September 15, 2005 (Vol. 25, No. 16)

Industry Shifts to New Paradigm

The Patents (Amendment) Act 2005 was ratified by the Indian Parliament in April, and is effective from January 1. This amendment is the third to the Indian Patent Act of 1970. It also replaces the Patents (Amendment) Ordinance 2004, which was hurried through passage at the end of 2004 in order to meet January 1, 2005, compliance requirements under the World Trade Organization (WTO) agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).

The 2005 Act was driven by both compliance requirements as well as an increasing recognition that to become a global player in any technology industry, a lowest-cost driven strategy, while perhaps somewhat profitable in the short term, is ultimately not sustainable over time relative to an innovative, proprietary research and development paradigm.

The Act provides for significant changes in intellectual property protection in India. These changes signal a dramatic shift in intellectual property policy in India, and will impact the biotechnology/pharmaceutical industry in particular.

This should serve as an impetus in promoting a new level of innovation in the pharmaceutical and biotechnology industries in India, transforming a reverse-engineering, price-driven mentality to a proprietary technology-driven mentality.

While the Act covers numerous aspects of intellectual property, both from policy and procedural perspectives, some of the more significant aspects are discussed here.

Indian Patent Act

To understand the significance of the changes, it is worthwhile to review the history of the Indian Patent Act. The Indian Patent Act was created in 1970 and on the one hand was implemented to encourage innovation by protecting proprietary research and development.

This philosophy, however, was at odds with Indias desire (dare it be said necessity) to encourage and allow access to foreign technologies (e.g., pharmaceuticals) to Indian society that otherwise might be unavailable to its people due to cost and pricing structures under a proprietary intellectual property protection system.

Thus, to bridge this gap, patents were only issued for methods of producing products (also referred to as compositions of matter), but not for the products themselves (i.e., pharmaceuticals). This allowed one to commercialize a drug that was a proprietary product of another as long as ones own method of producing that product was used.

Furthermore, the patent term of an Indian patent for chemicals, food, and drugs was seven years; far short of the WTO mandated 20-year term from application filing date. Finally, imported products were not themselves protected, only the means of producing that product.

The cornerstone of the Act is the recognition of product (or composition of matter) patents for chemicals (including drugs), and provision of a 20-year term from the filing date of such applications. This includes so-called mail-box applications. Mail-box applications are product patent applications that were filed with the Indian Patent Office from 1995 to present, but were held in limbo (and unexamined) pending resolution of policies and laws regarding treatment of these product patents.

The infrastructure and timing issues to deal with the sudden flood of processing of about ten years worth of applications is a further point of contention and current debate.

In regard to known substances, the Act addresses a number of aspects. New uses of a known substance are not patentable. It is possible, however, that position might change in the future. New dosage forms are patentable as long as an unexpected or surprising result is established.

The Act also defines a pharmaceutical substance as a new entity involving one or more inventive steps. To be patentable, however, the pharmaceutical substance must demonstrate a synergistic effect, and not simply be an admixture where efficacy is merely that based on the individual ingredients independently.

Finally, the Act provides that derivatives, esters, salts, particle size, metabolites, polymorphs, isomers, complexes, combinations, and other derivatives of a known substance would be considered the same substance absent a showing of enhanced therapeutic efficacy.

More particularly to biotechnology, vectors, sequences, plasmids, and the like could be patentable under the revised laws, provided that a demonstration of industrial application is shown. Method of treatment of animals or humans are not patentable, while methods of treatment of plants are patentable. Diagnostic procedures, particularly those involving in vivo analysis, are not patentable.

From an enforcement standpoint, importation of a patented product or a product made by a patented process is now considered as infringing activity under the Act. It is noteworthy, however, that the import, use, or sale of a patented product for the purpose of obtaining data intended to be submitted to any regulatory authority is exempted from classification as an infringing act.

Compulsory Licensing

The Act also addresses importation and licensing issues. For example, the Act contains provisions that expand existing compulsory licensing provisions. Compulsory licenses for manufacture and export of patented pharmaceutical products to countries having insufficient or no manufacturing capacity may be obtained in order to meet public health needs, assuming the country of import authorizes such importation.

Interestingly, Indias Ministry of Science and Technology, as part of their biotechnology strategy, proposed that all biotechnology industries be exempted from the requirements of compulsory licensing.

While the recent changes in Indias patent laws are a dramatic shift in intellectual property policy in India, it is a first step. Promulgation of rules to implement the new law remains outstanding, and certain provisions of the Act are controversial in that it is not clear that they are in compliance with TRIPS. Thus, the rules, as well as the law itself, are still subject to revision.

Implementation and enforcement of the new intellectual property policies remain surrounded by ambiguities, and this will be an area of increasing development in the years to come. Despite the uncertainties, undoubtedly, the Patent Law changes will be a factor in influencing the direction of future biotechnology and pharmaceutical research and development in India.

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