Act, 1970.
11. The Government of India, however, reserved the right to intervene in the granting of ESDR if it was convinced that the existence of such rights was against public interest and also determine by a specified authority, the price at which an article /substance could be sold, at any time, after exclusive selling and distribution rights had been granted.
12. Convention Priority could be claimed from an application filed in countries who are members of the World Trade Organisation (WTO), from 01.01.95. Convention country application must have been filed on or after 01.01.1995.
13. Working of the invention should be deemed to be selling or distributing the article/substance and not manufacture in India; that is, importation would amount to working of the patent.
14. Compulsory licences applications to be made two years after the grant of ESDR. No licences of rights would be available.
15. Medicine and Agro-chemicals excluded Food and all other chemicals, but included intermediates for drugs and those chemicals which fell under Section 2 (1) (l).
16. While for an application for ESDR for inventions made in India and filed by an Indian resident/national,  it was required to prove that an application for process patent had been filed,
for a foreign applicant filing an application for an invention made outside India, it was required to establish that patent had been granted abroad.
17. It was proposed under the new Rules that applications for "pipeline" protection would  be handled and prosecuted from the Head Office in Calcutta and not by any of the Patent Office branches.
This Patent Amendment Ordinance lapsed in March 1995. A Patent Amendment Bill based on the Ordinance was also not been enacted and was withdrawn by the government due to lack of majority in the Upper House of Parliament. Two Select Committees of Parliament also failed to attain a consensus. As of now the Patents Act 1970 still holds good.

• Patent Bill - Reactions
• The Indian Patents Act 1970,  provides for grant of only "process" and not "product" patents, in the pharmaceutical and chemical sectors. With the signing of the General Agreement on Tariffs and Trade (GATT) and ratifying of the World Trade Organisation (WTO) agreement, India was obliged to incorporate the change from a "process" to a "product" patent regime. The Ordinance which was promulgated by the Government on  December 31, 1994, was to allow foreign and Indian applicants to apply for product patents in India for agro-chemical and pharmaceutical products. In respect of pharmaceutical and agro-chemical products or substances, not patentable earlier, under the Ordinance (which has now lapsed), priority could be claimed within one year from patent applications filed on or after 01.01.1995.
• A Patent Amendment Bill based on the Ordinance was presented in Parliament, but after having been passed by the Lower House, it was withdrawn from the Upper House due to lack of majority and non-cooperation by the Opposition parties. On May 29, 1995, the Government announced its decision to refer the Patent Amendment Bill to a Select Committee of the Upper House of the Parliament.  The Government is hoping to arrive at a consensus over this issue through the recommendations of the Select Committee.
• The objections raised and amendments sought are essentially in relation to clauses pertaining to the provision Exclusive Marketing Rights/EMR by the Opposition parties as well as the Indian drug industry.
  
• These are, briefly:
  a. EMR has been objected to as unconstitutional.
  Opinion: A V Ganesan, former Commerce Secretary and Chief Negotiator for India at GATT:
  "It is also possible that the grant of exclusive marketing right, pending consideration of the patent application, could be legally struck down by our courts on the ground that there is no rational basis to it."
  b. An additional clause is sought stating that "the examiner, to whom the application has been referred, shall examine whether the application made for the product is already in the market, and if so, no EMR shall be granted."
  c. Application for patenting of an invention should be first made in the country of its invention.
  d. If the application has been rejected anywhere, no EMR shall be granted in India without proper scrutiny and the application must conform to the terms and conditions of the Drug and Cosmetics Act, 1940.
  e. The Controller shall have the power to withdraw or reject the marketing of patent in case it is found to be adversely affecting public interest.
  f. There should be prior publication of notice in Gazette of application for grant of EMR.and of patent  specifications  before  acceptance.
  g. Right to inspect and obtain copies of specification and Examiner's Report should be given.
  h. The patent granted "shall not inhibit the invention of more efficient and economical processes for the manufacture of the same product, and it shall not either lead to artificial prices being maintained in the patented sector or competition being prevented from coming into the market."
  i. The lack of any third party opposition to the grant of EMR has also irked the Indian drug sector. They feel that the EMR applications need greater scrutiny with regard to novelty of the invention, a task that should not be left only to the Controller of Patents and the applicants. Before granting the EMR, the right to challenge the claim of the inventor must be open to a third party, which may suffer a negative effect due to the granting of the EMR to the applicant.
  j. The Ordinance provides that Compulsory licences applications to be made two years after the grant of  EMR. No licences of rights will be available. The Opposition wants compulsory licensing to be replaced by "licence of right". The Indian Drug Manufacturers Association (IDMA) feels that the applicant for Licence of Rights should be put to minimum obligation to establish his case. It should be sufficient if he is able to prove that the invention of the drug has not been worked to a reasonable extent and the item is not available at a reasonable price to the public.
  k. Importation as working of patent applied to EMR also, will stunt the development of the indigenous drug industry.

• Drug Industry Comments
  The President of the IDMA, Mr. D.B. Mody, has termed as "objectionable and misleading", certain statements made by Dr. Richard Arnold, Executive Vice-President of the International Federation of Pharmaceutical Manufacturers' Association (IFPMA) at a National Seminar of Health Care in India. In Dr. Arnold's opinion, it was in India's interest to accept the product patent regime now rather than at the end of the transitional period, as a product patent regime would lead to "prohibitive pricing" and a greater investment in research and development. Mr. Mody said that multinational companies have never invested in R&D and production of bulk drugs in any other country (even those with a product patent regime) apart from their home country.
  A climate of apprehension prevails upon the issue of patent law amendment in India.

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• India joined the Paris Convention and ratified the Patent Cooperation Treaty (PCT) on 07 December, 1995.
  
• Priority for all Patent applications can now be claimed from all WTO countries (since 3rd January, 1995)
  
• Priority claims can now, however, be made on the basis of the Government of India notification dated 3rd January, 1995, designating 72 WTO countries at par with the 6 convention countries under the Patents Act 1970. Priority can be claimed within one year from applications for Patents in all sectors including processes for making of drugs and agro-chemicals, filed before or after the date of notification.
  
• Priority cannot be claimed from EPO/PCT application even if it designates one of these countries.

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The government announced the much awaited new drug policy on September 15, 1994. The policy reflects the government's effort to reconcile the demands of the industry. However, the amendment in the Drug Price Control Order (DPCO) and the announcement of specific incentives for research and development has been postponed.

The Highlights:

• Industrial licensing for all bulk drugs, formulations, intermediaries abolished except for five drugs   reserved for Public Sector Units and those involving recombinant DNA technology or specific cell/  tissue targeted formulations.
  
• Companies with 51% foreign equity brought on par with wholly Indian companies; automatic  clearance to be given for 51% foreign equity.
  
• Automatic approval for foreign technology agreements.
  
• Higher rate of return to be allowed for price controlled drugs.
  
• Drugs with a turnover of over Rs 4 crore to be controlled.
  
• List of controlled drugs halved from 142 to 73; span of controls down from 70% to 50% of the drugs.
  
• Controls may be reimposed if prices rise too rapidly.
  
• National Drugs Authority to be set up to monitor quality control.
  
• Ceiling prices for standard pack sizes of price-controlled formulations.
  
• R&D incentives to be announced later.
  
• National Pharmaceutical Pricing Authority to fix prices. Time limit of two months for formulations   and four months for bulk drugs.
  
• New department in Health Ministry to focus on Ayurvedic, Unani, Siddha and Homeopathic   medicines.
  
• Special legislation to impose cess of one percent on production of drugs and pharmaceuticals to   promote research and development.

In the new policy, there seems to be a reliance on the turnover of drugs to determine which drugs should be price-controlled rather than the cognizance due to essentiality and national health needs. The pharmaceutical industry in India is not a capital intensive industry and a relatively small capital investment can produce a large turnover. Besides, the process Patents regime and the neglible investments on Research and Development have kept profitability levels inflated.There are an estimated 60,000 to 80,000 brands of various drugs available in the Indian market and a majority of these are either hazardous or irrational. The problem is compounded by the non-availability of regular, unbiased authentic information on drugs produced in the country. Market demand is not regulated by prices of drugs, but by the prescription habits of doctors, disease profiles, drug resistance, etc. In this context, a WHO report says "there is an inherent conflict of interest between legitimate business goals of manufacturers and the social, medical and economic needs of the providers and the public to select and use drugs in the most rational way."

There is a school of opinion which feels that the new drug policy has not come to grips with the post GATT scenario and the essential requirement of TRIPs that is, the advancement in research and development demanded by the product Patents regime. Emphasis on generic and off-Patents drugs and formulations and research in indigenous herbs and medicinal plants should have been the key thrust areas of the new policy.

The Drugs Controller has prohibited the manufacture and marketing of the following categories of drugs under Section 26-A of the Drugs and Cosmetics Act:

• Fixed dose combination (FDC) of modern drugs with Ayurvedic drugs or drugs belonging to any   other system of medicine.
• FDC of Penicillin and Streptomycin.
• FDC of Oxyphenbutazone/Phenylbutazone with any other drugs.
• FDC of Analgin with any drug other than antispasmodics.
• FDC of Dextropropoxyphene with any drug other than non-steroidal anti-inflammatory drugs (NSAIDS).

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• Pre-GATT Scenario

A Computer Patents Search among Indian Patents'  records for the 1989 to 1996 have yielded the following facts about the Patents filing habits of Indian and Foreign Drug Companies in India:

• Only 10 Indian Drug Companies, 5 Indian Institutes, 55 Foreign Drug Companies and 14 Foreign Institutes have obtained Patents in India in the period 1987 to 1994.

• General Patent Data:
  a. Total number of Indian patents accepted since 1980 till 1994 are about  25,521.
  b. Since 1987, though several applications in respect of pharmaceuticals were filed, only 204  patent applications were accepted.  Of these 204 patents, 31 were in the name of Individuals, 47  in the name of Indian Companies, 20 in the name of Indian Institutes, 85 in the name of Foreign Companies and Institutes, 19 in the name of Foreign Institutes, and 2 in the name of Others.
  c. As of present, most of these 204 patents are not valid and subsisting in India.
  d. A professional market survey report informs:

1.    Only 7 drugs from the W.H.O. list of essential drugs are on patent (but not  in India).  Their international patents will progressively expire over the next four years.
2.    Of these 7 drugs only 3 drugs are sold in India.
3.    Total sale value of patented drugs on the W.H.O. list  is US $ 5 million, a mere 0.7% of the total value of drugs in the same list.
4.    Data for India: The 31 internationally patented drugs (foreign patents still to expire) in the Indian Pharmaceutical market have a turnover of only US $ 120  million, i.e. 8.4% of the total Indian pharmaceutical market.

• Notwithstanding the industrial policies of the Government, the Indian Drug companies have been greatly advantaged by the discriminatory features of the Indian Patents Act, 1970 namely, the grant of only process patents and no product or even product by process patents, a shorter patent term of only 7 years from the date of filing  and the draconian provision for compulsory licensing where even the royalty is fixed by the Controller of Patents.
• New drugs introduced abroad in the last 20 years following immense R&D  expenses have been reverse engineered at a fraction of the cost in India. For instance, Ranitidine of Glaxo, now has several producers in the Indian market. Another Glaxo product, generic Ondansetron introduced in the US in 1993 , is already being marketed by the Indian drug company Cipla under the brand name Emeset.
• Since investment in research  by Indian Companies was the barest minimum, the prices of drugs  in India remained one of the lowest in the world. The argument for continuing to have a process patent regime was therefore, its price  competitiveness.

• Post-GATT Implications
• Speculations and apprehensions have rifled the Indian pharmaceutical industry  following India's signing of the GATT accord. A spate of irresponsible newspaper reports, misinformation and Doomsday scenarios are presently making the rounds of the Indian Drug industry. For example a newspaper suggests:
• Approximately 90% of the 240 new drugs approved by the government in the last few years come under patent. According to legal counsel obtained by the Indian Drug Manufacturers Association on India accepting GATT, drug multinationals can legally demand compensation from Indian drug companies for marketing almost 200 drugs sold in India with effect from 1 January, 1995.The current upper limit of 4% will no longer be valid and multinationals can demand whatever "equitable remuneration” they think fit.
• Such reports and statements make no sense and are beyond logic. They only serve to increase the already gathering confusion in the minds of the industry people.
• The TRIPS recommendations, when incorporated in the Indian Patents Act is expected to encourage foreign drug companies to invest in India, speed up technology transfer and  facilitate the introduction of new drugs in the Indian pharmaceutical market. Following Patent Law amendments in 1978, Italy has seen the share of its drug companies increase from 36% in 1978 to 42% in 1987, R&D investment has increased from 6.5% to 11%. Today, Italy is the 5th largest producer of pharmaceuticals in the world.
• But it is doubtful if the Italian example is relevant to India. In India,  Indian Drug Companies are in a priority position in all respects.
• Intensive R&D will become a post-GATT necessity and therefore as part of the package of incentives in the proposed new drug policy, consideration will be given to exclusion of a new drug developed indigenously from price control for 10 years from the date of commercial production. There are going to be specific provisions to keep genetically engineered drugs produced by recombinant DNA technology and cell/tissue culture technology drugs out of price control for 10 years.
• Competition is also expected to lead to greater research and development in all fields. Even herbal and ancient Ayurvedic remedies will receive scientific attention. While the Indian Industry waits for the much delayed drug policy to be brought in tune with the liberalisation of the industrial policy and rules governing foreign investment, leading Indian Drug Companies like Lupin , Ranbaxy, Torrent  and Dr. Reddy's  Labs are already gearing up to new R&D ventures and planning global production bases to prepare for an era of freer, more patent protected trade in pharmaceuticals.