Parliamentary Report on the Patent System – The Good, the Ugly and the Doubtful


It recently came to our notice that the Department related Parliamentary Standing Committee on Commerce tabled its 88th Report on ‘Patents and Trademark System in India’ way back on 24th October, 2008. Usually Parliamentary Committees are quite participative and atleast attempt to invite as many stakeholders as possible in the discussion leading to the finalization of the report. This is all the more true when the Committee takes more than 3 years to complete such a basic report. However even after 3 years of work the reasoning in the Report is perfunctory and quite a few of its findings are merely reproduced from the submissions made to it by the 10 parties listed below.
This Report has limited submissions to only 10 people/institutions – Justice Krishna Iyer, 3 NGOs (IMAK, MSF & Lawyers Collective), 2 industry organizations (OPPI & IDMA), one lawyer (CLG), one bureaucrat (Former Controller) and one academic institution (NLU, Jodhpur). Notable exceptions include any of the top 5 IP law firms, any of the 18 IPR Chair Professors established by the HRD Ministry & also business chambers such as FICCI.
As with any report this report too has the good, the wrong and the doubtful apart from the ‘technical inaccuracies’. Due to a paucity of time I’ll list just the bare minimum below.

The good
1. The Committee very strongly recommended that the patent office provide a publicly searchable digital patent database, with a possible amendment to Section 145, so as to create a stronger, more transparent patent system where patents can effectively be searched and opposed by any person. In fact transparency has been a point on which the Committee has harped time and again. As many of our readers already know SpicyIP has been a strong proponent of greater transparency in the Patent Office and has even petitioned the Government on this point time and again. I was however a bit surprised to note that a substantial portion of para 5.5 of the report (regarding increased transparency) has been reproduced verbatim from IMAK’s submission to the committee, that is available on p.127 of the Report. Since the Committee has annexed all submissions to it, this slight oversight would not technically qualify as plagiarism. Having said it bears noting that the Committee was headed by Dr. Murli Manohar Joshi, who once upon a time headed the Ministry of Human Resources and Development, which is the Ministry in charge of Copyright Laws and higher education throughout the country.
2. The Committee also recommended that the number of examiners in the Patent Office be increased in substantial numbers along with a re-worked compensation package so as to attract better talent. It also provides various suggestions to improve the quality of examiners.
3. The Committee also asked the Government to clarify the meaning of ‘efficacy’ and ‘significantly’ in Section 3(d) of the Patent Act. It also requested the Government to clarify the meaning of per se in regards software patents under Section 3(k). It’s interesting to note that this suggestion was made on the basis of the submissions by the Kolkotta and Chennai patent offices. Of course the Report has almost no suggestions on how either clarification should be carried out.
4. The Committee also accepted Mr. Keayle’s suggestion that the Government should attempt to fix the royalty rates that will apply in the case of compulsory licensing of pharmaceutical products in an emergency situation. Countries like Canada already have fixed royalty rates for exports made under the Doha Declaration.
5. In regards GIs the Committee urged the Government to ensure that Article 24 of TRIPs, regarding Spirits and Wines, extended to even Article 22.
6. The Committee also recommended that the Department should take all possible efforts to ensure that India is designated as an International Search Authority (ISA).

The ugly
Some of the conclusions of the Committee are just horribly wrong. I’m going to list just a few of them below:

1. In para 5.39 the Committee reproduces verbatim from Mr. Keayle’s submission (on p.87) the following:
Article 70.3 of TRIPS Agreement provides that there shall be no obligation to restore protection to the subject matter which, on the date of application (i.e. 1st January, 2005 of TRIPS Agreement) for the Member in question has fallen into public domain. There are reportedly 36 products, with a turnover of over Rs. 3000 crore, which the domestic enterprises were producing as on 1st January, 2005, for which mailbox applications were filed by the applicants. Instead of implementing this provision, the amended Patents Act stipulates that those enterprises which have been producing mailbox products on 1st January, 2005, will have to pay royalty to the patent holder during the remaining period of the patent, and this amount of royalty works out to more than Rs. 150 crore annually to MNCs, even if paid @ 5%.

The Committee then goes on to berate the Department in the following words:

The Committee express surprise that the Department allowed a loss of valuable foreign exchange due to this provision, which could have been avoided, had the Department made use of Article 70.3 of TRIPS Agreement in the amended Patents Act. The Department should have taken advantage of this flexibility, to safeguard public interest in respect of availability of medicines at competitive prices through the domestic enterprises. The Committee, therefore, recommend that the Department should consider to implement this provision in future, by way of amendment to the Patents Act.

As per my understanding this is an erroneous interpretation of TRIPS. Article 70.3 merely implies that India need not extend protection to patented subject matter that is already in the public domain. This would refer to all pharmaceutical inventions claiming a priority of before 1995. The royalty provision in regards mailbox applications referred to above is actually the proviso to Section 11A which in fact is implementing India’s treaty obligation under Article 70.4. I’m quite ‘surprised’ that the Committee missed reading out Article 70.4.

2. In para 5.44 the Committee states the following:
The Committee is also of the view that it is in the interest of the country to have a Patent Law which has correlation with our Health Policy and is also pro-generic industry. On its part, the pharmaceutical industry in the country should also shun profit-centric approach, and look at the problem from a human angle. The guiding principles for the Patent regime as well as the Industry should be affordability, safety, accessibility and availability of a pharmaceutical system, which provides a coherent, cogent and people-centric health system in the country.

It is beyond my limited understanding as to how a Committee can state with such conviction that the Patent Act, an act meant to incentivize innovation, should be unabashedly pro-generic industry. Clearly objectivity was not a criteria for this committee. In my opinion the committee seems to be under the mistaken opinion that it was drafting a public health legislation instead of a legislation dealing with innovation.

3. In para 5.45 the Committee states the following:
The Committee feel that the provision of compulsory licencing contained in Article 31(b) of the TRIPS Agreement is extremely important to ensure effective role of the domestic industry to meet the demand for patented products in the country. Implementation of this provision would also open avenues for exports The Department should, therefore, make provision for implementing TRIPS 31(b) Article in our Patents Law at the earliest.

The Committee time and again notes that compulsory licensing provisions are already available in the Patent Act and yet it asks the Government to create a provision to implement Article 31(b) which is nothing but a compulsory licensing provision.

4. In para 5.48 the Committee states the following:
Since the consequences of Data Exclusivity are quite serious, the Committee strongly recommend that the Government should not fall prey to such demands of MNCs. The Government must thwart such attempts, being made at the behest of certain vested interests. It should also guard against moves to enter into FTA with USA, as the developed countries, particularly the USA, are trying to bring in certain TRIPS Plus measures through Bilateral and Regional Agreements.
In the build-up to this conclusion the Committee did not once discuss the rationale for Data Exclusivity. More importantly it did not make a single mention of the Reddy Report to the Ministry of Commerce on Data Exclusivity despite the fact that both points were covered in OIPPI’s submissions.

The doubtful
1. In para 5.12 the Committee states something which I just cannot understand:

A view in favour of pre-grant opposition is that, in a way, it forces the patent office to do better analysis of patent applications. It also forces compulsory licensing for drugs, when a patent is granted.

What is the connection between pre-grant opposition and compulsory licensing? I was curious as to where they got the idea from and so I searched. Turns out that this extract too is a verbatim extract from Leena Menghaney’s submissions on page 112. If anybody can understand it please do feel free to explain it to me.

2. In para 5.46 the Committee states the following:
The Committee express anguish that the Exclusive Marketing Rights Regime was allowed to prevail over the basic Public Health System. The Government should, therefore, take immediate steps to align the balance of convenience, as per the Indian patentability criteria laid down in the Act of 2005 so that the Public Health System does not suffer due to the Exclusive Marketing Rights Regime (EMRs).

This a slightly baffling proposition. On a reading of the report it came to light that the Committee seems to have come to this conclusion on the basis of Leena Menghaney’s submissions on the 18th of December, 2007 at p. 111. I’m slightly baffled with the Committee’s ‘anguish’ because the 5 year EMR system was abolished in 2005 and instead replaced by a 20 year patent system. So why the ‘anguish’ with only the 5 years term and not the 20 years term? And as far as I know , and I could be wrong on this, there were very few valid EMRs in India in the year 2007, certainly not enough to be anguished about and the last possible EMR granted would expire this year, with the exception of the pending GSK EMR application.

3. In para 5.54 the Committee while urging the Government to fight ‘Patent Harmonization’ ‘tooth and nail’ reproduced verbatim with acknowledgement, the following, from the Indian Drug Manufacturer’s Association (IDMA):
that the issue of Patent Harmonization, which provides for uniform law on Patents for all countries of the world, was nothing but a ploy by the United States to substitute the law of that country on all the countries of the world. In a world where every country had different Constitution, different commercial laws, different economic laws, and different stages of development, it was downright not possible to provide for a uniform patent law for the entire world.
Believe it or not this is the only reason given by the Committee while concluding that the Government should fight the proposal ‘tooth and nail’.

Conclusions: Regardless of the several inaccuracies listed above I think it’s necessary to commend some of the finer points of the report most of which have been borrowed from the submissions of IMAK to the Committee. The only point that I was not sure about was in regards Section 144 of the Patent Act. There must have been some underlying rationale for Ayyangar to recommend that examiner’s reports remain confidential until a Court grant leave to inspect the same. I’ll get back on that in another post.

Prashant Reddy

Prashant Reddy

T. Prashant Reddy graduated from the National Law School of India University, Bangalore, with a B.A.LLB (Hons.) degree in 2008. He later graduated with a LLM degree (Law, Science & Technology) from the Stanford Law School in 2013. Prashant has worked with law firms in Delhi and in academia in India and Singapore. He is also co-author of the book Create, Copy, Disrupt: India's Intellectual Property Dilemmas (OUP).

2 comments.

  1. AvatarAnonymous

    Whats the need for confidentiality of examination reports when the application for patent has been published?
    In most other countries the communication between the Patent office & the applicant is available to the public on their websites.See the EPO & USPTO websites where they have published even the details of interview between the office and applicant. When we are striving for transparency of govt offices,especially IP offices, if such reports are kept confidential, we may never come to know what transpired between the patent office and the applicant(i.e if some cozy dealings were involved). Now that Kurian has ordered that all examination reports have to be signed by the Controllers themselves and forwarded to the applicant, there is a greater need for the communication to be made public because there have been many proven cases of Controllers abusing their authority to earn a quick buck. It is well known that many controllers themselves draft patent applications for their clients, have them examined by ‘pliable’ examiners & then proceed to grant the case without much hassle.In case the application is allotted to an honest examiner by mistake and he recommends the rejection of the case, the file often goes ‘missing and becomes untraceable’. In some cases when an application had been rejected by an Examiner, all traces of examination were removed on the file and it was re-allotted to the same examiner for examination. This was the audacity with which the Controllers operated.The recent case of Deputy Controller of Mumbai Patent Office, M.A.Hafeez being caught with his hand in the cookie jar by the CBI in a corruption scandal proves this point.

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  2. Avatarmnbvcxzaq1

    i would quickly react to only 2 aspects: one to the author’s and other to Ayyangar’s:
    (i)”As per my understanding this is an erroneous interpretation of TRIPS. Article 70.3 merely implies that India need not extend protection to patented subject matter that is already in the public domain. This would refer to all pharmaceutical inventions claiming a priority of before 1995.”: there is a considerable debate on whether all such inventions that claim priority from pre-1995 should be deemed to ve fallen into the public domain. this is especially so, coz of the provision which provides that the convention applications can be filed in india within 12 months of the date of first filing (priority date) of the basic application in any convention country outside india. this provision seems to entitle indian filings in respect of even 1994 basic applications (whose priority is claimed in the convention application in india), provided it is filed within 12 months of basic application’s filing date. these two aspects must be harmonized (decision may go one way or the other) by some judicial pronouncement. from my personal handling of at least two big ticket proceedings, i can very well say that this is/was one of the issues before the IPAB as well as the Supreme Court. However, they ve, so far, shied away from clarifying this issue.
    (ii)Ayyangar’s recommendation is / should be anathema, at least in the modern times. whatever be the underlying reasoning, i still feel myself unable to terms with it and would advocate transparency. glasnost.

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