product patent
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This article is written by Abhishek Kurian, from National Law University, Odisha. This is an explanatory article that deals with Product Patent and EMR.

Introduction

Consider a situation where an American chemist develops a medicine that aids the immune system in fighting the global pandemic COVID-19 effectively. It is but natural that the chemist or the Company that he works for, would try to make sure that no third party, illegally makes profits from this novel invention by selling it without any formal permission by the owner.

It would simply be unfair to the creator of this product. Hence, there is a system of product patents followed in our country, which basically means that a due right would be given to the creator giving them an exclusive privilege to manufacture and sell the product.

Now, just imagine if such a situation existed in 1994. The pandemic would definitely lead to delays in the grant for a patent and it is obviously not right to let thousands of people suffer because of a delay in the legal procedure.

What could be the possible solution that would have ensured the quick distribution of the product and would have also adequately protected the right of the creator? 

A temporary provisional right could be given which would give the creator the sole right to sell or manufacture the product until a patent could be granted. Such rights were known as Exclusive Marketing rights (hereinafter referred to as EMR).

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How product patent and exclusive marketing rights prove beneficial

In order to appreciate and understand these concepts better let’s first completely understand the benefits of each.

Benefits of Product Patent

A product patent is basically a right that is given to the inventor or creator of a product for the sole distribution, sale and manufacture of that product. Its major benefits include:

  • Eliminates competition 

Since the creator is given this special right, it implies that no other competitor in the market would be able to create such a product using any procedure whatsoever. Thus, the competition in the market is eliminated to a great extent.

  • Higher level of protection 

Once a product patent is granted, no other individual or group can manufacture the product even by using a different process of manufacturing, since the product itself has been patented. This is a very strict policy which results in a higher level of protection.

  • Conformity with TRIPs agreement 

After India became a part of the World Trade organisation, it was obliged to adopt the laws and principles of the TRIPs Agreement, which mandate the use of product patents. 

  • Promotes production: 

One of the main benefits achieved by a product patent is that its greater level of protection and higher returns makes a conducive environment for inventors, giving them the necessary impetus to develop novel products.

Benefits of exclusive marketing rights

EMR gives an exclusive right to the applicant (one who applies for a patent) to distribute an article or product in their country for a period of five years. The applicant is also given the right to allow agents the sale or distribution of the article. While it is a provisional solution, it has its own benefits: 

  • It does justice to the Creator and the public at the same time, as a useful and novel drug could be distributed while giving the due profits to the inventor.
  • It is a quicker process compared to the rigid terms of a patent that need to be satisfied.
  • It is also in adherence to the norms of the TRIPs Agreement.

Difference between product patents and process patent

There is a major difference between Product Patent and Process Patent which needs to be understood before learning why India adopted Product Patent. 

Let’s imagine that I am making tea. I prefer to add the milk and water, boil it and then add the tea leaves. After that, I strain the mixture and there I have tea.

Now, what my friend does is that he adds tea leaves into boiling water until the mixture changes colour completely. Then he adds milk and strains the mixture.

In both the above processes the final result is tea. And who knows, there may be even more ways to make the same tea. Here, we see that the end product is of more value and is, in fact, the essence of the creation. 

So, if I would have been the one to invent tea, which had the potential of a great beverage, it would be advisable to patent the tea, (instead of my unique process) so that no one else could use other methods to make tea and gain profits from it.

In the Process Patent regime, the patent is granted for the uniqueness of the method of manufacturing rather than the final product. A person would be free to replicate that product using a totally different method of creation. This also happens to be a detriment of this regime since it does not ensure complete protection of the patent.

The Product Patent regime protects the product or the creation thereby resulting in a greater degree of protection. It gives the patentee sole right of distribution and sale. It is usually adopted by developed countries.

TRIPs and adoption of product patent and EMR

The Trade-Related Aspects of Intellectual Property Rights (TRIPs) is an agreement that governs the laws and regulations for the IP laws of member nations of the WTO. All member nations of the WTO must conform to the standards of regulations provided in the agreement. The members must also adhere to strict policies for the protection of intellectual property rights in their respective nations. The agreement provided for product and process patents in all fields of technology.

On 1st January 1995, India became a member of the World Trade Organisation (WTO) and in accordance with the regulations of the TRIPs agreement made changes in the Patents Act,1970.    

Since India was a developing country during that time, it was given a period of 10 years to make sure that its Patent laws complied with the TRIPS agreement and provided patent protection for agro and pharmaceutical products. This period was known as the transitional period.

During the transitional period, however, the developing nations were required to include laws that would provide for a system for filing patents as an alternative to protect the original creators of drugs. This led to India agreeing to grant EMR for those products which had been patented in other countries or for the applicants of a patent. Let’s learn what circumstances resulted in this change.

United States v. India, 1997

(See here)

Issue: Whether the India Patents Act, 1970 adequately protected the novelty of foreign pharmaceutical products?

Facts: The United States was not satisfied with the existing laws for the protection of patents in India as all the products that were categorised as food, medicine or drugs were entitled to only process patents. They felt the need for a product patent in such cases. 

This led to a dispute between the two nations, which was adjudged by a WTO panel. The US contended that India was in breach of the following two provisions of the TRIPs Agreement-

Article 70.8: This Article provided for the means of filing an application of a patent in the transitional period that would help in protecting the novelty of inventions. 

Article 70.9: This Article provided for granting Exclusive Marketing Rights for a product when the patent for the product was pending in another member nation for a period of five years or till the time the patent is granted, depending upon which period is shorter. 

Arguments: India did not provide for such a ‘means’ through the Patent Act, 1970 and there was also no provision of granting EMR, which resulted in a clear breach of the TRIPs Agreement by India. 

Conclusion: The Panel was of the view that India was in violation of Article 70.8 and Article 70.9 which imposed that obligation of providing a mechanism for filing patents and providing EMR until the transition period was over. This view was also upheld later by the WTO Appellate Board.

All of this led to due amendments in the Patent’s Act, 1970 by the Patents (Amendment) Act 1999

This was required so that Indian pharmaceutical companies were disabled from creating foreign drugs by using a non-identical process as such replication of drugs was prevalent in India before that. The decision of granting EMR put a stop to such practices. 

Why is the difference between the rights under an EMR and under a patent is more notional than real

As discussed earlier, EMR is defined as the sole right to distribute and sell an article. A patent is also very similar in terms of its definition (See here) as it gives the sole right to the creator to sell, manufacture, use and import. 

After comparing both the definitions one must wonder as to what is the difference between the two? 

Well, as we see the difference is that the term ‘import’ is not included in the definition of EMR. After all, the term ‘distribute’ could have a wider interpretation which would include use and manufacture. 

We observe that the difference is very subtle. In fact, it is so subtle that it is almost non-existent and hence it is often said that the difference between these two is more notional than real.

Why is the difference so minute? Why was a provisional solution given the same importance as a patent?

This would explain why there is a very subtle difference between EMR and Patents.

In the Uruguay Round of WTO Negotiations, it was the developed countries that came up with the concept of EMR which was added to the TRIPs Agreement. It was a highly strategic move that deserves to be broken down for better understanding:

  • The majority of novel inventions obviously took place in the developed countries. They were the hub for the manufacture of medicines, drugs, food, etc.
  • The developing countries did not usually have such industries in large scales and hence the developed countries saw this as an excellent opportunity to expand their markets.
  • They acquired the exclusive rights to sell their products through the implementation of EMR in developing countries.
  • In effect, they got the level of protection from a patent, without even getting a patent. They gained for years from this strategy.

So, it becomes clear as to why the difference between Patent and EMR would be so subtle.

Important case laws

Novartis Ag vs. Adarsh Pharma and Anr., 2004

In Novartis AG v Adarsh Pharma and Anr. 2004, the plaintiff was a swiss pharmaceutical company that created a unique drug as a remedy for blood cancer. They had filed for patents in many countries where it was pending and they were also granted the patent for this drug in a few countries. 

They contended that since India was a member of the WTO, it must adhere to its guidelines by providing them with EMR as an interim measure until their patent was granted.

It was held that the Plaintiff was eligible for EMR under Part IV-A of the Patent’s Act and was thereby the court granted for the first time EMR in India.

Novartis Ag vs. Union of India, 2013

This was another landmark case, that deals with a very important concept called ever-greening. Since a patent is valid only for a period of 20 years, this practice of making a minor change in the composition of the drug and seeking a new patent for the drug is prevalent. This way the company extends its monopoly on the drug and the drug can not be made by other companies. 

Novartis Ag indulged in a similar practice with its drug for which it had acquired EMR in 2004. After making a small change it applied for a fresh patent in order to create a monopoly over the drug. The court stated that it was unfair to the public as such a practice derived them from cheap drugs. 

Thereby, it was held that the patent would not be permissible as it is an illegal way of seeking the patent for the same drug. 

Critical analysis

Unfair protection without getting patent

As we learnt before, the difference between EMR and Patent is almost non-existent. This results in EMR giving patent-like protection without the grant of a patent. This essentially means that the applicant receives all the benefits of a patent, without going through the strict policies that are mandatory for the grant of a patent.

This could result in an abuse of the IP laws as the purpose of the rigid rules for granting a patent was its higher level of protection. By giving EMR to an entity, such a purpose could be lost.

A patent could be rejected

The EMR are valid for a period of five years or until the patent is granted or rejected. The keyword here being rejected.

A company could create a monopoly by their medicinal product while exploiting and expanding its market without actually having the right to do so as there is a possibility that the application for the patent gets rejected. This is an unfair advantage of those who are granted EMR.

Ever-greening and Unfair Monopoly

As we learnt in the Novartis case of 2013, evergreening could be a major threat as a consequence of the product patent. Pharmaceutical companies are able to use this for creating a monopoly in the drug market. 

This results in the public being deprived of cheap drugs as no other company is able to manufacture many essential drugs even by employing alternative methods of creation.

Conclusion

We see that the laws for the protection of a patent in India were nowhere near perfect, but the necessary additions to patent laws in India have been able to curb the possible menaces to a great extent. 

There is still the need for enhanced protection as this would help India in becoming the hot spot for novel inventions in the near future, which would aid in its strife to be self-reliant in the truest sense.

Reference


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