How India rejects bad patents 

How India rejects bad patents 

Context

In 2005, India made some remarkable amendments to the Indian Patents Act of 1970, to keep medicines affordable in the country. Since then we have faced a significant blowback not just from the global pharmaceutical industry but also from developed world including from the U.S. and the European Union.

Strong standards for patents have filtered the bad from the good, with the least administrative and financial burden.

• At the heart of the matter are the strong standards for patents which India introduced to promote genuine innovation across all fields of technology, in perfect compliance with the World Trade Organisation (WTO) norms
• In contrast, developed countries have weaker standards as a result of incessant lobbying by corporate behemoths.

The background

The findings of a new study which examined all 1,723 pharmaceutical applications rejected by the Indian Patent Office (IPO) between 2009 and 2016 have been an eye-opener.

Section 3(d)

Section 3(d) of the Indian Patents Act, a provision introduced to restrict the patenting of new forms of known pharmaceutical substances, became the subject of international attention after its use in rejecting a patent application by Novartis for the anti-cancer drug, Gleevec. We found that exceptions to patentability in Section 3 of the Act, which includes Section 3(d), were responsible for 65% of all rejected pharmaceutical patent applications.

Challenges before Section 3(d)

• Over its short lifetime, Section 3(d) has survived a challenge to its constitutionality before the Madras High Court, and Novartis’s fight against the rejection of its patent that went to the Supreme Court
• Both courts ruled decisively to uphold the legality of Section 3(d)
• The United States Trade Representative has also repeatedly rebuked India for this provision in its Special 301 Report, despite its perfect compliance with WTO norms
• While the world’s attention is still fixed on this legal experiment that the Indian Parliament introduced into law, there has been a dearth of information on how the IPO has applied Section 3(d)

Rejected using Section 3(d)

• An astonishing 45% of all rejected pharmaceutical patent applications cited Section 3(d) as a reason for rejection: the applications were identified as mere variants of known compounds that lacked a demonstrable increase in therapeutic value.
• Between 1995 and 2005, prior to our new law, India provided a temporary measure to receive patent applications for pharmaceutical products at the IPO, called the mailbox system.

Gradual increase in the section

• Though introduced in 2005, the use of Section 3(d) gradually increased from 2009 when mailbox applications were examined
• The spike coincides with the Supreme Court’s ruling in the Novartis case, in April 2013
• It would appear that this judgment provided legal certainty to Indian patent law in general, and Section 3(d) in particular, enabling the IPO to weed out trivial innovations.

At the patent office

In the last decade, we found that the IPO rejected about 95% of all pharmaceutical patent applications on its own

Only 5% were through the intervention of a third party, such as a pre-grant opponent

Frequent grounds of rejection

Our basic patentability criteria, that the invention should be new, involve an inventive step (also known as non-obviousness), and should be capable of industrial application, were the most frequently used grounds for rejection, followed by the exceptions to patentability grounds in Section 3.

Trivial Innovations

• Section 3(d) invaluably equips the IPO with a yardstick to evaluate applications that are merely trivial innovations over existing technology
• Trivial innovation must result in a far better product in order to qualify for patent protection.

Arguments against section 3(d)

Within the arcane world of patent law, an argument against provisions such as Section 3(d) is that it is no more than an extension of one of the basic requirements of patentability: non-obviousness.

Advantage of Section 3(d)

• The advantage that a provision such as Section 3(d) provides is the ability to question an application at the IPO itself without having to go through expensive and time-consuming litigation. The high cost of litigation poses significant barriers
• Cases are often settled before reaching a conclusion, in pay-for-delay settlements negotiated by patent owners, where generic manufacturers are essentially paid to stay off the market
• Patent litigation is expensive, but it is the patient who eventually pays a higher price — by being subject to exorbitant medicine prices, driven by the unmerited exclusivity that bad patents create.

As a check

• Without Section 3(d), the Indian public would have to bear the burden of invalidating a bad patent through litigation.
• India is certainly not alone in facing two connected challenges: constrained government budgets and urgent public health needs.

Conclusion

As Section 3(d) has been efficient in separating the bad patents from the good in India, it would be a wise move for other developing countries, grappling with similar challenges, to incorporate similar provisions in their law.