IPR Regime in India

Breach of promise on IPR policy?

SAGNIK DUTTA

By constituting a new think tank on intellectual property rights and seemingly sidelining the committee it had set up earlier, the government appears to be going back on its promise of providing corruption-free, transparent governance. By SAGNIK DUTTA in New Delhi

THE Narendra Modi government, which came to power riding on the wave of public anger against corruption in the corridors of power and promising transparency in governance has not quite lived up to its word if some recent policy decisions on intellectual property

rights (IPRs) are anything to go by. On October 22, the Department of Industrial Policy and Promotion (DIPP) of the National Democratic Alliance government constituted a think tank to draft a national IPR policy and advise the department on such policy matters. The formation of this think tank smacks of arbitrariness and ad hocism in policymaking both in the choice of experts and in the manner in which it was constituted. A number of academics, public health activists and industry representatives have raised legitimate concerns about conflicts of interest, the lack of relevant expertise of some of the new think tank’s members, the lack of representation of all stakeholders and the secrecy and ad hocism that are evident in its hasty formation. This think tank was formed even while the government had just received a draft national IPR policy from a three-member group of renowned academics that the DIPP constituted on July 24. This committee—comprising Prabuddha Ganguly, IPR chair professor of Tezpur University; Shamnad Basheer, IPR expert; and Yogesh Pai, assistant professor at National Law University, Delhi—submitted a draft national IPR policy on October 21. There was no correspondence whatsoever from the DIPP following the submission of this document, and much to the committee’s amazement, the department announced the formation of a think tank tasked with the same job that it had been assigned.

The committee constituted on July 24 worked on a draft national IPR policy which was meant to reiterate India’s position on issues of IP principles and serve as an effective instrument to negotiate with trading partners. The draft policy, a copy of which was accessed by Frontline, takes a nuanced position on IPR issues and states that policy formulation is not intended to have the force of law but merely serve as the guiding principles in the administration and enforcement of IP norms. Speaking to Frontline, Shamnad Basheer expressed his disappointment at the manner of the government’s decision-making: “We only

got to know about the formation of the new IPR think tank from press reports. Also, there was no correspondence from the government after the three-member group submitted its report. This is disregard for a group that the government itself appoints. 

Is this the way to treat academics and researchers?”

Officials of the DIPP did not offer any response when asked about the hasty formation of the new committee and the lack of communication with the existing one. A detailed email questionnaire to the official who had notified the formation of the group of experts in July went unanswered at the time of writing this article. Speaking about the thrust areas of the draft policy, Basheer said: “The policy was to offer guiding principles while negotiating with

international partners for free trade agreements. We had made it clear that it was meant not to substitute existing laws but to outline India’s position with respect to various IP regimes and international obligations did not override the public interest and the civil rights

of our people. The draft policy also highlighted the concerns of stakeholders who are not normally represented in the intellectual property debate such as the informal economy.”

Draft national policy

    The draft national IP policy makes some important comments on the stance to be adopted by India vis-a-vis international IP regimes. It states: “While India will continue to draw on foreign precedent from jurisdictions that have had a longer and more sophisticated history with intellectual property, it will not blindly adopt their norms.” It further states that India will need to evolve new norms to leverage its technological proficiency while keeping in mind the interests of large segments of the population who are poor and underprivileged and to whom access to pharmaceuticals is crucial.

     The draft policy spells out some significant common core principles which would inform India’s stance on IP issues. It states that India will explore alternative innovation incentives such as prizes and open source/access models that complement existing regimes to foster

funding for research into drugs for diseases that disproportionately affect India and the developing world. It also states that entities that register IP for the mere purpose of extracting excessive rents without any interest in developing products and services will be

discouraged. It also suggests data-driven studies to assess the nexus between foreign direct investment and IP norms and the costs of introducing stronger IP norms.

    The draft policy unambiguously points out the right of the government to take pro-public health measures such as compulsory licences in instances where patents impede access to medicines. It states: “While rights holders will be encouraged to fulfil part of their social bargain, the government will not hesitate to deploy compulsory licensing, price control and other measures where the rights holders so fail and where the government deems it necessary to check IP excesses and abuse.” It further outlines a nuanced position with respect to compliance with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) of the World Trade Organisation (WTO). The draft states: “India is committed to ensuring TRIPS compliance and will avoid any TRIPS-plus measures, purely at the behest of a trading partner.” This is a significant policy recommendation in the light of increasing pressures from the developed world to thrust TRIPS-plus measures on the developing world through bilateral treaties and regional free trade and investment agreements.

     The other specific focus areas that the draft policy proposes are data-driven studies to explore innovation and creativity in the informal sectors to find out the role of incentives and create national and international markets for segments within India’s informal economy. The draft policy also recommends that public-funded innovation and IP be a key focus of the government and that the government explore the possibility of capturing IP generated through public-funded research. Another important area of concern the draft IP policy flags up is the rapid proliferation of ex parte injunctions in patent litigation cases which work against the interests of public health and harm the civil rights of defendants. An article published in the November 15, 2013, issue of Frontline took note of the alarming rise in the number of patent cases and courts issuing interim injunctions against generic companies. In a letter sent to Prime Minister Narendra Modi on November 13, Basheer and Pai said: “We were surprised that a policy committee was constituted for the very same tasks that we were initially entrusted with without so much as even a notice to us. We naturally wrote to the government immediately asking them whether or not they needed us anymore and if so, in what capacity. Not only were we not informed, we have not received any response to our communications addressed to the DIPP seeking a clarification in this

regard.”

The new think tank

    Apart from drafting a national IPR policy, the new think tank has to identify areas in the IPRs where study needs to be conducted and furnish recommendations in this regard to the Ministry of Commerce and Industry. The committee is chaired by retired Justice

Prabha Sridevan and the other members are Pratibha M. Singh, senior advocate; Punita Bhargava, an advocate with Inventure IP (a New Delhi-based law firm that provides IP services); Unnat Pandit of Cadila Pharmaceuticals Limited; Rajeev Srinivasan, director of Asian Business School, Thiruvananthapuram; and Narendra K. Sabharwal, retired Deputy Director General and member and convener of the World Intellectual Property Organisation (WIPO). Amit Sengupta of Delhi Science Forum said: “Most of the members have some industry connections and several of them are related to corporate law firms. This looks like a hatchet job.” Another activist said: “There is no representation in the new think tank from patient groups or those in favour of a pro-public health regime. Patient interests should be defended in any such forum. There is a clear conflict of interest if lawyers representing either the multinational pharma companies or generics are part of a think tank formulating a national IP policy.” Most academics and IP researchers this correspondent spoke to objected to the inclusion in the think tank of Pratibha Singh, citing several conflicts of interest. She did not respond to a detailed questionnaire asking her specific questions about conflicts of interest.

        A senior academic, speaking on the condition of anonymity, said: “Pratibha Singh is representing multinational companies in some bigticket patent infringement cases. She is the counsel for the Swedish network equipment maker Ericsson in a patent infringement case against the Indian company Micromax in the Delhi High Court.” The recent orders of the Delhi High Court in Telefonaktiebolaget LM Ericsson vs Mercury Electronics and Anr name Pratibha Singh as one of the lawyers for the plaintiff. Ericsson sued Micromax in

March last year, alleging patent infringement and claiming Rs.100 crore as damages. Ericsson had alleged patent infringement by Micromax in several of its eight telecom patents for a range of wireless technologies. Following this, Micromax and Ericsson approached

a single judge and informed him that they had entered into an interim arrangement until the final disposal of the lawsuit and were negotiating the royalty rates of the technologies in question. However, the dispute remains unresolved as of now. On September 19, the

Delhi High Court noted in an order that both parties were seeking an adjournment as a high-level team of the plaintiff would be visiting from Sweden to explore the possibility of a patent. Further, on October 14, the Delhi High Court noted that Ericsson had agreed to

produce six agreements with different operators containing the terms and conditions, in a sealed cover, and these operators, according to it, were somewhat similarly placed as the defendant company. Earlier, Prashant Reddy, in an analysis of the case in SpicyIP, an IP

think tank, had highlighted how this kind of litigation placed indigenous manufacturers at a disadvantage: “It has been estimated that your average smartphone covers around 250,000 patents and if each patent was going to be licensed at 2% the net sale price, the

product could very soon be unprofitable for Micromax. It is quite clear that if Ericsson succeeds in this litigation, Micromax will be sued by every other owner of an essential patent and we will have a classic case of ‘royalty stacking’.”

    Another renowned researcher, who did not wish to be named, pointed out another potential conflict of interest for Pratibha Singh: “[Pratibha] Singh is also pushing for the patent application for the pharma major Gilead’s $1,000 a day hepatitis C drug Sovaldi in the Patent Controller’s Office in Delhi.” The drug is normally given for either three or six months and costs $84,000 for a 12-week course in the United States. Hepatitis C infection impacts approximately 150 million people across the world. A large number of them are in

low- and middle-income countries. The patent claim of Gilead in India has been opposed by the Indian Pharmaceutical Alliance (IPA), the global patient access group IMak, and other pro-public health groups. The IPA had opposed the grant of patent to the new drug as it perceived it to be in violation of Section 3(d) of the Indian Patents Act, which prevents patents on new versions of existing molecules. Gilead is also entering voluntary licensing agreements with some Indian generic companies for the sale of this drug. However, such agreements have been criticised by patient groups and public health activists for their restrictive terms and conditions and as being attempts to ward off competition from generics. An IP expert pointed out: “These licensing agreements have several restrictive clauses. For example, active pharmaceutical ingredients (API) for the medicines can only be bought through Gilead-appointed agents. Also, Sovaldi is required in the Middle East [West Asia], Central Asia and Russia. But as per the agreement this drug cannot be sold in these regions.”

       Speaking of two of the other members of the think tank, a senior academic said: “Punita Bhargava is not a well-known practitioner in the field of IP. Also, she is related to Union Finance Minister Arun Jaitley. A government which was consistently critical of the UPA

[United Progressive Alliance] for cronyism is going down the same road in appointments to positions of vital importance in policymaking. Rajeev Srinivasan has been a management consultant and teaches in a business school. He has worked on innovation, but

has no experience in intellectual property rights.”

     Even representatives from the industry were unhappy with the lack of diversity in the constitution of the think tank. Ranjana Smetacek, director general of the Organisation for Pharmaceutical Producers of India, said: “The recent constitution of a think tank for

formulating a national IPR policy is a good idea, but its membership lacks diversity. The research-based pharmaceutical industry has not been represented at all.” Some analysts have questioned the need for an executive body to reframe a “national IP policy” when India’s position on IP is already well defined by statutes enacted in Parliament and subsequent judgments of the Supreme Court. Amit Sengupta said: “The move to ‘evolve’ an IP ‘policy’ somehow conveys a sense that India did not have one. This is not true as we have held a position for long in international forums that the same standard of IP is not in the interest of all countries. Even in 2005 when the amendments to the Indian Patents Act took place to make it compliant to TRIPS of the WTO, there was consensus across the political spectrum that the impact of IP on access to public health needed to be carefully weighed and having high standards of IP does not help India. It is too early to say how the new think tank is going to function, but if the constitution of the think tank is anything to go by, it marks a shift from the earlier emphasis on policymaking in favour of multinational corporations and a neoliberal vision of ‘development’.” Sengupta also pointed to the recent announcement of the India-U.S. IP working group following Modi’s visit to that country as a shift in the Indian stance on IP. He said: “This is a formal arrangement with the U.S. on IP issues. The working group has decision-making powers which are usually vested in Parliament and therefore threatens the sovereign policy space.”

The senior advocate Anand Grover echoed these sentiments: “What do you need an IP policy for? The IP policy is already spelt out in the Indian Patents Act and subsequent amendments which were unanimously passed by Parliament. Subsequent judgments have laid out a framework for IP. What is the need to tinker with this policy? Any changes to this policy yielding to international pressure will only deliver a blow to the Indian pharma industry which has made affordable medicines of good quality accessible to people all over the world. I hope the Prime Minister’s slogan ‘Make in India’ would mean make in India by Indians for the whole world and not facilitate ‘making’ by multinational corporations for themselves.” The constitution of a new think tank on IPR policy comes hard on the heels of the announcement of an “out of cycle” review (OCR) by the U.S. Trade Representative (USTR). An OCR is a periodic review of the IP policies of a country in between the two annual 301 reports the USTR prepares. Earlier, in April, the USTR Special 301 report put India on the Priority Watch List of countries that according to the U.S. have “weak” IP regimes. Swaraj Paul Barooah of SpicyIP notes in a blog post on October 14: “This OCR is being conducted to see if the new Modi government is more friendly towards U.S.’ IP policies or not. The not so subtle underlying threat is that if the OCR is not satisfactory, India will find itself on the Priority Foreign Country Watch List in the next review—which gives U.S. more leeway to pressure India regarding IP policies that don’t favour U.S. multinational corporations.”

     Some members of the Indian pharmaceutical industry, however, welcomed the OCR process. Ranjana Smetacek said: “I think this should be seen as an opportunity for constructive dialogue to address intellectual property concerns and discuss regulatory, quality, and safety challenges in India. There is a need for innovation in health care and we must demonstrate India’s genuine interest in fostering local innovation and improving patient access to new medicines.”

(Published in Frontline.in)