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Business News/ Politics / Policy/  India’s patent law may face legal hurdle at WTO

India’s patent law may face legal hurdle at WTO

Potential challenge from US, Switzerland over provision which defines inventions could hurt Indian drug makers

The majority of countries at WTO want a permanent moratorium in place, a South American trade official said. Photo: AFPPremium
The majority of countries at WTO want a permanent moratorium in place, a South American trade official said. Photo: AFP

Geneva: India’s amended national patent law, particularly a provision which defines what inventions are, could face a legal challenge arising from an aggressive move by the US and Switzerland.

The move, which could hurt India’s pharma companies, arises from efforts by the US and Switzerland to terminate the existing moratorium on non-violation complaints to the World Trade Organization’s trade-related intellectual property rights (TRIPS) agreement.

Non-violation complaints refer to complaints by a WTO member that claims another member’s actions or policies caused it a loss, even if there is no violation of a WTO agreement. Developing countries such as India are understandably wary of these complaints. Currently, there is a moratorium on such complaints till later this year.

The US, which has always opposed the moratorium, has specifically raised concerns about the section 3(d) in the amended Indian patent Act on the ground that it “may have the effect of limiting the patentability of potentially beneficial innovations" in its 2015 Special 301 Report.

In reality, the 3(d) provision prevented pharmaceutical companies from continually extending their 20-year drug patents by tweaking with minor changes or improvements, an “evergreening" process in the IPR jargon. The provision led to the cancellation of the patent for Novartis AG’s cancer drug Glivec.

India will have to forego these flexibilities and policy space if non-violation complaints are allowed under the TRIPS agreement, analysts said.

On Wednesday, India and Brazil with support from a large majority of countries, including Norway, asked the WTO’s TRIPS council to recommend to the upcoming 10th ministerial conference in Nairobi, Kenya, later this year that non-violation complaints “shall" not apply to the settlement of disputes under the TRIPS agreement.

The majority of countries at WTO want a permanent moratorium in place, a South American trade official said.

During the meeting, the US and Switzerland stood completely isolated in their demand for terminating the moratorium, several participants said.

The US and Switzerland must “seriously reflect on the concerns expressed by overwhelming number of delegations in this meeting and earlier and should join the consensus that non-violation complaints as identified in Article XXIII:1 (b) and (c) of the GATT 1994 be determined inapplicable to the TRIPS agreement, in the interest of the stability and certainty of the multilateral system," an Indian official said at the meeting.

Ahead of the meeting, India and Brazil submitted a joint proposal, which was co-sponsored by 17 other countries, including China, Bolivia, Colombia, Cuba, Ecuador, Egypt, Indonesia, Kenya, Malaysia, Pakistan, Peru, Russia, Sri Lanka and Venezuela, calling for continuing with the moratorium on non-violating complaints under the TRIPS agreement.

“The TRIPS agreement, unlike other WTO agreements," said India and Brazil, “is a sui generis agreement which is not designed to protect market access or the balance of tariff concessions but rather to establish minimum standards of intellectual property protection, which, if abused, may even undermine market access."

Therefore, non-violation complaints are unnecessary as they raise “serious concerns on the ambiguity, incoherence and limit on flexibilities" that members currently avail in the TRIPS agreement, an Indian official told the meeting.

Moreover, such complaints affect the development of robust pharmaceutical industry in developing and poorest countries due to the legal challenges and enormous litigation costs, the official argued.

Currently, non-violation complaints are only allowed for trade in goods and trade in service to ensure tariff and market access concessions are not undermined because of opaque governmental actions. Effectively, they only deal with market access in goods and services.

But the complaints are not permitted in the TRIPS agreement, which deals only with minimum standards to be implemented by WTO members for protecting intellectual property rights. The TRIPS agreement is not about the market access and currently there is a moratorium in force for not allowing these complaints to apply to TRIPS agreement since 2003.

On behalf of the big pharmaceutical companies such as Pfizer Inc., Merck & Co. Inc., Eli Lily & Co., Bristol-Myers Squibb Co., Roche Holdings Ltd, and Novartis, the US and Switzerland are mounting a warlike effort to end the moratorium at WTO’s 10th ministerial conference in Nairobi.

The US and Swiss companies which lost major IPR disputes in various developing countries, including India, reckon that patent provisions such as 3(d) in the amended Indian patent Act or compulsory licensing provisions can only be stopped in their tracks by raising non-violation legal complaints at WTO under the TRIPS provisions, said a pharma analyst in Geneva.

Given the rising strength of the Indian generic companies in the international market, the US and Switzerland can only regain their dominance and market access in India and elsewhere through launching disputes under non-violation complaints at WTO, the analyst added.

The US and Swiss IPR officials made a strong case that the time has come for terminating the moratorium saying that if there is no consensus on extension of moratorium at the 10 ministerial conference in Nairobi then non-violation complaints will automatically apply, according to participants at the meeting.

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Published: 12 Jun 2015, 12:17 AM IST
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