West should learn from India’s high patent standards

The Supreme Court’s denial of a patent for Glivec, an anti-leukaemia drug made by Novartis of Switzerland, has been widely but wrongly hailed by NGOs and castigated by pharmaceutical companies as an attack on patents and a victory for cheap medicine. Actually, the Court fully upheld the principle of patents, but set a high bar for deciding what’s innovative and what’s mere tweaking.

Instead of attacking the verdict, Western countries should raise their standards too. Their overliberal grant of patents has led to the tiniest design changes becoming patentable. This was exemplified by last year’s ridiculous battle between Samsung and Apple on whether features like a rounded rectangular cellphone screen and finger movements were patentable. Smartphones are a great invention, but hardly justify the grant of as many as 25,000 patents, many for piffling details.

Till 1995, India refused to patent drug molecules. But as a consequence of WTO membership, India in 2005 allowed product patents for drugs, but only for innovations after 1995. This meant no patent for Glivec, which was patented first in 1993. To get around this, in 2006 Novartis tried to patent a new variation of Glivec, for which it claimed improved efficacy. Some other countries granted patents for this variation. But the Indian Patents Office rejected the claim as insufficiently innovative. So too has the Supreme Court.

Many NGOs hailed the judgment for the wrong reason. The Cancer Patients Aid Association, which led the fight against Glivec, declared: “We are happy that the apex court has recognised the right of patients to access affordable medicines over profits for big pharmaceutical companies through patents.”

False: no such right was recognized by the court. It simply said Novartis had not proved that the new variation was innovative enough. The court clarified that it would grant patents for variations that were more efficacious, but set a higher standard for proof than many western courts do.

NGOs are wrong to paint Novartis as a bloodsucker that pauperizes patients. Glivec has saved lakhs of leukaemia patients from death. This is a great boon, and we must encourage more such life-saving boons by granting patents for new drugs. However, this does not mean giving patents for mere tweaking and “evergreening” of existing drugs through minor variations.

Normally, governments promote competition and prohibit monopolies. But temporary monopolies (patents) are justified to promote innovation in drugs and other fields. The patent regime should ensure that the public benefit from innovation far exceeds the cost imposed by monopoly profits. This implies a high bar for granting patents. But the US and other western countries have been giving patents so liberally and broadly that these lead more to lawsuits than innovation, leaving lawyers as the chief beneficiaries . Patents are supposed to spur innovation, but when granted over-liberally they create so much lawsuit risk and cost that they end up hampering innovation, not aiding it.

The Economist (UK), no basher of multinationals, acknowledges that over-liberal “proliferation of patents harms the public in three ways. First, it means that technology companies will compete more at the courtroom than in the marketplace. Second, it hampers follow-on improvements by firms that implement an existing technology but build upon it as well. Third, it fuels many of the American patent system’s broader problems, such as patent trolls (speculative lawsuits by patentholders who have no intention of actually making anything); defensive patenting (acquiring patents mainly to pre-empt the risk of litigation, which raises business costs); and “innovation gridlock” (the difficulty of combining multiple technologies to create a single new product because too many small patents are spread among too many players).”

Patent trolls buy up patents in bulk, typically from bankrupt companies, not for actual use but simply to hit other innovators with lawsuits for patent infringement, forcing them to settle to avoid fat legal bills. One US study estimated such legal costs at $ 29 billion in 2011 alone.

Last year, Google bought Motorola’s failing smartphone business for $ 12.5 billion, to access its 17,000 patents. Microsoft and others paid $ 4.5 billion for 6,000 patents from Nortel. Most of these will never be used in actual production: they are simply kept as legal weapons for possible lawsuits. This has nothing to do with innovation, which patents are supposed to promote.

The West’s over-liberal patent system is broken. It should learn from India’s much tougher system. Patents should be seen as monopolies, to be given sparingly only for genuine innovations where the public benefit clearly exceeds the monopoly cost. This means setting a high bar for innovation. High standards are desirable for patents, as for everything else.

7 thoughts on “West should learn from India’s high patent standards

  • 2013.May.15 at 23:22
    Permalink

    The problem with section 3(b) of the Indian patent law is that the wording “offend public order or morality” is so ambiguous and slippery in its definition that the terms ‘public order’ and even worse, ‘morality’ can be held to the insidious legal/judiciary practice of “interpretation by fiat,” meaning the interpretation of those terms are left to the whim of linguistic chicanery, not to the principles of ‘integrity in law,’ especially given that India is an extremely pluralistic society in which what might ‘offend’ one segment of the public might not offend another and what is deemed ‘moral’ to one segment would be deemed acceptable to another. The wording is simply too ambiguous for a law that requires ‘specificity’ on all points. In essence, such wording in patent law allows for an environment in which the stability and level playing field expected of patent laws is simply not possible under such flawed and slippery wordage as section 3(b) clearly illustrates.

    Reply
  • 2013.May.06 at 17:05
    Permalink

    We’ll have to see how this works out in practice. India has a right, of course, to set its patent laws out in this way, but will it always work out like this when a section 3(d) issue comes up again? Or will that only be when it’s a multinational company selling an expensive drug? Pricing, in fact, is not supposed to enter into this dispute, although for a while, it looked as if it would. The Indian appellate board, as Spicy IP reports , had originally tried to being in another interesting part of the patent law, section 3(b), which forbids patents for inventions that “offend public order or morality.” They had tried the argument that Novartis’ pricing offended public morality, but the Indian Supreme Court, to their credit, declined to pursue that line of thought.

    Reply
  • 2013.Apr.16 at 15:28
    Permalink

    Frederick, I don’t disagree with you, hence the need for major patent law reform that goes beyond the paltry stuff of 2011.

    As for the premise of the title of the article we are all commenting on, “… India’s high patent standard,” I’d like to point out that part of any standard, especially a legal or regulatory one, is the ability to ‘enforce’ that standard.

    India, like China, does not have an adequate ‘enforcement’ apparatus in place to uphold it so-called ‘high patent standard.’

    A ‘standard’ is only as good as the ‘enforcement’ of that standard. No enforcement = no standard.

    India’s low enforcement of patents = India’s low patent standard.

    It really is that simple! And needs no further discussion.

    Reply
  • 2013.Apr.13 at 10:26
    Permalink

    Your views as ever are logical and sensible. Have been a fan of Swaminomics for ages. Therefore I need to point out that the third paragraph is factually incorrect and misleading.

    “Till 1995, India refused to patent drug molecules.”

    – Not just drug molecules but products in general. India was possibly motivated by the german way of ‘process patents only’ in making the 1970 Patent act. Prior to 1970, India had both product as well as process patents. Your wording gives a pharma-specific impression.

    “But as a consequence of WTO membership, India in 2005 allowed product patents for drugs, but only for innovations after 1995.”

    – There is no special 1995 bar in the Patent act or rules. India’s obligations under TRIPS / WTO began on 1 Jan 1995 but we had a 10-year period for implementation which gives us the 1 Jan 2005 date. For this interim period, we had to put in place a mechanism whereby inventors seeking product patents would have their rights protected. We therefore put in place the Mailbox system and Exclusive Marketing Rights mechanism. (See 1999 and 2002 amendments, TRIPS Article 70 paras 8 and 9 and WTO disputes DS50 and DS79.)

    – Also, your wording may give an impression that any invention after 1995 can get a patent in India _at any time_ which is patently incorrect. Things are much more complex of course.

    “This meant no patent for Glivec, which was patented first in 1993.”

    – Again, the above was NOT the reason why Glivec or Imatinib free base or Imatinib Mesylate could not get a patent – the reason was simply because it was already being sold commercially around the world and had been disclosed via patent applications and publications around the world thus losing its novelty! (Patent Law and Prosecution modalities aside!)

    “To get around this, in 2006 Novartis tried to patent a new variation of Glivec, for which it claimed improved efficacy. Some other countries granted patents for this variation. But the Indian Patents Office rejected the claim as insufficiently innovative. So too has the Supreme Court.”

    – Again, Novartis’ attempt to seek patent for Beta-crystalline form of Imatinib Mesylate in India was neither India-specific nor had anything to do with the 1995/2005 mis-conception above. Your wording bypasses the concept of evergreening until the sixth paragraph and thus has the potential to confuse.

    Sir, a lot of people base their understanding and opinions on issues on your writing. Therefore kindly consider revising please.

    Reply
  • 2013.Apr.11 at 08:48
    Permalink

    dear swami,
    i must say this article provides an insight view of the most hyped stories of these days. but i would like to add on here that by making ptent laws more stringer as compared to western countries will definitely prevents the misuse of it but on the other hand it will hamper local innovations as well. As we all know that most of the patents in our country are in possesion of foreign players and cost cutting by our government in R&D sector will never change the scenario. it is the need of hour that there should be a balance between patent protection, public interest and scientific advancements in our country.

    Reply
  • 2013.Apr.10 at 02:46
    Permalink

    The US patent system is prefectly reasonable and very easy to understand. It works like this: The litigant with the most money wins. Period. You can have the law on your side, you can have the facts on your side and you can have god almighty as your attorney but without unlimited funds to pursue the case, you lose. This is America, we are a capitalist society where everything is for sale, as it should be, including the decisions of the courts.

    Reply
  • 2013.Apr.09 at 03:41
    Permalink

    Having been involved in the United States patent process, on the whole I’m inclined to agree with this writers observations. However, also having worked with India contacts and attempting to work NDA based arrangements, I have found that we almost always hit the snag of protections of NDA under India law. Where ‘patent protection’ is involved I’ve learned that though India has signed onto the international treaty for patent protection and claims to have laws protecting patents, India in fact has a very poor ‘enforcement’ apparatus in place for ensuring patent protection, especially foreign patents, not too dissimilar to that of China, but admittedly not as bad as China, but a problem all the same. Again, I agree with the writers observation of patents needing to be about ‘original’ inventions, not mere tweaks, as the writer illustrates, but the problem of India’s overall ‘enforcement’ of protecting patents is still a dismal proposition when a company considers doing business with an Indian firm or selling its products in India.

    Reply

What do you think?