The Hindu Business Line : There is no need to be `TRIP'ped by patents

Major tussles are on in the IP (intellectual property) world. For instance, Pfizer is fighting Ranbaxy, in a US District Court, to block a generic product. And, in an Indian court, Novartis is challenging our patent law. Meanwhile, the Mashelkar Committee's report on patenting has been at the centre of a heated controversy. Is there a need for changes in India's IP law? "It is really not a question of changing IP laws. It is a question of using the flexibilities in TRIPS (Trade Related Intellectual Property Rights) to a maximum in a manner that benefits the country," says Ms Srividhya Ragavan, Associate Professor of Law, University of Oklahoma College of Law (www.law.ou.edu) , US. "Unfortunately, the Mashelkar report forces one to conclude that India clearly lacks adequate expertise to appreciate the legal, economic and social implications of patenting," she rues, in a recent interaction with Business Line.

Before joining the University of Oklahoma, Ms Ragavan taught law at the National Law School of India in Bangalore. She serves as a visiting faculty for the IP programme at NALSAR (the National Academy for Legal Scholarship & Research) in Hyderabad.

Excerpts from the interview:

What does TRIPS essentially say about patenting?

TRIPS' Article 27 (3) basically states, "... patents shall be available 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." Thus, TRIPS limits patent protection to inventions that are new, useful and embodying an inventive step. In all fields, including chemicals, patent protection has to be granted only to new, useful inventions that embodies an inventive step.

Why is the Mashelkar report under fire?

Among other things that the report is criticised for, what is of great concern is this: Basically, the report states that all chemical entities, rather than only NCE (new chemical entities), are entitled to patent protection. The breadth of the statement signifies, perhaps, a flawed understanding of patent law. TRIPS mandates that chemical entities that are useful, novel (new) and non-obvious (involving an inventive step) be patented.

However, TRIPS does not define the constituents of novelty or non-obviousness. Every WTO (World Trade Organisation) member has its own definition of what can be new.

For instance, Section 102 of Title 35 of the US Code basically states that "public knowledge or use" outside of the US is irrelevant for determinations of novelty for a US patent application.

In essence, something that is publicly known and outside anywhere outside the US can still qualify as "new" within the US. That is how some of the Indian indigenous materials such as turmeric passed the novelty test. India certainly is entitled to draw its own limits for defining novelty and inventive step.

Is there clarity on what we mean by invention?

The patent provision of TRIPS does not dictate how a country has to define invention and whether the definition of invention should vest patent protection over known products with new use or improvements. So, if India were to allow protection for all chemical entities, for instance, what is already known would become patentable. If I was using, say, Chemical A for the last 10 years, suddenly by virtue of lack of appropriate limitations, Chemical A would be patented by one company or a person. Which means that what was available at a little above cost of production will become a premium product by virtue of the monopoly that we vest in one company or individual. In patent terms, it would amount to taking from the public domain into a private domain.

Getting back to the Mashelkar report, perhaps, the report meant to analyse whether a new use of a known product is patentable. The question of patenting new use of old substance is important in the context of the Novartis case.

If India believes that the same known substance for which a new use is discovered should be eligible for another patent, then it should widen the definition. TRIPS does not concern itself with the narrow issue of defining the scope of an invention. As a mark of the flexibility, members of WTO (World Trade Organisation) approach the question differently. For instance, the US does not allow patenting of new uses of known substances. Hence, protection is in fact limited in the US to chemicals that are new, embody an inventive step and have commercial utility.

The European Union differs by vesting a limited protection for discovery of new uses of known chemical entities. Under the European Patent Office Guidelines (`EPO Guidelines'), a limited protection is allowed provided a new use of the product is disclosed using what is called as a "purpose-limited-product claims."

What are the economic implications of patenting?

TRIPS urges for patent protection to improve trade, which is meant to improve the economy. India has to appreciate the correlation between patents and economic growth. The ability of a system to cater to several patents within existing product ranges reflects the sophistication of a patent system. Such sophistication is not acquired by patent law but by the supplementing claim drafting mechanisms in which both Europe and the US excel. Minor innovations promote further inventions (even if it is simple) at all rungs of society. For example, the paper cup can have a huge market in all coffee shops. This invention has a lot of practical utility.

Such inventions encourage newer products in the market (which is the crux of the patent system) while promoting inventors of these products to exploit the market and thus move towards economic prosperity. The precise boundary when a minor improvement ceases to be an innovation is something that India has to carefully determine. India should promote protection in areas that ultimately improve the Indian economy.

Is a clash of interests between pharma majors and developing countries inevitable? What are the options?

It is not just inevitable — such clashes are important too. For pharmaceutical industries, the bottom-line is the numbers in the annual report. For developing countries, the overwhelming need is to uphold Constitutional objectives and to balance social with economic factors.

The plight of the poor is not the direct concern of the pharmaceutical industry. The CEO of a pharmaceutical company is not voted by the poor people. The plight of the socially disadvantaged is that of the government. Hence, it is important for India to understand the economic implications of patenting.

For instance, India currently is enjoying a high GDP. If more and more people find it difficult to access medication, it would affect productivity and consequently, the economy.

Every person's productivity is derived from several indicators, such as: Living conditions; earning potential; or per capita income. The loss of full production capacity of each adult life in his/her most productive age represents an equivalent deprivation of productivity to the economy. Thus, the loss each individual suffers because of lack of appropriate access to medication is reflected as a cumulative loss of productivity to the national economy.

India did have declining productivity due to rate of mortality at the time of Independence, which is why the Ayyangar Committee recommended the process patent regime. While it is important to adhere to the TRIPS Agreement, there is no need for the economy to do a kamikaze.

Cumulative loss of productivity would include loss from labour, and from other factors of productivity — `total factor productivity' — from costs affecting the economy. Examples of other costs range from the increasing cost of employee medical benefits to the deterrence such costs create for foreign investments. For example, the increased incidence of AIDS in South Africa raised the cost of employee medical benefits from 7 per cent of income in 1995 to 19 per cent by 2005.

The increased cost of employee benefits have impacted the overall economic productivity and output, especially since the additional costs have been at the same time that productivity is declining due to increased death of young people from AIDS.

On protection of `undisclosed information'.

The Mashelkar Report cites Article 39.3 of the TRIPS agreement in support of its conclusion that patent protection need not be limited to new chemical entities. Article 39 deals with undisclosed information (generally known as trade secrets) and hence, is irrelevant to the question of patentability of NCEs.

The article relates to what is called as a condition of marketing. The article is directed at the agency approving the marketing of pharmaceuticals or agricultural chemicals. The article mandates the agency to ensure that data designated by the applicant as a trade secret should not be disclosed, either to the public or as part of the marketing label of the invention. Even this disclosure can be done away with for reasons of public interest.

Assuming that Researcher Rani makes an application to market a known product but embodying a new use. Rani wants to ensure that her test data remains a secret. It is a TRIPS-imposed duty of the agency (authority falling perhaps, within the realm of the Narcotic Drugs and Psychotropic Substances Act, 1985) to ensure that the test data is treated as a secret unless the authority determines that the data is required to protect public interest.

As for the Mashelkar Committee report, it is surprising to note that members use this section to validate patenting of NCEs. It is depressing to note that the members ignored the public interest exception that is a part of that section itself.

What is `new medical entity'?

India has to decide what a new medical entity is. Is it the process of medical treatment or is it a product of medical treatment or is it a known compound that exhibits pharmaceutical properties. All western countries treat each of these questions separately for the purposes of patent protection.

Method of medical treatment: Should a new method say, of cutting the body open for a surgery, or doing a cataract surgery be entitled to a separate patent. For example, assuming Dr. Sita discovers that for C-section deliveries of babies, making an incision curved at a particular angle allows quicker delivery while at the same time facilitating a faster recovery. Allowing it to be patented would necessitate that anytime any doctor uses that curved incision to deliver a baby, Dr. Sita would make royalties over it for the next twenty years. It also means that patients who cannot afford that royalty would not benefit from deliveries that necessitate a curved incision. The question is whether such methods of medical treatment ought to be patented.

Several countries exclude methods of medical treatment from patenting and on grounds of public interest. The US allows such patents but eliminates all remedies for infringement against medical practitioners or a related health care entity for the use of the patented technique. In essence, while the method is patentable, it is also freely available for others to copy (for public interest purposes).

New product or composition used for medical treatment: A new product that involves an inventive step for medical treatment has to go through the same steps for patentability as any other invention. Thus, a new product for medical treatment should be new, nonobvious (inventive step) and have commercial utility in order to be patentable. Patent protection for such products can be exempted under the terms of the Doha Declaration read with the relevant provisions of the TRIPS agreement.

Known product used for medical treatment: If a product is known, naturally it simply cannot pass the test of inventive step. Hence, it boils down to the question to vesting patent protection to a known product with a new use, which in turn goes back to the issue of whether it would fall within the broader definition of invention. Again, the US does not allow patenting of new uses of known medical products. Either the process of making the product has to be novel or the product has to embody something new before it can pass the test of patenting.

India is well within its rights, under the TRIPS agreement, to define inventions to limit protection to new chemical and medical products embodying an inventive step. There is nothing in the patent provision of the TRIPS that forces India, or any member for that matter, to define inventions as embodying known products with just new uses.

On patenting micro-organisms:

TRIPS, mandates that micro-organism should be protected but only requires microbiological organisms that qualify as an invention to be protected. In order to qualify as an invention, it is not enough that the micro-organism has a utility, it should also be new (genetically engineered/ not known before) and embody an inventive step.

The Mashelkar report concludes that new micro-organisms isolated for the first time from natural surroundings can only be patented if they differ in characters and find new or improved uses. Even countries like the US (known for overreaching when it comes to protection of genes and micro-organisms) do not allow patenting of all micro-organisms. The Manual for Patent Examination Procedure of US outlines micro-organisms made by the hands of man patentable.

The larger question of patentability of micro-organisms deserves an in-depth and closer study. For instance, is a newly genetically engineered micro-organism protectable because it is potentially useful for further research or it is protectable because in some tests the new organism seems to exhibit properties that shows its potential use against certain diseases or is it protectable because research has conclusively proved that the micro-organism is a cure against a specific disease. The answer to this question is purely a matter sovereign determination. Basically, it is up to India and the government to determine when the utility requirement would be considered fulfilled.

That is, assuming that Researcher Raman derives a genetically engineered micro-organism MX. Now, nobody, including Raman, knows what MX is useful for. But everyone knows that MX can be researched upon further to determine its real use. The question is whether we grant protection to Raman just because MX can be used as a tool for research. Even developed nations like the US require that a proper use has to be determined before the micro-organism becomes patentable.

The Mashelkar report should have deliberated on what amounts to successful completion of research to determine the threshold requirements for microbiological innovations. As such, the conclusion of the Mashelkar report gives the impression that all micro-organisms - even those that are merely research tools - are eligible for patent protection.

Can patenting micro-organisms stand in the way of further research?

Patenting research tools can have vital implications. It could, for instance, block competition and further research in the long run. In the example above, if a patent is awarded to Raman for MX and if he assigns it to Company A, only Company A can research on the micro-organism MX. Other companies like Company B, for instance, that wants to research on MX would be required to pay a royalty to Company A to even do research on that micro-organism. Consequently, the following happens:

The ultimate cost of a drug when one is fully invented using MX as a research tool, will involve cost of the royalty to get the permission to work on MX and the cost of the research of Company B.

The more such tools of research are patented, the pharmaceutical industry would find itself having to license several research tools which in itself becomes cost prohibitive. Ultimately, that cost would be passed on to the consumer.

As more research tools are protected by patents, the incentive to actually conclude a research is gone. If Raman can become a millionaire by just inventing a microorganism without telling the world what it is useful for, Raman would not wait to determine the ultimate use. Companies also start making money by just creating research tools rather than research itself.

Research becomes procedurally cumbersome because it involves a lot of paper work and litigation.

It would increase the burden of the courts and would lead to more unnecessary cases on whether a research tool was used without proper licensing. Basically, it would elevate the importance of licensing lawyers.

It is important for a country like India to determine at what stage and when a genetically modified micro-organism becomes patentable.

MuraliDe@gmail.com