Novartis had challenged Section 3(d) of the Indian Patent Act, which deals with such situations, and argued that the provision is arbitrary and inconsistent with the World Trade Organisations trade-related aspects of intellectual property rights (Trips) agreement. Novartis and many other pharma giants argue that this unfavourable judgement would undermine incentives for pharmaceutical innovation, incremental innovation in particular.
Why was such a decision taken The Indian Patent Amendment Ordinance, 2004 is perhaps the only law in the world that included a provision to protect public health from companies who seek extension of their patents by marginal value addition. The law states that patents would not be given for 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.
Parliament, in its wisdom, incorporated this clause to address the sham of patent life extension while ensuring patentability of known substances when the inventor is able to demonstrate enhancement of known efficacy. In other words, this provision promotes incremental innovation, but restrains evergreening. Albeit difficult to discern evergreening from incremental innovation, in practice, though, the so-called evergreening process is importantly different.
To legally draw a line to differentiate these two is a Herculean task. To follow the usual practice of referring the laws of rich countries in this matter does not arise as India is the first in the world to legally address this problem. But, if we go by the WHO report of the Commission on Intellectual Property Rights, Innovation and Public Health, 2006, Section 3(d) is legally sound. The report says legislation through this provision tries to make a distinction in law between evergreening and incremental innovation. Moreover, the Trips agreement gives complete freedom to WTO members to use this flexibility.
This entire dispute arose merely because of a lack of clarity on how to determine the enhancement of a substance. This was not addressed by the high court in its verdict, giving ample scope for future litigation in this area. But the growing fear that the decision would have an impact on future R&D within the country is a pettifogging ploy.
Under our Act, patents are granted for 20 years according to the WTOs timeframe to sufficiently remunerate an inventor. Even after this, if an inventor creates a modified version of the original product with improved efficacy then the law explicitly recognises it under Section 3(d).
What it restrains is the practice of extending the patent term beyond 20 years by tweaking the composition of the original product without any enhanced efficacy. In other words, it tries to restrain the firms monopoly.
What the current situation demands most is minor clarification of this controversial provision to avoid future challenges. The ideal situation would have been for the Madras High Court to come out with its own interpretation, after due consultation with the patent and health authorities, of Section 3(d) in its verdict. However, it has not done so. On the contrary, in its verdict, it claimed that the provision does not suffer from vagueness, ambiguity or arbitrariness and contains reasonable in-built protection for patent applicantsa statement which cannot be denied.
But, for a better understanding, either we can wait for a similar dispute to be raised in court, or could come up with an addendum in the law giving greater clarity to the provision by setting up some criteria for judging the enhanced efficacy of a new drug. Nevertheless, none of these steps are imperative as the provision is consistent with the Trips agreement.
The writer is secretary-general CUTS International. The article was prepared with the research assistance of Simi TB, researcher at CUTS