EFTA-India Free Trade Agreement and Patents Rules Amendment: Compromising Public Accountability and Transparency in the Indian Patent System

Recently, India and a group of 4 European countries- Iceland, Liechtenstein, Norway, and Switzerland (EFTA) signed a Trade Economic Partnership Agreement (TEPA) on a variety of trade related issues, including intellectual property rights. Significantly, the agreement requires India to make substantive changes to its provision obligating a patent applicant to furnish information about their foreign applications corresponding to their application in India. While there are multiple provisions in the agreement dealing with issues like trademarks and GIs (indicatively see here), we are pleased to bring to you this guest post by Prathibha Sivasubramanian and Sreenath Namboodiri focusing on the changes in the above obligation to share information about foreign applications and discussing the combined effect of these changes on transparency, public information system in the Indian patent regime, and public health. Prathibha Sivasubramanian is a law researcher working with TWN. She has been working in the field of access to medicines, patents and IP for more than a decade. She has been working on patent oppositions and was involved in patent challenges on key drugs including the Gleevec-Novartis case. Sreenath is an independent legal researcher and Adjunct Faculty of Law at Ramaiah Law College. His research focuses on intellectual property rights in relation to health systems, sustainable development and innovation, pharmaceutical patents, knowledge governance, and technology and law.

EFTA-India Free Trade Agreement and Patents Rules Amendment: Compromising Public Accountability and Transparency in the Indian Patent System

By Prathibha Sivasubramanian and Sreenath Namboodiri

The signing of the European Free Trade Association (EFTA)-India Free Trade Agreement (EFTA-India FTA) and the amendment of Patent Rules have serious implications in accessing affordable medicines, and on the accountability of and transparency in the Patent Office. The sixteen-year long negotiations with the EFTA process was finalised with a chapter on Intellectual Property in Trade and Economic Partnership Agreement (TEPA). To briefly point to much discussed worrisome provisions in the Annex of the Intellectual Property chapter:

1. Article 11.7 provides for dismissing pre-grant oppositions by the controller if they consider it to have been filed on unfounded grounds. This obviously will lead to allegations of arbitrariness and makes the office vulnerable to undue influence.
2. Article 12, along with the recent amendments to the Patent Rules, restrict the obligation to disclose the “working” statement., This could make it harder to force companies to license patents if they are not being used to make affordable products in India. And further restricting policy levers such as compulsory licensing.

 Among the developments outlined in the text, the most worrying yet least discussed is the potential impact of this FTA on the applicability of Section 8 of the Patent Act. Such consequences could significantly undermine the accountability and transparency of the Patent Office, particularly when considered alongside the recently amended Patent Rules. This analysis concerns modifications to Section 8 and its Rules, and their impact on the transparency and accountability of the patent office.

Section 8 and the Transparency of Indian Patent System

According to Section 8 of the Indian Patents Act, patent applicants must regularly disclose to the patent office any same or substantially similar foreign applications corresponding to their patent applications for Indian inventions, and any updates relevant to their prosecution. Justice Ayyangar advocated for the inclusion of Section 8 to promote honest and open disclosure. He opined that it also serves as a vital resource for patent examiners, enabling them to make informed decisions based on developments in other jurisdictions. Further, Section 8 is not solely for the benefit of examiners. It also serves the public interest by providing valuable information about the statuses of similar or substantially identical patent applications and fostering transparency in the patent office’s operations and encouraging further scrutiny in case of any rejection or abandonment in foreign countries.

As per the earlier Rules, under Section 8, patent applicants are obliged to provide updates every six months from the date of filing the foreign application. This obligation is continuous, and requires regular updates on foreign applications. Failure to comply with Section 8 is a ground for opposition and could lead to rejection of the application, or revocation of patent, due to omission or non-disclosure of information. The amended Rules reduce the time of filing the statement from every 6 months to 3 months from the date of issuance of the first statement of objections. Thereafter the applicant has to file the statement only if required by the Controller. Besides that, amended Rules state that the “Controller may, use accessible and available databases, for considering the information relating to applications filed in a country outside India.” (The implications of the amended Rules and TEPA are discussed later in the post.)

In the Chemtura judgement (2009) concerning section 64(1)(m) (revocation for not furnishing Section 8 information), The Court emphasized on strict interpretation and application of the obligation. However, in 2014, the Delhi High Court in Sukesh Behl V. Koninklijke Philips Electronics significantly narrowed the scope of this provision by introducing the ‘wilful and deliberate’ test. Some experts suggest that the 2014 ruling aligns Section 8 more closely with the ‘Inequitable conduct’ defence in US patent law, due to its similarities in jurisprudence.

India-EFTA and Patent rules : How it hurts Section 8.

The EFTA-India Agreement saw India relinquishing an opponent’s statutory right to utilize it as ground for opposing an application, along with the Controller’s authority to reject applications for non-compliance with Section 8.

Article 13.2 of the EFTA-India FTA states that “A Party may require a patent applicant to provide information concerning the applicant’s corresponding foreign application and grants. A mere failure to comply with this requirement, may not result in revocation of or refusal to grant a patent, except where the competent authority determines there is deliberate or wilful suppression of information.” This provision dilutes Section 8 of Indian Patent Act by adding a mental element to the failure of providing details of foreign prosecution. i.e. to prosecute under section 25(1)(h) there should now be a “deliberate or wilful suppression of information”. 

The Agreement should be seen in light of recently published amended Patent Rules. The amended Rule 12(3) states that “The Controller is responsible for overseeing the progress of related applications using information that’s publicly accessible. If necessary, the Controller can request further details from the applicant, provided a written explanation is given”. Similar language is incorporated in Article 13.3 of the EFTA-India FTA.

As compliance with the Section 8 requirement is mandated by the Act, any alteration to this provision—be it removal, dilution, or deletion as a ground of opposition—would necessitate an amendment to the Act. Consequently, an amendment to the statute can be anticipated in the near future.

Both the provisions show a stark divergence from the current provision, where the legal burden of foreign filing information lies with the applicant. Transferring this burden to the Controller would shift a private obligation of the patentee to the government as a public duty. These provisions in the Rules and the Agreement are likely to create obstacles and raise significant concerns regarding the transparency and accountability of the patent office. For the effective patent examination and decision-making, it is imperative that examiners and the Controller are equipped with all pertinent information. However, the patent office may often lack access to necessary data from diverse sources, including information held by the patent applicant, during the patentability assessment process. Given India’s adoption of higher standards of patentability criteria, knowledge of any rejections or abandonment of similar applications serve as a valuable cautionary indicator for the Controller, empowering them to seek further insights from the applicant. At the least, India could prevent granting patents to frivolous and low-quality patents. In countries like the United States and China (paywalled), a significant volume of patent applications is submitted (as per the latest report) and approved, raising considerable doubts about the quality of these patents.

The absence of verifiable information accessible through Section 8 may likely lead to approval of frivolous applications, depriving the general public access to affordable innovations, and may particularly impact areas like public health. The table below demonstrates that despite the provision, numerous applications have been granted patents despite the suppression of crucial information about their corresponding foreign applications, highlighting a lack of oversight by the Patent Office.

Name of the drug	Patent/Application Numbers	Relevant Information Not Disclose
Deuterated Ruxolitinib	10670/DELNP/2014	Form 3 failed to reveal that the patent was invalidated in the US
Bedaquiline	220/DELNP/2005	The Form 3 failed to reveal that the patent was rejected in Egypt (EG2003070704)
Daridorexant	9366/CHENP/2014	The corresponding Eurasian Patent EA028046 had ceased to exist. Form 3 failed to disclose the information about the cessation.
Osteseconazole	6792/DELNP/2014	The corresponding Australian application AU2013209516 was abandoned, but Form 3 has not reflected it and states pending.
Delamanid	IN9790/DELNP/2007	The corresponding Egyptian application (EG2008000154) was rejected and the Argentina application (AR055357) was discontinued.
Afatinib	IN2029/DELNP/2006	The corresponding Egyptian (EG2006040335) was rejected, German Application (DE10349113A1) was withdrawn, applications in Peru (PE20100267) and Argentina (AR046118) were withdrawn however Form 3 only gives only a list of application and not their status.
This table is prepared based on the disclosures in the Form 3 of a particular application uploaded on the IPO website.

The information regarding the above applications were available in public databases, yet the Indian Patent office did not verify it.

Section 25(1)(h) provides a ground to oppose a patent application for non disclosure of Section 8 information or if the furnished information is false. EFTA-India FTA undermines this lever . Additionally, mandating the patent office to rely on publicly available websites shifts the burden of obtaining the information on corresponding application from the Applicant to the Controller. It’s crucial to note that not all public databases are readily accessible. For example, IP websites in countries such as Brazil, Korea, Indonesia, Malaysia, and China pose linguistic barriers, and some require login, username and password and a local mobile number for access. Moreover, in certain countries, prosecution details are in a foreign language, rendering them inaccessible. Patent-Scope, a public database managed by WIPO (World Intellectual Property Organisation) does not often provide updated information. Further, the global dossier lacks information from countries such as Brazil, Korea, or Egypt. Further it is important to understand that WIPO CASE(Centralized Access to Search and Examination) and WIPO Digital Access Service (DAS) are not public databases as they are not accessible to the public.

The applicants argue that Section 8 is a compliance burden and if we are to assume any merit in the argument, then the question is whether there is any comparative advantage by shifting the burden. Even if we assume the Controller can access the same level of credible information through public databases, it can always be disputed by the applicant. On the other hand if the same information is provided by the applicant then it is only a matter of verification by the Controller, thereby reducing the litigative nature of such information gathered.

Conclusion

Weakening Section 8 risks patent quality, discourages accurate disclosure of information about the relevant foreign applications, harming consumers.

Hence, it is crucial for us to reconsider the patent rules, taking into account the altered circumstances brought about by the TEPA agreement, which introduces Section 25(1)(h) as an opposition ground and necessitates enabling an active implementation of Section 64(1)(m). Our recommendation is to amend Rule 12, to include a sworn affidavit that all foreign patent prosecutions and their statuses, as updated to the patent office, are conclusive and comprehensive to the best of the knowledge of inventors and right holders. A rule can be introduced, whereby giving false or suppressing information under the affidavit could attract unliquidated damages for loss of time and resources of the patent office. This will ensure that if the company was aware of certain foreign patent proceedings but failed to disclose them to the Patent Office, a mental element can be assumed through an affidavit by default.

It’s crucial to uphold the safety net established by the pioneers of our patent law to balance the rights of the holder with the public’s interests. This is especially vital as technology advances rapidly while the law struggles to keep up.