By the time this piece comes to print, the dust would have settled on the 3rd Amendment to Patent Act, 1970 or the alternatives to it. There was a lot of speculation as to when the 3rd amendment would be introduced in the Parliament, in what format, with or without this or that proposal etc. The "silver lining" is, that there is virtually no difference of opinion as to whether the TRIPs compliant product patent regime is to be introduced from 1.1.2005 or not. The issue is only about what amendments other than introduction of product patents.
It is almost clear now that the 3rd amendment or its substitute will appear as an ordinance. Because,it is rather late in the day to come out with a Bill in Parliament, get it passed in both houses and follow it up with Notification of Rules. The original draft of 3rd amendment had taken away most of the procedural time frames to be brought into the Rules. This would make the 'Agenda' on the Rules rather heavy, especially in the light of the short time frame. The "Patent Pundits" may have already completed this exercise also. However, a newly notified Rules requires 30 days to come into effect and the Act can only come into effect with the Rules, which will definitely miss the 1.1.2005 deadline. This makes the ordinance route, the only option.
Having settled this speculation, When do we expect the Notification. ? Any day between 23rd December 2004 to 1st January 2005. What do we expect in the ordinance ? The ordinance can have two options. The first one being a one line option - "Section 5 and 24 A, B, C, D, E, F of the Patent Act, 1970 are deleted". This option has earlier been suggested as the best option by this author in an earlier article in Pharmabiz way back in mid-2003, when the "roadshows" for 3rd amendment deliberations had started. Taking the simple and straightforward option to introduce product patents effective 1.1.2005 and thereby becoming TRIPs-compliant is the best option. The second option is to cover all the assorted amendments (and amendments to amendments) as per original draft and speculations thereof. This second option will necessitate the simultaneous or immediate notification of the corresponding rules also stating that the Patent Act (3rd Amendment) 2004 and the Patent Rules 2004 will come into effect on 1.1.2005.
Will this help settle the heat and dust of deliberations and debates ? On the contrary, we can expect pens and throats to go dry in coming days. While the four "major issues" of pre-grant opposition, patentability criteria, compulsory licensing conditions and "grand father drug patents" have been extensively discussed, it is felt that the single most issue of major concern is the status of new products already introduced in the market some of which are expected to claim the product patent status post-2005. The majority of product patent applicants would expect for grant of a product patent with effect from date of application (which could be anytime after 1.1.95). This is justified as the same is in line with the Patent statute. If so why do we need to debate on this. This arises from the fact that Part VI of TRIPs and Articles 65 to 70 deal with "Transitional Arrangements".
In this context, it may be useful to reproduce below Article 65 of TRIPs
Article 65
Transitional Arrangements
1 Subject to the provisions of paragraphs 2, 3 and 4, no Member shall be obliged to apply the provisions of this Agreement before the expiry of a general period of one year following the date of entry into force of the WTO Agreement.
2 A developing country Member is entitled to delay for a further period of four years the date of application, as defined in paragraph 1, of the provisions of this Agreement other than Articles 3, 4 and 5.
3 Any other Member which is in the process of transformation from a centrally-planned into a market, free-enterprise economy and which is undertaking structural reform of its intellectual property system and facing special problems in the preparation and implementation of intellectual property laws and regulations, may also benefit from a period of delay as foreseen in paragraph 2.
4 To the extent that a developing country Member is obliged by this Agreement to extend product patent protection to areas of technology not so protectable in its territory on the general date of application of this Agreement for that Member, as defined in paragraph 2, it may delay the application of the provisions on product patents of Section 5 of Part II to such areas of technology for an additio-nal period of five years.
5 A Member availing itself of a transitional period under paragraphs 1, 2, 3 or 4 shall ensure that any changes in its laws, regulations and practice made during that period do not result in a lesser degree of consistency with the provisions of this Agreement.
In the context of recent interpretation of effective date for product patents by Dr.Yusuf Hamied of Cipla, if one looks at Article 65, it appears to be fairly obvious that effective date for India is 1.1.2005, deriving the 1 year from sub-article (1), 4 years from sub-article (2) and 5 more years from sub-article (4). India has already complied with sub-article (5).
If this effective date as per Article 65 is unambiguously 1.1.2005, then where is the ground for debate. This arises from Article 70, the relevant sub-articles are reproduced below.
Article 70
Protection of Existing Subject Matter
1. This Agreement does not give rise to obligations in respect of acts which occurred before the date of application of the Agreement for the Member in question.
3. There shall be no obligation to restore protection to subject matter which on the date of application of this Agreement for the Member in question has fallen into the public domain.
4. In respect of any acts in respect of specific objects embodying protected subject matter which become infringing under the terms of legislation in conformity with this Agreement, and which were commenced, or in respect of which a significant investment was made, before the date of acceptance of the WTO Agreement by that Member, any Member may provide for a limitation of the remedies available to the right holder as to the continued performance of such acts after the date of application of this Agreement for that Member. In such cases the Member shall, however, at least provide for the payment of equitable remuneration.
5. Members shall not be required to apply Article 31, or the requirement in paragraph 1 of Article 27 that patent rights shall be enjoyable without discrimination as to the field of technology, to use without the authorization of the right holder where authorization for such use was granted by the government before the date this Agreement became known.
6. In the case of intellectual property rights for which protection is conditional upon registration, applications for protection which are pending on the date of application of this Agreement for the Member in question shall be permitted to be amended to claim any enhanced protection provided under the provisions of this Agreement. Such amendments shall not include new matter.
7. Where a Member does not make available as of the date of entry into force of the WTO Agreement patent protection for pharmaceutical and agricultural chemical products commensurate with its obligations under Article 27, that Member shall:
(a) notwithstanding the provisions of Part VI, provide as from the date of entry into force of the WTO Agreement a means by which applications for patents for such inventions can be filed;
(b) apply to these applications, as of the date of application of this Agreement, the criteria for patentability as laid down in this Agreement as if those criteria were being applied on the date of filing in that Member or, where priority is available and claimed, the priority date of the application; and
(c) provide patent protection in accordance with this Agreement as from the grant of the patent and for the remainder of the patent term, counted from the filing date in accordance with Article 33 of this Agreement, for those of these applications that meet the criteria for protection referred
to in subparagraph (b).
8. Where a product is the subject of a patent application in a Member country in accordance with paragraph 8(a), exclusive marketing rights shall be granted, notwithstanding the provisions of Part VI, for a period of five years after obtaining marketing approval in that Member or until a product patent is granted or rejected in that Member, whichever period is shorter, provided that, subsequent to the entry into force of the WTO Agreement, a patent application has been filed and a patent granted for that product in another Member and marketing approval obtained in such other Member. 1/3
Sub-articles 1, 3, 4, 6, 8 and 9 are to be scanned with a legal bend of mind to arrive
at the "effective date" for a product patent.
India has already complied with Article 70(9) by making provision for EMR. Hardly a dozen or so product patent applications for new chemical entities were made in India post 1.1.1995, and most are reportedly not complying with the qualifying requirements of Section 24 A and B of Patent Act, 1970 (as amended) which is now known to one and all. However, we have about 4500 non-NCE product patent applications in the mailbox out of which about 1/4th to 1/3rd are from Indian Pharma Companies. These product patent applications filed in the mailbox will be examined post 1.1.2005 (or to be more precise post effective date of 3rd amendment).
The most "burning" issue relating to the Product patent regime, is the status of products already introduced in the market by Indian companies, some of which may become eligible for product patent grant. This leads to the question, whether they are eligible for protection from date of filing of the application, or date of introduction of product patent regime or date of grant of the product patent. The patent statute may prescribe the last option. However, in the light of Articles 65, and Articles 70 (and relevant sub-clauses therein) described above and in the light of a potential "grandfather clause" provision, it is worth evaluating the merits of a recent claim that product patents granted should entail protection from date of grant or date of introduction of product patent regime.
What is the "grandfather clause"? Grandfather clause is defined differe-ntly as follows :
GRANDFATHER CLAUSE
Allowable continuance, based on practice prior to legislation, of a practice now forbidden by new definition.
An exemption that allows person or entities to continue with an activity they were engaging in before it become illegal through a change in regulation.
In the United States, a grandfather clause is an exception which allows something pre-existing to remain as it is, despite a change to the contrary in the rules applied to newer situations. It is often used as the verb "to grandfather" or "grandfather in", alternately, as "grandfather clause". Often, such a provision is used as a compromise, to effect new rules without upsetting a well-established physical or political situation.
A provision exempting persons or other entities already engaged in an activity from rules or legislation affecting that activity. Grandfather clauses sometimes are added to legislation in order to avoid antagonizing groups with established interests in the activities affected.
All these definitions and interpretations relate to a period of transition when the relevant laws are undergoing change.
The fairness of application of this provision should be based on the degree or extent of damage or injury suffered by a majority of the community to which the change applies or in short, a matter of private right vs. public benefit.
The current provisions of the Patent Act, 1970 is that the EMRs granted (which have derived the qualification for grant from the mailbox-product patent-applications pending for grant) will automatically get extinguished with the grant (or rejection) of product patent. It could be interpreted that the protection for a product patent will start with grant of the product patent (at least in case of the products which enjoyed EMR protection).
In case of The Trade Marks Act, 1999 under section 159 (5) states as follows:
"Notwithstanding anything contained in this Act, where a particular use of a registered trademark is not an infringement of a trademark registered before the commencement of this Act, then, the continued use of that mark shall not be an infringement under this Act".
Transition is inherent to change. There is no change possible without a process of transition. Resistance to change is a natural "human" reaction, resulting primarily from the fear of the unknown. Debating on transition, as if transition itself is an end and is the permanent element in change, is being unfair to the system and also to the positives that could emerge from the change. One needs to look forward to the benefits and positives in the long term and be flexible and soft to reduce the damage or injury in the interim arising out of the period of transition.
- (The author is CEO of Gopakumar Nair Associates, Mumbai. E-mail: gopanair@gnaipr.net)