India's IP regime: Patent error

Written by Shamnad Basheer | New Delhi | Updated: Feb 22 2014, 02:38am hrs
Even as the Khobragade scandal fades from public memory, another controversy threatens to derail US-India bilateral relations. This time around, the battle is over intellectual property (IP) rights. A US governmental agency, the International Trade Commission (ITC), recently initiated an inquiry into allegations that Indias IP regime was flawed and at odds with US business interests. In the Khobragade case, there had been noise about how India had to learn to respect the national laws of the US. The present controversy highlights the USs efforts to coerce India to amend its national IP regime to suit the formers business interests.

Clearly, multinational pharmaceutical companies are upset with Indias rigorous patent threshold. In other countries, patent regimes are routinely gamed to protect and even promote the evergreening of drugs (that is, when an old drug that is off patent is modified ever so slightly so that an additional patent monopoply can be procured). India, in its 2005 amendments to the patents act, sent a clear message that it would not suffer evergreening. The notorious Section 3(d) has been used to axe many an evergreening attempt, the most significant being Novartiss anti-cancer drug, Glivec.

In similar vein, India went on to grant a compulsory licence to Bayers excessively priced anti-cancer drug (selling at Rs 2.8 lakh a month), paving the way for a cheaper generic to enter the market at Rs 8,800 per month. All of this was done in conformity with Indian patent law and WTO obligations. More importantly, the licence was issued after a rigorous judicial process. Yet, big pharma continues to remain peeved and has been offering testimony after testimony in the US on how Indian IP law is not respectful of global pharma interests. It seems oblivious to the fact that US courts denied injunctions to patentees and effectively granted de facto compulsory licences when they deemed it necessary in public interest.

The Bayer and the Novartis cases will no doubt take centrestage at this inquiry, triggered by senators who complained, among other things, that India has applied its patent law in a discriminatory manner, particularly against innovative US pharmaceutical companies, so as to advantage its domestic industries.

In what appears to be a bid to show India in poor light at these hearings, the US Chamber of Commerces Global IP Centre (GIPC) issued a timely report ranking the IP regimes of a curious assortment of 25 countries. Unsurprisingly, the US topped the list and India came in last. The Chamber of Commerce has now gone on to demand that the US trade representative classify India as a priority foreign country, a status reserved for the worst IP offenders and one that could potentially lead to trade sanctions. Given that the GIPC report was authored by prominent members of a thinktank (Pugatch Consilium) who consult significantly with big pharma, it is reasonable to suspect its independence.

This is more than evident from a methodology that seems designed to make India look bad. First, the report lumps together a diverse set of countries, without regard to their socio-economic status or their developmental imperatives. If history is any indication, almost every country had minimalist IP protection at the start of its technological trajectory and moved to a maximalist IP position when its indigenous units had built sufficient capacity. Indeed, as the American historian, Doron Ben Atar, reminds us, the US was once a pirate economy, with American enterprises being encouraged to borrow freely from European technology.

Second, there is no real mention of why the GIPC report picked the indicators they did or how it weighted them. For instance, the baseline value of the compulsory licencing index and the consequent ranking is extremely critical of any issuance of a licence, even when it is fully compliant with WTO-TRIPS norms.

Third, much of the ranking rests on perception and, conveniently enough, the perception of US multinationals that have faced difficulty extracting excessive patent rents from India. Relying on perception, particularly when patent numbers and data abound, is not just shoddy but dishonest.

Last, there is a delicious paradox underlying the flawed GIPC ranking and methodology. The report appears premised on the perception that an IP regime that offers more protection to inventions, even trivial ones, is a strong one. Countries such as India, which stands for genuine invention and will not suffer low quality evergreened varieties, are surprisingly labelled as weak. In fact, stretched to its logical limit, the GIPC index would suggest a score of infinity for any country granting an eternal patent or copyright term, pushing it right to the top of its rankings.

Co-authored by Swaraj Barooah, Basheer is the founder of Spicy IP. Barooah is editor-in-chief