With the enactment of the Patents (Amendment) Bill 2003, India will have a fully TRIPS compliant patent system which hopefully will be operative from 1.1.2005 as per the mandate . The draft Bill, also termed the Third Amendment presented on December 22nd to the Lok Sabha has covered the provisions left out of the First and Second Amendments notably the ones concerning the introduction of the Product Patent regime for all classes of products without discrimination. Once again the Government has attempted to bring in a balanced legislation which would not hurt the interests of either the inventors or the users of the inventions. To what extent has it succeeded?

The stated objectives of the new Bill to further amend IPA (1970) are to not only make the law, TRIPS compliant, but also to simplify and rationalise the procedures for grant of patents; in other words, to make the practice of the system more user-friendly.. The salient objectives of the Bill are to introduce the product patent regime for all inventions, to delete the provisions relating to EMRs which will become redundant with the advent of the Product Patent regime, to introduce the provision of grant of Compulsory Licenses to supply drugs to Countries which have no manufacturing capacities to meet their acute public health problems as per the TRIPS Agreement on the DOHA Declaration on Public Health and to strengthen issues related to national security.

Product Patents Regime

The Amendment has deleted Section 5 of IPA 1970 which had, specified that only methods or processes of manufacture are patentable for certain inventions, so as to allow product patent protection in all fields of technology including areas of foods, medicines and drugs. However the new uses of known substances are still non-patentable unlike in the case of patent laws in many other Countries, which afford protection for new uses (Swiss type of claims). It would have been appropriate if Utility Patents were allowed under the Indian Law, considering Indian strengths in this area and its R&D capabilities.
Biological material or traditional knowledge and any other subject matter of strategic importance that may be notified by the Government from time to time cannot be a subject for patent applications as per the new Amendment.

Working of the Patent, Compulsory Licenses & Revocation of Patents

Under Section 82 , conditions for grant of Compulsory Licenses, such as National emergency, circumstances of extreme urgency, public non-commercial use etc which are all causes for grant of Compulsory Licenses have been defined. Under Section 83, abuse of patent rights which restrain trade and adversely affect international transfer of technology are additional causes which can lead to grant of Compulsory Licenses. If a patent is not worked in India for three years from the date of sealing of the patent. and efforts to obtain license from the patentee has failed the government can grant Compulsory License on terms to be agreed upon between the patentee and the licensee and if there is no agreement, the royalty payable will be fixed at not more than 5% of the annual sales turnover at ex-factory prices. The term of the license will be co-terminus with the life of the patent. Compulsory licenses also could be revoked for non-working of the license for a period of two years after the license is granted. Further, under Section 85, if patented invention is not worked in India by the patentee or his licensee or if the product is not available at affordable prices to the public, the Government can order even the forfeiture of the patent.

Under new Section 92 (A), Compulsory License shall be available for manufacture and export of patented pharmaceutical products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned product to address public health problems, provided a Compulsory License has been granted by such Country. The Controller shall grant a Compulsory License solely for this purpose under terms and conditions decided by him. This particular provision has been included to support the letter and spirit of the DOHA Declaration on TRIPS and Public Health, which the TRIPS Council approved in August 2003. However, the terms stipulated to qualify for the import of the patented product by the Country which has acute need for the product and for the Country which manufactures the product and exports it , are far too cumbersome, complex and bureaucratic to make it effective, according to most experts primarily from the developing countries.

Under Section 95, the patentee should transfer technology along with the license to manufacture the product for which Compulsory License has been granted. If the patentee does not cooperate, appropriate means could be considered by the designated authority to enforce this requirement. This particular provision is extremely difficult to implement since the authorities designated in India have no jurisdictional powers or legal recourse over the patentee or his licensee from another Country.

Outcome of the Third Amendment

The compulsion for the proposed Amendments to the IPA 1970 was primarily to introduce product patents for all inventions as mandated by the TRIPS Agreement. While meeting that requirement, Government also introduced fresh legislations to take care of some of the specific features which would ensure an equitable patent system in the Country benefiting all the stake holders. Provisions for enhancement and strengthening National security considerations, protection of indigenous knowledge, heritage and biological diversity from unauthorized third party exploitation, provision for compulsory licenses both for domestic use as well as for exports of drugs to countries which have acute medical needs , but have no manufacturing capabilities, prevention of anti-competitive practices through monopolies granted by the patent system, provision for parallel imports to make patented drugs available from the cheapest licensed sources, removal of exclusivity under EMR provisions during the transition period and stream lining and rationalization of the entire system, are some of the other major objectives to be achieved by this Amendment.

While there are no serious conflicts with the provisions, mandated under TRIPS, a few of the issues addressed through this Amendment are likely to be questioned as not being fully compliant with the TRIPS mandate. They are related to lack of patentability of biological materials and various life forms including microorganisms, provision for parallel imports under the exhaustion of rights principle, liberal interpretation of the scope for issue of Compulsory Licenses, authority of the Controller and the Government to grant Compulsory Licenses for the domestic and export markets or even revocation or forced forfeiture of patent rights under a variety of conditions including high and unaffordable prices of drugs, definition of working of an invention not to include imports of the patented article, insistence on transfer of technology along with license to use the invention etc. There are a large number of implementation problems that will crop up as the various provisions get to be enforced apart from the serious problems of lack of infrastructure to put the new system in a fully operational mode.

The powers of the Appellate Board to decide on various tricky legal and technical issues which will come up during the implementation need to be carefully defined and their relative positioning vis-à-vis the judicial set up in the country also needs to be clearly established. Framing appropriate rules to support the various legislative provisions is bound to be a very tricky exercise and a nightmare to the Rule makers.

The final legislation incorporating and embodying all the essential provisions under the TRIPS Agreement need to be implemented by the end of 2004 for which all procedural matters including legislative debates in the Parliament, framing of the Rules and notification for effecting the implementation process collectively or in phases need to be finalized in a defined time frame to meet the deadline.

The road ahead after IPA 1970 becomes an effective pathway for encouraging inventions and innovations and spreading a culture of R&D among all the industrial segments. It is important for India, in view of the high quality and quantity of intellectual capital available in this Country, to realize its full potential to create economic wealth for the Nation and its people through a well laid out and implemented system for Intellectual Property Protection.