USTR Special 301 Review (2020) Submissions – Continued

Special 301As readers may know, the Special 301 Review is an effort by the US Trade Representative (USTR) to identify countries whose IP regimes are not conducive to US persons’ IP interests, with the stated goal of increasing bilateral attention on ‘problem areas’. This has most frequently been done through the threat of unilateral sanctions (see our posts on earlier editions of the Special 301 review here). This year’s report has come out as well – with India once again being placed on the Priority Watch List – we will have a detailed post covering that soon. This year, the report may have strategic significance due to the US-India trade deal that may be in the offing (and in fact, the AFTI specifically mentions this point in the Hearings that took place earlier this year, see page 67 of the transcript here).

Readers may have noticed that we have been doing quick takes on several of the India-specific issues mentioned in the Hearing submissions for the 2020 USTR’s Special 301 Review. Our quick takes have included:

  1. Prashant’s post: An overview of the lobbying against Indian IP law before the USTR (The intro of this post also has a general introduction to the 301 Review)
  2. Divij’s post: Piracy, Privacy and Procurement: What Internet and Software Associations Had to Say About India to the USTR
  3. Mathews’ posts: Global Trademark Report Card, 2019 (Special 301 Submission) – I &
    Global Trademark Report Card, 2019 (Special 301 Submission) – II

In this post, I intend to take a look at submissions from 1. Intellectual Property Owners Association (IPO), 2. Pharmaceutical Research and Manufacturers of America (PhRMA) and 3. Biotechnology Innovation Organization (BIO). The Indian Pharmaceutical Alliance‘s submission is also linked to at the end. I don’t intend to analyze or comment on these submissions here, but merely point out what they’re focusing on, along with any other points of interest that are to be found.

1. The Intellectual Property Owners Association (IPO)

The IPO, as is to be expected, advocates for more pro-IP rights holders reforms. Interestingly, of their 30 page submission, more than half are dedicated to China and India alone (9.5 pages to China, and 6.5 pages to India). The thrust of their submission seems to focus on compulsory licensing and related areas like local working requirement and disclosure of foreign filings through Section 8 of the Patents Act. They also touch upon need to upgrade trade secret regime, desire to introduce patent linkage, IPAB issues, need for regulatory data protection, removal of price controls on drugs, and inconsistency in patent examinations. Most of these issues have been discussed to death on this blog and elsewhere, however there are two points in their document that IP researchers may find of interest.
First, they point out that there are Indian policies that encourage compulsory licensing (page 21 of their submission):

Section 4.4 of India’s National Manufacturing Policy discusses the use of compulsory licensing to help domestic companies “access the latest patented green technology.”42 This section creates the “Technology Acquisition and Development Fund” (TADF) to help in situations when a patent holder is unwilling to license, either at all or “at reasonable rates,” or when an invention is not being “worked” within India. TADF is empowered to request compulsory licensing from the Government of India.
Similarly, India’s National Competition Policy requires IP owners to grant access to “essential
facilities” on “agreed and nondiscriminatory terms” without reservation. The concept of
essential facilities appears to cover a broad range of technologies including at least “electricity, communications, gas pipelines, railway tracks, ports, [and] IT equipment.” The unconditional application of the essential facilities doctrine to such a broad technology landscape substantially decreases the value of the underlying IP and can undermine incentives for innovation.
Although other motives might be at play, the impetus to use compulsory licensing appears
directly tied to industrial policy. Even though not adopted, a 2011 discussion paper produced
by the Ministry of Commerce provides some insights. It explains that “compulsory licensing
has a strong and persistent positive effect on domestic invention.” The objective of the paper was “to develop a predicable environment” for compulsory licensing to be used.

I haven’t looked into these other policies myself, nor do I consider their presence irregular – but I would think it would certainly be interesting to look more into these provisions, whether they’ve been used, how they made their way into these documents, etc.

The other point of interest they bring up is in regard to inconsistencies in patent examinations.

“Additionally, the Indian Patent Office has reduced application pendency by, among other
measures, hiring additional patent examiners. Given its rapid hiring rate, however, the average patent examiner now only has 3.8 years of experience, which has anecdotally had a negative impact on examination consistency. “

They source this from the 2019 WIPO World Intellectual Property Indicators Report (page 51 here) where Indian examiners have the 2nd lowest average years of experience from a select group of countries. It doesn’t appear like this is stated as a criticism, so much as just an unfortunate fact. It however would be an interesting point of study, for a researcher to actually look into correlations between experience and inconsistencies (along with other relevant factors).
Finally, and given the increased importance that bilateral methods have been taking in international IP norm setting, I thought it was interesting that the Intellectual Property Owners Association (IPOA) also advocates that the US take a stronger role in multilateral fora (“member driven” organizations, as they call them) where they see IP rights as being increasingly weakened by countries, which they state, are making efforts to align IP norms with their industrial strategies. (I’m not sure if the irony is lost on them).

2. Pharmaceutical Research and Manufacturers of America (PhRMA)

PhRMA, perhaps the most well known Pharma trade group/lobby, has listed out their comments regarding India on pages 103-116 of their submission. They positively acknowledge the National IPR Policy, the Make-in-India initiative, the 2017 National Health Policy, and the Ayushman Bharath Scheme, while also pointing out that at a mere 1.5% of the GDP, India’s government spending on healthcare is one of the lowest in the world. They also point towards shortage of doctors, inadequate medical facilities, and inadequate insurance based health-care financing – though I’m unclear what this has to do with their IP concerns. Their IP concerns seem to be their usual ones:- Compulsory Licensing (which they, ironically, even call  “contrary to the spirit of the TRIPS Agreement” – p.109), Section 3(d) and pre- and post-grant oppositions as being restrictive, regulatory data protection, patent linkage (though they refer to it as: lack of transparency regarding patent status), high tariffs and taxes on medicines, and ‘discriminatory and non-transparent pharmaceutical pricing policies’ (again I’m not sure if they see the irony in that last complaint).  They also call for clarity on the ‘New Drugs and Clinical Trials Rules, 2019’ calling them discriminatory and ambigious. PhRMA makes positive notes about the 2019 Manual of Patent Office Practice and Procedure and the adoption of Patent Prosecution Highway (PPH) with Japan’s Patent Office.

3. Biotechnology Innovation Organization (BIO)

BIO discusses India in pages 34 – 38 of their submission, and appear to be a bit more aggressive than others, with their recommendation that India be placed not just on the Priority watch list, but also with an Out-of-Cycle Review. Their IP concerns are nearly identical to that of PhRMA’s, with the additions of wanting patents for plants (asking for an amendment to Section 3(j) of the Patents Act), and referring to concerns regarding counterfeit drugs, claiming that significant numbers are entering from Bangladesh and Sri Lanka.

Concluding thoughts

The Indian Pharmaceutical Alliance’s 25 page submission, effectively serves as a defense of the Indian IP regime and responds to several of the above criticisms. It is available here.

While the Special 301 Review comes out year after year, much like the GIPC reports, little seems to actually happen as a result of it – at least with regard to India. As mentioned above, this year’s report has the potential to have some effect due to a potential US-India bilateral trade agreement. At the same time, the current pandemic seems to have majorly shaken up views on patent-flexibilities and their necessities, with several calls around the world, including within the US, for more attention to be given to compulsory licenses, patent pools, and other less restrictive IP mechanisms.

Will this be a repeat of the Anthrax / Doha Declaration situation? There- the US had been pushing hard against a reading of TRIPS flexibilities which would allow African countries to use Compulsory Licences to deal with the AIDS epidemic (for eg, in South Africa, 1 in 5 people were estimated to be infected at the time US was putting enormous pressure on South Africa to repeal their Medicines Bill allowing compulsory licences). However, when the Anthrax scare hit US in 2001 (less than perhaps a dozen people were affected), it didn’t take them long to threaten Bayer AG with a compulsory licence-esque order. Naturally, this greatly affected US’ credibility on the international stage, and when the fourth WTO Ministerial Conference took place at Doha later that year, the Doha Declaration was signed. It explicitly acknowledged Member states’ rights to interpret the TRIPS Agreement in a manner conducive to their public health concerns. Will we now similarly see a more potent revival of public-health concerns vis-a-vis IP maximization attempts, due to the on-going pandemic? We can only wait and see.

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5 thoughts on “USTR Special 301 Review (2020) Submissions – Continued”

  1. If you’re going to quote the least one would expect is that it is done correctly with the context needed. PhRMA does not refer to CLs as such as “contrary to the spirit of the TRIPS Agreement,” but rather to India’s push in international fora “for the broad adoption and implementation of legislation that facilitates the use of CL.”

    You may of course (still) disagree with the criticism, but it follows the relevant and in my view accurate criticism of how CL is seen by some in India, e.g. ” Indian pharmaceutical companies routinely initiate requests for voluntary licenses under Section 84(6)(iv) of the Patents Act as a precursor to seeking a CL, reducing CLs to a commercial tool [.]”

    TRIPS aims to strike a balance — pursuing CLs as a commercial tool, which Natco stated in connection with the Nexavar CL, is surely not in the spirit of TRIPS.

    1. I do still disagree on a number of counts and i don’t think PhRMA’s context there makes their claim accurate by any standard. Nonetheless, fair point that others may want to see the whole text (which is also why i put in the page number.) Thanks for expanding on the line here for others who may be looking for it but are too lazy/busy to check it directly.

  2. Sandeep Kanak Rathod

    Companies may ask for CLs for any reason, but the IPO has steadfastly rejected any applications that were short of the requisite standard/ factual position. Please refer my paper, here: .

    I am very interested on the details on where / how Natco ‘raised’ as its CL being as a commercial tool. Any links would be much appreciated.


    1. The link to “your paper” is blank so there’s not much one could add. In its submission, PhRMA criticized the practice of Indian companies applying for CLs on grounds that go far beyond what was envisioned in TRIPS. I don’t believe PhRMA was arguing that CLs have been granted post-Nexavar, so in a sense the link to your paper is pointless.

      As for how Natco “raised” (?) CLs as a commercial opportunity, I take it you didn’t look but you could start with the company’s 2011-2012 annual report: “The Company needs to examine the possibility of fully exploiting the compulsory licensing mechanism and consider additional launches in the Oncology segment and other therapeutic segments to augment its revenues and profitability.” There’s more if you’re actually interested and able to use google. Indeed, CLs as a business opportunity was discussed on this very blog. (!)

  3. Sandeep Kanak Rathod

    Dear Sadly, No:

    A) The link to the paper is not appearing due to a fault/ limitation that I could not fathom. I can send out the paper, if needed.
    B) Thanks for the Natco Annual report reference – during my study for the paper, I only focused on binary aspect of whether the CLs were issued or not issued;
    C) It can be argued that companies did try to use the CL as a commercial weapon but I still stand to my position – regardless of hidden corporate intentions or not, the IPO ‘has steadfastly rejected any applications that were short of the requisite standard/ factual position’ – so let’s focus on that.
    Ultimately, the USTR report is on India’s IP policies; not on how some Indian companies may examine ‘the possibility of fully exploiting the compulsory licensing mechanism’.

    & yes, I will try and to improve my Google skills- never too late to start something.

    Thanks once again.


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