Indian and its TRIPS Obligations

Priyanka Sardana and Vijay Sardana

The Government of India is committed to implement various agreements regotiated in the final act of Uruguay Round of GATT Negotiations from 1st January 2005.

India, along with some other developing countries though preferred to keep the Intellectual Property Law issue outside the purview of the WTO, yet they had to agree to include them in the form of Trade-Related Intellectual Property Rights (TRIPS) at the end of the negotiations.

TRIPS which stands for Trade Related Aspects of Intellectual Property Rights, including trade in counterfeit goods, is an important agreement and is one of many areas negotiated and agreed upon under the auspices of the Uruguay round. It is mandatory for all members to comply with the TRIPS agreement. However the transitional arrangements provided under Article 65 and 66 allowed a grace period of five years to developing countries and ten years to the least developed countries (on request to the TRIPS Council the least developed countries could further extend this period) to implement the TRIPS provision into their domestic law.

The main issues under TRIPS that had to be addressed to make the Indian Patent Act comply with clauses of TRIPS agreement were:

a. The right of importation and the prohibition of discrimination between local production and importation,

b. Broadening patentable subject-matter to include micro-organisms,

c. Limiting compulsory licensing to comply with the conditions set forth in Article 31,

d. Increasing the term of protection to twenty years uniformly for all subject matters,

e. Allowing product patents,

f.  Shifting the ”burden of proof” in matters of process-patent infringement proceedings.

The key feature of this agreement is that it takes a major step for harmonization of the norms and standards of Intellectual Property Protection. It requires members to comply with a defined set of minimum standards for the protection of IPR’s covered in it.

The Indian government has made prompt efforts to introduce legislation to modify the Patent Acts in compliance with TRIPS. It failed to get it passed due to technical problems as the Parliament was dissolved. The new caretaker government responsible for administration, which came after dissolution of the government in November 1995, was not authorized to legislate on any new law. Under these circumstances, the United States called for a consultation with India under Article 4 of the understandings on rules and procedures governing the Settlement of Disputes on 2nd July 1996.

Considering that India had violated the TRIPS obligations the Panel was set up on 20th November1996, and by September 1997 the Panel ruled that India had failed to comply with its TRIPS obligations.

The main charges against India were:

a. India did not provide any legal mechanisms for the deposit of applications for product patents for the transition period (i.e. until new legislation allowing product patent was introduced).

b. India did not provide any provision for Exclusive Marketing Rights as required under Article 70 (9) of the TRIPS Agreement.

c. India violated Article 63 (1) and (2) of the TRIPS Agreement, which required a member state to publish the new administrative rulings and legislation pertaining to Intellectual Property to other member states and to the TRIPS Council of the WTO Secretariat.

India’s arguments in defense of these charges were that it allowed applications for biological and chemical patents in the Patent Office thus complying with Article-70 (8)(a) by promulgating an Ordinance, which was in fact a de facto law. India had also the advantage of 5 years grace period as a developing country and it did not need to introduce any legislation to give effect to Article-70 (9) immediately and could delay this for another 4 years.

The Panel supported U.S. charges against India and stated that Ordinance was an administrative notification rather than a law and hence it has violated its TRIPS obligations. The Panel also stated that India’s reading of Article 70(9) was incorrect and under this Article India was required to introduce the transitional system immediately. Aggrieved with the panel decision, India appealed before the WTO Appellate Body. The Appellate Body upheld the decisions of the Panel and found India to be in default of its TRIPS obligations under Article 70(8)(a) and 70(9), but reversed the Panels alternative findings with regard to Article 63(1) and (2) of the Agreement. The Appellate Body recommended that the Dispute Settlement Body of the WTO should request India to change its Patent Laws to make it TRIPS – Compliant by April 1999. This decision compelled the Indian Government to introduce the amended Patent Bill in 1998 to the Indian Parliament which was passed on 26th March 1999.

After a number of meetings and discussions, finally a consensus could be reached and the Patents (Amendment) Bill 2003 was introduced in the Lok Sabha of the Parliament on 23rd December 2003.The Bill brings in the final changes that will make the Indian Patent Act fully TRIPS compliant. It is expected that the third amended Bill 2003 will be passed soon and become effective on or by 1st January 2005.

Patents Regime and Stakeholders Opinion

The scope of the issue relating to the patentable subject-matter in particular pharmaceuticals may be specifically mentioned in the relevant sector. It is important that pharmaceutical substance is also defined in Section 2 of the Act, so as to include ‘drug chemical entity‘ or drug molecule or bulk drug involving inventive steps. Similarly inventions, which are not patentable, should also be clearly provided in an exhaustive manner.

Exclusion of all life forms should be placed in this category and no patent claim should be entertained thereof. As regards patenting of microorganisms the issue is still being examined by the WTO as stipulated in Article 27(3)(b) of TRIPS, and as such extending patentability to microorganism at this stage should be avoided. The scope of patentability should also define all technical terms so that ambiguities could be avoided to the maximum extent. All these issues should be adequately covered in the Patents (third amendment) Bill 2003.

There has been a mixed feeling regarding the issue of stricter Patent Laws and India’s compliance with the TRIPS Agreement not only in India but also on International level. Many professionals, academics and activists in India as well as abroad feel that if WTO goes into full swing at the instance of big powers, it is a matter of serious concern. They feel that its effect may be disastrous because of the huge difference in the economic and Industrial atmosphere of the developed nations and the developing nations.

However, it cannot be denied that there has been a considerable development in the last two decades in India and it cannot remain ignorant and oblivious to its surroundings when countries across the globe are able to exploit India’s rich biodiversity and herbal medicines and continuously apply for Patents in different countries of the world.

Developing countries like India will also be able to meet the challenges in the new IPR regime provided they put in place an Intellectual Property Strategy system and their in-house R&D. The formalization of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) at the conclusion of the Uruguay Round of General Agreements on Tariff and Trade (GATT) negotiations was a direct consequence of the efforts that the commercial interest in this frontier technology has made. One of the compelling reasons why it should be implemented in WTO, which monitors the Agreement on TRIPS, has initiated a process through which attempts are being made to bring the objectives and sustainable development on an even keel to protect the interests of under-privileged and deprived sections of the society.

So our global endeavor, embracing all humanity is to create a just world system promotive of economic equity and social egalite, reversing the process, which holds the developing nations as mere markets to be exploited. This can happen only if we raise our concerns at appropriate forums with proper evidences and at the same time speed up our march towards cutting edge frontier technologies.

Important Features of the Patent (Amended) Bill 2003

Some important features of the forthcoming Patent (amended) Bill 2003 are:

  • Extension of the product patent regime to all sectors of Indian economy.
  • Amendment of Section-9 to harmonize the Patent Laws in matters relating to application by a Convention Country so that it is in line with the Patent Cooperation Treaty (PCT).
  • The Bill removes the provision related to EMR’S under Section-163 and introduces transitional provisions in its place to safeguard the EMR’S that had already been granted.
  • It intends to amend the provisions relating to opposition procedures by introducing a tiered mechanism for representation against patent applications and also for oppositions and revocations of Patents.
  • These changes will make the entire procedure of processing a patent application user friendly and in line with International Standards and practice.
  • It also intends to amend the provisions relating to penalties for different violations of the Patent Act
  • The penalty under section 120 for unauthorized claim to Patent Rights is increased from “ten thousand rupees” to “one lac rupees”.
  • The penalty under section 122 in the case of refusal or failure to supply information to the Central Government has been increased from “twenty thousand rupees” to “ten lac rupees”.
  • The penalty for practice of Patent Law by non-registered Patent Agents (Patent Attorneies) has been increased from “ten thousand rupees in case of first offence to “one lac rupees” and in case of second or subsequent offence it has been increased from “forty thousand to five lac rupees”.
  • The most important issue in the Bill is the introduction of Section 92A in relations to the provisions granting compulsory license exclusively for the purpose of exporting drugs to countries without the capacity or with insufficient capacity to manufacture them themselves. However in such cases it will only be possible to manufacture drugs to be marketed in another country under a compulsory license if that country also grants a compulsory license at the same time.

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