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PATENT LAW IN INDIA

CRITICAL OVERVIEW

Perspectives on Law and


Business

Submitted by
Nishant Bhaskaran

PATENT LAW IN INDIA CRITICAL OVERVIEW


Introduction
The history of Patent law in India starts from 1911 when the Indian Patents and
Designs Act, 1911 was enacted. The present Patents Act, 1970 came into force in
the year 1972, amending and consolidating the existing law relating to Patents in
India. The Patents Act, 1970 was again amended by the Patents (Amendment) Act,
2005, wherein product patent was extended to all fields of technology including food,
drugs, chemicals and micro organisms. The Patent (Amendment) Act 2005
(hereinafter referred to as the 2005 Amendment) was passed by the Parliament in its
budget session of 2005 to amend The Patent Act, 1970 hereinafter referred to as
The Act) and meet its obligation under TRIPS Agreement of WTO. The Act was
effective from 1st January 2005. After the amendment, the provisions relating to
Exclusive Marketing Rights (EMRs) have been repealed, and a provision for
enabling grant of compulsory license has been introduced. The provisions relating to
pre-grant and post-grant opposition have been also introduced. Although the Act
makes wide ranging changes to India's patent regime, the most controversial
provision is the one introducing product patents in the area of pharmaceuticals.
An invention relating to a product or a process that is new, involving inventive step
and capable of industrial application can be patented in India. However, it must not
fall into the category of inventions that are non-patentable as provided under Section
3 and 4 of the (Indian) Patents Act, 1970. In India, a patent application can be filed,
either alone or jointly, by true and first inventor or his assignee.
Meaning of Patent
In simple words, Patent is a document which is generally issued by government
conferring a monopoly right on an inventor to exploit his invention for a limited
period. The person to whom patent is granted in called as Patentee. It gives the
patentee an exclusive right to use, manufacture and sell the invention for a limited
period of time. The grant of such a patent to the inventor of any invention is only for a
fixed or limited period of time and thus after the expiry of such period, the patented
invention passes on to the public domain.

Patents are one of the oldest forms of intellectual property protection and, as with all
forms of protection for intellectual property; the aim of a patent system is to
encourage economic and technological development by rewarding intellectual
creativity. The purpose of a patent is to provide protection for technological advances
i.e. inventions. It provides an award for the disclosure of the creation of something
new as well as for the further development, or refinement, of existing technologies. In
short, through patents, progress in changing technologies finds incentive to improve.
Abraham Lincoln describes the importance of Patent as Before then [the adoption of
the United States Constitution], any man might instantly use what another had
invented; so that the inventor had no special advantage from his own invention. The
patent system changed this; secured to the inventor, for a limited time, the exclusive
use of his invention; and thereby added the fuel of interest to the fire of genius, in the
discovery and production of new and useful things.
Procedure for Grant of a Patent in India
After filing the application for the grant of patent, a request for examination is
required to be made for examination of the application by the Indian Patent Office.
After the First Examination Report is issued, the Applicant is given an opportunity to
meet the objections raised in the report. The Applicant has to comply with the
requirements within 12 months from the issuance of the First Examination Report. If
the requirements of the first examination report are not complied with within the
prescribed period of 12 months, then the application is treated to have been
abandoned by the applicant. After the removal of objections and compliance of
requirements, the patent is granted and notified in the Patent Office Journal. The
process of the grant of patent in India can also be understood from the following flow
chart:

Filing of Application for Grant of Patent in India by Foreigners


India being a signatory to the Paris Convention for the Protection of Industrial
Property, 1883 and the Patent Cooperation Treaty (PCT), 1970, a foreign entity can
adopt any of the aforesaid routes for filing of application for grant of patent in India.
Where an application for grant of patent in respect of an invention in a Convention
Country has been filed, then similar application can also be filed in India for grant of
patent by such applicant or the legal representative or assignee of such person
within twelve months from the date on which the basic application was made in the
Convention Country i.e. the home country. The priority date in such a case is
considered as the date of making of the basic application.
Pre-Grant Opposition
A representation for pre-grant opposition can be filed by any person under Section
11A of the Patents Act, 1970 within six months from the date of publication of the
application, as amended (the "Patents Act") or before the grant of patent. The

grounds on which the representation can be filed are provided under Section 25(1) of
the Patents Act. There is no fee for filing representation for pre-grant opposition.
Representation for pre-grant opposition can be filed even though no request for
examination has been filed. However, the representation will be considered only
when a request for examination is received within the prescribed period.
Post-Grant Opposition
Any interested person can file post-grant opposition within twelve months from the
date of publication of the grant of patent in the official journal of the patent office.
Grounds for Opposition
Some of the grounds for filing pre-and post-grant opposition are as under:
a. Patent wrongfully obtained;
b. Prior publication;
c. The invention was publicly known or publicly used in India before the priority
date of that claim;
d. The invention is obvious and does not involve any inventive step;
e. That the subject of any claim is not an invention within the meaning of this Act,
or is not patentable under this Act;
f. Insufficient disclosure of the invention or the method by which it is to be
performed;
g. That in the case of a patent granted on convention application, the application
for patent was not made within twelve months from the date of the first
application for protection for the invention made in a convention country or in
India;
h. That the complete specification does not disclose or wrongly mentions the
source and geographical origin of biological material used for the invention;
and

i. That the invention was anticipated having regard to the knowledge, oral or
otherwise, available within any local or indigenous community in India or
elsewhere.

Term of Patent
The term of every patent in India is twenty years from the date of filing the patent
application, irrespective of whether it is filed with provisional or complete
specification. However, in case of applications filed under the Patent Cooperative
Treaty (PCT), the term of twenty years begins from the international filing date.
Payment of Renewal Fee
It is important to note that a patentee has to renew the patent every year by paying
the renewal fee, which can be paid every year or in lump sum.
Restoration of Patent
A request for restoration of patent can be filed within eighteen months from the date
of cessation of patent along with the prescribed fee. After the receipt of the request,
the matter is notified in the official journal for further processing of the request.
Patent of Biological Material
If the invention uses a biological material which is new, it is essential to deposit the
same in the International Depository Authority ("IDA") prior to the filing of the
application in India in order to supplement the description. If such biological materials
are already known, in such a case it is not essential to deposit the same. The IDA in
India located at Chandigarh is known as Institute of Microbial Technology (IMTECH).
What are the Rights granted by Patent?
If the grant of the patent is for a product, then the patentee has a right to prevent
others from making, using, offering for sale, selling or importing the patented product
in India. If the patent is for a process, then the patentee has the right to prevent
others from using the process, using the product directly obtained by the process,

offering for sale, selling or importing the product in India directly obtained by the
process.
Before filing an application for grant of patent in India, it is important to note "What is
not Patentable in India?"
Following i.e. an invention which is (a) frivolous, (b) obvious, (c) contrary to well
established natural laws, (d) contrary to law, (e) morality, (f) injurious to public health,
(g) a mere discovery of a scientific principle, (h) the formulation of an abstract theory,
(i) a mere discovery of any new property or new use for a known substance or
process, machine or apparatus, (j) a substance obtained by a mere admixture
resulting only in the aggregation of the properties of the components thereof or a
process for producing such substance, (k) a mere arrangement or rearrangement or
duplication of known devices, (l) a method of agriculture or horticulture and (m)
inventions relating to atomic energy, are not patentable in India.
Maintainability of Secrecy by the Indian Patent Office (IPO)
All patent applications are kept secret up to eighteen months from the date of filing or
priority date, whichever is earlier, and thereafter they are published in the Official
Journal of the Patent Office published every week. After such publication of the
patent application, public can inspect the documents and may take the photocopy
thereof on the payment of the prescribed fee.
Compulsory Licensing
One of the most important aspects of Indian Patents Act, 1970, is compulsory
licensing of the patent subject to the fulfillment of certain conditions. At any time after
the expiration of three years from the date of the sealing of a patent, any person
interested may make an application to the Controller of Patents for grant of
compulsory license of the patent, subject to the fulfillment of following conditions, i.e.

the reasonable requirements of the public with respect to the patented


invention have not been satisfied; or

that the patented invention is not available to the public at a reasonable price;
or

that the patented invention is not worked in the territory of India.

It is further important to note that an application for compulsory licensing may be


made by any person notwithstanding that he is already the holder of a license under
the patent.
For the purpose of compulsory licensing, no person can be stopped from alleging
that the reasonable requirements of the public with respect to the patented invention
are not satisfied or that the patented invention is not available to the public at a
reasonable price by reason of any admission made by him, whether in such a
licence or by reason of his having accepted such a licence.
The Controller, if satisfied that the reasonable requirements of the public with respect
to the patented invention have not been satisfied or that the patented invention is not
available to the public at a reasonable price, may order the patentee to grant a
licence upon such terms as he may deem fit. However, before the grant of a
compulsory license, the Controller of Patents shall take into account following
factors:

The nature of invention;

The time elapsed, since the sealing of the patent;

The measures already taken by the patentee or the licensee to make full use
of the invention;

The ability of the applicant to work the invention to the public advantage;

The capacity of the applicant to undertake the risk in providing capital and
working the invention, if the application for compulsory license is granted;

As to the fact whether the applicant has made efforts to obtain a license from
the patentee on reasonable terms and conditions;

National emergency or other circumstances of extreme urgency;

Public non commercial use;

Establishment of a ground of anti competitive practices adopted by the


patentee.

The grant of compulsory license cannot be claimed as a matter of right, as the same
is subject to the fulfilment of above conditions and discretion of the Controller of
Patents. Further judicial recourse is available against any arbitrary or illegal order of
the Controller of Patents for grant of compulsory license.
Infringement of Patent
Patent infringement proceedings can only be initiated after grant of patent in India
but may include a claim retrospectively from the date of publication of the application
for grant of the patent. Infringement of a patent consists of the unauthorized making,
importing, using, offering for sale or selling any patented invention within the India.
Under the (Indian) Patents Act, 1970 only a civil action can be initiated in a Court of
Law. Further, a suit for infringement can be defended on various grounds including
the grounds on which a patent cannot be granted in India and based on such
defence, revocation of Patent can also be claimed.
Copyright
Indian copyright law is at parity with the international standards as contained in
TRIPS. The (Indian) Copyright Act, 1957, pursuant to the amendments in the year
1999, fully reflects the Berne Convention for Protection of Literary and Artistic Works,
1886 and the Universal Copyrights Convention, to which India is a party. India is also
a party to the Geneva Convention for the Protection of Rights of Producers of
Phonograms and is an active member of the World Intellectual Property Organization
(WIPO) and United Nations Educational, Scientific and Cultural Organization
("UNESCO").
"Work" protected in India
Under the Copyright Act, 1957 the term "work" includes an artistic work comprising of
a painting, a sculpture, a drawing (including a diagram, a map, a chart or plan), an
engraving, a photograph, a work of architecture or artistic craftsmanship, dramatic

work, literary work (including computer programmes, tables, compilations and


computer databases), musical work (including music as well as graphical notations),
sound recording and cinematographic film.
In order to keep pace with the global requirement of harmonization, the Copyright
Act, 1957 has brought the copyright law in India in line with the developments in the
information technology industry, whether it is in the field of satellite broadcasting or
computer software or digital technology. The amended law has also made provisions
to protect performer's rights as envisaged in the Rome Convention.

SOME MAJOR CHANGES INTRODUCED BY THE 2005 AMENDMENT


The 2005 Amendment amended many provisions of the Act; these amendments
were absolutely necessary for India to meet its obligation under TRIPS Agreement.
Some of important amendments are discussed below 1.

Extension of product patent protection to all fields of technology

The most prominent and controversial change of the 2005 Amendment has
been the deletion of section 5 of the Act, thereby paving the way for product
patents in the area of pharmaceutical and other chemical inventions. Section
5 of the Act (as it stood after the 2002 amendments) had provided that, in the
case of inventions being claimed relating to food, medicine, drugs or chemical
substances, only patents relating to the methods or processes of manufacture
of such substances could be obtained. Before this Amendment in the Act,
Product Patent was not granted on the inventions related to drugs, foods and
chemicals and only process patents were granted on these inventions. It
means if a company invented a medicine to cure a disease using a certain
process. That company cant claim a patent on that medicine while the
company can claim a patent on the process which it has used to manufacture

that medicine. In the other words that company cant stop other competitors
from manufacturing the end product but can stop others from producing the
end product using their patented process or method. This resulted in a
situation in which reverse engineering mechanism was highly used to develop
the same medicine and drugs with slightly or substantially different process.
This copycat business helped a few pharmacy companies, to grow into global
players and made medications cheaper. The pharmacy MNCs were forced to
watch Indian companies eat into their market share as Indian companies
developed same medicine at much lower cost because of relatively lower
investment in R&D. The Process Patent regime left no scope for absolute
monopoly in the market; this resulted in increased competition in market and
consequently leads to further drop in medicine prices.
This

deliberate

strategy

of

denying

product

patent

protection

to

pharmaceutical inventions is traceable to the Ayyangar Committee Report, a


report that formed the very basis of the Patents Act, 1970. The Committee
found that foreigners held between eighty and ninety percent of Indian patents
and that more than ninety percent of these patents were not even worked in
India. The Committee concluded that the system was being exploited by
multinationals to achieve monopolistic control over the market, especially in
relation to vital industries such as food, chemicals and pharmaceuticals.
Medicines were arguably unaffordable to the general public and the drug price
index was rising rapidly. The Committee therefore recommended that certain
inventions such as pharmaceutical inventions, food and other chemical
inventions be granted only process patent protection. Indias well-developed
generic industry today is testimony to the farsightedness of this report.
Few cases reported by media and newspapers, given below, provide
glimpses of how Indian companies have taken legal measures to refute
claims of multinational drug majors for extension of their patents.
a.

A case that attracted a lot of attention in India is that of the

Swiss drug company Novartis. Novartis had challenged Section 3(d) of


the Indian Patents Act claiming immunity for their drug Gleevic, a major

drug for leukemia on the pleas that the new Gleevic was a major
improvement over a older version whose patent was over. This was
disputed by Indian companies such as Natco Pharmaceuticals. The
plea of Novartis was rejected consequently enabling manufacture by
Indian generic companies. Cost estimates of the new generic drug
place it at one tenth the price of Gleevic.
b.

In a similar case the Delhi Court rejected the petition of Bayer

Healthcare, a German drug major from preventing the Drug Controller


General of India giving marketing approval to Indian company Cipla for
the generic version of the cancer drug Nexavar. The ruling however
had a caveat namely, that if the Indian drug company is found guilty of
patent infringement damages will have to be compensated by payment
to Bayers.
c.

Cipla in another case won the right to manufacture and market

the generic version of the anti-cancer drug Tarceva originally patented


by the Swiss pharma company Hoffman La Roche both in Delhi Court
and the Supreme Court.
d.

Recently, Aurobindo Pharma an Indian drug pharma received

USFDA approval for Risperidone Oral Solution a drug used in the


treatment of mental and emotional problems. Indian companies are
becoming increasingly active in the US market. In the first quarter of
2009 Indian companies had achieved 50 ANDA approvals.
2.

No Swiss Claims and Expansion of Exclusion under Section 3(d)

A Swiss Claim is a claim for patent wherein the use of a substance or


composition that has already been used for a medical purpose is intended or
specified to be used for a new medical purpose. Section 3(d) as amended by
the 2005 Amendment clarifies that mere discovery of a new form of a known
substance, which does not result in the enhancement of the known efficacy of
that substance is not an invention and therefore not patentable. For the
purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure

form, particle size, isomers, mixtures of isomers, complexes, combinations


and other derivatives of known substances are to be considered to be the
same substances, unless they differ significantly in properties with regard to
efficacy.
In order to fully understand the amended Section 3(d), one need to first
address the issue of what exactly the term efficacy means. The term has not
been defined in the Act, but in Novartis AG v. Union of India, the High Court of
Madras , while answering the question, whether section 3(d), as amended by
the Third Amendment, is violative of the fundamental rights guaranteed under
Article 14 of the Indian Constitution, interpreted the phrase efficacy as the
ability of a drug to produce the desired therapeutic effect i.e. how effective the
new discovery made would be in healing a disease/having a good effect on
the body, for which an applicant in order to pass the test of efficacy"
needs to show that the discovery of a new form of a known substance has
resulted in the enhancement of the known efficacy of that substance and if the
discovery is nothing other than the derivative of a known substance, then, it
must be shown that the properties in the derivatives differ significantly with
regard to efficacy. Further, the Honble High Court stated that such
enhanced efficacy could be shown by giving necessary comparative details
based on the relevant scientific data demonstrating the enhancement in the
known efficacy of the original substance and that the derivative so derived will
not be the same substance, since the properties of the derivatives differ
significantly with regard to efficacy.
In this case a Swiss drug company Novartis had challenged Section 3(d) of
the Indian Patents Act claiming immunity for their drug Gleevic , a major drug
for leukemia on the pleas that the new Gleevic was a major improvement over
a older version whose patent was over. This was disputed by Indian
companies such as Natco Pharmaceuticals. The plea of Novartis was rejected
consequently enabling manufacture by Indian generic companies. Cost
estimates of the new generic drug place it at one tenth the price of Gleevic.

The Hon'ble High Court also noted that though section 3(d) is not only limited
to drugs and pharmacological substances, it is clear that certain portions of
the section and the attached explanation is only referable to pharmacological
substances.
3.

Software Patentability

Section 3(k) of the Patents Act, 1970 excluded a computer programme per
se from the scope of patentability. This exclusion met with conflicting
interpretations at the patent office, with some examiners granting patents to
software combined with hardware or software with a demonstrable technical
application of some sort. The 2004 Ordinance therefore qualified this
exclusion by stating that software with a technical application to industry or
when combined with hardware would be patentable. Owing to vigorous
opposition from the free software movement, this provision was removed from
the 2005 Act. The earlier position under the Patents Act, 1970 that a computer
programme per se is not patentable now prevails.
4.

Deletion of the provisions relating to Exclusive Marketing Rights

(EMRs)
Section 21 of 2005 Amendment deleted the Chapter IVA of the Act. The 1999
Amendment inserted this chapter in the Act to provide that applications
claiming pharmaceutical inventions would be accepted and put away in a
mailbox, to be examined in 2005. These applications are commonly referred
to as mailbox applications. This amendment was in pursuance of a TRIPS
obligation aimed at preserving the novelty of pharmaceutical inventions in
those developing and least developed country (LDC) members that did not
grant product patents for pharmaceutical inventions in 1995. By virtue of this
mailbox facility, applications would be judged for novelty on the basis of the
filing date and not with reference to 2005, the year in which product patents
were first incorporated into the patent regime.
To obtain an EMR, the following conditions must be fulfilled:

a)

The product must be patentable, that is, it must be an invention

as per Section 2 of the Patents Act 1970, and must not fall under the
non-patentable products listed in Sections 3 and 4, such as products
derived from traditional knowledge or atomic energy-related products.
b)

The invention must have been made in India or in a WTO

Convention country. If made in a convention country, the invention must


have been:
(i)

Filed on or after January 1, 1995, and

(ii)

Before getting a patent in India, the applicant must have

obtained such a patent in the Convention country.


c)

If the invention has been made in India,


(i)

The application for patent for the method or process of

production of such a substance should have been filed on or


after January 1, 1995, and
(ii)

The patent must have been granted on or after the date

of filing of such EMR.


5.

Compulsory Licensing Regime

Section 84 of The Act provides for the grounds on and procedures by which, a
compulsory license will be granted. The 1999 Amendment adds an entire
chapter to the Patents Act on the working of patents, compulsory licenses,
and revocation of licenses. After this amendment, the grounds on which a
compulsory license will be granted are:
a.

Reasonable requirements of the public with respect to the

patented invention have not been satisfied; or,


b.

The patented invention is not available to the public at a

reasonably affordable price; or,


c.

The patented invention is not worked (i.e. not used or

performed) in the territory of India.


In respect to the 2005 Amendment following amendments have been made in
respect of compulsory licencening regime -

a)

Automatic Compulsory Licences for Mailbox Applications

The 2005 Amendemt provides that in the case of those mailbox


applications that result in the grant of a patent, an automatic
compulsory licence would issue to those generic companies that made
a significant investment and were producing and marketing a drug
covered by the mailbox application prior to 2005. Such licence is
subject to a payment of a reasonable royalty. However, no specific
yardstick is provided to determine reasonableness and this term is
likely to lead to disputes in coming years.
b)

Compulsory Licences for Exports

In order to incorporate what is commonly referred to as the Paragraph


6 Decision, the Ordinance introduced section 92A, which provides for
compulsory licences to enable exports of pharmaceutical products to
those countries with no manufacturing capacity of their own.
Unfortunately, this suffered from a handicap - the provision required
that the exporter obtain a compulsory licence from the importing
country as well. In the process, the provision failed to cater to those
situations where there was no patent in such importing country and no
requirement for obtaining a compulsory licence there. The 2005
Amenment therefore seeks to rectify this by adding that an exporter
can resort to section 92A where the importing country has by
notification

or

otherwise

allowed

importation

of

the

patented

pharmaceutical products from India.


c)

Procedural Changes

The general compulsory licensing procedure under Chapter XVI states


that in most cases, a compulsory licensing application can be
entertained only if negotiations towards a voluntary licence have not
borne fruit within a reasonable time period. In order to prevent
patentees from dragging on voluntary negotiations to the detriment of
applicants, the Act caps a reasonable period of negotiations at six
months.

6.

Other Amendments

There are many changes brought by the 2005 Amendment in the


provisions of the Act, that can be summarized as follows a)

The

2005

Amendment

amend

the

definition

of

New

Invention,Inventive Step and insert a new entry of Pharmaceutical


Substances in the definition clause.
b)

Provision of 'acceptance of specification' and its advertisement

have been deleted.


c)

Modification in the provisions relating to opposition procedures

with a view to streamlining the system by having both Pre-grant and


Post-grant opposition in the Patent Office.
d)

Application for patent will be published in Official Journal. At that

time opposition can be made on limited grounds but hearing is not


mandatory.
e)

After grant of patent, opposition can be made within 12 months.

f)

Suit for infringement of patent cannot commence before date of

publication of publication of the application.


g)

Penalties enhanced substantially.

h)

Strengthening the provisions relating to national security to

guard against patenting abroad of dual use technologies.


i)

Rationalisation of provisions relating to time-lines with a view to

introducing flexibility and reducing the processing time for patent


applications, and simplifying and rationalising procedures.
IMPLICATIONS OF 2005 AMENDMENT ON INDIAN ECONOMY
Some possible implications of product patent regime in the field of food, medicine,
drugs or chemical substances can summarised as below
1.

Price rise and access to medicine -

It is feared that the 2005 Amendment would spur a steep rise in drug prices
and an adverse impact on access to important and life saving drugs. From
a completely objective point of view two categories of drugs will be affected
first, medicines that will be invented after January 1, 2005. If a medicine is

patentable, the patent holder will be granted a 20-year monopoly from the
date of filing as a result of the new rules. Without a compulsory license,
generic versions will not be permitted on the market for the life of the patent.
In other developing countries that have begun protecting patents on
medicines in accordance with WTO rules, the vast majority of medicines
patent filers in developing countries are multinational drug companies based
in industrialized countries.
The second category of medicines that will be affected by the 2005
Amendment are those that have been patent protected outside of India since
January 1, 1995. According to WTO rules (TRIPS Art. 70.8), India was
required to establish a mailbox where patent applications could be filed
between 1995 and 2005. After January 1, 2005, the mailbox will be opened,
and requests for patents considered by the Indian Patent Office.
In a nutshell, there is no doubt that, after 2005 Amendment, the prices of
above mentioned drug will rise but the question which really needs to be
answered is to what extent this price rise will eventually affect the access and
affordability of life saving or very essential drugs to most of the Indian
population. In statement issued by Shri Kamal Nath, Union Minister of
Commerce & Industry, on 04 Apr 2005 said that 97% drugs in the market, and
100% of all essential drugs are not covered by patents. On the other hand
fear of substantial price rise, in life saving drugs patented after 2005 can be
addressed to a certain extent by safeguards built in the 2005 Amendment and
other related laws for the time being in force, such as
a.

Compulsory licensing,

b.

Parallel import of products,

c.

Acquisition of patent rights by the government,

d.

Revocation of patents in the public interest

e.

Provisions to deal with emergency situations

f.

Patentability threshold,

g.

Opposition mechanism, and

h.

Price control regime like Essential Commodities Act, 1955, etc

Now the real issue is whether these provisions would in fact be interpreted
and implemented in a manner conducive to public health needs of Indian
society at large and would largely depends upon the efforts of the government
towards the same. The Indian Policy makers have to keep in mind, the ground
realities of India while implementing these provisions. Ground realities of India
is substantially different from developed nations, under pressure of whom we
have adopted product patent regime in pharmaceuticals. In India there is no
sound healthcare insurance system and per capita income is also relatively
very low.
According to Health GAP (Global Access Project), a US-based NGO that
advocates the cause of AIDS patients, human rights and fair trade, the 2005
Act fails to utilise fully the public health safeguards available to WTO member
states under TRIPS, which were reaffirmed by the Doha Declaration on the
TRIPS Agreement and Public Health. Going by this history, one is prone to
be a little skeptical of the role of price control in India. For e.g. when India
passed its Patent Act in 1970, it also instituted a Drug Price Control Order
(DPCO) under the Essential Commodities Act of 1955 to control the price of
drugs and ensure access to the general public. Under this order, prices of bulk
drugs and their formulations were fixed by the government as per a specified
formula that allowed a 100% margin on ex factory cost. Price changes of the
remaining drugs were also to be monitored. However, over a period of time,
as a result of sustained lobbying by the Indian pharmaceutical industry, the
number of drugs listed in the DPCO fell from 347 in 1979 to 76 in 1995. A new
pharmaceutical policy in 2002 that sought to relax controls even further was
challenged on the ground that, under the policy, certain life saving drugs had
the potential of being excluded from the DPCO. The challenge made its way
to the Supreme Court and is yet to be resolved.
In August 2005 there were indications that, the government is considering
strengthening the price control regime to increase competition and ensure
affordable medicines to the general public. To this end, a new Drug Pricing

(Regulation & Management) Act was being considered, but still after almost
six years it is yet to be implemented.
2.

Cultivating Innovation Culture in India

In the fear substantial price rise pepole are ignoring one of the biggest
advantages of the 2005 Amendment. The Indian Pharmaceutical Industry
today consist of about 8174 bulk drug manufacturing units and 2389
formulations units spread across the country. Pharmaceutical Companies
Operating in India is a pool representing about 250 large Pharmaceuticals
manufacturers and suppliers and about 8000 Small Scale Pharmaceutical &
Drug Units including 5 Central Public Sector Units. The 2005 Amendment by
giving an extra incentive to new and innovative drugs will also cultivalte an
innovation culture in Indian pharma industries. It needs to be noted however
that basic reverse engineering skills (organic chemistry skills) are different
from the skills required to arrive at new drugs (medicinal chemistry
skills). Besides, the costs of researching upon and introducing a new drug into
the market are colossal. It therefore remains to be seen whether incentives
through a patent regime will achieve the desired results and whether Indian
companies will be able to compete with global multinational companies on this
turf. A commentator rightly notes that till recently, the emphasis has been
mainly on building a system of production and not on a system of innovation.
Conclusion
The originators of inventions should get their just reward by way of suitable royalties
and there should be no grudge in providing the same. The doors should be opened
for obligatory licensing involving the domestic enterprises in the production of
patented drugs. Judicious and careful implementation of TRIPS is needed for its
smooth application and balancing of rights and obligations of the patent holder in a
manner conducive to social and economic welfare as stipulated in Article 7 of TRIPS
Agreement. India can play an effective role in the region about the availability of
generic drugs by the pharmaceutical industry only after the ignored issues are
provided through further amendments to the Patents Act 1970.

In all possibility, it can be said that Indian Pharma Industry will not end up where it
started in pre 1970 era but it is safe to assume that Indian drug companies might
become dependent on MNCs for technology to produce new drugs. According to
reputed magazine it is likely that the existing drugs say about 10 per cent of the
marketed drugs are likely to become expensive due to amendments made in new
Patents Act. It must be noted that the remaining 90 percent of drugs will be
unaffected by this amendment.
The safeguards provided under the Act and other laws, if implemented in a manner
conducive to Indian consumers can prove a boon for them. The Indian consumers in
that case can enjoy the benefits of both innovative as well as affordable drugs. To
conclude it can be clearly said that, this amendment will definitely have a varied
implication on Indian economy. On one side it may compromise with the interest of
certain Indian companies and consumers but on the other side it will act as decisive
step in internationalization of Indian Patent System and cultivating an innovation
culture in Indian Pharmaceutical Industry.