In this blogpost, Shaunak Banerjee, Student, National Law University, Odisha, writes about the evolution of India’s patent legislation.

India’s pre-TRIPS era

The concept of issuing pharmaceutical patents was first initiated by the British, during the colonial era.[1] Over time, the system of issuing patents evolved, and over the next few decades, India witnessed a sharp fall in the production of -patents on medicines.[2] One of the more famous legislations that followed was the Patents Act, 1970. This came in the backdrop of the exorbitant prices charged by the firms on pharmaceutical products, something which the common people could not afford to buy.[3] This was the result of the continuing dominance of the foreign pharmaceutical firms who controlled almost 70% of the local market.[4]

This consequently allowed India[5] to transform and develop itself into one of the more functional pharmaceutical industries on the global scale. This created space for the local pharmaceutical companies to dive into the local market, and increase their overall share of the Indian Market. This resulted in the dwindling of shares by the foreign firms, who were now held in their steps. As a result, Indian firms became more technically sound and sophisticated knowing that they could ward off attention from the foreign firms, they started developing new processes for drug production, and also became skilled in reverse-engineering.[6]

INDIA’S AGE OF TRANSFORMATION (1995-2005)

TRIPS Agreement in India Hits A Roadblock

 India added a new dimension to its International IP Law, when it became a member of the WTO, and accepted The TRIPS Agreement. This agreement came into force in 1995.[7].The TRIPS Agreement revolved around the idea that the supremacy and the overall stability of the developed nations, vis-à-vis, the USA, Japan, Europe depended upon them ensuring ample protection of IP rights outside their dominions, especially in the developing countries.[8] The TRIPS Convention also ensured that for the countries to be part of the WTO, they had to be a part of the TRIPS agreement.[9]This, specifically, underlined the “single undertaking” nature of the WTO.

The TRIPS Agreement has stirred a lot of controversies, as it requires patents on pharmaceutical products, which was something that the developing nations did not adhere to at that time.[10] This didn’t go down well with the developing nations as it affected their shares in the local market.[11]Issuing of patents meant that the prices of the pharmaceutical products would go up, and which render them incompetent to function in such conditions.[12] The only upside that was presented to it was the fact[13] that it would lead to pharmaceutical innovation.[14]By allowing the innovators to block competition, and therefore, lead to a greater appreciation of their ideas, IPR’s can act as incentives for initiating further investment in research and development.

India, consequently, objected to the TRIPS Agreement, and all of its patent provisions,[15] as did all of the local pharmaceutical firms.[16] On being faced with the threat of having to leave the WTO if it didn’t adhere to the TRIPS Agreement, India finally acceded to it.
TRIPS Agreement required that the issuance of compulsory licensing should be “predominantly” within the local markets only.

 Article 31 of this Agreement was a slight deviation from this general rule, as it allowed the issuance of compulsory licenses by the government to third parties under four conditions: (a) Situations of National Emergency (b)Situations involving commercial non-public use (c) Where there is an inherent need to correct anti-competitive practices (d) Involving dependent patents. TRIPS inherently aims to bridge the fine gap between the interests of consumers and the manufacturers.[17]This article added many flexibilities as to the issuance of compulsory licenses though it still left terms like “National Emergency” undefined, which led to many ambiguities, thus leaving the provisions of the agreement in utter uncertainty. As a matter of fact, there were doubts as to whether India could avail these flexibilities under this article, and whether or not, it would have to declare a state of National Emergency to invoke this particular statute.

Effects Of The TRIPS Agreement On India: An Overview

Between the periods of 1995-2005,as a direct response to the imminent threat that was looming, that is the loss of the local market, due to the increase in prices of the pharmaceutical products, the local firms turned their attention outside India.They turned towards exports and R&D(Research and Development) in the developed nations. This was aptly pointed out by the Organisation of Pharmaceutical Producers of India (OPPI)[18].

Indian companies, however, could not manage to enter the American Market because of their stringent regulatory barriers. This, however, was temporary, as the Indian firms gained valuable expertise in navigating patents and soon they were to hold 20-50% of all the applications of drug approval in the US. [19] This massive turnover has resulted in India gaining a significant advantage in trade affairs. “It has become one of the largest suppliers of pharmaceuticals formulations in the world”.[20]

This is in stark contrast to what the condition was prior to the TRIPS Agreement. Foreign exports now formed a bulk of the revenue of the local firms, then the local sales. This, in turn, will lead to greater foreign investment. As per the WHO, “Developing countries bear the brunt of the problem” and “poverty, and the lack of an official supply chain, are major factors in creating markets for counterfeit products”[21]. By using India’s third world patent system in line with that of the Western countries, India gained legitimacy and positive attention. The R&D Sector also improved drastically under the TRIPS Agreement.

 One of the ramifications that have followed is that “Indian firms involved in Research and Development have focused on the diseases prevalent in the developed countries other than those specific to India.”[22]
This economic development brought the complete and utter disregard for public health to the forefront, as public health activists raised the issue of the conflict between the two sections.[23]Many NGO’s, the WHO, and other organizations began to study and analyze the relationship between economic development, and the overall public health. The HIV crisis acted as the epicenter for the medicine campaigners, who propagated the idea that TRIPS acted as a barrier to the access of generic[24] AIDS medicines in the developing countries.[25]

The efforts of the health activists reaped awards as the Doha Convention ensured that the issuance of compulsory licenses extended to that of the developing countries as well, also known as the countries who did not have the resources to manufacture medicines or pharmaceutical products, could now get access to such products, by means of a compulsory license.[26]

The Doha Declaration was held in Doha, on November 14, 2001. It shifted the focus from that of the developed countries to that of the developing countries, as it moved a step further towards promoting and looking out for the overall benefit and welfare of the entire global population at large. It aimed to promote increased access to medicines and, consequently support and aid the overall public health.

 It allowed the issuance of compulsory licenses to those countries which lacked the resources to manufacture their own pharmaceutical products. The Doha Convention went a long way in alleviating the distressing conditions in the third-world countries. [27] It, however, failed in its objective to clarify the term “national emergency,” which being a vague term, could be construed so as to benefit the developed nations. .[28]

To put things into perspective, in the light of all the ambiguities mentioned in the TRIPS Agreement, India put forward its Revised Act in 2005. India was attributed with the assertion that developing countries required a “Transition Period.” India had to file their patent applications, in accordance with the “Mailbox Provision”, when the 2005 changes came into effect.[29]
In order to meet with the TRIPS deadline, India passed an ordinance that temporarily brought such laws into force.[30]“The Indian Pharmaceutical Association(Hereinafter referred to as IPA),which represented the largest local generic firms, insisted that the Revised Act include a new provision which would prevent the patenting of already known substances, as well as the patenting of new forms of known substances.”[31] Local HIV organizations rallied against such laws and helped protests against the passing of the bill.[32]Humanitarian bodies like MSF [33]and representatives from WHO also pleaded to the government “To make laws that would facilitate access to the medicines and not go beyond the minimum level which was required by TRIPS.”[34]

The ultimate objective of adding the provision of compulsory licensing in the 2005 Revised Act was to provide such a license[35] if (a)”a patent is not worked in India [for] three years after its grant”[36](b)”reasonable requirements of the public’ are not satisfied”(c)”the patented invention is not available to the public at a ‘reasonably affordable price’[37].

The Revised Act has further added some provisions to shape the future of India’s pharmaceutical industry. These provisions are (a)the recognition of product patents, not just process patents (b) A twenty-year term from the filing date of applications(c)the availability of patents for industrial application.”[38]

On close examination of the Indian context, we can find many anomalies in the Revised Act. Many undefined and vague terms, such as the requirement to involve in “reasonable” efforts to negotiate with the patent-holders is lost completely in relation to the Indian perspective.[39] Such ambiguities have given rise to many flexibilities, which are of relevance with respect to the developing countries, and their access to pharmaceuticals.

Such a wide analysis of the flexibilities is beyond the scope of this paper. Despite these ambiguities, India has gone on to implement the TRIPS Agreements, as this allows a vast scope of expansive development and flexibility in the area of pharmaceuticals that no other legislation had ever provided before in the international dominions, remains one of the more go-to topics to research on.

[1]P. Narayanan, Patent Law 5 (4th ed. 2006)

[2]P. Narayanan, Patent Law 546 (3d ed. 1998)

[3]STAFF OF S. COMM ON THE JUDICIARY, SUBCOMM. ON ANTITRUST AND MONOPOLY, 87TH CONG. IST SESS., REP. No. 448 (June 27, 1961) 41 tbl.19

[4]SudipChaudhuri, The WTO and India’s Pharmaceuticals Industry: Patent Protection, Trips, and Developing Countries 1, 29 (2005)

[5] Jean 0. Lanjouw, The Introduction of Pharmaceutical Product Patents in India: “Heartless Exploitation of the Poor and Suffering”3 Nat’l Bureau of Econ. Research, Working Paper No. 6366, 1998

[6]Dilip G. Shah, Generic to Innovative: Transition of Indian Pharmaceutical Companies, 5 Pharma Focus Asia 13, 14 (2007).

[7] The Patents (Amendment) Act, 2005, No. 15, Acts of Parliament, 2005

[8]Susan K Sell, Private Power, Public Law: The Globalization Of Intellectual Property Rights, Berne Convention for the Protection of Literary and Artistic Works art. 33, Sept. 9, 1886

[10][10]Carlos M. Correa, Patent Rights In Intellectual Property and International Trade: The TRIPS Agreement 227

[11] F. M. Scherer, A Note on Global Welfare in Pharmaceutical Patenting, 27 World Econ. 1127, 1128 (2004)

[12]World Health Org., The World Medicines Situation 31, 68-69 (2004)

[13] Keith E. Maskus, Implications of Regional and Multilateral Agreements for Intellectual Property Rights, 20 World Econ. 681, 689 (1997)

[14] Alan V. Deardorff, Should Patent Protection Be Extended to All Developing Countries

[15] George K. Foster, Opposing Forces in a Revolution in International Patent Protection: The U.S. and India in the Uruguay Round and its Aftermath, 3 UCLA J. Int’l L. & Foreign Aff.283, 311 (1998).

[16] Id.

[17] James ThuoGathii, Rights, Patents, Markets and the Global AIDS Pandemic, 14 FLA. J. Int’l L. 261, 300 (2002)

[18] OPPI’s Position on Trade Related Aspects of Intellectual Property Rights (TRIPS)

[19] Hitesh Gajaria, India to Be Amongst Top Three Generic Makers in the World, Express Pharma, Jan. 16-31, 2008

[20]Shubham Chaudhuri, Pinelopi K. Goldberg &Panle Jia, Estimating the Effects of Global Patent Protection in Pharmaceuticals: A Case Study of Quinolones in India, 96 Am. Econ. Rev. 1477, 1481-82 (2006)

[21] WHO Fact Sheet No. 275, Counterfeit Medicines, Feb. 2006,

[22] See Comm’n On Intellectual Prop. Rights, Innovation and Pub. Health, World Health Org., Public Health, Innovation And Intellectual Property Rights 15 (2006)

[23]Ellen’Thoen, The Revised Drug Strategy: Access to Essential Medicines, Intellectual Property and the World Health Organization, In Access To Knowledge In The Age Of Intellectual Property(2010)

[24]James Love, Panel Discussion, AIDS Drugs And The Developing World: The Role Of Patents In The Access Of Medicines,12

[25]Fordham Intell. Prop. Media &Ent. L.J.683, 705 (2002)

[26]Radhika Bhattacharya, Are developingcountries going too far on TRIPS? A closer look at the new laws in India, AmericanJournal of Law & Medicine, Summer-Fall2008 Issue

[27] WTO, Ministerial Declaration of 14 November 2001, WT/MIN(01)/DEC/1, 41 I.L.M. 746 (2002)

[28]Frederick M. Abott Et Al, International Intellectual Property in an Integrated World Economy 330 (2007)

[29] Appellate Body Report, India-Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/AB/R (Dec. 19, 1997)

[30]Patents (Amendment) Ordinance, No. 7 of 2004.

[31] See AmitSen Gupta, Mashelkan Committee Trips Again, People’s Democracy, Sept. 20, 2009

[32] Interview with Loon Gangte, President, Delhi Network of Positive People, in New Delhi, India (June 20, 2007)

[33]Medicins Sans Frontilres, Will The Lifeline Of Affordable Medicines For Poor Countries Be Cut 5-6 (2005)

[34] Letter from Jim Yong Kim, HIV/AIDS Dir., World Health Org., to Dr. A. Ramadoss, Minister of Health and Fain. Welfare, Gov’t of India (Dec. 17, 2004), available at http://www.cptech.org/ip/health/c/india/whol2172004.html

[35] Sands, Katharine W,Prescription drugs:India values their compulsory licensingprovision–should the United States foll,Houston Journal of International Law, Winter 2007 Issue

[36] Peter Nunn, India Introduces Product Patents, Charles Russell, Apr. 1, 2005

[37] Id.

[38] See Jeffrey D. Hsi, Patent Law in India Focuses Strongly on R & D, 25 Genetic Eng’g News 9, 9-10 (2005)

[39] Art. 31(b), TRIPS