PRODUCT VERSUS PROCESS PATENTS

[Term Paper Submitted Towards The Fullfilment Of A Project Of The Total

Assessment]

SUBMITTED TO: SUBMITTED BY:

Dr. Gargi Chakrabarti Parikshit Shukla

Associate Professor Roll no. 1281
Faculty of Law SectionA
National law University, Jodhpur

July 2017- November 2017

Summer Semester
 2

I. TABLE OF CONTENT

I. TABLE OF CONTENT ....................................................................................... 2

I. PRODUCTS VERSUS PROCESS PATENTS .................................................. 3

A. INDIA AND THE INTERNATIONAL PATENTING SYSTEM ......................................... 3

II. DISTINCTION BETWEEN PROCESS AND PRODUCT PROTECTION.. 5

A. PATENT IN GENERAL:.......................................................................................... 5
B. FUNDAMENTAL PRINCIPLES UNDERLYING THE PATENT LAW IN INDIA: .............. 5
C. THE DISTINCTION BETWEEN PRODUCT AND PROCESS PATENT: ........................... 6

III. THE CONFLICTS BETWEEN DEVELOPED AND DEVELOPING

COUNTRIES: ............................................................................................................ 11

IV. COMPULSORY LICENSING AND THE PRODUCT BASED IPR

REGIME ..................................................................................................................... 11

V. SCOPE OF AMBIGUITIES IN THE LEGISLATION: ................................ 13

VI. INDIAS COMPLIANCE WITH THE TRIPS ........................................... 15

A. MAKING THE PATENT LEGISLATION IN COMPLIANCE WITH TRIPS
15
B. MAIN FEATURES OF THE TRIPS SYSTEM ........................................................... 15
C. SALIENT FEATURES OF THE PATENTS (AMENDMENT) ACT 2005 RELATED TO

PRODUCT PATENTS: ................................................................................................... 17

VII. RIGHTS OF A PATENTEE UNDER PRODUCT AND PROCESS

PATENT ..................................................................................................................... 18
D. ELEMENTS OF THE RIGHT: ................................................................................. 19

VIII. CHAPTER 4 ................................................................................................... 20

A. ISSUES IN THE NEW REGIME OF PATENT LAW IN INDIA.................... 20

IX. CONCLUSION .................................................................................................. 24

 3

I. PRODUCTS VERSUS PROCESS PATENTS

A. INDIA AND THE INTERNATIONAL PATENTING SYSTEM

Consequent to India becoming signatory to TRIPS in 1998, the patent laws and rules

have been amended with the latest amendments taking effect from May 5, 2006. The

Annual Report of the Indian Patent Office (IPO) states that the TRIPS compliant

intellectual property laws in India coupled with strong enforcement mechanism and

judicial system created the best investment opportunities and conducive environment

for protection of IP rights in order to enable the business community to diversify their

commercial activities.1

India was not a party to the Paris Convention on Industrial Property 1883, which is the

embodiment of main principles of international patent system. India joined the Paris

Convention on December 7, 1998.2 With India joining the Paris convention, the focus

of revising the international patent system shifted to the General Agreement on Trade

and Tariffs3 and on its Uruguay Round of Negotiations.4 India played a crucial role in

these negotiations whilst with little success particularly with regard to the evolution of

the principles of IPR protection in TRIPS Agreement.5

India had joined the World Intellectual Property Organization (WIPO) in 1975. WIPO

provided institutional framework to the Paris Convention. India, along with other

developing countries, was not in favor of evolving uniform standards for the protection

of patents in the Uruguay Round of Negotiations. It had taken the view that the

Negotiating Group should not deal with questions of what should be the proper level of

1
Annual Report 2009-10, Annual Report Of The Office Of The Controller General Of Patents,
Designs, Trade Marks And Geographical Indication June 2011.
2
Bimal N. Patel, India and International Law, (1st Edn.), at p. 93.
3
General Agreement on Trade and Tariffs (GATT)
4
Uruguay Round of Negotiations-
5
Agreement of Trade-related Aspects of Intellectual Property Rights.
 4

protection of IPRs, but should confine itself to the negative effects on international trade

of the implementation of existing laws and treaties for the protection of IPRs.

There are five uniform standards as per Article 27 of the TRIPS Agreement, namely

a) Availability of patents for all kinds of inventions;

b) Patents to be granted in all fields of technology, whether processes or products;

c) Inventions to be patentable should fulfill the criteria of novelty, inventive step

and industrial applicability;

d) Patents should be available and patent rights and patent rights enjoyable without

discrimination as to the place of invention, the field of technology; and

e) Patents granted irrespective of products importation or local production.6

With the coming into force of the WTO regime on IPRs on 1st January 1995, India had

a marginal space to accommodate its concerns. It should be remembered that

amendment to Patent Act in 2005 was taken not particularly to meet the immediate

needs and aspirations of the people of India; it was adopted because of the compulsion

of TRIPS and to be able to discharge the obligations that India has undertaken under

the WTO.

6
Bimal N. Patel. Supra Note 4 from above.
 5

II. DISTINCTION BETWEEN PROCESS AND PRODUCT PROTECTION

A. PATENT IN GENERAL:

According to World Intellectual Property Organization (WIPO),7 intellectual property

refers to the product of the mind: inventions, literary and artistic works, any symbols,

names, images, and designs used in commerce.8

Patent protection means that the invention cannot be commercially made, used,

distributed or sold without the patent owners consent. A patent is a limited monopoly

that is granted in return for the disclosure of technical information. 9 A patent is a right

to exclude others from making, using, selling or offering for sale the subject matter

defined by the claims. In order to exclude someone from using a patented invention in

a court, the patent owner, or patentee, needs to demonstrate that what the other person

is using falls within the scope of a claim of the patent. Therefore, it is more valuable to

obtain claims that include the minimal set of limitations that differentiate an invention

over what came before, i.e. the so-called prior art. On the other hand, the fewer the

limitations in a claim, the more likely it is that the claim will cover or "read on" what

came before and be rejected during examination or found to be invalid at a later time

for lack of novelty.10

B. FUNDAMENTAL PRINCIPLES UNDERLYING THE PATENT LAW IN INDIA:

The fundamental principle of the Patent Law is that patent is granted only for an

invention which must have novelty and utility. 11 The mere mixture of two known

7
Established in 1970, the World Intellectual Property Organization (WIPO) is an international
organization dedicated to helping ensure that the rights of creators and owners of intellectual property
are protected worldwide, and that inventors and authors are therefore recognized and rewarded for their
ingenuity.
8
Jennifer Davis, Intellectual Property Law, (2nd Edn.), at p. 2.
9
L.Bently And B. Sherman, Intellectual Property Law, (2nd Edn.) at p. 323.
10
Ein, Patent, Utility Models, (Last accessed on March 15, 2014), text available at
http://www.einpat.com/strengths/intro1.html?mname=strengths.
11
Bishwanath Prasad Radhey Shyam V. Hindustan Metal Industries, AIR 1982 SC 1444.
 6

substances or a collocation of two or more things without some exercise of the inventive

faculty in combining them is not subject-matter for a patent.

In Lallubhai Chakubhai Jaiwala v. Chimanlal, the court held that in case of a

combination the inventor might have taken a great number of principles, which are

common knowledge and acted on a number of principles, which are well known. If he

had tried to see which of them, when combined produce a new and useful result, and if

he succeeds in ascertaining that such a result is arrived at by a particular combination,

the combination will, generally speaking, afford subject-matter for a patent.12

There can be only one single patent in case of a single invention. A patent may be in

respect of a product or in respect of process. A patent cannot be bifurcated and state

that a certain part is in relation to the substance and the other to the process. The

specifications and the claims must be clearly and distinctly mentioned to have a

complete patent.13

C. THE DISTINCTION BETWEEN PRODUCT AND PROCESS PATENT:

After the amendment to the Indian Patents regime in the year 2005, both forms of patent

are available in India provided it satisfies the patentability criteria it would be

appropriate to understand the distinction very clearly.14 The difference between these

two types of patent matters only in case of invention in the chemical field. The basic

rationale behind the grant of a patent for the process for the preparation of a product is

that the said product can be manufactured by a totally new, different and innovative

method.

12
Lallubhai Chakubhai Jaiwala v. Chimanla AIR 1936 Bom 99 at p. 104-105.
13
Imperial Chemical Industries Ltd. v. Controller General of Patents, Designs & Trade Marks, AIR
1978 Cal 77.
14
KM Gopakumar, Third World Resurgence No. 273, May 2013, pp 17-21. Available at
http://www.twnside.org.sg/title2/resurgence/2013/273/cover03.htm.
 7

When one refers to a patent as product patent it means that he has developed a new

product. Similarly, when one refers a patent as process patent, it implies that he has

developed a new and improved process for producing a known product. In the case of

a product patent, one will have claims (defining the area of the legal protection) for the

new product and if he desires can also have claims for the process for preparing the said

product. Of course if he does not claim the process is mandatory that the process for

the preparation of the new product should be disclosed in the text of the document

(specification).

Whereas, in the case of a process patent, one can have only claims for the process and

not for the product, as the product prepared by the said process is already known and

therefore there is no novelty in such a product.

With the coming into force of the product patent regime in India only those products

which are new on the date of filing of the application for patent for that product will be

patentable and not others. The exception to this fact is the WTO applications (meaning

those applications claiming new pharmaceutical/agricultural chemical products), which

have been filed since 1-1-1995. In other words, the products which are already known

prior to 31-12-2004 (except the above said WTO applications) cannot be patented, as

their novelty has been lost.

The process patent regime of developing nations does not protect the product; instead

the method or the process of making the product is protected to the exclusion of the

product. Hence, identical products can be produced by several manufacturers who each

hold a process patent. Protecting innovative processes encourages innovation in the

methods of making known products, although the lack of product patent protection

stunts the research and development of new products. Most developing countries

encourage the use of process patents for food, drug, and pharmaceutical products, as
 8

well as chemical processes.15 Developing countries have used the flexibility afforded

by process patents to innovate cheaper methods of making expensive patented products,

such as pharmaceuticals. They tend to keep inventions in critical subject matters, like

food, drugs, and chemicals, away from product patent protection in order to increase

market competition through process innovations, cater to public health, and address

other social concerns.16

In case of process patent, patents are confined to the use of that particular process of

preparing the product only. Therefore, anyone else can develop an alternate process and

if it satisfies the criteria of patentability, he can secure a patent for the alternate process.

In this context, it should be noted that in this case the product obtained by the processes

is already known. Therefore, nobody gets the protection for the said product and hence

the commercial production of the said compound by the alternate process is possible

without the fear of any infringement, even though there is patent for another different

process of preparing the same substance is in force in the same country. The possession

of a patent confers on the patentee not merely certain valuable monopoly rights and

privileges, but also certain obligations and duties.17

It is also to be noted that if the alternate process for a product developed is very efficient

and the said product is very useful having good commercial potential; the two different

patent holders for the respective inventions (one for the product and another for the

15
For example, the Indian Patents Act reads as follows:
In the case of inventions:
(a) claiming substances intended for use, or capable of being used, as food or as medicine or drug, or
(b) relating to substances prepared or produced by chemical processes (including alloys, optical glass,
semi conductors and inter metallic compounds), no patent shall be granted in respect of claims for the
substance themselves, but claims for the methods or processes of manufacture shall be patentable.
Patents Act of 1970, 27 India A.I.R. Manual 450 5 (1979) [hereinafter Indian Patents Act].
16
Srividhya Ragavan, Cant We All Get Along? The Case for a Workable Patent Model, 35 ARIZ. ST.
L.J. 117, 13537 (2003); Judy Reh, International Governance Through Trade Agreements: Patent
Protection for Essential Medicines, 21 NW. J. INTL L. & BUS. 379, 40003 (2001).
17
P. Narayanan, Patent Law, (Eastern Law House, 1998 4th Edn.), at p. 264; Trivedi, P.R.
Encyclopedia of intellectual property rights. Volume 1. (2008). Jnanada Prakashan (P&D) In
association with Indian Institute of Intellectual Property Rights. New Delhi, P. 2614.
 9

improved process) can come together and have a joint agreement (cross licensing) and

bring the new product to the market and share the profits amongst themselves. Such an

exercise will benefit the society at large, in getting the fruits of the research work and

will, instead of hampering research and development (R&D) in developing alternative

processes for a product, under the product patent regime, will enhance developmental

activities.

It is very important to note that in many countries including India, the patent law

excludes certain inventions from being patented. This includes an invention, which is

1. frivolous or contrary to well established principle of natural laws.

2. An invention, commercial use of which could be contrary to public order or

morality or

3. which causes serious prejudice to human, animal or plant life or health or to the

invention.

4. It explicitly excludes mere discovery of a scientific principle or the formulation

of an abstract theory.

5. The mere discovery of a new form of a known substance which does not result

in the enhancement of the known efficacy of that substance or the mere

discovery of any new property/use of a substance, machine, or apparatus unless

such known process results in a new product or employs at least one new

reactant.

6. The mere arrangement or re-arrangement or duplication of known devices each

functioning independently of one another in aknown way.

7. A method of agriculture or horticulture; any process for the medicinal, surgical,

curative, prophylactic diagnostic, therapeutic or other treatment of human

beings or any process for a similar treatment of animals to render them free of
 10

disease or to increase their economic value or that of their products cannot be

called an invention as per Indian law.

8. Any plant or animal in whole or any part thereof other than micro organisms

but including seeds, varieties and species and essentially biological processes

for production or propagation of plants and animals.

9. Moreover, an invention which in effect, is traditional knowledge or which is an

aggregation or duplication of known properties of traditionally known

component or components.18

The lawmakers have kept this in mind that India is a pro-agricultural country and

therefore excluded methods of agriculture and horticulture.19

In India, the inventions for which patents can be secured is defined in Section 2(1)(j)(ja)

of the Act. The term process may be defined as one or more steps or acts performed

on materials / substances to produce a result (product/composition/material/substance).

The process should be regarded as an artificial process or operation of an industrial

nature wherein certain starting materials/substances are subjected to the process or

operation to convert the starting materials/substances in such a manner to produce a

new or known and useful article or substance or substance or product which is tangible.

If the starting materials/substances used in the process remains unaltered and the

resulting product also remains the same as the starting materials/substances, then, the

process may not be an invention for which patent protection can be secured.20

TRIPS standardizes the product patent regime by providing a uniform international

norm. 21 TRIPS favors the product patents since developed nations argue that the

18
Section 3 of the Patents Act, 1970 of India.
19
Section 3(h) of the Patents Act, 1970 of India.
20
Janice M. Mueller, Patent Law, pg. 232, 3rd edition, (NY: Aspen Publications, 2009).
21
Article 27, Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994, 33
I.L.M. 81.
 11

exclusion of the product in the process patent regimes distorts international trade by

allowing duplication of the patented product using different processes.22 The rhetoric

of the developed nations has been that the product patent regime provides more

effective protection and prevents all forms of duplication. TRIPS, however, does not

suggest any particular claiming mechanism or procedures to provide effective patent

protection. Essentially, TRIPS deprives developing countries of the flexibility to

exclude subject matters like food, drugs, and chemicals from product protection.23

III. THE CONFLICTS BETWEEN DEVELOPED AND DEVELOPING

COUNTRIES:

The TRIPS mandated IPR regime provided for the strong protection of the IPR through

dictating the grant of the product patents. As it was realized that such a grant of the

product patent may end up conferring a monopoly on the patentee to the exclusion of

others. Such a move was staunchly opposed by the developing countries also. Thus to

combat such an abuse of the monopoly rights by a patentee and to make developing

countries yield to the TRIPS regime, provisions for the compulsory grant of license was

also provided.

IV. COMPULSORY LICENSING AND THE PRODUCT BASED IPR REGIME

To put it simply, Compulsory License is a statutory mechanism to effectively protect

public interest from possible abuse of monopoly by the patentee.24 The Indian Patents

22
Robert Pechman, Seeking Multilateral Protection for Intellectual Property: The United States
TRIPs over Special 301, 7 MINN. J. GLOBAL TRADE 179, 183 (1998).
23
Srividhya Ragavan, A Patent Restriction On Research & Development: Infringers Or Innovators?,
(Last accessed on March 15, 14), available at
http://www.soonerlawyeronline.org/faculty/facfiles/patent_restriction.pdf.
24
Dr. Dhanlakshami Iyer & Dr.P.G.Yeole, A Perspective on Compulsory Licensing Provisions,
The Pharma review ( July-August 2011)
 12

Act provides that after three years have passed from the date of sealing of the patent,

and application can be made to the Controller of Patents by interested person for grant

of a compulsory license to work the patented invention on the grounds that the

reasonable requirements of the public with respect to the patented invention have not

been satisfied or that the patented invention is not available to the public at a

reasonable price.25

TRIPS regime also provide for such a grant of compulsory license without the

authorization of the right holder. 26 It is pertinent to note that the TRIPs Agreement

places its emphasis on obtaining authorization from the right holder on reasonable

commercial terms before granting such a compulsory license and if the government

fails in its endeavor, it does allow this grant of compulsory license in the circumstances

of extreme emergency or in cases or public non-commercial use. The corresponding

provision in the Indian legislation empowers the Central Government to grant

compulsory licenses in special circumstances.27 Indian Patents Act also empowers the

Controller to grant compulsory license for the manufacture and export of patented

pharmaceutical products to any needy country if compulsory license has been granted

in that country. 28

The Act had originally contained in it two important grounds for invocation of

Compulsory Licenses. As it was provided in the Act, for the invocation of a compulsory

license, any interested person could have approached the Controller of Patents to seek

a Compulsory License on grounds that

a. The reasonable requirements of the public with respect to the patented

inventions have not been satisfied, and

25
Section 84 of the Indian Patent Act, 1970
26
Article 31 of the The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)
27
Section 92 of the Indian Patents Act, 1970
28
Section 92A of the Indian Patents Act, 1970
 13

b. Patented invention is not available to the public at reasonable prices.

The amended provision contained in Section 84 of the Act now includes in it a third

ground i.e. of local working for seeking Compulsory Licenses. It means that if the

patented invention is not worked within the territory of India, it can be made a ground

to seek Compulsory License by any interested person.

V. SCOPE OF AMBIGUITIES IN THE LEGISLATION:

The law as it originally stood did contain a provision that the reasonable requirements

of the public is deemed not to have been met, if for reason of the default of the patentee

to manufacture in India the patented article, or not to give a license for the manufacture

of the patented article the interests of the existing trade or industry is adversely affected.

In addition to the above, under the provisions of the Indian Patents Act, 197029 Central

Government can issue notification for the grant of compulsory licenses, at any time

after the sealing of patent, in the case of national emergency or extreme urgency or

public non- commercial use. Also under the act, the Controller of Patent is required

to endeavor to ensure that the patented invention is available at the lowest price

consistent with the patentees deriving reasonable advantage from their patent rights.

Moreover, subsection (3) of the same Section provides that in circumstances of

national emergency, extreme urgency or public non-commercial use including

health crisis relating to AIDS, HIV, tuberculosis, malaria or other epidemic, the

controller is not required to afford an opportunity of opposition to the patentee.

Difficulties are bound to arise in the interpretation of the meaning and extent of the

grounds on which Compulsory Licenses can be sought as the grounds enumerated for

29
Section 92 (1) of the Indian Patents Act, 1970
 14

the grant of the compulsory license are not well defined. Various expressions such as

National Emergency and Extreme Urgency are nowhere defined and it can only be

inferred that these terms refer to situations of grave magnitude.30

Thus the decision to grant compulsory license in the Indian legislation is vested in

the hands of the Controller who on being satisfied that reasonable requirements of

the public with respect to the patented invention have not been satisfied or that

the patented invention is not available to public at a reasonable price, may order the

patentee to grant a license on such terms as he deems fit. The Patents Act has the

following grounds for invocation of Compulsory Licenses:

i. The reasonable requirements of the public with respect to the patented

inventions have not been satisfied.

ii. Default of the patentee to manufacture in India the patented article, or not to

give a license for the manufacture of patented article the interests of the existing

trade or industry is adversely affected.

iii. Patented invention is not available to the public at reasonable prices.

iv. National emergency or extreme urgency or public non-commercial use.

The amended provisions have broadened up the grounds for seeking Compulsory

Licenses. Difficulties may arise in the interpretation of the meaning and extent of the

grounds on which Compulsory Licenses can be sought. The expressions national

emergency and extreme urgency are nowhere defined though it may be inferred that

these terms refer to situations of grave magnitude.

30
National emergency can take the form of perceived terrorist attack using biological warfare. For
instance, in the year 2001 Canada overrode Bayer Corporations patent over Ciprofloxacin and ordered
production of a million tablets of generic version from a Canadian company. Ciprofloxacin was
stockpiled as an antidote for any attack on the nation using the deadly Anthrax. See: Patent protection
versus public health, The Lancet, The Lancet, Volume 358, Issue 9293, Page 1563, 10 November 2001
Next Article> doi:10.1016/S0140-6736(01)06633-8
 15

VI. INDIAS COMPLIANCE WITH THE TRIPS

A. MAKING THE PATENT LEGISLATION IN COMPLIANCE WITH TRIPS

The main features of the un-amended Patents Act 1970 were as follows:

i. No product patent system for pharmaceuticals, food and chemical-based

products: These industrial sectors were covered by only process patent. (Section

5).

ii. Term of the process patent was 7 years from the date of application or 5 years

from the date of sealing of patent whichever period was shorter. (Section 53).

iii. A system of licensing of right was provided for the sectors covered by the

process patent (Section 87 &88) in order to ensure effective role of the domestic

enterprises in the patented product,

iv. No constraint on exports of pharmaceuticals and other products.(Section

90(a)(iii)).

v. An obligation to work the patent in country for the patent holder. There was also

a provision for revocation of patent for non-working. (Section 83).

vi. For licenses of right, the royalty ceiling was stipulated at 4 per cent of the net

ex-factory sale price in bulk of the patented article. (Section 88(5)).

B. MAIN FEATURES OF THE TRIPS SYSTEM

The main features of the TRIPs patent system are as follows:

 16

i. TRIPS mandate patent protection for any inventions whether products or

processes in all fields of technology provided that they are new, involve an

inventive step and are capable of industrial application.31

ii. The foreign patent holders have been absolved from working of their patents.

The imports by them are to enjoy the same patent rights without discrimination

as to the place of invention, field of technology and whether the products are

imported or locally produced.32

iii. The term of all product or process patents will be 20 years from the date of

application.33

iv. There is no licensing of right provision. The compulsory license provisions

are having tight conditions for meeting domestic demands.34

v. Exports will also have practical difficulties, as only those enterprises that are

already producing the concerned patented product will be able to meet the

export demands.35

vi. There is no royalty ceiling for compulsory licenses. The royalty payment will

have to be based taking into account the economic value of the authorization.36

For the least-developed countries (LDCs) the transition period will remain

in force for pharmaceutical patents and data protection at least until 2016 under

Article 66.1 of TRIPS under paragraph 7 of the Doha Declaration.

31
Article 27 of the TRIPS
32
Ibid
33
Article 33 of the TRIPS
34
Article 31 of the TRIPS
35
Ibid
36
Ibid
 17

C. SALIENT FEATURES OF THE PATENTS (AMENDMENT) ACT 2005 RELATED TO

PRODUCT PATENTS:

i. Extension of product patent protection to products in sectors of drugs, foods

and chemical.

ii. Term for protection of product patent shall be for 20 years.

iii. Introduction of a provision for enabling grant of compulsory license for export

of medicines to countries which have insufficient or no manufacturing capacity;

provided such importing country has either granted a compulsory license

for import or by notification or otherwise allowed importation of the

patented pharmaceutical products from India (in accordance with the Doha

Declaration on TRIPS and Public Health)

iv. A new provision has been introduced that provides that the mere discovery of

a new form of a known substance which does not result in the enhancement of

the known efficacy of that substance or the mere discovery of any new property

or new use for a known substance or of the mere use of a known process,

machine or apparatus unless such known process results in a new product or

employs at least one new reactant, shall not be patentable.

In 1999, India brought in the mailbox facility for product patent application and the

grant of Exclusive Marketing Rights in the interim period. With the Second

Amendment in 2002, India brought in the provision relating to rights of patentee,

term of patent, compulsory licensing and reversal of the onus of proving the violation

from the affected party to the accused party. And finally in 2005, the product

patents were extended in all fields of technology, particularly food, drugs and

pharmaceuticals. There is no doubt of the possible conflict of private rights and public
 18

interests when it comes to patenting of food, drugs and pharmaceuticals as it concerns

the basic necessities of life of a large number of people living below the poverty line.37

However, with the third amendment, Parliament has not only complied with

TRIPS obligations but has attempted to do the balancing of private monopoly and

public interest by using flexibilities under TRIPs Agreement such as compulsory

Licensing in case of emergency situations (section 92) compulsory Licensing for

export to countries with no manufacturing capacity (Section 92 A), use of invention

for the purpose of the government (section 102) or the research and

experimentation exception which is provided in section 47, revocation of patent in

public interest (section 66). These in the authors view represent significant measures

if used imaginatively for balancing private rights with public interests, the object being

to make drugs accessible and affordable.

VII. RIGHTS OF A PATENTEE UNDER PRODUCT AND PROCESS PATENT

1. A patent grant gives the patentee the exclusive right to make or use the patented

article or use the patented process. As a consequence flowing from this he can

prevent all others from making or using the patented article or using patenting

process.

2. A patent monopoly not only entitles the holder to exploit the invention without

competition during the period of patent protection; it also enables him to enter

the market, on the expiry of the monopoly in strong position.38

37
V.K. Unni, Indian Patent Law and TRIPS: Redrawing the Flexibility Framework in the Context of
Public Policy and Health, IIM Calcutta. Available at <
http://www.mcgeorge.edu/Documents/Conferences/GlobeJune2012_IndianPatentLaw.pdf>

38
American Cyanamid v. Ethicon (1975) AC 396 at p. 410
 19

3. A patentee also has the power to assign the patent, grant licenses under, or

otherwise deal with it for any consideration. These rights created by statute are

circumscribed by various conditions and limitations.39 According to section 48

of the Indian Patent Act, 1970, a patent granted under this Act shall confer upon

the patentee:

a) Where the subject-matter of the patent is product, the exclusive right to prevent

third parties, who do not have his consent, from the act of making, using,

offering for sale, selling or importing for those purposes that product in India.

b) Where the subject-matter of the patent is a process, the exclusive right to prevent

third parties, who do not have his consent, from the act of using that process and

from the act of using, offering for sale, selling, or importing for those purposes

the product obtained directly by that process in India.

D. ELEMENTS OF THE RIGHT:

1. The right conferred under this section is an exclusive right, whether product or

process.

2. No third party can exercise the patentees right without the patentees consent.

3. The rights conferred, in respect of a product patent, are the act of making, using,

offering for sale, selling or importing for those purposes the patented product in

India.

4. In respect of a process patent, the act of using that process, using, offering for

sale, selling or importing for those purposes the product obtained directly by the

process in India.

5. The product obtained by using the patented process is not one in respect of

which no patent shall be granted under this Act.40

39
P. Narayanan, Supra note 20.
40
Ibid at p. 254.
 20

VIII. CHAPTER 4

A. ISSUES IN THE NEW REGIME OF PATENT LAW IN INDIA

Indias full-scale TRIPS compliance raises several critical issues from an access to

medicines perspective.41 We can discuss these issues point by point:

i. The issue of price increases: The Indian public is concerned that massive price

increases of the pharmaceutical products following patent reform to comply with

TRIPs will pre-empt widespread access to valuable pharmaceuticals. The process

patent system allowed GENERIC DRUGS. The product patent regime would

disallow such production and trade. To except developing countries to accept

such price spirals without adequately addressing their concerns of access to cheaper

medicines to fight life threatening diseases, particularly in a public health

emergency, seems unfair. 42

a. As far as the anti-AIDS drug prices go, the government will always have

the power to intervene and come up with a desirable pricing policy, if prices

move up.

The Indian government has gone on record to say that the fears of spiraling of drug

prices is unfounded as 97 per cent of the drugs sold in India are off-patent. There are

alternatives available to the government to ensure availability of patented products

at affordable prices.

b. The important fact is that drugs which are already being manufactured as

generics will not be eligible for patents. Hence fears that in the future all drug

prices will be higher appear unfounded.

41
INDIAS PRODUCT PATENT PROTECTION REGIME:
LESS OR MORE OF PILLS FOR THE POOR?,Padmashree Gehl Sampath, UNU-Working Paper
Series. Available at < http://arno.unimaas.nl/show.cgi?fid=4610 >
42
Effects of New Patents Regime on Consumers and Producers of Drugs/Medicines in India,
UNCTAD report, August 2010, Available at < http://wtocentre.iift.ac.in/UNCTAD/09.pdf >
 21

c. The new drugs are supposed to be introduced in the Indian market making the

share of patented drugs to rise. But it should be remembered that after some

time the patent expiries which contributes to the generics market.

d. Because India is one of the world's biggest producers of generic drugs, this loan

will have a severe knock-on effect on many developing countries which depend

on imported generic drugs from India. In most cases, generic products are

available once the patent protections afforded to the original developer

have expired. When generic products become available, the market competition

often leads to substantially lower prices for both the original brand name

product and the generic forms. The time it takes a generic drug to appear on the

market varies.

e. The government under the new regime can declare an emergency and cancel its

patent, if a drug is desperately needed.

f. New regime of product patent will attract more and more FDI in India: Till now

there has been low level of presence of pharmaceutical multinationals in

Indian market because of the rigid price controls and absence of product patents.

There has not been significant foreign direct investment (FDI) in the

Pharmaceutical industry in India. The position is expected to change with the

introduction of product patents.

ii. The main concern about TRIPs provisions of WTO agreement is in respect

of Patents. There is a feeling that the Multi National Companies (MNCs) will have

upper hand in maximizing the benefits of IP in developing countries like India.

This is because of the fact that MNCs have not only financial powers but also adequate

expertise in managing efficiently the portfolio of IP. A generic drug (generic drugs,

short: generics) is a drug which is produced and distributed without patent protection.

The generic drug may still have a patent on the formulation but not on the active
 22

ingredient. A generic must contain the same active ingredients as the original

formulation.

iii. Another area which is causing concern is the fear of appropriation of community

knowledge available in such countries. Such an appropriation results in huge

commercial profit to the MNCs without any adequate benefits to the community

who provided the knowledge. There is therefore an urgent need to safeguard such

community knowledge by appropriate legislations and policies. In this direction

new IP legislations such as a sui generics system would not only to protect the

community knowledge but also help appropriate sharing of the revenue earned

through such IPRs. Therefore such a system should be formulated and brought

into force on a priority basis. Further time bound actions are to be initiated and

completed to establish appropriate infrastructure (like patent office with modern

facilities and officials, patent information systems) creation of knowledgeable IP

professionals and efficient legal systems to quickly provide justice in the case of IP

disputes.

iv. A change in the market dynamics: Over the past decade, several drugs (with

features similar to patent protected drugs overseas) have been launched in

the Indian markets but very few path breaking new molecules have been developed.

In India most patients pay for medicines through their own funding and is not backed

by medical insurance schemes.

v. Amendment to Section 3(d): The new addition to section 3(d), says: The mere

discovery of a new form of a known substance which does not result in the

enhancement of the known efficacy of that substance or the mere discovery of a

new property or new use for a known substance or of the mere use of a known

process, machine or apparatus-unless such process results in a new product or

employs at least on new reactant. The Act further clarifies that salts, esters,
 23

ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of

isomers, complexes, combinations and other derivatives of the known of

substance shall be considered to be the same substance, unless they differ

significantly in properties with regard to efficacy.

vi. New added Section 11(A): This section ensures that a patent obtained through the

mailbox route cannot be used to initiate infringement proceedings against a

generic manufacturer.

vii. Traditional System of Medicines: Being a tropical country, India is indeed very

rich in biodiversity. India is well known for its traditional systems of medicine like

Ayurveda, Unani and various local folk and tribal medicine. Companies like

Himalaya, Zandu, Sandu, Baidyanath, Dabur and Hamdard have been

manufacturing and marketing these traditional medicines and also have developed

their own formulations based on these systems of medicines. India has a clear

advantage in these systems in terms of the knowledge that has passed down

through generations. TRIPs will be a golden opportunity for getting protection for

these products in India. Recent unsuccessful attempts made in the West to obtain

patents for medicinal products being used in India over centuries like turmeric,

Basmati rice, karela and neem have alerted the government and industry to

take steps to seek patent protection for innovations made in Indian systems

of medicine. Attempts are being made by CSIR to prepare a Traditional Knowledge

Digital Library (TKDL) and Traditional Knowledge Resource Classification

(TKRC) so that such bio-piracies can be checked effectively in future.43

viii. The issue of Patent length: There are two welfare effects of extending the patent

length. One is the growth enhancing effects: extending the patent length reduces

43
TKDL is an organization which does documentation of the traditional knowledge available in public
domain. It has endeavored to protect the bio-piracy of the traditional knowledge of India. See: Bio
piracy of traditional knowledge, Available at <
http://www.tkdl.res.in/tkdl/langdefault/common/Biopiracy.asp?GL=Eng >
 24

economic growth by raising the rate of return of R&D. The other is the static

inefficiency effect: extending the patent length reduces the amount of output by

increasing the proportion of monopolistic sector, and thus the amount of

consumption. The length of the patent granted should not be of a fixed duration

for all inventions. It should be linked to the actual expenditure on R&D and

the degree of innovativeness. As long as the companies refuse to give information

about their R&D costs, the incentive argument for patents only represents and

ideology for supporting the monopoly power of the companies. If they really need

extra profit to be willing to take the risk of R&D, the public has the right to

demand to know how much they need, and how they calculate their needed

profit. In fact, the exclusivity of a patent right needs to be supported by

convincing arguments and by transparency in the calculations of the R&D costs to

make it more than an ideology used to justify extra profit for some already very

profitable companies.

Foreign companies will look to bring their innovative products through existing

subsidiaries or set up 100 per cent owned firms in the country. The industry will see

further change in the form of foreign companies joining hands with Indian firms which

have a strong distribution network. This again would aid both foreign and Indian firms.

IX. CONCLUSION

In authors views, the issue is a contentious one and involves multi faceted and

multidimensional aspects which needs to thoroughly debated before any action being
 25

taken on them. In practice, several issues remain open. Law cannot be static and has to

evolve. It has to be modified to meet the requirements of the fast changing environment.

Similarly, science is also not static and changes are taking place at a very fast pace.

Since patent is related to science & technology, the patent legislations cannot also be

static. This is based on the fact that our country possesses the highly capable

intellectuals and natural wealth, and that too in plenty. Combining these two

valuable strengths/assets, we could have become a country holding valuable IPRs

which would have helped economical and industrial development of the country even

faster. India should have been proactive instead of reactive. Time is still not lost. India

can still initiate appropriate action in this direction in the coming years and achieve

benefits from the Intellectual Property System, especially Patent system.

While many countries need to change their patent system from process patent

to product patent, there is not much formal analysis about the regulations that

should be contemplated while making the switch. If there is compulsory licensing, it

can help to eliminate the welfare reducing effect of product patents, as compared to

process patents. With the WTO regime on IPRs coming into force on 1st January

1995, India had a marginal space to accommodate its concerns. While for India,

its concerns on IPRs, particularly on patent protection were clear; its WTO obligations

required it to modify its existing patents law. Implications of these modifications are

slowly sinking down into the Indian economic and industrial development process.

While it appears that India has managed to withstand some of these changes, the

precise legal and economic implications of these changes, particularly in the area of

the pharmaceutical and chemical sector, needs long-term review. Currently, India is

moving forward with the changes as envisaged under the WTO regime. Some of these

changes, it may be noted, may become new battlegrounds for a new interpretative

matrix within the WTO dispute settlement system.

 26

The profit-driven model of the TRIPs is not suited to the health needs of the

developing and poor countries. The amended Patents Act 1970 as in the present form

is a super profit-driven Act. A judicious and careful implementation of TRIPs

Agreement in needed for patent holders in a manner conducive to social and

economic welfare as stipulated in Article 7 of TRIPs Agreement. If the damage to the

amending process of the Patents Act is not undone, the public sufferings will soar to an

unimaginable extent.

The authors suggest the India should not either go for a solo product patent or process

patent. Rather India should adopt a mid-way in which a partly product patent should

be and after a reasonable time being given to the inventor to make a reasonably large

profit it should be converted to a process patent whereby the patented drug can

be manufactured by competing manufacturers using an alternative process. This would

ensure that the problem of excessive hike in prices in medicines does not occur and

it would also would render the drugs more accessible to the millions suffering.

Collaboration with the MNCs on various fronts such as research and

development, manufacturing and marketing will help Indian Pharmaceutical companies

make profitable breakthroughs.

In the authors view, the non-provision of product patents has been one of the

strongest aspects of our Patents Act. Complete compliance with all aspects of the TRIPs

agreement is prejudicial to our national interest and the TRIPs agreement itself places

limitations on our ability to enact out national legislations in public interest. The authors

would like to conclude by suggesting that to prevent public interest from being

prejudicially affected; it is imminent to mobilize public opinion against complete

compliance of the obligation under TRIPS. It must always be borne in mind that that

pharmaceutical industry owes a moral responsibility to the society. The monopoly

granted by patents to the Drug companies should not be exercised without

 27

responsibility. The patents regime should be enacted for the benefit of all and not for

only the manufacturers.