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Business News/ Opinion / Online-views/  India should not give way on IPR

India should not give way on IPR

The Indian industrial and economic policy elite must not succumb to pressures from Washington and Brussels

A fortnight ago, the US had completed the second round of dispute settlement hearings against India on the domestic local content requirements under the Jawaharlal Nehru National Solar Mission for solar cells and solar modules. Photo: AFPPremium
A fortnight ago, the US had completed the second round of dispute settlement hearings against India on the domestic local content requirements under the Jawaharlal Nehru National Solar Mission for solar cells and solar modules. Photo: AFP

A leading Republican lawmaker in the US is upset that India is accorded a kids glove approach on intellectual property rights (IPR). “Once again, the (Barack Obama) administration has missed the mark," complained congressman Orrin Hatch, chairman of the powerful House Finance Committee. “After squandering the opportunity to crack down on India’s rampant IP violations in their out-of-cycle review last year, they have now issued a report that fails to fully recognize the seriousness of India’s harmful IP policies," Hatch charged.

Launched 26 years ago as a unilateral crowbar mechanism to punish countries for alleged IPR violations, the Special 301 report reviews annually the state of enforcement of IPR protection. The US Trade Representative (USTR) is expecting to see “substantive and measureable improvements" in India’s IPR regime, according to deputy USTR Robert Holleyman.

Perhaps Hatch is unaware of Prime Minister Narendra Modi’s statement that India is ready to work “on IPR guidelines matching global standards". Modi did not elaborate on the global standards that he alluded to, but there are no standards other than those in the Trade-related Aspects of Intellectual Property Rights (TRIPS) agreement implemented by 161 countries at the World Trade Organization. If India possessed expertise in genetic sciences and plastic surgery in the ancient times, as Modi said last year, it is somewhat puzzling why India should now follow “global standards" set by one superpower or the other.

Nonetheless, the USTR reportedly acknowledged Prime Minister Modi’s April 2015 statements recommending that India align its patent laws with international standards. The USTR’s decision to go slow on its patent-related travails with India may seem like a small victory for the few newly imported mandarins of the government. They are bound to claim credit for their influence-peddling in Washington. Otherwise, the USTR would not have turned a deaf ear to the demands for an out-of-cycle review of India. It was not long ago that these mandarins had advised the US lawmakers to launch a dispute against India at the WTO on the amended Indian patent law.

The 2015 Special 301 Report has raised several concerns against New Delhi’s patent regime. To start with, Washington says that Section 3(d) of India’s Patent Act “may have the effect of limiting the patentability of potentially beneficial innovations". This provision prevents companies from continually extending their 20-year drug patents by tweaking with minor changes or improvements, an “evergreening" process in the IPR jargon. It led to the cancellation of the patent for Novartis AG’s cancer drug Glivec, which the Supreme Court upheld.

Second, India’s application of compulsory licensing law needs “clarity" as it affects US stakeholders such as Pfizer Inc., Merck and Co. Inc., Eli Lilly and Co., and Abbott Laboratories, among others.

Third, India is wrongly identifying “patents as obstacles to the dissemination of climate change technologies that would potentially undermine incentives for innovation".

Fourth, the enforcement of patent rights in India is cumbersome as evidenced in Merck vs Glenmark and Cipla vs Roche.

And fifth, India lacks “an effective system for protecting against unfair commercial use, as well as the unauthorized disclosure, of undisclosed tests or other data generated to obtain marketing approval for pharmaceutical and agricultural chemical products", a unilateral demand that Indian generic companies must generate their own data on drugs that are out of patent.

If the US is so unduly concerned about India’s patent laws, it can simply take New Delhi to task at the WTO. Only a fortnight ago, the US had completed the second round of dispute settlement hearings against India on the domestic local content requirements under the Jawaharlal Nehru National Solar Mission for solar cells and solar modules.

In the past, Washington launched five disputes against India, beginning with the dispute on the non-establishment of a mailbox system and exclusive marketing rights for pharmaceutical and agricultural chemical products in 1996. The WTO’s highest court—the appellate body—ruled against India for failing to comply with the TRIPS provisions. Consequently, New Delhi was forced to pass legislation in early 1999 creating a mailbox for patent applications.

But now, the US sees a danger in challenging India at the WTO on 3(d) and other aspects of the Indian patents Act. Perhaps, it may have seen the documentary Fire in the Blood released two years ago that revealed the international solidarity behind the Indian generic industry for its yeoman services.

US pharmaceutical firms thrive on monopoly prices, says Nobel Prize-winning economist Joseph Stiglitz. At a time when there are few new patents in the pipeline and the existing patents are about to expire, Indian generic companies pose a problem because they provide medicines at affordable prices. “Monopolies arising from patent protection," said Stiglitz, “are economically inefficient in the same way that any other monopoly is, they lead to higher prices than would be seen in a competitive market." Further, “if patent rights are too strong and maintained for too long, they prevent access to knowledge, the most important input into the innovation process", Stiglitz argued in an interview published last month.

Asked about the optimal approach to intellectual property for a country like India with a limited public health budget and rising disease burden, Stiglitz said: “India has already increased patent production on medicines relative to a few decades ago by acceding to the TRIPS agreement. Greater intellectual property protection for medicines would, we fear, limit access to life-saving drugs and seriously undermine the very capable indigenous generics industry that has been critical for people’s well-being in India and other developing countries."

The Indian industrial and economic policy elite, particularly Prime Minister Modi, must consider Stiglitz’s advice seriously and not succumb to pressures from Washington and Brussels on data exclusivity and other changes in the IPR regime through the back door. Otherwise, the Indian poor and middle classes will hold the “Make in India" government responsible for multinational companies jeopardizing their health and livelihood conditions!

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Published: 12 May 2015, 12:45 AM IST
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