Data Exclusivity

Syngenta Misleads Indian Court on "Data Exclusivity" and Article 39.3 of TRIPS


In a very interesting matter concerning the protection of regulatory data, Syngenta, a Swiss MNC argued before Justice Ravindra Bhat of the Delhi High Court that Article 39.3 of TRIPS mandates data exclusivity.

This is sheer nonsense! Anyone with a fair understanding of Article 39.3 of TRIPS and its negotiating history would appreciate that it does not mandate “data exclusivity”. But first the facts of Syngenta India Ltd vs Union of India (W.P. (C) 8123/2008 ):

Facts:

Syngenta procured registration for its insecticide that was allegedly useful in tackling the bollworm problem plaguing Indian cotton. Jaishree comes along for a “me too” registration and submits essentially “bio-efficacy” data (asking the government to rely on data already submitted by Syngenta).

Syngenta objects to this and takes the matter finally to court, stating that government rules provide for data exclusivity and the government cannot rely on Syngenta’s data to approve Jaishree’s generic version of the insecticide in question. The matter is a very technical and complex one and really turned on the fact that at the time that Syngenta procured registration for its insecticide, the ‘data exclusivity” rules by the government were not in force. In any case, since Syngenta had “provisional registration” prior to final registration, its supposed data exclusivity period is 3 years from the date of the provisional registration–and this period had lapsed when Jaishree’s generic version came up for registration.

Back to Syngenta’s outlandish claim that Article 39.3 mandates data exclusivity:

Article 39.3 of TRIPS

The Article states as below:

“Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use.”

In other words, the mandate above is that regulatory data be protected against “unfair commercial use”. This does not however mean that the regulatory data submitted by an innovator cannot be relied upon by the government to approve a generic. It could mean (as I have argued) that the government may use it to approve a generic version, but the generic manufacturer in question has to pay a certain sum of money to the innovator (a “compulsory licensing” scheme of sorts). It could also mean, as others have argued, that the data ought to be only protected against disclosure and fraudulent procurement by another third party.

A close look at the negotiating history of TRIPS would reveal why Syngenta’s argument that Art 39.3 mandates data exclusivity is inherently flawed. An earlier draft of Article 39.3 (the “Brussels draft”) had clear “data exclusivity” language ( “the data shall not be relied upon for a reasonable time..”) which was knocked off in the subsequent TRIPS text. And this clearly demonstrates that the TRIPS negotiators did not wish to impose a “data exclusivity” obligation, but wished to have a more flexible obligation. For more details of this negotiating history etc, see here.

Reddy Committee

More worryingly perhaps, the petition also argued that the Reddy Committee Report mandated “data exclusivity”. Here is how Justice Bhat captures the mistaken contentions of Syngenta:

“The petitioner argues that …. a Statutory Authority (in this case the Committee) cannot rely on the data submitted by the Originator for approving the second and subsequent applications for the same insecticide. This protection and data exclusivity, however, would be for a limited period and not in perpetuity. The petitioner also alludes to a “Reddy Committee” report, dated 31.05.2007 that endorses TRIPS’ recommendations concluding that the Act and the Rules should be amended…. ”

While Syngenta is right in stating that the Reddy Committee opined that Indian law does not comply with Article 39.3, they are wrong in assuming that the Reddy Committee recommended “data exclusivity” as the only way to comply with Article 39.3. Preventing data from “unfair commercial use” is not the same thing as preventing “reliance” on the data (which is essentially what data exclusivity is all about).

Far from endorsing a “data exclusivity” mandate under Article 39.3, the Reddy Committee Report clearly mentions that such exclusivity is not needed for pharmaceutical data at the moment. However, they propose amendments to the Drugs and Cosmetics Act to ensure that no data wrongfully leaks out of the Drug Controller’s office and falls into the hand of competitors. These proposals are yet to be implemented in India. Round 2 of amendments to the Drugs and Cosmetics Act, setting up the Central Drug Authority (CDA) and dealing with clinical trial regulation etc is on the anvil; and one expects that some of the Reddy recommendations would be implemented through these amendments. (ps: the first set of amendments to the DCA deals with “spurious drugs” and came into force recently).

Interestingly although the Reddy Committee does not recommend “data exclusivity” for pharmaceuticals (at least for the time being), they do so for agro-chemicals and traditional medicines. And since the Syngenta case is really about the approval of an originator pesticide (and its generic version), Syngenta is correct in their view that the Reddy committee recommends data exclusivity at least for agro-chemicals. However, the Reddy committee does not do this out of a fear of the Article 39.3 mandate. Rather, they are of the view that there is broad industry consensus in favour of exclusivity in so far as agro-chemicals were concerned.

Data Exclusivity Through Government Rules

What is even more interesting in this case is that without an amendment to the Insecticides Act, the government introduces data exclusivity through a mere “rule”. Justice Bhat takes them to task noting that this is an ‘essential legislative function” that cannot be subsumed within rule making powers of the government. However, since the vires of these rules was not directly challenged in the litigation, he did not dwell further on this aspect.

However, in keeping with his reputation as a “costly” judge, he imposed a cost of Rs 3.75 lakhs on Sygenta (75,000 per hearing) to be paid to Jaishree, the generic manfacturer for bringing a “speculative” action and inviting “the court to make a policy declaration, which could not have been made under any circumstances.” Also the pendency of the court proceedings delayed the entry of Jaishree into the market and this had to be compensated.

Its interesting that the last few months have seen two similar cases by patentees who attempt to delay generic entry by bringing highly untenable legal claims. The first was the Bayer vs Cipla matter, where Bayer attempted to introduce a patent drug linkage mechanism through the backdoor. And now this agrochemical case involving Syngenta.

But perhaps, it is even more interesting that Justice Ravindra Bhat, the presiding judge in both these cases is clearly not amused by these attempts to use courts to create legislative policy through the backdoor and expresses his displeasure by imposing costs!

On August 11, 2009, a Division Bench of the Delhi High Court upheld Justice Bhat’s order, but it watered down the costs imposed on Syngenta to about Rs 1 lakh.

ps: Thanks to Prashant for bringing this interesting case to my attention.

Shamnad Basheer

Shamnad Basheer

Prof. (Dr.) Shamnad Basheer founded SpicyIP in 2005. He's also the Founder of IDIA, a project to train underprivileged students for admissions to the leading law schools. He served for two years as an expert on the IP global advisory council (GAC) of the World Economic Forum (WEF). In 2015, he received the Infosys Prize in Humanities in 2015 for his work on legal education and on democratising the discourse around intellectual property law and policy. The jury was headed by Nobel laureate, Prof. Amartya Sen. Professional History: After graduating from the NLS, Bangalore Prof. Basheer joined Anand and Anand, one of India’s leading IP firms. He went on to head their telecommunication and technology practice and was rated by the IFLR as a leading technology lawyer. He left for the University of Oxford to pursue post-graduate studies, completing the BCL, MPhil and DPhil as a Wellcome Trust scholar. His first academic appointment was at the George Washington University Law School, where he served as the Frank H Marks Visiting Associate Professor of IP Law. He then relocated to India in 2008 to take up the MHRD Chaired Professorship in IP Law at WB NUJS, a leading Indian law school. Later, he was the Honorary Research Chair of IP Law at Nirma University and also a visiting professor of law at the National Law School (NLS), Bangalore. Prof. Basheer has published widely and his articles have won awards, including those instituted by ATRIP, the Stanford Technology Law Review and CREATe. He was consulted widely by the government, industry, international organisations and civil society on a variety of IP issues. He also served on several government committees.

8 comments.

  1. AvatarAnonymous

    Dear Mr. Basheer,

    Thank you for bringing this to our attention. The judgments are available on the Delhi High Court website in the pdf section.

    Regards,

    ABC

    Reply
  2. Avatarmnbvcxzaq1

    shamnad,
    i ve the following comments on some (not all) aspects of your post:
    1) although it seems that the imposition of cost (but not its quantum) may be reasonable in the present case, yet at another level, i am discerning an uncomfortable trend. in principle, it seems a bona fide trend. but only if it is awarded impartially/non-discriminatorily. there should not be any discrimination in imposing cost on the basis of domestic vs mnc status. there r thousands n thousands of domestic litigants who indulge in frivolous litigation and such litigants must be discouraged thru measures, like cost-imposition. although I fully welcome the ‘iron-hand’, yet I rue the lack of even-handedness and consistency in this regard. the iron-hand should deliver justice even-handedly – left, right and centre.
    2) outside the context of the syngenta case and at a general theoretical level: i totally agree that article 39.3 of trips does not provide for ‘data exclusivity’ at all. it is totally incomprehensible for me to even think that I could ve ever argued in a court of law that the said article 39.3 mandates data exclusivity. and it is for mainly this reason, the imposed cost (not its quantum) in the syngenta case seems to be reasonable to me. however my agreement with most scholars ends here, largely.
    3) u ve advocated as follows, “It could mean (as I have argued) that the government may use it to approve a generic version, but the generic manufacturer in question has to pay a certain sum of money to the innovator (a “compulsory licensing” scheme of sorts).” numerous other scholars (e.g. gopakumar), too, ve advocated, albeit a lil differently, as follows, “It could also mean, as others have argued, that the data ought to be only protected against disclosure and fraudulent procurement by another third party.” Despite the difference in approach, the net effect of both of these foregoing approaches is that it allows for ‘reliance’ by the govt. on the regulatory data submitted by the innovator in granting marketing approval for subsequent generics. this is crucially dependent upon the interpretation of the term “unfair commercial use”. i am of the opinion that it is actually a mis-reading. In fact, the proponents of these approaches are actually factoring in ‘public interest’ in article 39.3. without factoring-in the public interest factor, the interpretation of article 39.3, per se, does not allow for the ‘reliance’, as the said ‘reliance’ results in commercial use, which in my view, is unfair, especially in the light of the raison d’etre of the patent regime under the trips. the spirit of the trips n the Indian patent act should be given a wholistic reading/interpretation/implementation. the public interest factor has already been factored-in while providing ‘flexibilities’ under various articles of trips (e.g. article 27.1 & 27.3, etc.). this factor should not be over-player/over-used to stymie each n every provision of any agreement (trips, here). otherwise, every provision can be nullified using the public interest factor and the very raison d’etre of having a patent regime will be lost.
    contd……..

    Reply
  3. Avatarmnbvcxzaq1

    (……contd.)
    moreover, in the Indian patent act itself, several safeguards have already been built-in. e.g. if the govt ever feels the need to give primacy to public interest over patentee’s monopolistic interest, it can very well initiate proceedings for compulsory licensing. this, n not the vice versa, should be the way to ensure public interest. the spirit of trips warrants that govt. should not do something in “over-anticipation”, i.e. in anticipation of ensuring public interest, it should not first ‘rely’ upon the exclusive data of the innovator to grant manufacturing licence to the generic manufacturers, even if the latter pays certain fee under the compulsory licensing, as advocated by shamnad. there is a need for striking a balance.
    4) somehow i feel that the judiciary should ve refrained from venturing into the “recommendations” aspect of the reddy committee. The things which are not yet part of the law, should be outside the scope of judicial scrutiny, in general.
    5) while in my comment on your post on patent linkage case (in re bayer), i had disagreed with the judgment as far as it had imposed cost on account of speculative-ness of the plaintiff, in the syngenta case, i find the cost-imposition reasonable, on this ground.
    i ll await your response to my comment, shamnad.

    Reply
  4. AvatarShamnad Basheer

    Dear mnbvcx,

    I have to really thank you for being one of the most engaging and insightful commentators on this blog. It really adds a lot of value to the discussion and contributes to better awareness in this hitherto esoteric and largely closed off area.

    Coming to your specific comments here, I agree with you wholeheartedly that “costs”, wherever appropriate, must be imposed, without discrimination between MNCs and domestic companies. I salute J. Bhat for finally giving “costs” some meaning at least by getting to a more realistic figure than earlier.

    On the point of Art 39.3, I’m not sure I follow you. You state right at the start that: ” i totally agree that article 39.3 of trips does not provide for ‘data exclusivity’ at all.”

    And then you go on to make what appears to be a contradictory statement:

    ” the interpretation of article 39.3, per se, does not allow for the ‘reliance’, as the said ‘reliance’ results in commercial use, which in my view, is unfair..”

    If you prohibit reliance on the data, then you are effectively granting “data exclusivity”..

    Thirdly on your point that there are anway safeguards in the patents act such as compulsory licensing etc misses the point that Data exclusivity (DE) and patents are separate regimes–and sometimes drugs merit DE but no patents and vice versa. So safeguards from one regime does need not automatically apply to the other.

    Reply
  5. Avatarmnbvcxzaq1

    shamnad, i am in a hurry to go out, so wud quickly take up your third point only (the point regarding contradiction may require some analysis, so i wud do it later on).
    i am fully aware that de n patents r in two different realms. also i agree wid u that sometimes, drugs may merit de but no patents (in fact, i advocate that drugs do merit data exclusivity), yet i made my point despite that fact. coz though safeguards in one regime do not ‘automatically’ apply to another regime, yet they ‘can’ be applied. n when there is the possibility of applicability, v shud not merely keep on multiplying the applicator/implementor authority, n that, too, in the name of ‘public interest’. i aint against ‘public interest’ factor at all, but there shud not be multiplicity of authorities deciding on account of public interest factor. in this limited sense, may b, v can take the cue from the brazillian ANVISA, which is the sole authority in this regard (although i dont totally approve the way it functions, but still, it serves a useful purpose, as far as centralised decision-making on the basis of public interest factor is concerned). ”as i mentioned in my comment, if one starts applying ‘public interest’ factor everywhere, then the sanctity n rationale of having a patent regime is gone for a toss. one shud not over-do the ‘public interest’ factor. there has to b some balancing/harmonizing act. also, i am aware of your ‘compensatory liability’ model in this regard. but i disagree wid your model n wud rather side wid correa’s interpretation of ‘unfair’.
    i can intellectually debate over all these aspects, but open forum may not b the appropriate place for it.
    lastly, thanx for the kind words. i respond to your blog, coz (1)i find your blog largely impartial n (2)i ve an academic side of me which doesnt get full satisfaction in the regular practice.
    take care.

    Reply
  6. AvatarShamnad Basheer

    You now state:

    “i ….rather side wid correa’s interpretation of ‘unfair’.

    If you support Correa’s reading, you cannot also then support “non reliance” or data exclusivity, can you??? This is nothing short of a very blatant contradiction in your stand!!

    Reply
  7. Avatarmnbvcxzaq1

    regarding my first contradiction – i guess i miscommunicated a lil. instead of stating “i totally agree that article 39.3 of trips does not provide for ‘data exclusivity’ at all”, i shud ve stated as follows – “i totally agree that article 39.3 does not mandate that ever country is under any obligation to provide for a data exclusivity law/regime”. also, probably i didnt clarify the difference between the “data exclusivity” n “data exclusivity regime law”. now it shud not appear to be contradictory to my other statement “the interpretation of article 39.3, per se, does not allow for the ‘reliance’, as the said ‘reliance’ results in commercial use, which in my view, is unfair”. this is not necessarily contradictory to my miscommunicated (but now revised) statement. on the ‘unfairness’ of ‘reliance’, i side with correa. i ve never advocated for carte blanche ‘reliance’; altho on selective basis, reliance can be resorted to, if public interest is involved. but this public interest factor shud be (1)only on case-to-case basis n (2)decided by one authority (instead of a multitude of authorities, as is presently the case).
    on ‘reliance’, i side with corea’s view. but that doesnt necessarily mean that data exclusivity should or should not be advocated. existence of a data exclusivity regime can be independent of ‘govt. reliance factor’. however, its a different matter that existence of one may obviate or facilitate the need of the other.
    wen i support corea’s view (that govt reliance is unfair) then i also support that there shud be data exclusivity law in india. however, i clarify that such law is not mandated by the article 39.3, as some scholars opine.

    Reply

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