Every year, the United States Trade Representative (USTR) conducts hearings for its ‘Special 301’ report. The report which draws its name from Section 301 of the Trade Act, 1974 is meant to name and shame America’s trading partners based on their efforts to protect American intellectual property. This report then feeds into other reports by the USTR, such as the National Trade Estimate on Foreign Trade Barriers which forms the basis of the American President’s trade policy.
In almost all of the previous editions of the Special 301 reports, India has always been on the priority watch list of the USTR, an honour reserved for countries that decide to have their independent IP policies that upset the Americans. For most part, the bark of the USTR has proven to be worse than its bite. I cannot remember of a single instance apart from one in the early nineties, where a Special 301 report has formed the basis of American trade sanctions against India. This is partly because post-Reagan, American Presidents have been wary of unilateral trade measures because such measures reinforce the image of the ‘ugly American’. The reliance on diplomacy has changed with the Trump presidency’s aggressive trade policy – his punishing trade war with China is a scary example of the extent America will go under Trump to protect its trade interests. The Trump administration has made it very clear that it will be training guns on India’s trade policies, which in its view are too protectionist. Trump made good this threat last year, when he suspended trading privileges offered to India under America’s GSP program.
Given recent announcements that the Americans want a new trade deal with India, we thought it would be useful to scrutinize some of the complaints being made by American lobbies to the USTR as part of the Special 301 process. Since the USTR makes available the entire docket for its hearings on its website, we were able to access the submissions made by various lobbies. Over a series of posts, we will be discussing the highlights of the various submissions.
In this post, I will be scrutinizing the submissions of the following industry groups: US Chamber of Commerce, National Association of Manufacturers, Alliance for Fair Trade with India and US-India Strategic Partnership Form and Federation of Indian Chambers of Commerce and Industry (FICCI).
First the praise
The US Chambers of Commerce (USCC) and others are very happy with measures taken to speed up the process before the Patent Office and Trade Mark Registry with applications being disposed much faster than earlier. The Chambers was also very happy with the centralisation of activities within the Department for Promotion of Industry and Internal Trade (DPIIT) under a single Joint Secretary. Apparently, this reorganization was a result of the National IP policy of 2016 and has helped raised the profile and importance of IP within the Indian bureaucracy. This consolidation reportedly helped increase transparency and access to Indian officials responsible for various aspects of IP policy and this reportedly helped raise India’s ranking on the infamous GIPC IP index. The Patent Prosecution Highway (PPH) with Japan came under special praise from the Chambers.
I suspect one of the reasons the USCC was happy with the DPIIT was a senior IAS officer by the name Rajeev Agrawal who was the Joint-Secretary in charge of IP and who took the lead on several of the above initiatives. A suave, well-spoken bureaucrat, Mr. Agrawal was spotted attending events hosted by the USBIC (a part of USCC) in Washington D.C. In November, he resigned from the IAS to join Uber India.
The standard complaints
The standards complaints in most of the above submissions, against Indian patent law (which have remained unchanged for most of the last decade) have concentrated on Section 3(d), Section 8, the lack of a linkage between regulatory approvals under the Drugs & Cosmetics Act and the Patents Act, the compulsory licensing provisions in the Patents Act, Section 146 disclosure of working and the lack of smooth functioning of the IPAB.
Apart from complaint regarding delays at the IPAB, most of the other complaints are targeted at safeguards in Indian patent laws against potentially abusive practices by patentees. Section 3(d) is meant to limit ever-greening of patents, Section 8 requires patentees to make proactive disclosures to the Indian patent office about all examinations reports/status of corresponding foreign patent applications before foreign patent offices, compulsory licensing provisions are recognized by the WTO framework post the Doha declaration and finally, the Section 146 disclosure requirements requires patentees to disclose the extent of their sales in Form 27 is tied to the compulsory licensing requirements. It is interesting to know that FICCI, an Indian industry organization has pushed back hard on the compulsory licensing complaints of American industry by pointing to many provisions in American law which support compulsory licensing and also listing judicial orders passed by American courts which are tantamount to compulsory licensing.
The demand for a linkage between drug regulatory authorities and patent law has been attempted earlier through the judicial route and was dismissed by the Delhi High Court and subsequently the Supreme Court. Attempts to lobby the governments on instituting such a mechanism have been on for more than a decade with no success.
None of the above measures save for the Supreme Court’s interpretation of Section 3(d), are in violation of TRIPS. Nevertheless, American lobbies are entitled to ask their government to lobby on their behalf. But given that a parliamentary amendment will be required to give effect to any of the above demands it is unlikely that the Modi government will accede very easily.
Another standard complaint has been the lack of a trade secret law and lack of data exclusivity under Indian law. Once again, these are not required under TRIPS but at least on the issue of a trade secret law, it may make sense for India to enact such a legislation because Indian courts quite often get the law wrong on the issue and some codification may help subject to proper safeguards.
The ‘newer’ complaints
Some of the emerging complaints against India are regarding Section 31D of the Copyright Act and the increasing use of price control. These issues have been raised in earlier years but are not as old as the “standard complaints”.
Section 31D is the statutory license regime which was put in place in 2012 to allow Indian broadcasters to access music at a rate fixed by the Copyright Board. It is a provision that is hated by even Indian music labels and songwriters/musicians. And I doubt the legality of the provision under TRIPS. The provision has also been challenged before Indian courts.
Price control has been a particularly sensitive issue of late since the Modi government used it to control stents and knee implants manufactured by the very powerful lobby of medical device manufacturers in the United States. Several of the submissions speak about para 32 of the Drug Price Control Order (DPCO) which exempts patented medicines from price control. There is some confusion regarding the wording of para 32 and hopefully the litigation initiated by civil society group – All India Drug Action Network (AIDAN) – will force some clarity in this regard. This is going to be the trickiest issue in any future negotiations between the Americans and the Modi government because the DPCO is purely within the executive ambit and Modi cannot pass the buck to Parliament.
One of the interesting trends I came across while studying the above submissions, is the practice of praising Justice Pratibha Singh, by name, for some of her judgments. The submission by the U.S. Chambers of Commerce highlights her name three times – in context of her judgment on computer related inventions (which Swaraj critiqued over here), in relation to her judgment in Pharmacyclics v. Union of India because of her criticism of the long delays in patent opposition matters and third, for her judgment in the Christian Louboutin SAS and Amway cases on intermediary liability under Section 79 of the IT Act. Her Amway judgment was overturned recently by an appeals bench.