Patent Amendment Act, 2005- An Over View

The intellectual property in India is important at all levels of statutory, administrative and judiciary. India ratified the agreement establishing the world trade organization. This agreement inter_ alia contains an agreement on trade related aspects of the intellectual property rights, which came into force on the 1st January 1995. It lays down the minimum standards of protection and the enforcement of the intellectual property rights in the member countries with a view to reduce the distortions and impediments in the international trade. Trips provided for the norms and the regulation in respect following areas of the intellectual property copyrights and the related rights, trademarks, geographical indications, industrial designs, layout designs of the integrated circuits, protection of the undisclosed information (trade secrets), patents and plant varieties. India as a developing country had a transition period of five years (with the effect from 1st January 1995), i.e. till the January 2000to apply the provisions of the agreement. An additional transition period of five years, i.e. January1 2005, is also available for extending the product patent protection to the areas of the technology not protected so far. This would be mainly in the areas of pharmaceuticals and agricultural chemicals.

Basic Provisions of The Trips Leading India To Run In Consonance

v The TRIPS Agreement required Member countries to make patents available for any inventions, whether products or processes, in all fields of technology without discrimination, subject to the normal tests of novelty, inventiveness and industrial applicability. (Article 27.1) There are three permissible exceptions to the basic rule on patent ability.

1. For inventions contrary to order public or morality; this explicitly includes inventions dangerous to human, animal or plant life or health or seriously prejudicial to the environment. The use of this exception is subject to the condition that the commercial exploitation of the invention must also be prevented and this prevention must be necessary for the protection of ordre public or morality (Article 27.2).

2. Members may exclude from patent ability diagnostic, therapeutic and surgical methods for the treatment of humans or animals (Article 27.3(a)).

3. Members may exclude plants and animals other than microorganisms and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. Moreover, the whole provision is subject to review four years after entry into force of the Agreement (Article 27.3(b)).

v Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties (Article 30).

v The term of protection available shall not end before the expiration of a period of 20 years counted from the filing date (Article 33).

v Members shall require that an applicant for a patent shall disclose the invention in a manner sufficiently clear and complete for the invention to be carried out by a person skilled in the art and may require the applicant to indicate the best mode for carrying out the invention known to the inventor at the filing date or, where priority is claimed, at the priority date of the application (Article 29.1).

v If the subject-matter of a patent is a process for obtaining a product, the judicial authorities shall have the authority to order the defendant to prove that the process to obtain an identical product is different from the patented process, where certain conditions indicating a likelihood that the protected process was used are met (Article 34).

v Compulsory licensing and government use without the authorization of the right holder are allowed, but are made subject to conditions aimed at protecting the legitimate interests of the right holder. The conditions are mainly contained in Article 31.

Since among all the above provisions except the product patent were almost in consonance with the trips agreement, the amendment was basically done to bring into force article 27 effectively.

The Few Important Amendment of the Act Includes
1) Emphasis on Indigenous manufacturers: Indigenous manufacturers are allowed to manufacture patented products even after a patent is granted, in respect of mailbox applications, on payment of a reasonable royalty to the patent holder, if they had been producing and marketing the concerned product since prior to 1/1/2005. This provides a level playing field for domestic players who have already made substantial investments and have been manufacturing the products for which applications for patents have been received in the mailbox. This provision ensures the smooth transition from pre patent era to post patent era.

(2) Both pre-grant and post-grant opposition avenues: The system provides for both pre-grant and post-grant opposition avenues, and reduces the timeframe for grant of patents in a cost-effective manner, while taking care of public interest. In fact, pre-grant opposition to patents has been strengthened and all the 11 grounds for pre-grant opposition to patents have been specifically listed in the Act, in the same way as before the Ordinance of December 2004.

Ground of opposition U/S 25 as well as revocation U/S 64 have been enlarged by adding following grounds:
i. Non disclosure or wrongly mentioning the source of geographical origin of biological material used for invention;
ii. Anticipation having regard to the knowledge oral or otherwise available with in local or indigenous community in India or elsewhere.

This provision is aimed at establishing a mechanism by which system of patent protection and provides avenues for the patent holders to challenge violation of their intellectual property rights by unfair means.

(3) Prevent "ever greening" of patents: In order to prevent "ever greening" of patents for pharmaceutical substances, provisions listing out exceptions to patentability (or what cannot be patented) have been suitably amended so as to remove all ambiguity as to the scope of patentability. This is very important in Indian context as it is very rich in traditional knowledge and heritage. The clear-cut instructions regarding what cannot be patented would help public at large in a long run. The healing techniques of well established in ethnic system of medicines such as Ayurveda, Siddha and Unani system and formulations there in couldnt be patented.

(4) Conditions for obtaining compulsory license: Conditions for obtaining compulsory license have been clarified in order to facilitate export of patented pharmaceutical products by Indian companies to countries that do not have adequate production capacities such as least developed countries. The compulsory licensing is an instrument that the TRIPs allows by which governments can allow domestic manufacturers to manufacture patented products within 3 years of their introduction. The provision of this would be an opportunity for indigenous manufacturers to export the medicines to third world countries, which cannot manufacture their own drugs. There are many countries in Africa, Asia and South America, which are in need of cheap drugs due to poor economic development in this area. It will be a boon for basic and formulation manufacturers as the market to this segment will definitely promotes opportunities. India being rich in cost effective and intellectually competitive manpower and other resources would definitely emerge as world leader as far as export of drug is concerned.

(5) Reasonable period for negotiations between the patent holder and companies seeking compulsory license : Reasonable period' for negotiations between the patent holder and companies seeking compulsory license has been fixed at six months. This provision of the Act would ensure positive dialogues and negations to happen between indigenous manufacturers to arrive at deals leading to win situations. In due course of time a better understanding of the situations and conditions in the needy poor nations would resolve the conflicts as the patent holders would also appreciate the efforts of the indigenous manufacturers efforts to sell drugs at a cheaper price. The patent holder will not be interested to sell the drugs to the poor nations as he would find practically obstacles and considerations are not cost effective for him.

(6) Exemption of research and development from the ambit of patents: Exemption of research and development from the ambit of patents, including experimental and educational purposes. The basic research and education are the pillars of applied research. The education and research methodologies are the tolls for developing science and technology. Barring this area from the patent, government wants to ensure availability of trained manpower for sustained growth.

(7). Product patent : Product patent has been included in all fields of the technology (that is drugs, food and chemicals).

(8). Appellate board: Appellate boards jurisdiction has been enhanced and it now includes the jurisdiction to revoke patents also.

Some of the effective amendments in the Act and Rules are:
Term of every patent which is in force including a patent restorable, U/S.60 as on 20.5.2003 has now become 20 years from date of filing. Time for restoration of a ceased patent, U/S 60 has now increased from 12 months to 18 months as such an application for restoration of a patent ceased on or after 20th May,2003 can be filed within 18 months from the date of ceasession. A new definition of "Invention" means a new product or process involving inventive step and capable of industrial application; has now come in force. A method or process of testing during the process of manufacture will now be patentable. Process defined, U/S 3(i) in case of plants, are now patentable while a process for diagnostic and therapeutic has now been considered as non patentable.

A list of Authorized Depository Institutions have been notified (annexed hereto) in the Gazette of India, Part II, Section 3 sub-section (ii) dated 20.5.2003 for depositing the biological materials mentioned in the specification at the time of filing a patent application. 18 months publication has been introduced, therefore, every patent (excepting which a secrecy direction is given U/S 35) will now be published just after 18 months from the date of filing/priority and will be open for public on payment. As such the filing intimation being published in the Gazette immediately after filing has been stopped. A request for examination system has been introduced and therefore all the patent applications in which First Examination Report has not been issued on or before 19th May,2003 will now be examined U/S 12 only after filing a request for examination on Form 19 with prescribed fee. The applications for patent will now be examined in serial order in which the request for examination is filed. In case the application has been filed before the commencement of this Act, the request shall be made within a period of twelve months from the date of commencement of the Act i.e. 20th May 2003 or 48 months from the date of application, whichever is later.

Provision for filing request for examination by any other interested person (other than applicant) also has been introduced.

Provision for the withdrawal of application by applicant any time before grant has been introduced. Time for putting the application in order for acceptance U/S 21 has now been reduced from 15/18 months to 12 months. Section 39 in modified form prohibiting filing patent application outside India, inventions limited to the fields of defence purposes or atomic energy has been reintroduced.

Opposition Proceedings U/S 25 have been simplified and shortened, fixing hearing is not compulsory, if the applicant does not file reply statement and evidence, application will be deemed to have been abandoned. Provision for extension of time up to 6 months for paying the overdue renewal fees initially i.e. renewal fees, which have become due, due to the late grant of patent can now be paid within 9 months from the date of recorder by taking an extension on Form 4. Charges for supplying the photocopies of the documents available in the Patent office have now been reduced from Rs. 10/- to Rs. 4/- per page. Charges for amendments in name, address, nationality, and address for service, payable on Form 13 have been drastically reduced from Rs. 1000/- 6000 to Rs. 200/500. Patent Applications and other documents (except PCT International application) are now required to be filed only in duplicate. Documents can now be filed 1 copy in electronic form with one hard copy (paper form).

Fees required to be paid on documents can now be paid within 1 month from its date of filing. Provision for allowing Paris Convention Priority has been extended to group or union of countries or inter governmental organizations, therefore, 12 month priority will also be available to applications filed in EPO, AIRPO, OAPI and EAPO.

The Scope of Patentability Critical Analysis

Some of the key issues relating to the scope of patentability are given below
.Inventive Step : The act provides the following definition of what is required of a patent application to meet the inventive step criteria; a feature of an invention that involves technical advance as compared to the existing knowledge or having economic significance or both that makes the invention not obvious to a person skilled in the art. The above provision arguably broadens the existing provision to the benefit of patent holders and is ambiguous to the extent that it allows for two criteria for meeting an inventive step. As it stands, to meet inventive step criteria the patentee will either have to show that the invention includes a technical advance or has economic significance, or both.

The provision should have required the applicant to comply with both requirements for an inventive step, namely existing knowledge and having economic significance and delete the term or both. Otherwise, the requirement of technical advance is compromised and diluted by the fact that a patent could be simply granted on economic significance alone. Economic significance alone, cannot determine the inventive step of a patentable invention.

Pharmaceutical substance

The amendment currently describes Pharmaceutical substance as any new entity involving one or more inventive steps.
As it stands, the provision is too broad as it allows all types of pharmaceutical substances. The term chemical ought to have been inserted so as to read any new chemical entity.

Inventions not patentable

Section 3(d) has been amended to read : 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 the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least employs one new reactant.

The use of the phrase which does not result in the enhancement of the known efficacy is ambiguous, too broad and potentially allows for new forms of existing substances to become patented. For example, result in enhancement of efficacy could be a minor amendment to an existing invention to in order to get around the provision as it stands. Also, the explanation supporting the above provisions provides :Salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy.

The phrase unless they differ significantly in properties with regard to efficacy is not necessary and offers an entry point in favour of the patentee, thus leading to excessive litigation. For example, certain properties are never known or are clear at the time of application in the claim so one would not know how they differ, thus leaving any recourse to opposition.

The definition of pharmaceutical substance is not linked to the provisions relation to the exclusion for patents and, therefore, stands alone. Furthermore, the inventive step requirement has been severely diluted. As a result, section 3(d) allows ever greening.

Immunity to ongoing generic production:
The act permits generic manufacturers to continue producing generic version of new drugs, which are in the mailbox. However, this only applies where the generic producer has made a significant investment provided they were producing and marketing the generic version prior to 1st January 2005. However, the generic companies are required to pay the patent holder a reasonable royalty.

The question of significant investment poses a threat of potential infringement suits as the generic producer would have to clearly show that is has made what would be considered a significant investment in producing and marketing the generic drugs. With respect to the reasonable royalty it creates the problem o excessive demands from the patent holder and litigation. The reasonable royalty rate should have been fixed as a particular percentage, the norm being 4 %. For example in that in South Africa, Glaxo Smith Kline demanded a royalty of 25 % before the courts intervened.

Publication:
The act amends Section 11A of the Patents Act which prescribes the initial publication requirement. After the publication the applicant shall have the rights as if patent for the invention had been granted n the date of publication of the application. However, no infringement proceedings are permissible until the grant of patent. This means that one can get the privilege of patent from the date of publication i.e. even before filing the request for the examination of application. Lastly the Bill refers to the publication of an application, but fails make the publication of the complete specification available to the public. This will greatly hamper opposition proceedings

Compulsory Licenses

The effective and efficient issuance of compulsory licenses is imperative to curb the abuse of patent rights by the patentee. The amendment has only made cosmetic changes to quicken the process of dealing with an application for a compulsory license in section 84 (6) to the extent that where the applicant has made efforts to obtain a license from the patentee on reasonable terms and conditions and such efforts have not been successful within a reasonable period, the Controller can now interpret reasonable period to mean a period not ordinarily exceeding 6 months. However, the amendment does not remove the existing requirement that only after three years after the grant of a patent, ( unless there is a national emergency, which has never been used ) can a person make an application to the Controller for the grant of a compulsory license. Therefore, in total the request for a compulsory license does not have to be considered for at least 3 years and 6 months from the date of the grant of the patent. Furthermore, one also has to take into the account that the Bill fails to provide a timeline within which the Controller must deal with compulsory license application once made. Therefore, this could lead to a further delay before any license can be issued, as it is well known that MNC pharmaceuticals often refuse to deal with requests for compulsory licenses or demand high royalties.

With respect to exporting drugs to a country, which makes a request for a generic drug, the amendment no longer requires the importing country to issue a compulsory license. However, one question that arises is whether the procedure for the grant of the compulsory license for the domestic market ( under section 84 (6) discussed above ) will also be the same for compulsory licenses for export. It is quite possible to argue the procedure both ways, therefore, potentially delaying urgent new drugs that a developing or least developing country may require.

Discretionary powers of the patent office:

The Act took away the limitations imposed by the Act, and made it discretionary of the Patent office by virtue of the Rules. As a result, the patent office can now tamper with the various time lines by amending the Rules as and when they choose. Under the amended ordinance, 7 types of time limits will be determined by the office through the Rules and not by the statute. The excessive and unbridled delegation to the Patent office is further increased by the following provision : the central government way, if it is satisfied that circumstances exist, which render it practically not possible to comply with such condition of previous publication, dispenses with such compliance. As a result, the public will not be given an opportunity to offer its comments to the Rules before it being amended.

Quick Examination.
As per the act the time frame for making the examination report is left to the Rules. The new Rules provide a period 1-month for the examination report to be issued following the application. This period was previously 18 months period. This is likely to create immense pressure on the Indian Patent office as there will not be enough examiner to deal with it thoroughly.

Necessary Implications of the Act - Dominance of the Multinationals
Over a period of time Indian drug companies will lose the opportunity to develop processes for patent protected drugs in the country. Indian drug companies might become dependant on MNCs for technology to produce new drugs. However, among existing drugs say about 10 per cent of the marketed drugs are likely to become expensive due to amendments made in
new Patents Act. However, the existing 90 per cent of the old drugs will not be affected by this Act. While this is true, it must be understood that the rate of obsolescence of old drugs is extremely fast today.

It was feared most that, technological dependence on MNCs will lead to establish their dominance over the Indian drug market. MNCs once again may start charging exorbitant prices for drugs in the Indian market. India, which has more than 70 US FDA-approved manufacturing plants, could become a production hub because of its cheap and skilled labour. ''As of now pharmacy companies in India were thriving on reverse engineering but the rule of the game is likely to change and most firms belonging to the organised sector are fully geared to face the upcoming challenges. It must be noticed that outside the USA, maximum number of US FDA-approved plants are in India, which in itself is a testimony to the preparedness on the Indian industry.

Hotbed For The Clinical Research

With patent protection, India could be ideal center for activities of research and development and clinical studies. The contract research organisations of domestic and global are viewing as the hotbed for clinical research. The proficiency in English and skilled manpower, and availability of huge patient volunteers with this new amendment is going set phase for unprecedented opportunities for domestic manufacturers.

Profit For The Domestic Manufacturers

Domestic manufacturers along with MNCs may also find it profitable to discover novel drugs for diseases of developing countries. The diseases like Malaria, Tuberculosis needs to be addressed urgently. There seems to be stimulation in activities in this neglected field of diseases.

Unnecessary Flexibility

The India government is going far beyond what is required under WTO rules. The bill proposes to extend the patent protection to the new uses of the known drugs- a level of the protection, which is not required by the trips agreement. This would increase the frivolous inventions just by increasing the slight efficacy.

Indifferent Compulsory Licensing And The Loss To The Smaller Companies And Poorer Countries

The important aspect for the development of the small company in India is a proper compulsory licensing system. In a product patent regime, a proper compulsory licensing system is of vital importance in promoting competition while ensuring that patentees get compensation through royalties. In fact compulsory licensing is one of the ways in which TRIPS attempts to strike a balance between promoting access to existing drugs and promoting R&D into new drugs. But India has not been able to take full advantage of the compulsory licensing provisions. The wording of the general grounds for compulsory licenses is not amenable to easy interpretation and is not operationally useful.. The process is much more legalistic than what TRIPS requires. It provides opportunities to the powerful patentees to manipulate the process by litigation to prevent others from getting such licenses. Even incases of special provisions relating to national emergency, extreme urgency or public non-commercial use, adequate care has not been taken to put in place a proper structure to prevent delay due to litigation. To make sure that the poorer countries do not find the ways of using the compulsory licensing, the major companies are using the army of lawyers to press their case hence the smaller companies are unable to access such inventions.

No care on Export of Invention to the Low Manufacturing Countries

India as a low cost producer of drugs has particular significance from the point of view of supplies to countries with no manufacturing capacities. Care has not been taken in the patent amendments to facilitate such exports.

Conclusion
Patent amendment should be favoured for the patent protection India which will in turn India an ideal center for the research and the domestic manufacturers will be benefited but the loopholes in it should be rectified for the all round development.

Patent law Articles:
Patenting of Micro-Organisms in India
Patentability
Patent & Its Effect In India
Challenges to India Patent Regime
Whether Patent Law Protects Biotechnological Inventions

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