Evolution of Patent Laws (Developing Countries' Perspective)

Evolution of PATENT LAWS Foreword by : S.S. KANG (Vice President, C.E.S.T.A.T.) Capital Law House CONTENTS . 1 PA...

Author: D. N. Choudhary | S. S. Kang (foreword)

64 downloads 1021 Views 29MB Size Report

This content was uploaded by our users and we assume good faith they have the permission to share this book. If you own the copyright to this book and it is wrongfully on our website, we offer a simple DMCA procedure to remove your content from our site. Start by pressing the button below!

Report copyright / DMCA form

DOWNLOAD PDF

Evolution of

PATENT LAWS Foreword by :

S.S. KANG (Vice President, C.E.S.T.A.T.)

Capital Law House

CONTENTS

.

1 PATENT SYSTEM I . WHAT IS A PATENT ? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1. I1. INGREDIENTS OF PATENTABILITY - EXTERNAL & INTERNAL CRITERIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. (a) External Criterions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 . CI (i) Patentable subject-matter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 . CI (ii) Novelty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 0 (iii) Inventive step . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 (iv) Industrial Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 (b) Internal Criterions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4. (i) Clear and complete disclosure . . . . . . . . . . . . . . . . . . . . . . . . . .4 CI (ii) Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 (iii) Improper amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 I11. PATENT SYSTEM - CATEGORIES AND TYPES AS PER STAGE OF DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6. (a) Two Categories Of Patents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 (b) Varying Patent Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

.

2 ORIGIN AND DEVELOPMENT OF PATENT LEGISLATION I . TRACING THE HISTORY OF PATENTS IN THE WORLD . . . . . . . . . . . .9 (a) Greek Patent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9. (b) Honour-driven Venetian Patent Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 (c) English & Other European Patent Laws . . . . . . . . . . . . . . . . . . . . . . 9 . (d) Patent Laws In Asia, Africa & Latin America . . . . . . . . . . . . . . . . . 12 I1. PATENT SYSTEM IN INDIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 (a) Early History (Ancient and Medieval) . . . . . . . . . . . . . . . . . . . . . . . 13 (b) Later History (Modern) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 a (i) The Pre-Legislation period: 1832-1856 . . . . . . . . . . . . . . . . . .13 (ii) The period of Exclusive Privileges: 1856 -1911 . . . . . . . . . . .15 (iii) T h e Period of Colonial Patents: 1912-1947 . . . . . . . . . . . . . . 18

.

3 DEVELOPMENT OF PATENT REGIME IN

INDEPENDENT INDIA I . RAJAGOPALA AYYANGAR COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . 22 11. CHANGES RECOMMENDED IN THE LAW . . . . . . . . . . . . . . . . . . . . . . 25

CONTENTS

XlV •

•

CONTENTS . .. . .

( a ) Restrictions on the Patentability of Inventions . . . . . . . . . . . . . . . . 25 0 (i) Chemical products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 (ii) Food a n d Medicine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 (b)Anticipation and Novelty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 (c) Remedies for Abuse of Patent rights - Compulsory Licensing and Revocation for Non-Working . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 (d) Provisions for Patents of Food and Medicine . . . . . . . . . . . . . . . . . . 32 (e) Other types of Monopoly Abuses, Restrictive Trade Practices and Monopolistic Combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

t

1

.

4 PATENT LAW STANDARD-SETTING BY DEVELOPED COLJNTRIESPRE-TRIPS

XV . . .

( n ) Transitional arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 I1. SIGNIFICANT PROGRESS AT DOHA . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 (a) Patentability of Micro-organisms and Non-biological and Micro-biological processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76 (b) Review of TRIPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 (c) Relationship between TRIPS Agreement and Convention on Biological Diversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80 (dl Trade and Transfer of Technology . . . . . . . . . . . . . . . . . . . . . . . . . . 81 I11. LEGAL STATUS OF DOHA DECLARATION . . . . . . . . . . . . . . . . . . . . 86

.

I . COMPETITION FROM DEVELOPING COUNTRIES . . . . . . . . . . . . . . . 42 I1. GAMES PLAYED BY US BUSINESS & GOVERNMENT . . . . . . . . . . . 43 I11. AT THE NEGOTIATING TABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 IV. THE PUZZLE OF TRIPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

7 OTHER M'LTLTILATERALTREATIES AND INTERNATIONAL CONVENTIONS I

.

5 PATENT LAW STANDARD-SETTING BY

DEVELOPING COLTNTRIES PRE-TRIPS AND DURING TRIPS NEGOTIATIONS I . PRE-TRIPS PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 I1. DURING THE TRIPS NEGOTIATIONS . . . . . . . . . . . . . . . . . . . . . . . . . 59 1

.

5

6 BASIC FRAMEWORK OF TRIPS AND ITS

IMPLICATIONS I . SALIENT FEATURES OF PATENT REGIME UNDER TRIPS . . . . . . . . 68 (a) Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 (b) General provisions (Articles 1-- 6) . . . . . . . . . . . . . . . . . . . . . . . . . 69 (c) Objectives and Principles (Articles 7 and 8) . . . . . . . . . . . . . . . . . . . 69 (d)Scope of Patentability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 (el Non-patentability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 (f] Invention not defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 (g)Working of patents . a Non-Issue . . . . . . . . . . . . . . . . . . . . . . . . . . 70 ( h )Non-Authorized use of patented product . . . . . . . . . . . . . . . . . . . . . 72 (i) Term of the patent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 (1) Reversal of burden of proof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 ( k )Control of anti-competitive practices . . . . . . . . . . . . . . . . . . . . . . . . 73 (1) Enforcement -- general obligations . . . . . . . . . . . . . . . . . . . . . . . . . 73 (m) Dispute Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

I . PARIS CONVENTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 ( a ) Salient features of Paris Convention . . . . . . . . . . . . . . . . . . . . . . . . 88 (b) Relationship between Paris Convention and the TRIPS Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90 I1. PATENT CO-OPERATION TREATY (PCT) . . . . . . . . . . . . . . . . . . . . . . . 91 ( a ) International Phase of PCT Procedure . . . . . . . . . . . . . . . . . . . . . . . 91 (c)National Phase of PCT Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 I11. THE CONVENTION ON BIOLOGICAL DIVERSITY (CBD) . . . . . . . . 92 ( a ) Salient Features of CBD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 (i) Scope of t h e CBD access regime . . . . . . . . . . . . . . . . . . . . . . . . 93 (ii) Sovereign rights over genetic resources (Art. 15(1)) . . . . . . .94 (iii) Mutually agreed terms, prior informed consent & benefit-sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .94 (b) Relationship between CBD and TRIPS Agreement . . . . . . . . . . . . . 95 Differences between TRIPS a n d CBD . . . . . . . . . . . . . . . . . . . . . .96 IV . INTERNATIONAL CONVENTION FOR THE PROTECTION OF NEW VARIETIES OF PLANTS (IJPOV) . . . . . . . . . . . . . . . . . . . . . . . . 100 ( a ) Salient Features of UPOV-1978 & UPOV .1991 . . . . . . . . . . . . . . 100 (i) T h e Farmer's Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 . (ii) The Breeder's Exception . . . . . . . . . . . . . . . . . . . . . . . . . . . .102 (b) Relationship between UPOV and TRIPS Agreement . . . . . . . . . . 103 V . International Treaty on Plant Genetic Resources for Food and Agriculture (PGRFA Treaty) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 ( a ) Salient Features of The International Treaty on Plant Genetic Resources for Food and Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . 105 (b) Relationship between PGRFA Treaty and the TRIPS Agreement 106

XVI

.

CONTENTS

.

8 PROBLEMS WITH TRIPS PATENT SYSTEM (FOCUS

ON PHARMA SECTOR)

1. A pACTUM DE CONTRAHENDO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 11. AN ASSAULT ON SOVEREIGNTY . . . . . . . . . . . . . . . . . . . . . . . . . . . .109 111. NO DEMOCRATIC BARGAINING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 IV . A HIDDEN AGENDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 V . PTJBLIC INTEREST MISSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 VI . INSTRUMENT O F TECHNOLOGICAL PROTECTIONISM . . . . . . . . 112 VII . ALLOWING IMPORTS HARMFUL . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 VIII . PROMISED TECHNOLOGY TRANSFER THROUGH FDI FALSE . 113 IX . NO R&D FOR UNREMUNERATIVE SECTORS . . . . . . . . . . . . . . . . . 114 X . NO BINDING MEASURES AGAINST ABUSES . . . . . . . . . . . . . . . . . . 117 XI . NO EXPLICIT COMPULSORY LICENSING . . . . . . . . . . . . . . . . . . . . 118 XI1. 30 AUGUST, 2003 DECISION ON PARA 6 O F DOHA DECLARATION ONEROUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 XI11. UNSCRUTINISED EMR REGIME . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 XIV.RUNAWAYPRICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 XV . ACCESS DENIED TO MEDICINES AND HEALTH CARE . . . . . . . . 125 XVI . ONE-SIDED HARSH MEASURES TO HURT LOCAL PRODUCER-INFRINGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .127 XVII . PATENTING O F PLANT VARIETIES . . . . . . . . . . . . . . . . . . . . . . . . 127 XVIII . PATENTING O F LIFE FORMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

.

9 IN-BUILT FLEXIBILITIES IN TRIPS AND

ENDOGENOUS CONSTRAINTS (FOCUS ON PHARMA SECTOR) I . AN EVOLVING TREATY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 I1. A DEVELOPMENT-ORIENTED PREAMBLE . . . . . . . . . . . . . . . . . . . . 132 111. DIFFERENTIAL IMPLEMENTATION SCHEDULES . . . . . . . . . . . . 132 IV. BALANCING OBJECTIVES AND PRINCIPLES . . . . . . . . . . . . . . . . . 133 V . NARROWING THE PATENTABILITY CRITERIA . . . . . . . . . . . . . . . . 133 VI . EXCEPTIONS TO EXCLUSIVE RIGHTS . . . . . . . . . . . . . . . . . . . . . . . 135 ( a ) Early Working - Regulatory use .Exception . . . . . . . . . . . . . . . . . 136 (b) Research and Experimental use Exception . . . . . . . . . . . . . . . . . . 137 (c) Parallel Importation and Exhaustion of Rights . . . . . . . . . . . . . . . 137 VII . COMPULSORY LICENSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 VIII . TECH-TRANSFER FROM DEVELOPED COUNTRIES TO LDC'S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .143 IX . LIMITING TEST DATA PROTECTION . . . . . . . . . . . . . . . . . . . . . . . . 143

. .

CONTENTS

. . . .

XVll

X. CONTROL OF ANTI-COMPETITIVE PRACTICES . . . . . . . . . . . . . . . 144 XI . WIDE GROUNDS FOR REVOCATION/FORFEITURF, O F PATENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .146 XI1. ENDOGENOUS CONSTRAINTS ON NATIONAL EFFORTS TO IMPLEMENT TRIPS FLEXIBILITIES . . . . . . . . . . . . . . . . . . . . . . 148 (a) Lack of Techno-Legal expertise to incorporate and implement TRIPS Flexibilities in National Law and Policy . . . . . . . . . . . . . . . 148 (b) Insufficient Domestic Research And Manufacturing Capacities . 149 (c) Insufficient Technical and Infrastructural Capacities for Product Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 (d) Difficulties in Establishing Efficient Product Management and Procurement Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . 151 (el Difficulties in tackling Anti-Competitive Practices and Abuse ofIPR's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 (0 Information Asymmetry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152

.

10 "SELF-HELP" (SOME INSTITUTIONAL

PROPOSALS) I . DIRECTED R&D BY GOVERNMENT OWNED RESEARCH FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .154 I1. INTEGRATED POLICY MAKING .NEED FOR INTRACOORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154 I11. A DEVELOPING COUNTRY "QUAD" . . . . . . . . . . . . . . . . . . . . . . . . . . 155 IV. ESTABLISHING SOUTH .SOUTH REGIONAL FRAMEWORKS . . . 156 (a)Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 (b) Latin America & Caribbean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 (c) Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .158 V . REGIONAL ECONOMIC COMMUNITIES . . . . . . . . . . . . . . . . . . . . . . 159 VI . REGIONAL INTELLECTUAL PROPERTY ORGANIZATIONS . . . . . 160 VII . REGIONAL MANAGEMENT AND PROCUREMENT MODELS . . . 162 VIII . RESISTING BILATERAL AND OTHER TRIPS-PLUS PRESSURES 166 IX . REGIONAL COMPETITION ENFORCEMENT MECHANISMS . . . . 166 X . LIMITATIONS O F REGIONAL COOPERATION . . . . . . . . . . . . . . . . . 167 XI . ENHANCED ROLE FOR NGO'S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167

.

11 ROADMAP FOR FUTURE NEGOTIATIONS I . MAXIMALIST "RIGHTS CULTURE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 I1. BROAD PRINCIPLES FOR ADOPTION BY WTOIWIPO . . . . . . . . . . . 173 (a)Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 (b) Proportionality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .174

XVlll

I

. CONTENTS . .

(c) Developmental Appropriateness . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 (d) Farticipation and Transparency . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 (e) Openness to Alternativee and Additions . . . . . . . . . . . . . . . . . . . . 174 (flNeutrality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174

CONTENTS

.

13 PATENT LAW STANDARD-SETTINGBY AND ON BEHALF OF DEVELOPING COUNTRIES POST-TRIPS

!

STANDARD-SETTING AT WIPO . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 11. A DEVELOPMENT AGENDA FOR WIPO . . . . . . . . . . . . . . . . . . . . . . . 229 (a) Integrating Development dimension with Intellectual Property a t W I P O . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .230 (b)Promoting pro-Development norm-setting a t WIPO . . . . . . . . . . . 233 i (c) Principles and guidelines for WIPO's Development-oriented assistance and evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .235 (d) Guidelines for future work on Transfer and Dissemination of Technology & related Competition policies . . . . . . . . . . . . . . . . . . . 237 (i) Supportive policies by Developed countries . . . . . . . . . . . . . . 238 (ii) Multilateral supportive measures . . . . . . . . . . . . . . . . . . . . . 239 o (iii) Guidelines for Competition Policies . . . . . . . . . . . . . . . . . . . 240 (e) Strenthening the role of member-driven structures and facilitating the participation of public-interest groups to ensure the effective implementation of WTO's Development mandate . . . . . 242 (flDevelopment dimension and I P enforcement . . . . . . . . . . . . . . . . . 244

J . IP

I

I11. PRECISE DEFINITION O F SUBJECT-MATTER & INGREDIENTS O F PATENTABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178 IV . ARTICLES 7 & 8 AS AN INTERPRETATIVE TOOL . . . . . . . . . . . . . . 182 V . SPECIFIC EXCEPTIONS TO PATENT RIGHTS . . . . . . . . . . . . . . . . . . 182

I

,

VI . BEEFING UP COMPULSORY LICENSING PROVISIONS . . . . . . . . 183 VII . PARALLEL IMPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .186 VIII . TIERED OR DIFFERENTIAL PRICING . . . . . . . . . . . . . . . . . . . . . . 186 IX . CLARIFICATION ON TEST-DATA EXCLUSIVITY . . . . . . . . . . . . . . . 188 X . MARCHING TOWARDS A COMPETITIVE REGIME . . . . . . . . . . . . . . 188 XI . EXTENDING MORATORIUM ON NON-VIOLATION COMPLAINTS 191 XI1. SUBORDINATION O F I P RIGHTS TO HUMAN RIGHTS . . . . . . . . 192 XI11. TECHNOLOGY TRANSFER & STRENGTHENING R&D INFRASTRUCTURE IN DEVELOPING COUNTRIES . . . . . . . . . . . . . 196 XIV . COMPLEMENTARY ROLES O F WTO & WIPO . . . . . . . . . . . . . . . . 196

I I

t

.

14 POST-TRIPS AMENDMENTS OF INDIAN PATENT LAWS .LACUNAE & SUGGESTIONS

.

12 US APPROACH TOWARDS PATENT LAW STANDARD-SETTINGPOST-TRIPS I . NEW MULTILATERALISM (FORUM-SHIFTING) . . . . . . . . . . (a) Patent Law Treaty (PLT) . . . . . . . . . . . . . . . . . . . . . . . . . . (b) Reforms of Patent Cooperation Treaty (PCT) . . . . . . . . . . . . . . . . 202 (c) Substantive Patent Law Treaty (SPLT) . . . . . . . . . . . . . . . . . . . . . 203 0 (i) Defining patentability requirements . . . . . . . . . . . . . . . . . . .204 0 (ii) Technical character of inventions . . . . . . . . . . . . . . . . . . . . .204 (iii) Exclusions from patentability . . . . . . . . . . . . . . . . . . . . . . 205 . 205 (iv) Infringement a n d doctrine of equivalents . . . . . . . . . . . . . . (v) Prohibition against further conditions . . . . . . . . . . . . . . . . .205 I1. CONTINUED BILATERALISM (TRIPS-PLUS TREATIES) . . . . . . . . . 206 ( a ) US-JORDAN FTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .215 (b) T h e Nicaraguan BIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217 . (c) E U a n d EFTA - only a step behind . . . . . . . . . . . . . . . . . . . .219 I11. UNILATERALISM .UNABATED, POSSIBLY LEGITIMISED . . . . . 221

XIX

1. PATENTS (AMENDMENT) ACT. 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . 247 I1. PATENTS (AMENDMENT) ACT. 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . 247 111. PATENTS (AMENDMENT) ACT. 2005 . . . . . . . . . . . . . . . . . . . . . . . . . 248 N . SOME SALUTARY FEATURES I.N THE AMENDMENTS . . . . . . . . . 249 V . FLEXIBILITIES O F TRIPS AND DOHA DECLARATION IGNORED 250 VI . RECENT INTERNATIONAL STIJDIES IGNORED . . . . . . . . . . . . . . . 250

1

VII . WARNING BY ECONOMISTS, SCIENTISTS & MASS : ORGANIZATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .251 WII . PROVISIONS WHERE AMENDMENT IS NECESSARY . . . . . . . . . 251 (a) Scope of Patentability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .251 (i) Section 2(j) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .251 (ii) Section 2(ta) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .252 (iii) Section 2(ja) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252 . 0 (iv) Section 3(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .253 (v) New clause ( d a ) in Section 3 . . . . . . . . . . . . . . . . . . . . . . . . . 253 (vi) Section 3 u ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253

L

. I

.

xxxx

CONTENTS

'

. . . .

. .

o (vii) Section 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .256 o (viii) Section l l A ( 7 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257 (b) Pre-grant Opposition weakened . . . . . . . . . . . . . . . . . . . . . . . . . . . 257 (c) Reversal of Burden of Proof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258 ( d ) Provisions for Compulsory Licensing inadequate . . . . . . . . . . . . . 258 Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259 China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259 . . . . . . . . . . . . . . . . . . . . . . . . . . . (i) C.L. u n d e r Section 84 . . . . : 260 0 (ii) C.L. u n d e r Section 92 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .263 0 (iii) C.L. u n d e r Section 92A . . . . . . . . . . . . . . . . . . . . . . . . . . . . .264

. .

XXI

(c) Bilateral Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296

(d) Databases of Traditional Knowledge . . . . . . . . . . . . . . . . . . . . . . . 297 IX . REGIONAL & NATIONAL INITIATIVES FOR PROTECTION O F TK 298 . CRITICAL APPRAISAL O F THE OUTCOMES O F VARIOUS REGIONAL AND NATIONAL INITIATIVES . . . . . . . . . . . . . . . . . . . . 303 XI . SUGGESTED MODELS O F TK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304 (a) TK Model based on utilizing TRIPS Flexibilities . . . . . . . . . . . . . 305 o (i) Prior A r t S e a r c h . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306 o (ii) Disclosure of Origin requirement . . . . . . . . . . . . . . . . . . . . . 307 0 (iii) Adapting t h e Novelty requirement . . . . . . . . . . . . . . . . . . . 308 0 (iv) J o i n t Inventorship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .308 (b) Petty Patent a s a model for TK Protection . . . . . . . . . . . . . . . . . . . 309 (c) Geographical Indications (GI) a s a tool for TK Protection . . . . . . . 310 (d) Effective sui generis TK model . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311 (i) U n d e r s t a n d i n g t h e various facets a n d linkages of Intellectual Property based on Traditional Knowledge . . . . . . . 311 0 (ii) Meaning of a n effective sui generis T K regime . . . . . . . . . . .313 0 (iii) Wisdom of having t h e required kind of sui generis regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314 0 (iv) P a r a m e t e r s of a sui generis T K model . . . . . . . . . . . . . . . . . 314 0 (iv) Towards a Special Innovation P a t e n t S y s t e m . . . . . . . . . . .317 0 (v) A new concept of T K Innovation . . . . . . . . . . . . . . . . . . . . . . 317 0 (vi) Linking Innovation, Investment a n d Enterprise . . . . . . . . .317 XI1. ESTABLISHING A COMPLEMENTARY PROTECTIVE REGIME AGAINST MISAPPROPRIATION O F PUBLIC DOMAIN KNOWLEDGE BY IPR SYSTEM . . . . . . . . . . . . . . . . . . . . . 320 (a) Traditional Knowledge Database . . . . . . . . . . . . . . . . . . . . . . . . . . 321

x

.

15 TRADITIONAL KNOWLEDGE . CONSTRUCTION

OF A RIGHTS MODEL I . MEANING O F TRADITIONAL KNOWLEDGE . . . . . . . . . . . . . . . . . . . . 267 I1. WHETHER TK I S INFERIOR TO WESTERN SCIENCE ? . . . . . . . . . 272 I11. T H E RISING IMPORTANCE O F TK . . . . . . . . . . . . . . . . . . . . . . . . . . . 274 IV. URGENCY I N PROTECTION OF TK . . . . . . . . . . . . . . . . . . . . . . . . . . 276 ( a ) Development Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276 (b) Conservation Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276 (c) Preservation of traditional practices and culture . . . . . . . . . . . . . 277 (dl Prevention of Biopiracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277 (e) Equity Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277 V . INADEQUACY O F TRIPS REGIME FOR TK PROTECTION . . . . . . . 278 VI . IRRELEVANCE O F TRIBAL CUSTOMARY LAWS . . . . . . . . . . . . . . . 282 VII . INTERNATIONAL INITIATIVES FOR PROTECTION O F TK . . . . . 282 ( a ) The International Labour Organization Convention No . 169 . . . . 283 (b) Draft UN Declaration on t h e Rights of Indigenous Peoples. 1994 284 ( c ) The Convention on Biological Diversity (CBD) . . . . . . . . . . . . . . . 284 ( d ) Declaration of Indigenous Groups And Peoples . . . . . . . . . . . . . . . 287 (e) The World Intellectual Property Organization (WIPO) . . . . . . . . . 288 (f] The World Trade Organization (WTO) . . . . . . . . . . . . . . . . . . . . . . 289 (g) The Food and Agriculture Organization (FAO) . . . . . . . . . . . . . . . 292 (h)The United Nations Conference on Trade and Developnlent (UNCTAD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293 (i) The World Health Organization (WHO) . . . . . . . . . . . . . . . . . . . . . 294 VIII . CRITICAL APPRAISAL O F THE OUTCOMES OF INTERNATIONAL INITIATIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294 ( a ) Disclosure requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295 (b) Evidence of prior informed consent and benefit-sharing . . . . . . . . 295

CONTENTS ~

4

ANNEXWRES

r

1

ANNEXURE I EXTRACTS FROM AGREEMENT ON TRADE-RELATED ASPECTS O F INTELLECTUAL PROPERTY RIGHTS (TRIPS) . . . 329 ~NEXURE 11 DECISIONS AND DECLARATION ADOPTED AT T H E DOHA MINISTERIAL CONFERENCE (NOVEMBER 2001) . . . . . . . . . . . . 351 ~ N E X U R E111 EXTENSION O F THE TRANSITION PERIOD UNDER ARTICLE 66.1 O F THE TRIPS AGREEMENT FOR LEAST DEVELOPED COUNTRY MEMBERS FOR CERTAIN OBLIGATIONS WITH RESPECT TO PHARMACEUTICAL PRODUCTS . . . . . . . . . . . . . . . 365

XXll

-

CONTENTS

---

ANNEXURE IV LEAST-DEVELOPED COUNTRY MEMBERS - OBLIGATIONS UNDER ARTICLE 70.9 O F THE TRIPS AGREEMENT WITH RESPECT TO PHARMACEUTICAL PRODUCTS . . . . . . . . . . . . . . . 366 ANNEXURE V IMPLEMENTATION O F PARAGRAH 6 O F THE DOHA DECLARATION ON THE TRIPS AGREEMENT AND PUBLIC HEALTH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .367 ANNEXURE VI PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .372 ANNEXURE TlII CONVENTION ON BIOLOGICAL DIVERSITY RIO DE JANEIRO, 5 J U N E 1 9 9 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .385 ANNEXURE VIII INTERNATIONAL CONVENTION FOR PROTECTION O F NEW VARIETIES O F PLANTS (UPOV) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410 ANNEXURE IX EXTRACTS FROM PATENTS ACT, 1970 . . . . . . . . . . . . . . . . . . . . . 430

PATENT SYSTEM I. WHAT IS A PATENT? It means a grant of a limited monopoly, privilege or property by the Government or the sovereignty of the country to a person who has invented a new and useful article or an improvement of an existing article or a new process of making an article, in return for the disclosure of technical information. The instrument by which such grant is made is known as 'Patent'. The very meaning of the word 'patent' is to make known. That is why the phrase: to make patent what is latent. The patent system was evolved as a means to encourage disclosure of the invention so that further research could be carried out and the new knowledge was made available to the posterity. It conveys to the inventor an exclusive right to manufacture the new article either by himself or by his assignees (upon payment of a monetary consideration) according to the invented process for a limited period of time. During the term of the patent, the owner is entitled to prevent any other person from using the patented invention. In addition, the patentee's rights are infringed irrespective of whether or not the defendant copies from the patented invention. A patent is a form of industrial property or an intellectual property. The patentee can sell the whole or part of this property. He can also grant licences to others to use or exploit it. A patent is a creation of statute and is, therefore, territorial in extent. Thus, patent granted in one country cannot be enforced in another country unless such invention is patented in that country also.

11. INGREDIENTS OF PATENTABILITY INTERNAL CRITERIONS

- EXTERNAL

&

(a) External Criterions

Historically and, by and large, globally, following external factors have been recognized as a prerequisite for the grant of a patent in relation to an invention: (i) consists of a subject-matter that is patentable. (ii) is novel (i.e. previously unknown to the public). (iii) involves an inventive step (which is not obvious to a person skilled in the art); in other words, the step is non-obvious. (iv) is capable of industrial application (i.e. is useful).

EVOLUTION OLPATENT LAWS ----

(i) Patentable subject-matter The task of having to decide whether to grant property rights in a particular type of invention raises a complex mix of legal, cultural, political and social questions. Under various national legislations, there is a negative list in relation to which a patent cannot be granted. Thus, a patent is not granted in respect of a mere discovery of a scientific principle or formulation of an abstract scientific theory or mathematical method. It is also not granted for a method of agriculture or horticulture or any process for the medicinal, surgical, curative, prophylactic, diagnostic or therapeutic treatment of human beings or animals. Under the present Indian law, Sections 3 & 4 of the Patent Act, 1970 lists a number of such excludible inventions. (ii) Novelty For an invention to be patentable, it must be 'new'. An invention is said to be new if it does not form part of the 'state of prior art'. 'Prior art' is defined very broadly to include all matter that is available anywhere in the world before the priority date of the invention. Where an invention is disclosed, by prior publication or use, or anticipated by 'prior art', a patent will not be granted or, if it has been granted (because the prior art escaped the attention of the Examiner), the patent is liable to be revoked. For instance, the recent grant of patent in U.S.A. to turmeric products was attacked on this very ground. The Indian Counsel of Scientific and Industrial Research (CSIR) challenged the grant of patent on turmeric by the U.S. Patent Office on the plea that the patent could not be granted since there was no novelty in the invention. Also that what was patented was already published in Indian texts and such turmeric preparations were being carried out in India since many centuries. The CSIR was successful in getting the grant of patent to an American company revoked. Novelty requires that thelnvention be quantitatively different from what has been disclosed previously, i.e. that the technical information disclosed by the patent is not already available to the public. Novelty helps to ensure that patents are not used to prevent people from doing what they had been doing before the patent was granted (Right to Work argument). Another rationale is that the public is willing to pay the costs (or, monopoly profits) of patenting only if they are able to get access to information that would have otherwise not been available to them. In other words, novelty ensures that the inventor provides the consideration necessary to warrant the patent being granted in the first place. Another factor is that given the sophisticated information tools available to researchers, it is in public interest to prevent duplication of research that has already been carried out.

1. PATENT SYSTEM

3

--

(iii) Inventive step invention is said to involve an inventive step if it is not obvio~rsto a person skilled in the art. This criterion is basically a qualitative examination to ascertain whether the contribution is creative enough to warrant a monopoly. It is a difficult and problematic task to draw a line between inventions that are obvious (or non-inventive) and those that are inventive (or non-obvious). Indeed, this dilemma prompted Ld. Justice Hand to speak thus in Harris v.Air King (1950), "(an inventive step is) as fugitive, impalpable, wayward and vague a phantom as exists in the whole paraphernalia of legal concepts."

In part, this is because it involves a 'question of fact' so that precedents are to be treated with caution. Further, the evaluative nature of enquiry means that two reasonable people can reach different conclusions leading to uncertainty and inviting criticism of arbitrary use of discretion. However, by ensuring that patents are granted only for non-obvious inventions, meritorious inventions, also qualify. The rationale was eloquently explained by Lord Westbury in Hnrzvood v. Great Northern Railway Co.(1964-65) on the basis that 'if every slight difference in the application of a well-known thing was held to constitute a ground for a patent', it would lead to an unjustifiable interference with trade. The philosophy behind the doctrine of obviousness is that the public should not be prevented from doing anything which was merely an obvious extension or workshop variation of what was already known at the priority date. Looking at it positively, it has been rationalized that but for the 'obviousness enquiry', people would not be encouraged to undertake risky research projects. A patentable invention, therefore, must involve something which is outside that probable capacity of craftsman. The ingredient 'involves an inventive step' has to be strictly and objectively judged. Several tests have been suggested for its determination. Some of these are: (a) "Whether the alleged discovery lies so much out of track of what was known before as not naturally to suggest itself to a person thinking on the subject. It must not be the obvious or natural suggestion of what was previously known" [JusticeSalmond in Rado v. John Tye and Son Ltd. (1967) RPC 2971. (b) In the context of a document: "Had the document been placed in the hands of a competent draftsman (or engineer as distinguished from a mere artisan) endowed with the common general knowledge at the 'priority date', who was faced with the problem solved by the patentee but without knowledge of the patented invention, would he have said, "this gives me what I want" " [Encyclopedia Britannica].

4

EVOLUTION OF PATENT LAWS

(c) "Was it for practical purposes obvious to a skilled worker, in the field concerned, in the state of knowledge existing at the date of the patent to be found in the literature then available to him, that he would or should make the invention the subject of the claim concerned?" (Halsbury,3rd ed., Vo1.29, p-42 referred to by Vimadalal J. of Bombay High Court in Farbwerke Hoechst and B. Corporation u. Unichem Laboratories (AIR 1969 Bom-255)). (iv) Industrial Application In order for an invention to be patentable, it must be capable of 'industrial application'. Thus, patent protection is not available for a purely abstract or intellectual creation. Industry is construed in its widest sense, including activities whether or not they are made for profit and includes agriculture. 'Capable of industrial application' implies that there is no need to show actual use - it is enough to show that it has potential to be used or made in an industry. It is also necessary to show that an invention has a 'useful purpose' [Chiron u. Mtirex (1996) RPC 535, 607 (Morritt L!)]. Such a criterion is particularly relevant to biological research. A case in hand is human genome project: the attempt to identify thousand of genes that comprise the human genetic blueprint. While researchers have been able to identify the genes that make up the human genome, the role that many of these genes play remains unknown. Unless a useful purpose can be found for these genes, they will not be industrially applicable and, as such, not patentable. However, not so useful inventions are protected in some countries as 'utility models'. But, that concept is not statutorily recognized in India.

(b) Internal Criterions There are three general internal requirements that concern us here. These are that: (i) the patent application must disclose the invention in a manner that is clear and complete enough for it to be performed by a person skilled in the art. (ii) the claims must be supported by the description. (iii) the patent must not be amended in such a way that it contains additional subject matter, or extends the protection conferred by the patent. (i) Clear and complete disclosure There is a need for sufficiency of disclosure in a manner that is clear and complete enough for it to be performed by a person skilled in the art. This aspect, in turn, requires an examination in respect of following factors: (a) attributes of person 'skilled in the art' (b) extent of disclosure or degree, clarity needed for an invention to be performed.

-

1. PATENT SYSTEM

5

-.

(c) extent of performance. (i)(a):The fictional person 'skilled in the art' is one who is able to make use of common general knowledge and is able to perform, using reasonable degree of skill, non-inventive experiments. The fictional person who is used to determine sufficiency of disclosure is similar to the notional interpreter used for assessing an inventive step except that the former has a knowledge, in addition to prior art, also of the invention as disclosed. (i)(b): The extent to which the invention must be disclosed for it to be performed has to be seen from the perspective of the same fictional person who is skilled in the art. The threshold degree of clarity needed for an invention to be performed varies depending on the nature of the invention and other circumstances of the case. Thus, while in some situations, mere disclosure of the formula is sufficient, in others, it may be necessary for the starting materials, formula as well as minute details of each step to put the invention into practice. Patent law permits the person to fine tune the invention i.e. engage in activities above and beyond those which are set out in the patent. However, if in putting the invention into practice, he needs to engage in any kind of inventive activity, the inventions will not have been sufficiently disclosed and, as such, will be invalid. This is the crucial test for the determination of sufficiency of disclosure or threshold degree of clarity wherein the skilled person, without undue burden i.e. with no more than a reasonable amount of experimentation and without applying inventive skill, is able to work out the invention. (i)(c):The extent to which an invention needs to be performed for it to be valid assumes importance where an application attempts to claim a broad range of products and processes on the basis of a limited number of representative examples listed in the patent. The correct approach, as approwed by Lord Hoffmann is Biogen v. Medeva -l(1997) RPC 1,491is that the invention must be performed in all cases to the full extent of the monopoly c!aimed. This approach was later read down, in view of practical considerations, to mean that all of the a t u r s of the claimed invention must be capable of being performed. (ii) Description The requirement that the claims must be supported by the description ensures that there is a correlation between what is invented and what has been claimed. This is based on the equitable principle that the extent of the patent monopoly, as defined by the claims, should correspond to the technical contrib to the art in order for it to be supported or justified. The common factor between the tests for 'sufficiency of disclosure' and 'whether the claims are by the description' is that the skilled person should be able to perform the invention over the whole area claimed without undue burden and without the need for any inventive skill. An important distinguishing feature 'supportive description' is 'whether the claims cover other ways in which might be delivered: ways that owe nothing to the teaching of the patent or

_-_

6

EVOLUTION OF PATENT LAWS

_

any principle which is disclosed' [Lord Hoffnzarzn in Biogen v. Medeva (1997) RPC 1, SO].

(iii) Improper amendments There are two important limits on the way patents may be amended: (a) must not be amended so as to introduce subject matter that extends beyond the content of the application as filed. (b) amendments after grant must not extend the protection conferred by the patent. (iii)(a):The first limit is that an application must not be amended in such a way that it contains subject-matter that extends beyond the content of the application as filed. Thus, applicants are limited by the scope of the description as set out in the application. Lord Staughton correctly highlighted its merit in A.C. Edzuards v. Acnze Signs r(1992) RPC 131,147] that this limitation ensures that patentees are not permitted to extend the patent so as to claim an invention developed after the priority date. The basic issue is whether the amended patent contains any additional inventive material that was not disclosed in the original application so that a skilled person could derive any additional information. Some specific instances of permissible and impermissible amendments may be mentioned. Lord Hoffmann said in Biogen v. Mecleva that an application may not add new matter to make an insufficient application sufficient. However, the patentee can always introduce an amendment whereby a previously non-essential feature is described as essential. Similarly, where a search reveals that some of the examples of prior art fall within the claims as originally filed or where subsequent experimentation reveals that certain examples listed in the claim fail to work, an applicant may narrow the ambit of the patent by disclaiming those examples. (iii)(b):After a patent has been granted, third parties modify their operations in light of published descriptions or specifications etc.. Therefore, in order not to prejudicially affect such third parties as also to curb monopolistic adventures of a patentee, restrictions are placed on the degree to which the scope of protections conferred by the patent can be altered after grant.

- CATEGORIES AND TYPES AS PER STAGE OF DEVELOPMENT

111. PATENT SYSTEM

The patent system of various countries can be understood in the twin perspective of (a) what category of patent protection is provided for which type of goods and (b) degree of grant of patent - protection as per the stage of development of society.

1. PATENT SYSTEM

7

_ C -

(a) T w o C a t e g o r i e s Of P a t e n t s Broadly speaking, the patent system provides for two types of patents, viz. patent and process patent. Product patent provides for absolute protection in respect of patented product, whereas process patent provides for protection only to the technology and method of manufacture. Process patent system, thus, promotes a competitive environment and exercises some check on prices, as against a monopoly created through product patent system wherein financial power of MNC's is used for snuffing oyt competition and charging unreasonable prices from consumers. Product patent regime, particularly in U.S.A., has undergone an undesirable change wherein a monopoly, once granted, is perpetuated in the form of fresh patent grants for new usage or dosage or combinations (formulations). (b) V a r y i n g P a t e n t S y s t e m s The patent system, in fact, has been an instrument of national economic policy for the industrialization and technological advancement of a country. Worldwide, national governments had evolved their own approaches towards the patent system, in particular, for drugs and medicines. It had generally been related to their stage of development. IPR laws in developing countries, therefore, were compatible with their developmental objectives so as not to smother their own industrial and technological capabilities. Thus, in developing countries and least developed countries (LDC's), the right to subserve the public interest prevailed over the intellectual property right, whereas, in the developed countries, welfare objectives was subordinated to profit claims of MNC's. Patent system had also been tied to a society's socio-cultural moorings. Thus, many oriental societies, such as India, where acquisition of knowledge & its unbridled diffusion was a sacred activity while its commercialization was a taboo, frowned upon a system of monopoly. It didn't help matters that the industrial base of these countries was weak so that there was no significant industrial class whose patent interest the government of the day had to reckon with. In the above backdrop, it is understandable that the national laws, which provided for balancing of right and obligations for the patent holders, of various countries differed widely from each other. Prior to TRIPS, least developed countries and many developing countries had either no system for drugs and medicines or had only a process patent System. Such process patent was usually granted for a time period of few years only. They had also provided for compulsory licensing/licensing of right System to ensure that monopolistic regimes were not established by the patent holders so that domestic industry was able to play its role in providing pharmaceutical products at competitive prices. Even the Paris Convention (1967) emphasized in Article 5(2) that, "each country of the Union shall have the right to take legislative measures providing for grant of compulsory licences to prevent the abuses which might resrtlt from

8

EVOLUTION OF PATENT LAWS

the exercise of the exclusive rights conferred by the patent, for example, failure to work." The TRIPS patent system now mandates a uniform patent law for all member countries of the WTO, irrespective of their stage of development. After the transitional period in Art. 65 of TRIPS Agreement is over, the national patent system of highly developed countries, developing countries and LDC's are supposed to be at par. This hurried approach to uniformity has generated a heated debate worldwide.

ORIGIN AND DEVELOPMENT OF PATENT LEGISLATION h this Chapter, it is proposed to trace the origin of law of patents generally and more particularly, in the Indian context. The causa callsans as well as the dialectic of patent law with the prevalent colonial or socio-economic context, wherever appropriate, shall be dwelt upon.

I. TRACING THE HISTORY OF PATENTS IN THE WORLD (a)Greek Patent The system of conferring exclusive privileges on inventors is not of recent origin. For instance, Phylarchus, a great historian of the 3rd century B.C.,writing about Sybaris, a Greek colony famous for living a life of luxury and self-indulgence, says that about the year 500 B.C., it had a law that, "if any confectioner or cook invented any peculiar and exclusive dish, no other artist was allowed to make this for a year; but he alone who invented i t was entitled to all the profit to be derived from the manufacture of it for that time, in order that others might be induced to labour at excelling in such pursuits". Thus, the early footprints of aState-sponsored, albeit, incipient patent-law are indeed visible into deep sands of time.

(b)Honour-drivenVenetian Patent Act

I C

!

In the post-Christ ~ e r i o d the , first known patent for an invention was issued in 1421 by the Italian city States of Florence and Venice. The Venetian Patent Act incorporated in its preamble the purpose of grant of patens as "to increase the honour of the inventors". It also termed "patens" as a "means to a social end". Theemphasis on the promotion of the social interest in the Venetian enactment has created an impression that the object of Venetian patent grants had all the ingredients of a modern patent system. However, unlike the modern Patent system, the Venetian Patents Act did not purport to create an exclusive m o n o ~ o l yright so as to facilitate increasing return to the inventors. Its limited objective was to "honour" the inventors in the field of artifacts and handicrafts. During the pre-industrial Revolution era of Europe, the patent-law served a useful Purpose by promoting its cultural progress. ( c ) English & Other European Patent Laws The origin of the patent system, in so far as it is based on a reorganization of the economic aspect of patent grants, can be traced back to the monopolistic grants made in England and in certain European Countries, in the Middle Ages

10

EVOLUTION OF PATENT LAWS

. -

-

in exercise of the prerogative powers of the Crown. Whereas these powers were generally exercised for granting monopolistic rights to artisans and craftsmen to encourage them to introduce new industries, but very often they were also exercised for making grants to royal favourites. Further, this system was distorted for replenishing royal coffers by granting oppressive monopolies for the manufacture or sale of articles of daily need, frequently in return for large payments to the Crown. This gave rise to strong condemnation of the system of granting such monopolistic privileges by the Crown, and led to the enactment of statutes which limited the powers of the Crown, and laid down specific conditions on which patents of invention might be granted by the Crown. The Statute of Monopolies enacted in England in 1624 A.D. is the earliest known legislation for this purpose. This statute provided, inter alia, that(i) patents may be granted only in respect of new manufactures which, at the time of grant, were not in use within the realm; (ii) patents may be granted only to the true and first inventors of such manufactures; (iii) the duration of patent privileges shall be limited to a term of 14 years; and (iv) the patent privileges, so conferred, shall not be contrary to law, mischievous to the state by raising prices of commodities at home or hurt of trade, or generally inconvenient. The origin of the modern patent institution is usually traced to the aforesaid provisions of the Statute of Monopolies. According to one view, this statute has been called the Magna Carta of the rights of inventors, not because it originated patent protection of inventors, but because it was the first general law of the modern state to lay down the principle that only the 'first and true' inventor of a new manufacture should be granted a monopoly patent. Others have felt that it was not a patent law in the sense that it did not represent a new regulatory system. It did, however, abolish the royal prerogative to grant monopoly privileges excepting only the privileges granted for a term of fourteen years for the sole working or making of any manner of new manufacture. From England, the system of conferment of monopoly of privileges spread to the continent of Europe and to the USA. The USA, which was the second country in the world to enact a law on patents, had her first legislation on the subject in 1790 i.e. nearly 166 years after the enactment of the Statute of Monopolies. The most-important point of difference in USA law was that while the English law accepted the prerogative of the Crown to grant monopolies, and grant patents for reasons of expediency, the American law was based on the recognition of the inalienable right of the inventor to the fruits of his genius and labour. Recognizing such a right, its law provided for a grace period of one year in favour of an inventor so that even

---. .

2. -ORIGIN AND DEVELOPMENT OF PATENT LEGISLATION --

11

after his invention became known but he applied for the grant of a patent within the grace period, his rights were not prejudicially affected. There was no corresponding grace period in the English law. Among the European Continental countries, the first to enact a law on patents was France where such a law was enacted in 1791.The French law was closely related to the American law. The influence of the French Patent legislation in Europe received a severe setback when the first German law, embracing the whole territory of German Empire, came into force in 1877. This law exercised a decisive influence upon the further development of patent legislation in the whole world and thus created a new system of procedure generally called the German System. The main stipulations of this law were as follows: 1. Articles of food, medicament and chemicals were excluded from patent protection; processes for their manufacture were patentable. 2. Novelty was destroyed by prior publication at home or abroad, or by prior use at home. 3. Applications were laid open to oppositions during eight weeks prior to grant. 4. The term of the patent was 15 yrs. from the day following its filing date. 5. A patent could be annulled for lack of novelty or general patentability, or for fraud, and revoked after the lapse of three years if the patentee did not exploit the invention or refused to grant licences on reasonable terms. 6. Infringement could be prosecuted by both penal (fine or imprisonment) and civil proceedings, wherein damages could be claimed. This patent law gave an immense impetus to the development of German industry. Limiting the patentability to chemical processes (excluding the chemical products) opened the field of research for new methods of manufacturing known chemicals. This proved to be a boon for German chemical industry. Another European country which had a national patent system of its own was Russia. Privileges which were granted in Russia, as in other European countries, as a reward for public service or as a sign of personal favour, could be traced back to 1752but the first Russian patent law dates from 1896.The law, as it existed prior to the First World War, resembled the German law. Thus, it can be seen that beginning from the late 18thCentury, by theeclipse of 19th Century, the tentacles of modern patent law had spread itself fully over USA as well as European Continent. This development took place both out of imitation as well as a clear necessity to accommodate quickly the fruits of then emerging Industrial Revolution.

2. ORIGIN AND DEVELOPMENT OF PATENT LEGISLATION

The economic growth and prosperity through the commercialization of new inventions provided the necessary justifications for adopting a patent system. At this stage, in order to overcome the complexities of protecting technological innovation and the consequent varied definitions of patents alongwith its regrllation within the different legal systems, efforts were made to evolve a uniform criteria at the international level during the later part of the 19th Century. This effort was essentially a Euro-centric approach, triggered as an aftermath of the Industrial Revolution. Technology, as a tool, emerged during this period and changed the whole method of production. This process of evolution continues even today. Technology also presented certain peculiar problems. It could be copied fairly easily by a skilled person working in the same field or else it could be reconstructed by "reverse engineering". This could bring to naught the efforts of an original inventor. So, at that time, many European countries who had a leading role in Industrial Revolution argued for an international protection of patents so that these technologies could be safely taken to otl~ercoul~triesfor "working" without being copied or reverse engineered locally. This is how the Paris Convention for the Protection of Industrial Property, 1886 evolved and this was the first international convention on patents providing for the uniform rules. (dl Patent Laws In Asia, Africa & Latin America Patenting was unknown to the societies of the East as it evolved. These societies didn't have any concept of patenting of knowledge or its commercialization although they had developed their own way of preserving the knowledge. Knowledge was considered as sacred and accordingly, it was systematically assimilated and safeguarded within communities: Knowledge was transmitted orally, often witho~ltany documentation whatsoever. While the access by a stranger or an outsider to this knowledge was carefully restricted, the same was not linked to commercialization or commodification. Perhaps this could be attributed to the nature of the knowledge or technology produced in the East and also as much to the nat~lreof the evolution of these societies. This is a phenomenon which'rould be seen in all the traditional and tribal societies in Asia, Africa and &&where.The preservation of knowledgebase throughcomm~~nityparticlp~'tion is the most interesting one and takes care of public interest concern&of a monopoly right like 'patent'. Even today, this dilemma could be seen in'the perspectives of major developing and less-developed countries of Asia and Africa, where this idea is often suggested as a solution to many issues concerning preservation of 'traditional knowledge'. Latin America, for historical reasons, has remained an exception. Some of the representatives from Latin American cormtries were brought forcibly on a ship to Paris in 1886 to sign the Paris Convention on Industrial Property. Africa did not exist as a 'civilized continent'.

!

While these less-developed societies didn't have any autochthonous patent regime, they had a system of "Colonial Patent regime" wherein the patent system of the ruling Colonial power became operative in the colony either or after formal registration. Needless to emphasize, such a regime was designed to serve the colonial interests and had little relationship with the developmental goals of the country. Among the independent countries of Asia, Japan made an earnest effort to introduce aneffectivepatent system in 1883.The Japanese Patent law was hailed as the most carefully thought-out, and perhaps, the best contemporaneous law in the world.

11. PATENT SYSTEM IN INDIA (a) Early History (Ancient and Medieval)

.

Information as to the system adopted in ancient India or during the Moghul period, either for encouraging inventors or for protecting new industries, based onsuch inventions is very meagre. It is, however, well established that ancient India had acquired a high standard of proficiency in art or science. Knowledge was handed on to posterity mainly through chosen disciples, or it was kept a secret, only the results being made available to the public. Much of this knowledge has been lost in the course of ages in the absence of any authoritative records. It was natural that in the absence of any statutory protection to the inventor or possessor of valuable knowledge, he should have kept it secret and handed it over to a favourite pupil or his kith and kin jrlst prior to his demise and that too on a condition of secrecy being maintained. Such pupil or relatives were not always worthy successors. Though such knowledge is in some cases available in books, the writing is often in cryptic language not capable of an easy interpretation. If there indeed had been a statutory patent protection, many of the Possessors of such knowledge might have published it, secure in the Pmtection which the law gave them to benefit from their intelligence and industry. (b) Later History

(Modern)

modem history of patent legislation in India falls into three periods, namely,

(i) the "pre-legislation" period; (ii) the period of "Exclusive Privileges" and (iii) the period of "Patents". A brief account of the major events of these three periods is described hereunder. ti) P~rLegislationperiod: 1832-1856

me -

lhe question of granting patents in India had been engaging the attention

the government since about 1832.The original intention appears to have been

1

to lntmduce a Separate Bill for conferring patent rights in respect of each - - p--...L.,b I I I U I ~I I ~ UDeen engaging the attentloll ent since about 1832.The original intention appears to have been a separate Bill for conferring patent rights in respect of each tJULC,LL3

ship to Paris in 1886 to sign the Paris Convention on Industrial Property. Africa did not exist as a 'civilized continent'.

13-

/

to

2. ORIGIN AND DEVELOPMENT OF PATENT LEGISLATION

EVOLUTION OF PATENT LAWS

separate invention, as and when there was an application for such rights. The proposal to enact a general legislation for empowering the Governor-General to grant patent rights regulated by such legislation, appears to have been a later development. Not surprisingly, under the colonial regime, the prime-movers for such a legislation were not the local inventors but such persons who already enjoyed a patent protection in England and wanted its coverage to be extended to their products which were being exported to India. These persons made frequent applications to the East India Company for extending their patent protection to the territories of the East India Company. The ensuing debates during this period involved two aspects: 1. "Legality" of a patent-grant by Governor-General: Opinion on this issue was divided. While Attorney General & Advocate General opined that granting of a patent by Governor-General would interfere with the Prerogative powers of the Crown, the Court of Directors and Counsellors of the Governor-General held an opposite view. 2. "Expediency" of a patent grant inIndia: Although the Legal issue was the main subject of discussion, there were frequent references to the "expediency" and providing for the grant of patents in India. Some of the sentiments expressed during this period, given hereunder, sum up the issue. In the minute by the Governor-General, dated the 3rd February, 1841, His Excellency said, "I look upon India as a country to the circumstances of which the laws of patent are very inapplicable, and in which, if such laws were in force within it, any projector depending upon them would, except in very rare cases, meet with certain disappointment. India is yet SO backward that, with any invention requiring mechanical art, it will long be far cheaper to import than to imitate, and this intermixture of foreign settlements and of independent States with the British Territories is such, as would otherwise greatly impair the power of interference".

The Governor-General-in-Council too was of the view that extending the patent protection, granted in England, to India was not only illogical but also injurious to the millions of India, as a British patent might very well be granted for a machine which was new in England but which was in every day use in India. In his minute dated the 5th February, 1841, Mr. Amos, Member of the Governor General's Council, while drawing out the difficulties gave a prescription also,

15

/

"On the subject of the policy of the Patent Laws with reference to India, I should doubt whether the stimulus of a monopoly would, at the present moment, produce so much benefit by promoting native inventions and the introduction of English or Foreign manufacturers, as it would occasion general inconveniei~ce.................... I a m inclined to think that the cases in which patents would be most beneficially granted in India, would be where a Patent had not been obtained in England, and could not, owing to climate, prior use, or other local circumstances, pretend to be a Patent Right or even possess utility, except in India."

i I

The above extracts, echoing native sensitivities, are reflective of an unbiased approach of the foreign rulers despite contrary pressures from their own patentee subjects based in England. The legal uncertainty ended as a result of persistent efforts by GovernorGeneral-in-Council & Court of Directors with a special measure enacted by Parliament in 1853, which read as follows:"No law or Regulation made by the Governor-General-in-Council shall be invalid by reason only that the same affects any Prerogative of the Crown, provided such Law or Regulation shall have received the previous sanction of the Crown, signified under the Royal sign manual of Her Majesty, countersigned by the President of the Board of Commissioners for the affairs of India."

7-

I I

'

I

i

I

On the whole, the antecedents of the first legislation for Patents in India show that the incentive came mainly from those who desired protection in India for goods and machinery made in England under patent protection in that country; but the credit for introducing the patent system in India must go to the successive Governors-General and their Councillors during this period (18321853). (ii) The period of Exclusive Privileges: - 1856 -1911 The firstcodified legislation for protection of inventions in India, ironically, didn't employ the term 'patent1but termed such rights as 'exclusive privileges'. The operative legislation, in this regard, was Act XV of 1859, which was a modification of earlier Act. No. VI of 1856. Thus, India had acquired a patent law before many Ellropean countries, while still under British colonial rule. On the removal of legal obstacles for legislation for grant of patents in India, a Bill was drafted by the Select Committee which was passed by the Legislative Council and upon receiving the assent of the Governor-General, it was desigmted as Act No. VI of 1856. In this Act, the word "patent" occurred nowhere. was done consciously by the Select-Committee after noticing a problem with such 'patent rights' in English law. In England, the patent right was derived entirely from the grant of the Crown and was subject to all the rules of law which was applicable to other

16

2. ORIGIN AND DEVELOPMENT OF PATENT LEGISLATION

EVOLUTION OF PATENT LAWS

grants made by the Crown. One of those rules was that the grant was to be most strictly against the grantee, and it was absolutely void if it contained any misrecital. The consequence was that patents were frequently set aside upon purely technical grounds. In order to overcome this difficulty, the Select Committee felt that the inventor should not derive his exclusive privilege from a grant, but he should be entitled to it by law, subject to certainrestrictions. Thus, the "exclusive rights" conferred by Act No VI of 1856 had their origin in the 'law' of the country, and not in the 'patents' granted by the Crown. Certain important features of 1856 Act are being outlined hereunder: 1. Purpose: The 'Preamble' of the Act stated its two-fold purpose encouragement of inventions of new and useful manufactures and induce inventors to disclose the secret of their inventions. 2. Patentees: The right to apply for exclusive privileges, apart from an actual inventor, was extended to importers. 3. Novelty: An invention was deemed to be a new invention if before the time of applying for leave to file specification, it was not publicly used or known in India (by means of a printed publication). Also, where an inventor had obtained a British Patent within six months prior to his application for the exclusive privilege in India and such British Patent was not publicly known or used in India before the date of the application for patent in UK, novelty of such invention was not disturbed. 4. Procedure offiling: A petition, accompanied by a declaration stating that the invention would be of public utility and that the petitioner or his assignee etc. was the inventor, was to be submitted to the Governor-General-in-Council for leave to file a specification. Upon prima-facie satisfaction, such petition was referred for the opinion of experts. Where the expert's opinion was in favour of the petitioner, leave was given to file the specification. Copies of the specification were available for public inspection. 5. Privileges: On the filing of a specification, the "exclusive privilege" sprang into existence by mere operation of law. Whereafter the petitioner or his executors etc. became entitled to the sole and exclusive privilege of making, selling and using the invention, and of authorizing others to do so for a term of fourteen years from the time of filing such specification. 6. infringement Suits: An action for infringement could be maintained by the inventor against any person who, during the continuance of any exclusive privilege, without the licence of the inventor, made, used, sold or put in practice the invention in question or who copied the same.

17

_C_

#-

,

I

I

7. Rescinding the exclusive privilege: An application for rescinding the exclusive privilege, acquired in respect of an invention, could be made by any person on certain specified grounds. These grounds were absence of novelty or that the petitioner was not the inventor or that the manner of performing the invention was not particularly described in the specification. 8. Crown prerogative: By a non obstante section, the prerogative of the Crown in relation to granting or withholding the grant of exclusive privilege was provided. Under the 1856 Act, thirty three "exclusive privileges" were granted. However, the Court of Directors challenged the legality of the Act on the ground that no previous sanction of the Crown was obtained by Governor-General-inCouncil prior to its enactment. And so, the Act of 1856 was, therefore, repealed by the Act IX of 1857. Thereafter, a fresh legislation for the purpose of granting "exclusive privileges" was enacted in 1859 which was a modified version of the earlier Act of 1856. Some of the important modifications were as under: 1. Nofrivolotis Applications: No "exclusive privilege" shall be acquired in respect of an invention which is of no utility. 2. No privilege to importer: The earlier exclusive privilege extended to an importer of an invention was withdrawn by providing that such an inventor was no longer deemed to be an inventor. 3. Novelty: An invention publicly used in India, or in the UK, or made publicly known by a written or printed publication in either country, was not a new invention. However, the use of an invention in public by the inventor within one year prior to the date of application in India did not affect the novelty of the invention. 4. Amendment: A restriction was imposed so that an amended specification couldn't enlarge the "exclusive privilege" acquired. 5. Withdrazul of Crown prerogative: The special provision made in 1856 Act for saving the Prerogative power of the Crown was omitted from J 1859 Act. The aforesaid Acts of 1856 and 1859 afforded protection for inventions 0.nly. There was thus no legislative enactment for the protection of Designs in India. To remedy this defect, the "Patterns and Designs Protection Act" was Passed as Act XI11 of 1872.This Act amended the 1859Act so as to include within the meaning of "new manufacturer", any new and original pattern or design, Or the application of such pattern to any substance of article of manufacture. About thirty years of working of the legislation for "exclusive privileges" showed that basic principles of Act XV of 1859, as amended, relating to inventiom were quite sound. Meanwhile, certain modifications had been made in UK

-~ 18

EVOLUTION OF PATENT LAWS

law in 1883 which was considered as desirable to be introduced in India. This led to enactment of Act V of 1888. Certain important amendments introduced by this Act are mentioned hereunder: 1. Specifications: Experience had s h o w n that the description of inventions furnished in the petitions for leave to file specifications was too meagre to ascertain its scope. Accordingly, it was mandated that every specification must explain the principle of the invention and the best mode in which the applicant had contemplated applying that principle, and must describe the manner of making and using the invention in such clear and concise terms as to enable any person skilled in the art or science to which the invention pertains to make or use the same. 2. Models: The Governor-General was also empowered to call for a model of the invention. 3. N o preference to Crozun: The Acts of 1856 and 1859 did not contain any provision relating to the rights of the Crown. Thus, it was provided for the first time that the "exclusive privilege" had the same effect against the Crown as it had against a subject. 4. Comptilsory Licence: Governor-General-in-Council was empowered to grant compulsory licences in case where an inventor who had acquired "exclusive privileges" did not make his invention accessible to the public on reasonable terms. (iii) The Period of Colonial Patents: 1912-1947

Though the 1888 Act was passed five years after the passing of the UK Act of 1883, the UK practice in its entirety was not introduced in India, as this country was still unripe for it. But after 23years of working of the Consolidating and Amending Act of 1888, in other words, after about 55 years operation of patent law in this country, it became imperative that the law and practice in British India should be brought into closer conformity with those of the UK. This view found favour with the lawmakers as the 1988 Act suffered from the following defects that caused considerable hardship: 1. The public has no proper opportunity of objecting to the grant of an 'exclusive privilege', as only a single manuscript copy of the application was available for inspection in Calcutta for a limited period of ten days. This copy, not infrequently, contained an imperfect description of the invention. 2. A defendant, in an infringement proceeding, couldn't plead invalidity and non-novelty in his defence. 3. The duration of the Indian Exclusive Privileges depended upon the donation of foreign patents.

--

2.

ORIGIN AND DEVELOPMENT OF PATENT LEGISLATION

19

Therefore, for the security of both the public as well as the inventions, a procedure more direct and more effectivewas called for. The fresh legislation - Act I1 of 1911 - was mainly based on the British Inventions and Designs Act, 1907. Only such provisions of 1888 Act were retained as appeared necessary to meet the special conditions in India. Certain important features of the new Act are being outlined hereunder: 1. Right of Patent - The term 'patent' was substituted for 'exclusive privilege'. 2. Sealing of Paterzt - Patent rights came into existence upon sealing of a patent, instead of by mere operation of law, as in the case of exclusive privileges. 3. Opposition proceedings -The procedure for granting the patent rights was thoroughly overhauled by providing an interval of three months for submission of "opposition" to the grant of a patent. This was intended to provide, on the one hand, an opportunity to any member of the public to prevent the grant of a patent which would be unfairly prejudicial to his interests, and, on the other hand, to enable the applicant torestrict his claim to what was properly hisinvention, thus obviating to some extent his risk in subsequent infringement and revocation proceedings. 4. The duration of Indian patents was made independent of the duration of foreign patents. 5. Opposition to Amendments - Amendment of the application and specification was allowed subject to an "opposition" thereto by the public. 6. Protection to Defendants - In infringement suits, defendants were allowed to plead non-validity and non-novelty of the patent. 7. Anomalies in favour of 'British' inventors were removed. 8. Conzpulsory licences made easier - Provisions relating to compulsory licences for the working of inventions were more clearly defined and the grounds on which they could be obtained were broadened. 9. Controller of Patents - A Patent Office, under the charge of a Controller of Patents and Designs was established to dispose off matters which were earlier looked after by Governor-General-in-Council. The 1911 Act underwent certain major amendments, during pre-lndependence period, by the amending Acts of 1920,1930 and 1945. The main object of the Amending Act of 1920 was to enable India to enter into 'reciprocal arrangements" with the UK and other parts of His Majesty's Dominion for securing 'priority' for the patent, taken out in any of the countries mentioned, by any person who had applied for a patent in India for the same

-

21

EVOLUTION OF PATENT LAWS

2. ORIGIN AND DEVELOPMENT OF PATENT LEGISLATION

invention. Provision for such an arrangement already existed between various countries which were parties to the "International Convention for the Protection of Industrial Property (The Paris Convention, 1883)" but India was not a party to the Convention. In the meantime, British Act of 1907 was extensively revised by the British Patents and Designs Act of 1919. The amending Act of 1930 was generally based on the British Act of 1919. Certain important features of this Act are outlined hereunder: 1. Secret Patents -Provision was made for the grant of "Secret Patents" in respect of inventions relating to instruments or munitions of war, provided that the inventions were assigned to Government. 2. Patents of Addition - Provision was made for granting "Patents of Addition" for any improvement or modification of the invention which formed the subject-matter of any basic patent. It was provided that a "Patent of Addition" would continue to be in force only so long as the original patent remained in force. 3. The normal term of a patent was enlarged from 14 to 16 years, and it was provided that the term might be extended ordinarily by 5 years or, in exceptional cases, by 10 years. 4. Provision was made for enabling British India to enter into "reciprocal arrangements" with the Indian States for granting priorities to patents. The Amending Act of 1930 fell short of expectations as it failed to include certain provisions of Bri tish Act of 1919, such as imposing special limitations on patents for "substances produced by chemical processes or intended for food or medicine". The absence of these provisions undoubtedly favoured a foreigner and enabled him to abuse his patent rights in India to the detriment of the people of this country. The main purpose of the Amending Act of 1945 was to provide for the filing of an application for patent on the basis of a "provisional specification". In order to appreciate the importance of this provision, it is necessary to understand the concepts of "provisional specification", "complete specification" and "provisional protection". A "complete specification" was a specification which particularly described and ascertained the nature of the invention and the manner in which the same was to be performed. It ended with a distinct statement of the invention claimed. A "provisional specification" described only the nature of the invention and was not required to describe the manner in which the invention was to be performed and that it need not end with a statement of the invention claimed.

Thus, while a "provisional specification" could be drafted as soon as the inventor conceived of the invention, a "complete specification" couldn't be drafted until he developed the practical method for carrying out the invention and also determined the scope of the invention for which he could claim the patent. "Provisional protection" referred to the protection afforded to an applicant for patent from the consequence of use and publication of the invention during the pendency of his application in the Patent Office. Before 1945, The Indian Act provided that any use or publication of the invention during the period between the date of the application and the date of sealing the patent shall not prejudice the patent to be granted. Thus, it provided for "provisional protection". But, under the Indian Act as it existed till 1945, an application for patent could be made only on the basis of a "complete specification". Hence, the "provisional protection" granted under the Indian Act was available to an applicant for patent only after he had worked out such details of practically carrying out his invention as were necessary for drafting his "complete specification". This had the drawback that an inventor could not develop the practical details of his invention under "provisional protection". As the practical working of an invention could not, in many cases, be developed without disclosing the invention to others, inventors were obliged to develop their invention only under the risk of prejudicing their rights. The provision made in the Act for enabling applications to be made on the basis of "provisional specification" removed this deficiency of the Indian Act, and it enabled inventors to develop the practical aspects of their inventions under the "provisional protection". The amending Act of 1945 provided that where an application was made on the basis of a "provisional specification", the "complete specification" might be filed within nine months thereafter, and that this period might, on request, be extended by one month.

20

--

23

The Committee endorsed the four broad objectives of patent system as highlighted in Swan Committee report of UK: 1. It encourages research and invention. 2. It induces an inventor to disclose his discoveries instead of keeping them as a trade secret. 3. It offers a reward for the expenses of developing inventions to the stage at which they are commercially practicable. 4. It provides an inducement to invest capital in new lines of production which might not appear profitable if many competing producers embarked on them simultaneously. Thus, it recognized that a patent system tended to encourage and maintain a continuous flow of inventions. Inventions bred more inventions and thus, the pace of inventive activity was accelerated. Even while endorsing the need for promoting the individual patentee's rights, the Committee was even more sensitive to the, hitherto, neglected dimensions of promoting the welfare needs of common people and giving fillip to industrial progress. As Michel observes:

DEVELOPMENT OF PATENT REGIME IN INDEPENDENT INDIA In the previous Chapter, we saw how the development of patent law in colonial India was conditioned by the needs of the colonial masters and absentee-patentees. Thus, the raison d'etre of various amendments was individualcentric viz. how to protect the rights of a patentee by granting him monopoly, albeit, hedged by certain not-so-onerous conditions. There was no debate, even on paper, as regards nexus of patent law with the socio-economic conditions or industrial profile of India. Naturally, the unstated purpose of the law was to augment the interest of British patentees and their industries located in UK. All this would change after 15th August, 1947 when India gained her independence. The reports submitted by the two committees, appointed by Government of India, to enquire into the functioning of the prevalent patent system and to submit their recommendations offer a valuable insight into the maladies afflicting the patent system. A Patent Enquiry Committee under the chairmanship of Dr. Bakshi Tek Chand was appointed on 1.10.1948. The Committee submitted its final report in April, 1950. Based on the report, Patents Bill, 1953 was introduced in the House of People but it ultimately lapsed.

"Patent systems are not created in the interest of the inventor but in the interest of national economy. The Rules and Regulations of the patent systems are not governed by Civil or Common law but political economy."

'

I. RAJAGOPALA AYYANGAR COMMITTEE A second Patent Enquiry Committee under the chairmanship of Rajagopala Ayyangar was appointed in April, 1957. The Committee submitted its final report in 1959.The analysis and recommendations in respect of various aspects of patent law provide very useful guideline for every lawmaker who sits to draft a domestic legislation having supra-national dimensions. This, therefore, shall be taken up in some detail so as to induce an introspection into the vagaries of present law in India but more of the same later. Suffice to say at present that the landmark report by Rajagopala Ayyangar guided the framing of Indian Patents Act, 1970, the first independently drafted native patent law. The present patent law is an amended version of the same law. Ayyangar Committee accorded primacy to the needs of community over hitherto untrammelled monopoly rights in favour of a patentee. It emphasized that the industrial progress of a country was considerably stimulated or retarded by its patent system.

3. DEVELOPMENT OF PATENT REGIME IN INDEPENJENTLNDIA-

.

L

A patent monopoly, being contrary to the common law right, could only be justified by some consideration moving to the public. Such consideration was to be not only the disclosure to the public of information which they could use when the period of monopoly expired but the benefit to trade by the new invention being brought into commercial use during that period. The public was, therefore, entitled to have the monopoly so framed and guarded that they were not deprived of this consideration. The Committee adopted a structural perspective in its analysis. It propositioned that the advantages accruing to a nation's economy from granting patent monopoly for a limited period were dependent on two main factors: (1) The country must be technologically advanced to maintain the rate of invention. This factor depended upon the degree of diffusion of scientific and technological education, industrial production and availability of speculative capital for investment in new ventures. (2) The patented invention must be worked in the country which granted the patent. Thus, the monopoly created by the patent and the reward to the inventor offered advantages only in the highly industrialized countries which had a large capital available for investment and a high degree of scientific and technological education.

24

3. DEVELOPMENT OF PATENT REGIME IN INDEPENDENT INDIA

EVOLUTION OF PATENT LAWS

(9) disclosure to the public of the invention and the manner of its working

Accordingly, the Committee rationalized the failure of patent system, in yielding any result, in industrially underdeveloped countries like India. It also pointed out that the proportion of patent grants to Indians and foreigners was roughly 1:9. Further, a very small proportion was being actually worked in India, since these foreign patents were taken not in the interests of the Indian economy or with a view to set up manufacturing base here but with the main object of protecting an export market from competition from rival manufacturers. Despite an obviously incipient structural base, the Committee looked at global practices and into the future while advocating for a modified version of patent law. The patent system was considered as the most desirable method of encouraging inventors and rewarding them. With an increasing emphasis on technical education alongside mushrooming of research institutes led by rapid industrialization in core sectors of economy, an India inventor and research worker, it was felt, would be able to take full advantage of the patent law. Moreover, the patent system had been working in India for over a century. As the relationship between a vibrant industrial base and local working of patent, the twin prerequisites for a beneficial patent regime, is synergistic, the aspect of local working of patent was analyzed in great detail. Edith Penrose's penetrating study entitled "The Economics of the International Patent System" is apposite to the context: "No amount of talk about the 'economic unity of the world'can hide the fact that some countries with little export trade in industrial goods and few,if any, inventions for sale have nothing to gain from granting patents on inventions worked and patented abroad except the avoidance of unpleasant foreign retaliation in other directions. In this category are agricultural countries and counties striving to industrialize but exporting primarily raw materials". The Committee was clearly of the view that even if the cost of the article manufactured in the home country might beconsiderably higher, it may in the long run prove to be an advantage to national economy in: (1) the saving of foreign exchange; (2) the absorption of surplus labour;. (3) the utilization of the country's scientific and technical talent; (4) the utilization of indigenous material; (5) the increase in technical knowledge by the establishment of a new industry by the working of the invention; (6) the utilization of by-products which might lead to a diversified economy (7) greater security particularly in emergencies; (8) economic independence arising out of increased self-sufficiency;and

(knowhow) so that on the expiry of the life of the patent, the public are enabled to work the invention themselves. Where the patentee has no intention of working the invention in this country because it is unprofitable or because he prefers to expand the production in his home country so as to achieve grea ter efficiencyand more production, the grant of the Indian patent may improve the economy of the patentee's home but would offer little advantage to India. Unless, therefore, the law provided for measures tobe taken to compel the patentees to work the invention within the country, the social cost to the community involved in the grant of the patent is unrelieved by way of any positive advantage by way of an increase of technical skill or of national wealth. 11. CHANGES RECOMMENDED IN THE LAW While recommending for the retentionof the patent system, the Committee suggested that it should be improved: (1) by defining with precision inventions which should be patentable and by rendering unpatentable certain inventions, the grant of patents to which will retard research or industrial progress or be detrimental to national health or well-being; (2) by expanding the scope of "anticipation" so as to comprehend not merely what is known or published in this country, but what is known or published outside India; (3) by providing remedies for the evils which India, in common with other countries, experiences from foreign owned patents which are \ not worked in the country, but which are held either to block the industry of the country or to secure a monopoly of importation; (4) by providing special provisions as regards the licensing of patents for inventions relating to food and medicine; (5) by providihg remedies for other forms of abuse resorted to by the patentees, to secure a more extended monopoly or a monopoly for a longer duration than what the statute grants. It is proposed to take up each of the above suggestions in some detail not man exercise in tracing the mere history of patent law in India but to understand the dynamics of interaction between social and economic milieu on the one hand and Patent laws on the other. In turn, such an understanding will provide useful guidance in the context of the present day when a raging debate is going on as to the suitability of the present patent laws. (a) Restrictions on the Patentability of Inventions Under the Indian patents and Designs Act, 1911, the test of patentability of an invention was furnished by the formula -is it a "manner of new manufacture" a phrase coming down from the U.K. Statute of Monopolies. This

-

\

1

26

EVOLUTION OF PATENT LAWS

definition was considered to be ambiguous, leading to considerable amount of litigation. Thus, a dire need for a statute specifying with clarity the categories of patentable and unpatentable inventions was felt so as to: 1. eliminate ambiguity and 2. prescribe in precise terms inventions for which patent should be refused in the interest either of national economy or national health or well-being. In regard to point (I), a more elaborate and clear definition of "invention" was attempted: "'Invention' means, any new and useful art, process, method or manner of manufacture, machine, apparatus or other article, or substance produced by manufacture; and includes any new and useful improvement of any of them."

This definition was certainly an advance over the earlier one. For one, it clearly recognized process and product patents. Secondly, although it failed to employ the more appropriate terminologies viz. "inventive step" and "capable of industrial application", yet it sowed its seeds by employing the expression "new and useful improvement". In regard to point (2), the Committee considered two subject matters in great detail. These were: (i) Chemical products and (ii) Food and medicine. (i) Chemical products In this regard, the history of patent law regarding chemical inventions in Europe during the past 100 yrs. and experiences of other countries somewhat similarly situated like India were examined. A contrast between French and German law was evident. In France, where a product patent for chemical products was granted, the chemical industry was considered somewhat backward. This was so as the grant of a patent to a chemical product per se had a deadening effect on research since it precluded attempts to arrive at the same product by other alternative processes. On the other hand, under the German Patent Law of 1877, where patentability was restricted to novel chemical processes, a stimulated research in regard to alternative methods for producing the same product was witnessed. The rise of the German chemical industry dated from 1877 and, in the course of next 30 years, it came to occupy the foremost position in Europe. This phenomenon led to the adoption of process patent law in chemical products by most countries of the world. The rationale of this law was correctly explained at the Lisbon Conference of Paris Convention Countries thus "....... where the manufacturing process developed by the inventor of the new product proved to be uneconomical, the patent of invention

3. DEVELOPMENT OF PATENT REGIME IN INDEPENDENT INDIA

27

/

granted in respect of the product would prevent the exploitation of a better manufacturing process invented by another person ......."

The Committee, therefore, concluded that industrial advancement and initiative would be promoted if the German system of permitting only process claims were adopted in respect of chemical products. Further, having regard to the state of metallurgical industries in India then, patentability of was suggested to be bracketed with chemical inventions. (ii) Food and Medicine While the MNC's started developing new drugs after the mid-1930, the indigenous companies concentrated on developing manufacturing processes. Under the 1911 Act, the MNC's legally prevented the indigenous companies from manufacturing most of the new drugs developed by them during the patent term of sixteen years which could be extended by another ten years if the working of the patent had not hitherto been sufficiently remunerative to the patentee. They could d o so by describing all the known and possible processes in the patent application. This was permissible under the 1911 Act, as noted by the Committee. Even an old process, if specified by the MNC's in the patent application, could not be used by the indigenous companies.The latter was also forbidden from processing a patented drug into formulations or importing it. In practice, the MNC's did use the strategy of mentioning as many processes as possible to prevent the entry of the former. The Committee noted that in every country where its laws imposed restrictions on the grant of patents in respect of chemical inventions by confining ~atentabilityto the invented processes, there was a similar or even greater restriction on the grant of patents to inventions in relation to articles of food and medicine. This was expected as most of the pharmaceutical preparations were the products of chemical processes. But, what was more compelling was what even in a large number of countries where per se product claims for chemical substances were allowed, the laws permitted only claims for processes so far as articles of food and medicine were concerned. Thus, the French law of 1844 and Belgian Law of 1854 while permitting patenting of chemical products as such, confined patents for articles of food and medicine to process claims. The reason for the above state of law was stated to be that denial of product claims was necessary in order that such articles of daily use as medicine or food, which were vital to the health of the community, had to be made available to every one at reasonable prices and, therefore, no monopoly was desirable. It was considered that the refusal of product patents would enlarge the area of and thus result in the production of these articles in sufficient quantity and at the lowest possible cost to the public. The Committee did consider on merits some stray voices to render even the process unpatentable and rejected is as being against public interest. After all, an exclusive right to a given process would accelerate research in developing

29

EVOLUTIONOF PATENT LAWS

3. DEVELOPMENT OF PATENT REGIME IN INDEPENDENT INDIA

other processes leading to a larger volume of manufacture at competitive prices. The examples of the rest of the world, where processes for inventions relating to articles of food and medicine were always held as patentable, could not be discarded without the weightiest of reasons.

p n t e d , it could be revoked on the same ground and suits for infringement could be resisted on that ground. The Committee next considered anticipation by prior use. While departing from the logical rule followed in many countries where public use even outside the country of patenting constituted anticipation, precedence was accorded to practical realities. The difficultiesin adducing evidence -necessity to take out commissions to foreign countries for examination of witnesses to prove such use etc. -persuaded the Committee to recommend that public use to constitute anticipation be confined to use within India.

(b)Anticipation and Novelty Questions as to anticipation or lack of novelty depriving an invention of patentability were relevant at four stages: 1. during the examination of an application for a patent; 2. as a ground upon which an application could be opposed; 3. in proceedings for the revocation of a patent; and 4. in suits for infringement where the validity of a patent was disputed by the defendant.

(c) Remedies for Abuse of Patent rights - Compulsory Licensing

and Revocation for Non-Working We had earlier discussed about the problems which many countries have had to surmount arising from the non-working of patents, particularly those of foreign nationals and who were unwilling to work their patents in the country where a patent was granted. It is proposed, in this section, to dwell upon the remedies, as conceived by the Committee, based on global practices. A survey of various European countries revealed that the problem which India faced had often been the lot of other countries even though more industrially advanced. Not surprisingly, the problem was accentuated in case of underdeveloped countries. The nature of the problem was neatly explained in the words of a member of House of Commons, Mr. Cawley, in the context of similar problems being faceh by u.K., thus,

Anticipation had two limbs -anticipation by publication and anticipation by use. Under the Indian Patents and Designs Act, 1911, the concept of "anticipation" was so woolly that what precisely deprived an invention of novelty and, particularly, where the previous publication ought to take place, was not specified in any of the provisions. In this regard, this Committee had before it two opposite precedents. While the rule restricting anticipation by prior publication of documents, published within the country, prevailed in the U.K. and the Commonwealth countries, in most of the other countries of the world, there was no similar geographical limitation as regards the place where the anticipatory matter could be published. While formulating its proposal in this regard, the Committee took into account both the rapid technological advances in the field of communication as also the public interest. It was noted, thus, that a provision removing the geographical limitation would be recognition of the fact that the world had shrunk in size due to rapid means of communication and would prevent those who visited foreign countries or got acquainted through foreign periodicals with the inventions which were published abroad from obtaining patents on the basis of the invention being "novel" in India. Similarly, in the public interest it was necessary to provide that publications which would constitute anticipation must include publications in India and elsewhere, before the priority date. Publications meant those in the form of patent specificationsas well as other scientificliterature. Although the Examiner r.ould be handicapped, in absence of adequate facilities, to determine novelty on the basis of overseas publications, if the law were that such foreign publications also constituted an anticipation, an opponent could cite the foreign publication as depriving the invention of novelty and similarly, even if a patent were

L

".....Although a patent lasted only fourteen years it was long enough to establish the industries abroad, and once established there, with trained labour, experience and an organized system of distribution, it was no easy matter to get it back again ........We got no quid pro quo for the monopolies we gave, but we allowed the person to whom the monopoly was granted to produce his patented articles solely abroad .....That Germany had made enormous strides could not be denied .......The chemical industry of Germany had increased rapidly and now amounted to something like 70 million pounds per annum and part of that trade had been taken away from this country........Most of the labour employed in these works was unskilled labour, and was the very kind of work which would absorb our unemployed if we only insisted that there should be a quid pro quo for the monopolies we granted and that they should not be taken away and used to find work f o r foreign labour in foreign country a t the expense of o u r fellow-countrymen. Had we said to them, we grant you a patent or monopoly for the sale of this article, you must in turn manufacture the article here, we would by now have much larger works in this country giving employment to a number of labourers, but our patent laws as they are at present are benevolently fostering great industries in

.

30

EVOLUTlON OF PATENT LAWS

3. DEVELOPMENT OF PATENT REGIME IN INDEPENDENT INDIA

Germany to the detriment of the manufacturers, consumers and working classes of this country. We had been granting thousands of patents to foreigners and getting nothing in exchange. We are now going to grant a monopoly but if we d o that, the country at least ought to have some recompense for having done it. The patent ought not to be merely a prize to the inventor who applied for it. The country where the man was granted protection ought at least to have some share in the benefit. If a man obtained a patent in this country, he ought to manufacture the goods here."

These long observations have been extracted to emphasize that patent laws of a country must serve its proper purpose of encouraging inventors and preventing new industries from being established in the home country and protecting foreigners. Globally, two methods for redressing the above problem had been adopted: (1) Compulsory working, with the revocation of a patent in the event of non-working, and (2) Compulsory licensing, on terms of royalty, to be settled by an outside authority where parties didn't agree. The compulsory working system originated in the French law of 1791 and was adopted by practically all the principal patent systems except USA. The Committee considered in some detail the experiences of UK. Up to 1872, England was comparatively so much industrially advanced that everyone who anywhere in the world made an invention of any consequence first worked such invention in England where he was able to find the necessary capital, the necessary spirit of enterprise and the necessary skilled labour. There was, therefore, no need for any working requirement and none was contained in her statute. In fact, UK opposed the principle of compulsory working at the Lisbon Conference. But soon, these prerequisites for large scale industrial production were also found in the USA and Germany. Alarmed by this development, UK set out to adopt measures in order to prevent her industries from falling behind that of the USA or Germany. This was done in two stages. A provision for compulsory licensing was introduced in 1883which proved insufficient so that by the turn of century, Edward Fry Commission was appointed to suggest appropriate remedies. In accordance with the Committee's recommendations, principle of revocation of a patent for abuse of monopoly by non-working for three years from sealing of the patent was introduced in 1902. The expression used to specify this abuse was "that the reasonable requirements of the public with reference to the patented inventions have not been satisfied." The UK Act of 1902laid down in terms the circumstances when the reasonable requirements should be deemed not to be satisfied. These were that if by reason of the default

iJ

of the patentee to work his patent or to manufacture the patented article in the

UK to an adequate extent, or to grant licences on reasonable terms :

b

(a) any existing industry or the establishment of any new industry is unfairly prejudiced or (b) the demand for the patented article is not reasonable met. But, the above conditions were too vague and narrow to achieve the This led to its revision in 1907 and 1919, enlarging the grounds on which compulsory licences could be granted. And finally, when the Patent Law was thoroughly revised in 1949 as a result of the recommendations of the Swan Committee, there was a further enlargement of these grounds. The history of UK furnished a valuable precedent. In fact, compared to the position of UK vis-a-vis USA and Germany in 1907-1919,India was then much less industrially advanced compared to the major industrialized countries, and, therefore, her laws in respect of compulsory working and compulsory licensing had, accordingly, to be broader based. The Committee also examined a frequently levelled criticism that in view of a small number of applications received for granting compulsory licences, the remedy was never needed. In this regard, the findings of Swan Committee found favour with the Committee. In India, the provision for compulsory licensing had, following U.K. Act of 1949, been introduced in 1950. Yet, there had been only a few applications to the Controller. This was rationalized on the ground that the possibility of the statutory grant of a compulsory licence had acted as an inducement to the grant of a voluntary licence on reasonable terms. This rationale favoured the expansion of grounds available for grant of such licences. Another obstacle to compulsory licensing pertained to the inability to exploit merely on the basis of the information contained in the specifications. An efficient exploitation required, in addition, a considerable amount of technical knowledge, comprehended in the compendious expression 'know-how'. In the absence of know-how, the patent could not be economically worked. The Committee first reasoned that this obstacle was caused by an inadequate disclosure for which stricter law of disclosure, before grant of patent, was desirable. However, in view of feedbacks from industries that in many instances how-how, as relevant to local conditions, was disclosed during actual working ofthe invention while surmounting the technical difficulties, it was considered m e s s a r y for the efficacy of compulsory licensing provisions that a patent had tobenecessarily worked locally and failure to do so would invite its revocation. Accordingly, the Committee suggested the following concrete imP*ovements over the existing provisions under Indian Patents and Designs Act, 1911:

32

EVOLUTION OF PATENT LAWS

(1) enlarging the grounds on which compulsory licences or compulsory

endorsement of "licences of right" could be obtained (a) by deleting all references to the invention being capable of being commercially worked within the country and (b) by making it available even in cases where an export market for the manufactured product already existed. (2) providing for the revocation of a patent in cases where a patent was not worked adequately to meet the demand for the article from the manufacture within the country at any time after two years from the grant of a compulsory licence or two years from the grant of a compulsory endorsement. It was earnestly expected that these suggestions would: (a) induce patentees voluntarily to grant licences readily and on reasonable terms; (b) induce patentees even in the case of compulsory licences to impart "know-how" to the licensees in order to prevent their patents from revocation; and (c) enable the elimination of those patents which no one was willing to work in the country but which hurt national economy by serving merely to confer a monopoly of importation on the patentee or otherwise hamper progress or block the working of other inventions. (d) Provisions for Patents of Food and Medicine Articles of food and medicine, owing to their importance to the health and well-being of the community, required special provisions, over and above the provisions for compulsory licensing, compulsory endorsement and revocation for non-working which applied to every patent. The approach here was preservation and promotion of public interest as distinct from avoidance of abuse of monopoly by patentee, as endorsed by House of Lords in Parke Davis v. British Drug Houses Ltd. The two basic features of the compulsory licensing provision in regard to patents for articles of food and medicine under Sec. 23CC of the Indian Patents and Designs Act, 1911 were :(1) that no time need lapse after the grant of the patent before the application for compulsory licence could be filed and (2) that the applicant was entitled to the grant of the licence without proof of any abuse "unless the Comptroller sees good reason not to grant the application". The italicized words were said to have caused vagueness which was responsible for the reluctance of persons to make applications for compulsory licences. The Committee suggested that the remedy for meeting this situation was to vest the power of selection of proper persons for working food and drug

I

3. DEVELOPMENT OF PATENT REGIME IN INDEPENDENT INDIA

33

4

patenk in thecentral Government who under the Industries (Development and Act, 1951controlled the starting of new manufactories. The selected person would be entitled to demand a licence from the patentee and if they were unable to agree on its terms, the Controller was to decide upon the dispute and to settle reasonable terms of royalty etc. Another recommendation made was for a provision enabling such patents tobe revoked if they were not adequately worked after a reasonable period after they were sealed. (e) Other types of Monopoly Abuses, Restrictive Trade Practices and Monopolistic Combinations A proper patent law results from the balancing of the following two factors: (I) Reward to the inventor so as to stimulate and accelerate invention and (2) Interest of the community that inventions are worked in the country within as short a time as possible after the grant and on as full and ample a scale as practicable. Earlier on, one type of abuse of patent rights, viz. by non-working in the country to block industrial progress and to secure a monopoly of importation and measures to counter such abuses, was discussed. However, there are certain other abuses in the nature of restrictive trade practices, which de jure mayn't contravene patents laws, yet cause extensive harm to public interest by permitting an entrenched monopoly. In this connection, a passage from "The Law of Restrictive Trade Practices and Monopolies" by Wilberforce Campbell and Elles is profitably quoted hereunder: "Restrictive trade practices are as old as the trade itself. They represent nothing more than attempts of intelligent men to interfere to their own advantage, or that of the industry in which they are engaged, with the free working of supply and demand and with the results of competitions ...... Moreover, just as the practice of restriction is endemic in commerce, so the state has from the earliest time sought to interfere by legislation with sectional profit making. There are monuments in India, dating from some centuries before Christ, recording regulations to prohibit merchants and producers from making collective agreement to influence the natural market prices of goods by withholding them from trade: boycotts are mentioned amongst other punishable offences as well as any interference with buying and selling of others, and throughout history, sovereigns, constitutional or otherwise, have attempted to repress private monopolies with one hand while often granting monopolistic privileges with the other."

EVOLUTION OF PATENT LAWS

3. DEVELOPMENT OF P A T E X E G I M E IN INDEPENDENT INDIA

The Committee found the prevalence of two other types of abuses while working the invention within the country: (1) using patent rights as a lever to obtain a more extended monopoly than what the law allowed, by insertion of manipulative stipulations in contracts of sale or lease with the customers, and (2) utilization of patents or a group of patents as a nucleus for the formation of combinations and cartels aimed at monopoly control of production and distribution. The example of UK provided useful guidance in the matter of manipulative stipulations. Some of such undesirable stipulations inserted in the leases were: (a) prohibition of the purchases of other unpatented articles from sources others than that specified by the patentee. (b) prohibition of the use of the inventions of other patentees. (c) requiring the payment of royalties even after the termination of the patent. (d) requirement to purchase solely from the patentee, both during the life of the patent and even afterwards, unpatented articles needed for the use of the invention. The abuse became so pervasive that the English Parliament enacted Section 38 of the Patents and Designs Act, 1907 whereunder such type of stipulations in a contract were invalidated. However, proviso to Section 38(1) saved such manipulative stipulations from extinction if the patentee offered an alternative contract which didn't contain the restrictions regarding the purchase or use of unpatented articles. This provided an easy loophole as per Swan Committee report. The patentees offered alternative contracts which required the payment of such exorbitant royalties as to leave no option to the lessees and licensees but to accept the contract containing the restrictive terms regarding the purchase and use of unpatented articles. The failure of the remedy was highlighted in the British United Shoe Machinery case where a buyer was forced to buy all subsidiary machines and even any machinery for improvement from the same patentee-supplier. The Indian Patents and Designs Act, 1911, which was largely modelled on the UK Act, of 1907, did not, however, contain any provision for countering this type of abuse. The Committee therefore, suggested an amendment for invalidating contracts for payments of royalty etc. after the patent had ceased. The second type of abuse - monopolistic combinations and restrictive trade practices - was, as is even how, a universal feature of capitalistic economy. It was more insidious and productive of greater harm to the public interest. In the early days of the patent system, when lone inventors were rewarded with a grant of monopoly, there was no excessive concentration of economic power by the reward thus obtained. In fact, the reward itself was

obtained by the working of the invention which was the only manner by which it could be put to beneficial use. Things, however, changed by the latter half of 19th Century when the lone inventor was replaced by a team of scientists working in the research laboratories of mighty Corporations. The immense wealth of these corporations had enabled them to set aside large funds for intensive research. Besides inventions evolved by their teams, these Corporations also acquired by purchase inventions of others in the field of activity in which they were interested. This led to an excessive concentration of economic power in the hands of particular individuals or groups, a power not always utilized in the interests of the community. Corporations could also use intellectual property rights and licences to structure, disguise and enforce a global knowledge cartel and to divide international markets among themselves. A cartel is born when individual producers come to an arrangement under which they fix the price of a commodity or limit its production. In the 19th century and the first part of the 20th century business life, cartel of all kinds were simply a fact of international economic life. , Patents were often used to mask a cartel. Usually, two or more international players would come together and negotiate an arrangement on the IPR's relating to the products and technologies in the industries in which the players were involved. Typically, the arrangement would divide the world into areas ( the British Empire, the USA, Central America etc. ). The arrangement might specify that some areas were to be the exclusive territory of party A and others the exclusive territory of party 8. Through these arrangements, members of the cartel "networked" their territorially based patents in order to coordinate their actions in world markets. Thus, an arrangement between two producers dividing market territories and setting limits on production, which would have been illegal in the absence of a patent, could be legal as a patent licensing arrangement. The use of intellectual property rights to- structure and enforce cartels spread between the two World Wars. Cartels became the outstanding characteristic of business, and intellectual property became the outstanding marker of knowledge cartels. The partitioning of the world's markets using intellectual Property rights occurred in all the world's key industries. The rubber cartel, the nitrogen cartel, thealuminium cartel, the magnesium cartel and theelectric lieht " u cartel were woven together through the thread of intellectual property agreements. Knowledge cartels were not about sharing knowledge, avoiding the duplication of research or achieving efficiencies. Thev were about ~rivatizine knowlu Mge that would grant the h k d e r of that knokledge the dower to discipline markets. Attacking patent-based cartels, moreover, was far harder for a competition ority than attacking commodity cartels or monopolies because an attack

34

35

EVOLUTION OF PATENT LAWS

3. DEVELOPMENT OF PATENT REGIME IN INDEPENDENT INDIA

could be construed as interfering in the use of private property. Once the veil of private property had been drawn over what was essentially a state-granted monopoly privilege, it became much harder for public authorities to question the nature of the business arrangements that individual competitors reached with each other using those privileges. The Committee felt that though patents might sometimes form a convenient nuclei which monopolistic combinations (and restrictive practices which are the concomitant of combinations and to effectuate which the combination might come into existence)were based, the problem could not be solved by mere amendment of the Patent law but only by dealing with it comprehensively so as to touch the manifold forms which these combinations might assume and in which they could operate. This had been the manner in which legislation in countries such as Canada, France, Sweden and UK had tackled the problem and with reason. Secondly, any solution had to be related to the precise manifestations of the combination or restraint which obtained in the country. The Committee left this problem to be tackled by a separate law on Prohibition of Monopolistic and Restrictive Trade Practices. We have, hereinabove, discussed in some detail as to how Ayyangar Committee went about its task of suggesting the necessary patent law reforms. An insight into the approach is relevant in today's context as well where divergent views have been expressed about the recent spate of amendments but more of the same later. According to a commentator: "The Ayyangar report must be regarded as both an amazing and a piquant effort. Within a short space of two years, a High Court Judge and a chemist administrator had navigated round the world of patent law and policy to provide an effectivere-examination of theTek Chand proposals. The report is more discursive, with more reasoned arguments and with a greater assimilation of the economics underlying patent law than its predecessor. There is more effective discerning of alternative choices and not just a blind imitation of changes that have been proposed in the UK." ["Whose interest? Independent India's Patent Law and Policy" - Dr.

(i) raising the technological level of the Indian economy by facilitating indigenous development, adoption and transfer of technology; (ii) ensuring that the fruits of technologicalinnovations become available to all the sections of society, serving other public purposes, particularly, public health; (iii) ensuring of competitive environment in the industrial sector; (iv) protecting the domestic enterprise from the adverse effects of monopoly in knowledge and technology; (v) contributing to meeting the constitutional obligations of the state under the Fundamental Rights, particularly, the 'right to life' guaranteed to the citizens of the country. These objectives were sought to be realized by the following important provisions of the 1970 Act: (1)The earlier vague definition of "invention" was replaced by the definition suggested by the Ayyangar Committee report. Thus, Sec.2 (j) stated: "'invention' means any new and useful (i) art, process, method or manner of manufacture; (ii) machine, apparatus or other article; (iii)substances produced by manufacture, and includes any new and useful improvement of any of them, and an alleged invention;" This definition included a new product as well as a new process. An improvement, if new and capable of being put to gainful use, too qualified for an invention. Sec.3 provided a negative list as determined by scientific principles or public interest. Thus, a claim which was frivolous or contrary to law or morality or injurious to public health was not an invention. Discovery of a scientific principle or abstract theory or new property or new use of a known substance too was not an invention. A mere admixture of known components or a mere rearrangement of known devices too was excluded. More importantly, towards a furtherance of public policy and public health, a method of agriculture or horticulture and any process for the medicinal, surgical, curative, prophylactic or other treatment of human beings or animals or plants even to increase their economical value was deliberately kept out of the purview of invention with the result that no patent could be claimed in respect thereof. In the interest of national security, inventions relating to atomic energy were held as not patentable (Section 4). (2) There was to be no product patent system for pharmaceuticals, food and chemical based products. These industrial sectors were covered by only process patent. (Section 5).

36

'~

Rajeev Dhavan and Others, 19881.

Twelve years after the first comprehensive bill, Patents Bill, 1965 was introduced and relegated to the Joint Committee of both houses. The Joint Committee's report was not debated in the House of People as it was adjouraed. Thereafter, the house was dissolved and with it the Patents Bill, 1965also lapsed. A new Patents Bill, 1967 to amend and consolidate the law of patents was referred to the Joint Committee. There was also an extensive debate in both the Houses of Parliament before the adoption of the 1970 Act. The 1970 legislation was aimed at attaining the following important objectives:

/

37

EVOLUTION OF PATENT LAWS

(3) There was a system of a pre-grant opposition in place. It involved the following steps: a. patent examiners scrutinized the claims and were given adequate time - not exceeding eighteen months to do so; b. the complete specifications were made open for public inspection and any interested person could oppose the grant of patent on specified grounds; c. a patent was granted only after entertaining such opposition. The advantage of such a procedure was that any wrongful claims could be detected before the patent was granted. For example, pre-grant scrutiny could successfully detect cases of such secondary patents which were not therapeutically significant whereupon patent protection was denied. (4) The term of the process patent was 7 years from the date of application or 5 years from the date of sealing of patent whichever period was shorter. In respect of product patents, the term was 14 years from the date of application (Section 53). (5) A peremptory power vested with the Central Government to revoke a patent which was mischievous to the State or prejudicial to the public interest (Section 66). Indeed, the width of this power was sufficient to deter any unscrupulous patentee. (6) Chapter XVI contained elaborate provisions in respect of working of patents, compulsory licences, licences of right and revocation. The Controller of Patents was to effect a reconciliation between individual and public interest while exercising his power. The individual interest pertained to encouragement of inventions. Public interest consisted in securing that the inventions were worked in India on a commercial scale and to the fullest extent without undue delay. Further, the patentee was not to abuse his monopoly by importation of the patented article (Section 83). (7) Compulsory licences could be ordered to be granted to any person, upon an application, by the Controller after 3 years from the date of sealing of a patent on the grounds that the reasonable requirement of the public with respect to the patented invention had not been satisfied or that the patented invention was not available to the public at a reasonable price. The patentee had to grant a licence upon such terms as determined by the Controller (Section 84). (8) A patent could be endorsed with the words "Licences of right", upon an application filed by Central Government, by the Controller after 3 years from the date of sealing of a patent on the grounds that the reasonable requirement of the public with respect to the patented invention had not been satisfied or that the patented invention was

Y

3. DEVELOPMENT OF PATENT REGIME IN INDEPENDENT INDIA

39

not available to the public at a reasonable price (Section 86).In public interest, patents relating to food, medicine, drug, or chemical substances (including alloys, optical glasses, semi-conductors and inter-metallic compounds) were deemed to be endorsed with the words "Licences of right" from the expiration of 3 years from the date of sealing of the patent (Section 87).The effect of such an endorsement was that any person could require a patentee to grant him a licence on mutually agreed upon terms. In order to curb the profiteering tendency of a patentee, it was provided that royalty payable to such patentee wouldn't exceed 4% of the net ex-factory sale price of the patented article (Section 88). .(9) It might so happen that in spite of the grant of a compulsory licence or the endorsement "Licences of right" having been made, the reasonable requirements of the public with respect to the patented invention remained unsatisfied or that the patented invention was still not available to the public at a reasonable price. In such a case, after expiry of a period of 2 years from the date of grant of a licence under Sec. 84 or Sec. 88, a patent could be revoked upon an application by either the Central Government or any other person (Section 89). (10) For the purposes of compulsory licences (Section 84), licences of right (Section 86) or revocation of patents for non-working (Section 89), an important consideration was that "the reasonable requirements of the public with respect to the patented invention had not been satisfied". Certain obvious circumstances that were included in the quoted categories pertained to lack of development of the manufacturing, trading and commercial activities as well as lack of adequate supply and prohibitive price line, all such objectives that were in tune with the objectives of a socialist welfare state. However, the progressive nature of the law was revealed by inclusion of a condition wherein if a market for the patented article, indigenously manufactured, was not being developed, then it could lead to invitation of harsh penal provisions contained in Sections 84,86 & 90 (supra). (Section 90) (11) In order to forbid the abuses of monopolistic practices by powerful patent holders, it was provided that certain kinds of restrictive conditions could not be entered in any contract for sale or lease of a patented article made by a patented process, or in a licence to manufacture or use a patented article, or in a licence to work any process protected by a patent. Thus, a condition the effect of which may be to require the purchaser, lessee or licensee to acquire from the vendor, lessor or licensor or to prohibit him from acquiring from any person other than vendor, lessor or licensor, any article other than the

40

EVOLUTION OF PATENT LAWS

patented article or an article made by a non-patented process, was held as illegal. The Patents Act, 1970 was hailed by many developing countries and UNCTAD as one of the most progressive statutes, suitable as a model for the developing countries. It safeguarded the interest of both the inventor and the consumer in a balanced manner. The interests of the public were given priority over the private interests of the patent holders. This Act was a product of deep considerations and long deliberations to synchronize with the Directive Principles of State Policy contained in the Constitution of India which provided in Article 39 thus: "39. The State shall, in particular, direct its policy towards securing (a) ....... (b) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good; and (c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment." The Patents Act, 1970 was a landmark in the history of industrial development and formed the basis for transfer and dissemination of technologies. The Act devoted equal attention towards the industry, the scientists, the consumers and the nation as a whole. It preserved the continuing interest of the inventor in his creation, his social interest in encouraging research, the consumer interest in enjoying the fruits of inventions at a reasonable cost and creations of conditions for the acceleration and promotion of economic development of the country. As a result of its operation, India became self-sufficient in production of basic drugs covering various therapeutic groups. This came about since the limitation of five to seven years process patents to drugs and medicines enabled the scientists to develop alternate processes for production of life-saving drugs which, in turn, permitted development of a domestic pharmaceutical industry in India in a relatively short period of time. Drug prices fell from "among the highest in the world" [Kefauver Committee of the US Senate] to being among the lowest in the world. Till recently, drug prices in India ranged from 5 to 30 times lower than in countries with product patents.

PATENT LAW STANDARD-SETTING BY DEVELOPED COUNTRIES PRE-TRIPS The Bretton Woods Conference (1944) marked the beginning of a new World Trade Order, switching the purpose of global alliances from the open11 military to the plainly economic. This paradigm shift is basic to an understanding of the nature and structure of the new Patent regime. The thrust of the New Economic Order which the US and its allies desiderated was conquest by trade under the mask of liberalization, privatization and globalization. Long ago, Calvin Coolidge had said that, "The business of America is business". /

Woodrow Wilson put it more bluntly: "The masters of the government of the United States are the combined capitalists and manufacturers of the United States. It is written over every intimate page of the record of Congress,it is written all through the history of Conferences at the White House, that the suggestions of economic policy have come from one source, not from many sources.............The government of the United States a t present is a foster child of the special interests." That the pursuit of hegemony is a die-hard part of pax Americana is eloquently brought out in the following passage from a book titled 'On Third World Legs' by S. Brian Wilson: "After World War 11, a sense of global Manifest Destiny came to dominate United States policies. Between 1945and the late 19801s,the United States militarily intervened more than 200 times into the internal, sovereign affairs of well over 100 "third world" countries, causing directly or indirectly the murder of 20-25 million human beings and the maimings of at least that many." Accordingly, to foster such hegemony, pursuant toBretton Woods, another institution to operate and oversee the 'liberalization' of World Trade was brought into being in 1948 i.e. the GATT (Ceneral Agreement on Tariffs and Trade). GATT, 1948was essentially a code of rules and a forum to negotiate and *eolve trade disputes arising out of the international sale of goods.

42

EVOLUTION OF PATENT LAWS

-

During the first 30 years of GATT existence, seven major trade negotiations took place: Geneva Round (1947); Annecy, France (1949); Torquay, England (1951); Geneva (1956), Dillon Round (1960-61);Kennedy Round (1964-67)and Tokyo Round (1973-79). Each of these negotiating rounds coincided with amendments to United States trade laws - a fact which has often been cited as evidence of the symbiotic relationship between the U.S. and GATT and America's use of GATT as a vehicle for its own trade objectives. A review of the functioning of GATT in 1958 by the Haberler Committee revealed that the developing countries' failure to obtain adequate gains from trade was due to the trade policies of the developed countries. In an effort to remedy the inequitable functioning of GATT, the developing countries raised their objections at the United Nations. In response, the United Nations Conference on Trade and Development (UNCTAD)was established in 1964 to address the relationship between trade and development. Under pressure from UNCTAD, though the developing countries benefitted slightly by institution of Generalized System of Preferences (GSP), yet the GATT remained essentially a rich man's club. Global trade statistics confirmed the view that GATT enabled the developed countries to dominate trade flows. In 1966, the developing countries ' accounted for only 11.296 of manufactured exports. Two decades later, in 1986, their share had increased to only 13.8%. On the other hand, the biggest beneficiary was US. She had become a credit provider to Europe and Japan. US banks I had progressively expanded into overseas market creating the era of multinational banking. US companies dominated the list of word's largest industrial enterprises. In each of the years 1962, 1967, 1972 and 1978, only two non-US companies appeared on the list of top ten largest industrial enterprises in the world. The US economy generally was building a comparative advantage in highly research-intensive and knowledge-intensive industries, such as Chemicals and Pharmaceuticals. US companies looked to new markets for their diverse products. They began to establish overseas production facilities and began a process of expansion.

I

: 1

I. COMPETITION FROM DEVELOPING COUNTRIES But, competition was looming large from all directions. The Asian tiger economies were witnessing hyper-growth. The great profits to be made in chemicals had tempted more and moreentrants in the market to join established players like DuPont, Dow, Monsanto and Union Carbide. Similarly, the pharmaceuticals industry had gone through its happy times of cartels and price-fixing behavior, for instance, of broad-spectrum antibiotics, and the large industry players now faced competition from generic manufacturers. The experience of US pharmaceutical giant Pfizer illustrates the problems that a knowledge company faced. The company had begun to expand into Southern country markets in the 1950's Manufacturing plants and distribution

4.

PATENT LAW STANDARD-SETTING BY DEVELOPED COUNTRIES PRE-TRIPS 43

networks were established in countries ranging from Argentina to Australia and Belgium to Brazil. In many countries, national pharmaceutical industries either did not exist or were only in their infancy. Patent protection was not yet important to Pfizer because countries like India did not have the technology or know-how to copy its products. By 1957, Pfizer International had more than achieved its target of US$60 million overseas sales. In India, these sales were aimed at the small but growing class of Indians who could afford Western prices. In the 1960's, despite having one of the poorest populations in the world, India had some of the world's highest drug prices. However, in course of time, increasing political stability and technological development gave India the capacity to produce quality drugs locally, cheaply and, by. using the patent system, legally. The process patenting, allowed for drugs under Indian Patents Act, 1970,gave Indian pharmaceutical manufacturers an incentive to find cheaper processes for the production of existing drugs. The law opened the path to a highly competitive Indian generics industry, which began to produce quality essential drugs at a fraction of their price in Western Markets. Southern countries like Brazil, Argentina, Mexico and the Andean Pact nations also made use of compulsory licensing regimes to bring down the price of essential drugs. All states designed their intellectual property laws in a way that suited their economic interests. All these policies began to bite. Pfizer was faced with unprofitable operations in the South. In the words of Edmund Pratt, the CEO of Pfizer from 1972 to 1991: "We were beginning to notice that we were losing market share dramatically [in Southern countries]because our intellectual property rights were not being respected in these countries." This "lack of respect" didn't amount to illegality, rather, the Southern countries were adjusting the rules of the patent game to serve their local industries in exactly the same way that Western States had used intellectual property for their own protectionist ends. Further, these countries werenot only providing pharmacCutica1 products to their populations at very cheap prices; Some of them, such as India, were also supplying neighbours like Nepal and exporting bulk drugs and formulations toplaces such as Canada. Southern-produced pharmaceuticals were also finding their way into African States.

11. GAMES PLAYED BY US BUSINESS & GOVERNMENT This alarming state of affairs spurred Pfizer to come up with the radical idea of linking investment and intellectual property to the trade regime. Howmer, this was not easy to be put into practice as intellectual property had a Protectionist history and monopolistic nature. Pfizer, thus, had to relocate the intellectual property issue within a framework of fundamental liberal values -

44

EVOLUTION OF PATENT LAWS

the individual right of property ownership; the right to a reward for labour; fairness - and appeals to pride in US high-technology achievements and US national interests. Towards this end, a corporate consensus would have to be built, policy analysts would have to lend legitimacy to the proposed new direction and finally the whole thing had to be politically saleable to the US government. Soon, the message about intellectual property went out along the business networks to chambers of commerce, business councils, business committees, trade associations and peak business bodies. Part of the domestic strategy to garner support was to talk about "piracy" viz. US knowledge and inventions were being stolen. An article entitled "Stealing From The Mind' was published in the New York Times propagating the message that governments of other countries were stealing from the minds of individual US inventors by denying them patent protection. The term "piracy", associated in the popular mind with a history of desperate outlawry and savagery, proved to be a particularly effective rhetorical tool. Pfizer also began spreading its tentacles by contributing financially to influential conservative US think tanks such as Heritage Foundation. In turn, these policy analysts began portraying US companies as embattled innovators facing an uncertain future in a world where rapacious Southern countries were ignoring the fundamental rules of business fair play. The strategy proved very effective because it drew on prejudices and anxieties within the US about the future economic security of the US in a world where successful Asian "tiger" economies were on the prowl. Pfizer had managed to create its own turf on the intellectual property issue that is fundamental to winning a campaign on any major issue. Within US government circles, intellectual property interests soon found receptive audience for their message that stronger intellectual property rights were desperately needed to protect American ideas and industry from thievery. Such a change in the attitude of US Government was caused also by changes taking place elsewhere. In the 1970'sand early 1980fs,a policy discourse developed of a United States in decline. Loss of competitiveness became an issue. The massive share of world trade enjoyed by Northern countries in 1960's began to lessen in the 1970's. Countries like India and Brazil began to show leadership potential. These and other new economic competitors, variously called as "the gang of four", "the Asian tigers", "the dragon economies" etc. made the US uneasy about its share of world markets. By the mid-801s,Japan had surpassed the US in technological prowess; in 1987, America's National Academy of Engineering reported that Japan was superior to the US in 34 critical areas of high technology. Japan had replaced the US as the key player in world economic market as Japanese corporations accounted for 48% of world capital-

-

4. PATENT LAW STANDARD-SETTING BY DEVELOPED COUNTRIES PRE-TRIPS 45

izat-on and 15 of the 20 largest corporations in the world. Japanese manufacturing triumphs began to be seen as portent of US de-industrialization. US faced recessionary conditions at home because of the declining international competitiveness of its industries. Worsening trade deficits and loss of jobs in manufacturing made it easier to believe in the possibility that the US might, sooner rather than later, become a felled economic grant. The trade deficit had gone from US$31 billion in 1980 to US$170 billion in 1987. During this time, the manufacturing trade balance had swung from a US$27 billion surplus to a US$ 138 billion deficit. The US had financed the deficit by borrowing from foreign creditors (such as Japan), thereby getting transformed from a net creditor to the world's largest debtor nation. Somewhere between two and four Americans had lost jobs in this seven-year period. In a climate of insecurity about US political and economic future, a nationalistic story that better intellectual property protection meant more jobs for Americans and would restore the US to a positive trade balance with the world made compelling listening. The radical idea of Pfizer had finally succeeded in creating a fertile ground for its unmitigated growth. Finally policy analysts and poHtical leaders were convinced about the need to "discipline" global markets by gaining global control of knowledge manifested in the various disparate but locally useful patent laws spread all over the world. In other words, they wanted to change the rules of the knowledge game. Here, however, they were faced with an uphill task. The rules of the international patents regime revolved around the Paris Convention of 1883, which had formed the International Union for the Protection of Industrial Property and which was administered by a UN organization, the World Intellectual Property Organization (WIPO).For much of its history, Southern countries had seen little benefit in joining the patent's regime. But, by the mid-80's, two thirds of the members of the Convention were Southern countries. These countries began to push for the Paris Convention reforms and for access to the technology of multinationals on favourable terms. The Paris Union, once a quite club devoted to the elevation of the international patent regime, became a bMeground. The fiercest debates took place over the revision of compulsory l i m i n g of patented technology. For the US, developing countriesf proposals for exclusive compulsory licensing amounted to little more than expropriation US intellectual property rights. The revision of the Paris Convention began in February, 1980. At its first meeting, the US hoped to obtain higher standards of protection, but instead had todefend existing Paris Convention standards. In the words of one commentsthe US, at this and subsequent revision conferences in 1981and 1982, found i b u a l o n e and almost isolated. The Paris Convention's change in membership meant that its reform could no longer be dictated by the developed countries. &#

!!L

\I '

\

EVOLUTION OF PATENT LAWS

The US pharmaceutical and other industries concluded that WIPO was no longer a forum that could deliver the standards it wanted. To secure a favourable investment regime for multinationals with global production needs which for knowledge industries translated into globally-enforceable intellectual property standards that could protect their knowledge in whichever jurisdiction a Company went - the "locus", where international intellectual property issues were debated, had to be shifted away from WIPO. The new locus to enforce such a global regime, the US thought, would be General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO) where, by linking the substantive issues of intellectual property protections to trade negotiations and by using retaliatory trade sanctions, the upwardly mobile developing countries could be compelled to agree to their proposals. GATT had a further advantage over WIPO as countries did not vote in blocks as developing, socialist or developed countries in GATT as they did in WIPO and other UN bodies. In GATT, the decision-making was done by a process of consensus. In addition, the broader negotiating framework enabled countries to gain in some negotiating areas even if they were to lose in others. Most importantly, WIPO treaties did not have provisions mandating effective domestic enforcement of IPR's, nor a dispute settlement mechanism to ensure complidnce with international obligations. However, it is one thing to have the idea of linking investment and intellectual property to the trade regime and entirely another to turn this idea into a negotiating ob~ectiveand then an international legal reality. The US corporate elite realized that they had to persuade policymakers that intellectual property enforcement was the single most important issue facing the US economy, so important that the US government would stake the outcome of the entire Uruguay Round of Multilateral Trade Negotiations on a deal for intellectual property. This persuasion was effectively handled by big business representatives sitting in a purely advisory but extremely influential committee Advisory Committee on Trade Negotiations (ACTN). This Committee had direct access to the US Trade Representative, thus establishing a direct line of communication from US business to the bureaucratic centre of trade policy Out of this business crucible came the trade-based strategy on intellectual property. When Pfizer's CEO Edmund Pratt became its chairman in 1981, ACTN began to develop a sweeping trade and investment agenda. It established a task force on intellectual property which developed a trade-based intellectual property strategy consisting of three parts: 1. Multilatera1ism:To develop in the context of the upcoming GATT round an intellectual property code containing good standards of intellectual property protection, which was binding on all parties to the negohations and was tied to a dispute settlement mechanism

I

I

I

4. PATENT LAW STANDARD-SETTING BY DEVELOPED COUNTRIES PRE-TRIPS 47 C__C_

2. Bilateralism: To begin bilateral negotiations with countries that did not protect US intellectual property sufficiently with a view to obtaining agreements from those countries for better protection. 3. Unilateralism: If necessary, to make use of the fact that many "pirate" countries traded in the US market to threaten or actually impose trade sanctions on those countries if they did not enact and enforce higher standards of intellectual property protectioi~s. Obtaining a strong multilateral Agreement on intellectual property was a long-term strategy, while the use of bilateral negotiations and unilateral trade tools could provide an interim strategy for improving intellectual property abroad. The US negotiating position had to become, "no intellectual property, no trade round" -and at the bilateral level, the US had to be prepared to wield the stick of trade sanctions. During the 198Ots,intellectual property was slowly but surely placed at the heart of the legislative provisions that guarded US commerce. Beneath the legal language, two simple approaches were at work to globalize the standards of intellectual property that certain US industries wanted: first, the carrot and the stick, and second, the big stick. A system known as the Generalized System of Preferences (GSP) allowed the US to develop the carrot and stick approach. Under this system, designated countries were allowed to export eligible products into the US duty-free. When the US GSP programme began in 1976, authorized by the US Trade Act, protection of intellectual property was not a criterion of eligibility. The GSP programme had to be renewed periodically by Congress. By an amend~nentin 1984in Section 501, one of the new goals of the GSP was to encourage developing countries to provide effective means under which foreign nationals may secure, exercise and enforce exclusive intellectual property rights. Another 1984 amendment in Section 503 introduced intellectual property rights as one of the criteria for designatingbeneficiary developing countries. The intellectual property lobby succeeded in bringing intellectual property into the GSP programme whereby US President could now look at a country's conduct on intellectual Property in deciding whether it would receive or continue to receive GSP benefits. Thus, it was noted in a report that the US was using its GSP system in a way that was quite alien to the spirit and purpose of the system. Under its differentiated regime, Singapore was given a favourable GSP package in 1987 because of its good effortsin copyright especially, while Mexico (1987),Thailand (1989) and India (1992)came in for GSP losses (US$50 million), US$165 million and US$80 million respectively) because they failed to meet certain standards ~fintellectual property protection. The big stick that the US gave itself was to amend Section 301 of the Trade Act in 1984 to give the US President the authority to withdraw trade benefits horn a country or impose duties on its goods if it failed to provide "adequate

48-

EVOLUTION OF PATENT LAWS

and effective" protection for US intellectual property. The US trade Representative (USTR) was also given the power to self-initiate a 301 action against a foreign country. The perceived success of the measures adopted in 1984 led to their reinforcement with the introduction of the Omnibus Trade and Competitiveness Act of 1988.This introduced an array of measures which enhanced the role of US Trade Representative (USTR) by, for instance, providing for annual reviews of intellectual property practice of foreign trading partners. Also added were the two most feared and unpopular measures viz. Super 301 and Special 301. The former mandated the USTR to retaliate against foreign practices which were "unjustifiable and burden or restrict US commerce". The latter required the USTR to investigate and retaliate against countries which allegedly failed to provide "adequate and effective protection" to intellectual property rights or that denied "fair and equitable market access" to US intellectual property owners. Those countries were then put in one of the three categories: "Watch List", "Priority Watch List" and "Priority ForeignCountry", as per their increasing degree of alleged deviation from norms in the annual report, on unfair trade practices by foreign countries, of USTR. Thus, against a "priority foreign country", investigations with regard to IPR infringements were to be launched and action completed within statutory time limits. "Priority watch list" countries were those that necessitated launching of an immediate bilateral negotiations while in respect of "Watch list" countries, further developments were to be closely monitored. Countries placed in these categories lived with the possibility of trade retaliation by US. Special 301 was, in effect, a public law devoted to the service of private corporate interests. Its sole aim was to prod all countries, in particular, deviant developing countries, into accepting intellectual property rules by instilling into them a threat perception. The bilateral 301 action taken in the 1980's and early 1990's were part of a coordinated strategy that had a multilateral dimension viz. to secure the forms of conduct that US was seeking to obtain officially through the Uruguay Round. Certain instances of selectively designed action under Section 301 may be cited in this regard. Korea was making strides in the manufacture of semi-conductor chips and showing every sign that its market would remain beyond the reach of US knowledge companies. Brazil had attempted to turn the UN into a forum to re-examine critically the patent system. India had, for 30 years, led developing country's resistance to western business initiatives to ratchet up standards on intellectual property protection. All three became the subject of 301 investigations. The menacing success of this tool in forging the final Act can be gauged from the fact that the US has continued to use the 301 system aggressively, even after the WTO dispute settlement resolution system came into effect in 1995. Indeed, if anything, 301 has acquired a more machine-like efficiency in the post-TRIPS period as the WTO dispute resolution system has come to be treated as part of the US 301 processes. This has enabled the US to

I

4. PATENT LAW STANDARD-SE'TTING BY DEVELOPED COUNTRIES PRE-TRIPS 49

s u c c e s s f ~ ltransplant l~ a TRIPS-plus regime in many weaker countries such as, ~ordan. While the US government was, thus, firmly advocating the line of placing PR issues on the agenda of forthcoming GATT ministerial conference, it yet neded the crucial support of European &Japanesegovernments. This task was undertaken by the US business interests who, in March, 1986, created the intellectual Property Committee (IPC), an ad hoc coalition of 13 major US that described itself as "dedicated to the negotiation of a comprehensive agreement on intellectual property in the current GATT round of multilateral trade negotiations". IPC had to convince business organizations in other "Quad" countries (the US, the European Community, Japan and Canada) to pressurise their governments to merge IPR and trade. Thus, a massive US lobbying campalgn got underway to build an international business coalition that would pressure other governments to negotiate an agreement on IPR in the forthcoming GATT round. P C of USA set out to convince the leading business associations of Europe and Japan, UNICE and Keidanran respectively. As a result of IPC's consensusbuilding exercise, both European and Japanese industries put up pressure on their governments to place IPR on the trade agenda. Until the 7th Round, the GATT only applied to goods. It excluded services, investments and IPR's from its purview and contained broad exclusions with respect of agriculture. At the 8th Round of GATT Ministerial Conference in Punta del Este in Uruguay in September, 1986, a group of key Southern countries that included India, Brazil, Argentina, Cuba, Egypt, Nicaragua, Peru, Tanzania & Yugoslavia, predictably, resisted the US proposals on IPR. They argued that WIPO, not GATT, was the appropriate forum for the development of IPR standards, and that the trade dimension of IPR, because of its close connections to technology transfer and development, fell squarely within the trade and development remit of the UNCTAD. This blocking strategy had roved effective as long as there Was no unified push by the US and Europe. However, with the US and the European commission becoming increasingly united on the need for some kind of a code on IPR in the GATT, and with the US (and the EC to a certain extent) m n g up the heat bilaterally, developing countries were being given a choice bebeen a bilateral or multilateral negotiation. They were outgunned in the f o n e r and not collectively prepared for the latter. - Thus, the enumerated subjects for negotiation under the Punta del Este were not confined to the usual matters such as tariffs, non-tariff measures, textiles and clothing, but also included, for the first time, intellectual Property rights (eg. patents, copyrights, trademarks) under the rubric of "trade Mated aspects of intellectual property rights, including trade in counterfeit ~ ~ ~ " ( T R I PThus, s ) . the ground was laid for expanding the scope of the GATT

50

4. -

EVOLUTION OF PATENT LAWS

negotiations beyond inter-border regulation of trade in goods to the internal functioning of domestic economies. It was one thing to place IPR on the negotiating table and entirely another to achieve the outcome that the IPC wanted. Pfizer's Edmund Pratt said:

, I

"Having been successful in getting 'TRIPS' on the GATT agenda, government asked the US private sector to provide specific proposals for a n agreement, a n d to form an international private sector consensus to achieve it ........ The USTR was impressed [with the IPC] and suggested that w e increase our effectiveness internationally by joining forces with UNICE, the principal pan-European business group, and its counterpart in Japan, Keidanran".

The IPC, in the next two years, continued its systematic activation of international business networks by a process of coalition building. The message was that international business had to provide states with leadership on the IPR issue in the Uruguay Round negotiations. Ultimately, IPC wanted to present states with a model GATT intellectual property agreement in the name of the international business community. It knew that opposing a model bearing the approval of international business would be hard for any state. The IPC realized early on that the Uruguay Round of negotiations on IPC would have to be a contest of fundamental principles, principles that did not necessarily square with existing laws. The chair of the TRIPS negotiating group, Lars Anell, accordingly, made sure that the negotiators stuck to the game at the level of principles: "I said: 'this argument that we can't d o that because our own law does not allow it should be an argument you cannot use'. And it was after that not used again."

His gentle but strategic diplomacy was a velvet glove over the iron fist of US and European corporate power. O n 14th,June 1988, a joint statement, which was to have a decisive influence on the course of negotiations on IPR, was presented to GAIT Secretariat. Bearing the title, "Basic Framework of GATT Provisions on Intellectual Property: Statement of Views of the European, Japanese and United States Business Communities", it represented a multilateral blueprint for trade negotiators. The Basic Framework was in many ways the seminal document of the TRIPS negotiations. It was a declaration of principles of property wanted by big business for the global economy; it was a set of negotiating objectives for the USTR. When one compares the Basic Framework and the final TRIPS Agreement, one doesn't find any basic difference as regards the new patent regime. The three powerful business organizations had thus been able to\ensure their monopolistic rights fully. In the words of James Enyart of Monsanto:

j

PATENT LAW STANDARD-SE'TTING BY DEVELOPED ___ -- __- COUNTRIES PRE-TRIPS _ _ -_- _ -_ 51 -

"We went to Geneva where we presented [our] document to the staff of the GATT Secretar~at.What I have described to you is absolutely unprecedented in GATT, Industry has identified a major problem in international trade. It crafted a solutiori, reduced it to a concrete proposal and sold it to our own and other governments .....The i n d u s t r i e s a n d t r a d e r s of w o r l d c o m m e r c e h a v e p l a y e d simultaneously the role of patient, the diagnostician a n d the prescribing physician."

[Janzes Enyart - "A GATT lntellectlinl Property Code"1.

111.AT THE NEGOTIATING TABLE

i

The Uruguay Round of multilateral trade negotiations was a big tladc round organized into two broad groups: a Group of Negotiations on Goods (GNG) and a Group of Negotiations on Services (GNS), both of which reporteil to the overall Trade Negotiations Committee (TNC) chaired by Director-Genera1 of the GATT. GNG subsequently was divided into 14 negotiation groups for different issues. Group 11 was the one on TRIPS. The first of its many m/eetings began in March, 87. When it acquired the Basic Framework document in June 88, Group 11 moved ahead at full throttle having already gained a unity among the "Quad" countries. Only the Southern countries remained to he tamed. This would happen sooner than later. To their utter dismay, Southern negotiators making the long journey from the negotiations in Geneva back home found US negotiators waiting at their doorstep. At the same time, the GAIT Secretariat put relentless pressure on Southern countries through the "Green Room" process. In the 'Green Room' process, negotiators from all engaged countries face each other across the table and negotiate. Drafts are exchanged and progress is noted as differences are narrowed and brackets are removed in successive drafts. The Green Room process had, in the case of TRIPS, been profoundly shaped by the consensus-building exercise that the private sector had undertaken outside of the Green Room. After the negotiations on the details of TRIPS began in 1990 and especially after the breakdown of the Uruguay Round of talks at Brussels over agriculture in 1991, further groups were created within the TRIPS negotiations to move the process towards a final deal, most notably the "10 + 10"Group which consisted of a mix of developed countries. As the TRIPS negotiations descended into higher levels of informality, the "10 + 10"was contracted or expanded to "3+3" or "5+5" or a group of 25 depending on the issue. It was in these informal groupings that much of the real negotiation was done and where the consensus and agreement was obtained. A list of these groups in roughly their order of importance would be: 1. US and Europe 2 . US, Europe and Japan 3. US, Europe, Japan & Canada (QUAD)

52

4. PATENT LAW STANDARD-SETTING BY DEVELOPED COUNTRIES PRE-TRIPS 53

EVOLUTION OF PATENT LAWS

4. QUAD 'plus' (membership depended on the issue, but Switzerland and Australia were regulars in this group) 5. Friends of Intellectual Property (a larger group that included the QUAD, Australia and Switzerland) 6. "10 + 10" (and the variants thereof such as "5+5", "3+3") The US and European Community were always part of any such group if the issue was important. Other active members were Japan, Nordics, Canada, Argentina, Brazil, Hong Kong, India, Malaysia, Switzerland and Thailand. 7. Developing country groups (for example, the Andean Group Bolivia, Colombia, Peru and Venezuela; Argentina, Brazil, Chile, China, Cuba, Egypt, Nigeria, Peru, Tanzania and Uruguay combined to submit a developing countries draft text in 1990) 8. Group 11 (The entire TRIPS negotiating group -about 40 countries were active in this group). It was the first three circles of consensus that really mattered in the TRIPS negotiations. Through the use of these circles of consensus, the TRIPS process became one of hierarchical than democratic management. Those in the inner circles knew what TRIPS had to contain. They worked on those in the outer circles until agreement of all groups to a text had been obtained. TRIPS was much more the prerogative of the first three groups than it was of the last five. LDC's were not a part of any of the groups that mattered. It can be seen from the hierarchical list of groups that the US and Europe could move amongst all the key groups. This allowed them to soak up more information than anyone else about the various dimensions of negotiations. Whenever they needed higher levels of secrecy, they could transform into a smaller negotiating globule. The claim that theTRIPS negotiations were a model of transparency is difficult to defend. In truth, it was the transparency of a one-way mirror. This arrangement of groups also allowed the US and the EC the fluidity to build a consensus whenever and wherever it was required. For any contentious issue, they retreated to the bilaterals. This way, even though they were not able to always secure an arrangement between themselves, their disagreement did not derail the TRIPS process itself. It is also noteworthy that most states were ignorant about the likely economic effects of TRIPS. On the other hand, MNC's had better information about the strategic use of intellectual property portfolios (being private information) in various markets around the world than did most governments. During the negotiations, the developing countries continued to argue for a narrower interpretation of the Ministerial mandate on the negotiation of intellectual property. Breaking the resistance of these 'hardliners' was fundamental to achieving the outcome that the US wanted. Its 1988 Trade Act made

resisting the US in a multilateral forum part of the conditions that could lead to a country being identified as a Priority Foreign Country and therefore the of Special 301 investigation. There could be no clearer articulation of a threat than to enact it as a law. Thus, Special 301 was swung into action in the beginning of 1989. When the USTR announced the targets of Special 301, five of the ten developing countries that were members of the hardline group in the GATT that were opposing the US agenda found themselves listed for unilateral action. Brazil and India, the two leaders, were placed in the more serious category of Priority Watch List, while Argentina, Egypt and Yugoslavia were put on the Watch List. Opposition to the US GATT agenda was being neutralized through these unilateral measures. Simultaneously, at the other end, in the ongoing "Green Room" process, key dissenting countries were being hauled into small group consultations. The group grew smaller and the strain of resistance greater, so much so that Southern country negotiators began to refer them as "Black Room" consultations. Gradually, one by one, all the Southern countries began falling in line. The Berlin Wall (India) was the last to fall in April, 89. But the US agenda would remain unfinished till the final Act was signed. Towards that end, even after India's capitulation, the US continued to resort to unilateral strong-arm tactics against India. Tn May '89, the USTR named India and Brazil as "priority counties" under the Super 301. Within a week thereafter, five of the ten Southern country "hardliners" in the GATT, including Brazil and India, found themselves listed for bilateral action as they were placed on a more serious "priority watch list" under the special 301 provisions. These countries had allegedly failed to provide adequate patent protection for all classes of inventions. The USTR's action plans for these countries included "constructive participation in multilateral intellectual property negotiations". TRIPS was thus less a ne~otiation t h a n e of v r o c e ~ " . To increase the pressure on India, in April '91, China, India and Thailand were named as "priority countries" under Special 301. This meant that following investigation and negotiation, retaliation could be taken against India if she failed to comply with the USTR's demands. Despite this strong arm tactics of USf hdian government still refused to negotiate with the US under the threat of retaliation. In the meantime, on its own, Indian government initiated its much applauded and epoch-making economic reforms in July '91 whereunder, inter alb. restrictions on foreign trademarks were removed. Nevertheless, the USTR whliated against India by suspending duty free entitlement of US$60 million Worth of pharmaceutical imports from India under the GSP under GATT. By h e . 92, US$ 80 million worth of pharmaceuticals imports from India were adversely affected by the suspension of GSP. The "Super 301" and "Special 301" .' b s t i g a t i o n s that India was subjected to was an assault on the country's iiig7ps

--

i

EVOLUTION OF PATENT LAWS

4. PATENT LAW STANDARD-SETTING B Y DEVELOPED COUNTRIES PRE-TRIPS 53

-

sovereign right to determine its own laws and policies and constituted unconscionable pressure to capitulate further in the GATT negotiations. On 15th September, 1993, the final sessions concluded in Geneva and the Director General brought his gavel down on seven years of Uruguay Round negotiations. On 15th April, 1994, the ministerial meeting at Marrakesh, Morocco, ratified the result of the Uruguay Round. Even before India had formally signed on the GATT treaty that included TRIPS, she had begun to introduce legislation which would amend the existing Indian laws in compliance with the requirements of the Final Act. In April, 1994, the Government privately circulated a draft Plant Variety Protection Act which would create sui generis protection of plant varieties in compliance with the TRIPS Agreement. In June, 1994, the Government passed the Copyright (Amendment) Act, 1994 in compliance with the TRIPS Agreement. In Septcmber, 1994, the government issued a New Llrug Policy which significantly reduced the types of drugs under price control. Ultimately, the government promulgated an Ordinance amending the Patents Act, 1970 on December 31, 1994.Thus, the government was in the process of amending existing Indian laws even before the Final Act was scheduled to come into force by January lst, 1995.

IV. THE PUZZLE OF TRIPS It is indeed amazing how more than one hundred nations had signed an agreement that was arguably not in their interests. It will be useful to analyze its reasons so as to serve as a useful guidance for future negotiations. The most important reasons are being summarized hereunder: a. Most importer nations were not in the room when the important technical details were settled and the deals were done. The WTO formally meets the conditions of equal democratic representation for all states, but the informal reality was that most states were not represented until the virtual fait accomyli of a Chairman's draft was being put on the table. b. Most states did not have a clear understanding of their own interests or were misinformed. Without intellectual property experts on their WTO delegations, they could not have understood the implications of TRIPS - for instance, of 20-years old patent terms on pharmaceuticals -even if their representatives had been in the room. TRIPS had all the transparency of a one-way mirror, with only the US and EC knowing exactly what was going on. c. Most nations were threatened by US trade power. US strategy proceeded as follows: first, use threat of trade sanctions to negotiate strategic bilateral agreements one by one -place particular emphasis on knocking over the most likely opponents to your favoured multilateral deal; next, go into the multilateral negotiations having

/

made certain terms of the favoured multilateral deal afizit accol?~plithe multilateral agre.ement then pulls those not subject to bilateral agreements up as far as thenew standard; next, return to a new round of bilateral negotiations to begin a new cycle of raising the bar. This whole process, perfected by now, is being pursued by US till this date. For example, having failed to rule out parallel importation and weaken compulsory licensing in TRIPS, the US is now aiming at these goals in its new round of bilateral negotiations. The US is also seeking to short-circuit the TRIPS transitional arrangements for Southern countries by persuading them bilaterally to implement all the TRIPS obligations earlier than required. d. The organized consumer movement was not active in lobbying against TRIPS when it counted, in the late 1980's and early 1990's. Diffuse public interests tend to be unrepresented because the cost to individuals of organizing in large groups are not matched by the small gains for each individual. Producer interests were decisively more organized than consumer interest. , e. Even within a country, noises of a perceived gain on a tangible matter effectively drowned muted voices of dissent about significant losses on intangibles (IPR). For example, in a deal in which Australia got agricultural export benefit and the US got IPR, there were loud voices for the agricultural deal, while those who would lose from IPR were silent. Agriculture was seen as a here-and-now priority, IPR a long-term matter with uncertain structural effects. f. Pro-TRIPS interests were concentrated while anti-TRIPS interests were so diffuse that they generally did not even recognize their interests until after the horse had bolted. The carrots and sticks arranged by intellectual property-owing interest involved short-term incentives, while the cost' TRIPS would impose seemed (and often were) much further in the future. g. Once a majority of states had decided to jump on the TRIPS bandwagon, any country holding out faced the worrying risk that foreign investors would brand them as hostile to innovation-based investment. Pharmaceutical companies began signalling that they were mainly interested in investing in states that supported standards even higher than TRIPS - such TRIPS-plus standards included patent protection of more than the 20 years guaranteed by TRIPS. States began to compete with one another to show that they were committed to TRIPS, to TRIPS-plus, and to extravagant enforcement gestures directed at "pirates".

5. PATENT LAW STANDARD-SElTING BY DEVELOPING COUNTRIES

PATENT LAW STANDARD-SETTING BY DEVELOPING COUNTRIES PRE-TRIPS & DURING TRIPS NEGOTIATIONS In order to appreciate the efforts and impact of developing countries in setting intellectual property standards, in particular, the patent agenda, it would be proper to analyse their role over a wider compass since patent agenda was not insulated from debates raging elsewhere such as trade in goods, services or investment measures etc.

I. PRE-TRIPS PERIOD

,

During the pre-world War 11days, the transplanting of IPR laws in developing countries was an outcome of empire-building and colonization. Thus, in parts of pre-independent Malaysia, it was English Copyright law that applied. The Philippines being a Spanish colony, Spanish patent law applied there. The direction of Korean patent law was affected by military conflict. Thus, while in 1910, Japanese replaced Korean patent law with their own, in 1946, Korea acquired another patent law as a consequence of US military administration. Evidently, these foreign patent systems were alien to the local requirements. After World War 11, many developing countries became independent states. Some of them began to review the operation of the intellectual property systems that had been left to them by their colonizers. So, for example, after India's independence, two expert Committees conducted a review of the Indian patent system. They concluded that the Indian patent system had failed "to stimulate inventions among Indians and to encourage the development and exploitation of new inventions". At the same time, related developments were taking place on the wider international economic scenario, which directly or indirectly did affect the process of IP standard-setting. These standard-setting processes most often remained within the domestic borders of developing countries and seldom affected the multilateral forums. A brief survey of these related developments will now be taken up. Historically, since the days of International Trade Organisation (ITO) charter negotiations, the developing countries have been clamor~ringfor some special exceptions to the international trade law regime. Although, in the GATT,

57

1947, there was no formal recognition of developing countries in the original contracting parties of the GATT, yet, over time, the developing countries have been recognized as a separate group for the purposes of implementation of international trade law regime. The reasons are not difficult to find. The principles of tariff reductions, non-discrimination and reciprocity in the GATT, 1947 was conceived on the presumption that the world was essentially homogeneous, composed of countries of equal strength and comparable economic development. Yet, the real world of international trade comprises of countries with varying and diverse levels of economic development and vast differences in economic and social systems. When GATT was established in 1947,ll of the original 23 Contracting Parties would have been considered as developing countries. The developing countries had all along been opposing an imposition of uniform trade policies arguing that it would not promote their industrialization and development. In fact, the Herberler Report, 1958, which was an outcome of GATT, 1957 Ministerial Meeting, concluded that, "there is some substance in thq disquiet among primary producing countries that the present rules and conventions about commercial policies are relatively unfavourable to them". With the establishment of UNCTAD in 1964 as the chief spokesperson of less developing countries in matters of trade and other economic policy matters, the less developing countries' clamour for more favorable and preferential treatment got a boost in 1974 when the UN adopted two major resolutions, one calling for the Establishment of a New International Economic Order and the Programme of Action on the Establishment of New International Economic Order and the other declaring a Charter of Economic Rights and Duties of States. TheNew International Economic Order (NIEO)conceived a variety of strategies to be introduced in international trade and economic relations. For the present Purpose, two major issues were -one, the right of countries for expropriation "d h o , the principle of preferential and non-reciprocal treatment. Thus, under NIEO, principle of economic equality of status was corrected so as to include preferential treatment for developing countries, in other words, a protective discrimination. Earlier, the international economic order as conceived in the GATT was 'developed countryf-centric and unfavourable to less developing countries' wonomies. UNCTAD used the paradigm of NIEO and was instrumental in making the policy makers in GATT to realise the emergent needs of developing corntries in the overall future GATT negotiations. In this overall conducive ahosphere, India's new patent law was passed in 1970. This law followed the system of allowing patenting of methods or processes that led to drugs, but not allowing the patenting of the drugs themselves. Patent-protection for pharmaceuticals was granted for only 7 years as opposed to 14 years for other inventions. This law laid the foundation for a highly successful Indian generics

5_8-_

EVOLUTION OF PATENT LAWS __ ~-

--

indl~stry.India was not the only country that began to reform its patent law. iluring the 197OPs,Brazil, Argentina, Mexico and the Andean IJact countries, all passed laws that saw patent rights in the pharmaceuticals area weakened. Lkveloping countries' manufacturers also became a threat to the western pharinaceutical cartels that had dominated the international pharmaceuticals industrv. Mexico's entry into the manufacture of steroids in the 1960's. for example, contributed to the end of the European cartel that had dominated production till then. Developing countries, in adjusting their intellectual property laws to suit their national interests, were only doing what they had observed developed countries doing. The case of UK provided an example for replication. In 1919, UK had changed its laws to prevent the patentability of chemical compounds in order to overcome the might of German chemical industry. In fact, a study undertaken by WIPO in 1988 revealed that of the 98 members of the Paris Convention, 49 excluded pharmaceutical products fromprotection, 45 excluded animal varieties, 44 excluded methods of treatment, 44 excluded plant varieties, 42 excluded biological processes for producing animal or plant varieties, 35 excluded food products, 32 excluded computer programs and 22 excluded chemical products. Thus, despite an oblique pressure from Paris Convention, developing countries had adopted different standards of patent regime, as suitable to their local requirements and developmental needs. They were, accordingly, able to resist international pressures in setting u p a domestic intellectual property agenda. During the 1960's and 19701s,developing countries began to raise certain important questions about the international standards of intellectual property . that had emerged in previous decades, particularly, in relation to the two main conventions, the Paris Convention and the Berne Convention. The theme of these questions was always the same. Were the international standards tilted too far towards the appropriation of knowledge rather than its diffusion? Developing countries sought adjustments to both the international copyright regime and the international patent regime. However, despite the positive role of UNCTAD throughout and the persistent efforts of developing countries towards a revision of prevalent intellectrlal property regime, in particular, to facilitate the transfer of technology and enable them some control over the affairs of MNC's, the results were not encouraging. By way of illustration, consider the following key events in the history of intellectual property standard-setting: The attempts to modify the Berne Convention to take into account the educational and developmental needs of countries in the field of copyright during the 1960's and 70's failed. The Stockholm Protocol never came into force and the Appendix to the Paris Act of Berne produced no real improvement in access to copyright materials.

5. PATENT LAW STANDARD-SETTING BY DEVELOPING COUNTRIES

59

Attempts by developing countries to change the compulsory licensing provisions of the Paris Convention during the 1970's failed and the negotiations concerning the Convention came to an end during the 1980's. Even as the Patent law in the main patenting jurisdictions (U.S.,Japan and European Union) steadily expanded to meet the needs of large industry players concerned with the industrial application of biological science, the use of compulsory licence as a regulatory tool had become harder rather than easier. The failed Paris revision process thus marked theend of anera of lowering or weakening international IPR standards. From this time on through the end of TRIPS negotiations, developing countries remained on the defensive. The work by UNCTAD on the Code of Conduct for the Transfer of Technology which had begun in 1976came to a halt in the mid-1980's. Work on the UN Code of Conduct for Transnational Corporations which had begun in 1975 eventually grounded to a halt in 1993.

11. DURING THE TRIPS NEGOTIATIONS This section focusses on certain key events and processes taking place both inside and outside the TRIPS negotiating group and attempts to draw lessons from this analysis for the developing countries. As already discussed earlier, an important US goal in launching a new round of trade negotiations was the effective integration of developing countries, which were becoming increasingly competitive in both traditional and high technology products, into the multilateral trading system. This goal meant that these countries should give up "special and differential treatment" and increasingly adopt "reciprocity" as a basis for trade concessions. Taking advantage of the broad mandate of the Preparatory Committee set UP inGATT in November 85 for a new round of multilateral trade negotiation,, the US and Japan tabled proposals in early 1986to include IPR's such as patents, trademarks, copyrights and trade secrets and did not confine themselves to counterfeit trademarked goods. These proposals were vehemently opposed by developing countries that were, at that time, even opposing GATT's competence over trade in corinterfeit goods. By Punta del Este, the twenty-five 'hardliner1 developing countries of mid-1985 had shrunk to only ten. This group ten Put up an alternative proposal, to exclude all new areas inclriding 1IJR's Uruguay Round negotiations, which received little support. With mounting pressure from its industry, the US government persisted On obtaining significant achievements on IPR1sin the new round. Against this, there was stark failure to effectively counter or even dilute such TRIPS proposal by the developing countries. They could have, at this stage or later, attempted

EVOLUTION OF PATENT LAWS

5. PATENTLAW STANDARD-SETTING BY DEVELOPING COUNTRIES

---

to link the progress of negotiations on T R I E to progress on another clearly difficult North-South issue viz. Agreement on Textile and Clothing (ATC). The failure to exercise such linking during negotiations had adverse consequences. So, while the developed countries agreed under the ATC to phase out their quotas on the most sensitive items of textile and clothing on the last day of the 10-year transition period, developing countries accepted the phasing-in of product patents for pharmaceuticals, the most sensitive issue inTRIPS, on the first day on the 10-year transition period. Thus, two non-reciprocal results were obtained despite the fact that the transition period for TRIPS, like that on textiles, was negotiated at the same time i.e. end of 1991. At the GATT meeting of trade ministers at Punta del Este in Uruguay in September, 1986, a declaration to launch the Uruguay Round was adopted. Part I of this declaration, on the negotiations on trade in goods, contained a decision to launch negotiations on TRIPS, including trade in counterfeit goods. The deadline for these negotiations was set for December, 1990. Many developing countries agreed to this text, believing that they could limit the negotiations primarily on trade in counterfeit goods and other such trade-related aspects. This was a misreading not only of the text but also of the writing on the wall. Clearly, the negotiations were aimed not only at clarifying GATT provisions but elaborating, 'as appropriate', new rules and disciplines. Significantly, in the very first paragraph, developing countries agreed to take into account 'the need to promote adequate and effective protection of IPR's', a language that would ultimately lead to the incorporation of minimum standards on a wide range of IPR's in TRIPS. The language in the second paragraph on trade in counterfeit goods was more specific 'to develop a multilateral framework of principles, rules and disciplines'. The third paragraph only stated that these negotiations were without prejudice to complementary work at WIPO or elsewhere. This language was a concession to the insistence by developing countries that WIPO was the right forum to discuss these issues. By this time, developing countries had conceded that the subject of counterfeit goods could be discussed at GATT. From early 1987, when formal negotiations in the Uruguay Round began, the TRIPS negotiations were meant initially to consider each element of the Punta del Este declaration: identification of the relevant GATT provisions, examination of matters relating to trade in counterfeit goods and the collection of information from relevant international organizations. However, the mandate for subsequent phases of negotiation included the tabling of specific suggestions and texts by participants so as to establish a common negotiating basis. This resulted eventually in the inclusion of all major IPR's in the final TRIPS Agreement. In the TRIPS negotiating group, developing countries blocked discussion of substantive issues on IPR's, other than counterfeit goods, on the ground that

/

61

onlythe trade-related aspects of IPR's were mandated to be discussed. Brazil and h d i a are widely credited with leading the opposition to the discussion of norms and standards of intellectual property in these early days of TRIPS negotiations. These countries insisted that only WIPO had the competence to discuss substantive matters on the subject of IPR's. They pointed, in to sub-sections (iv) and (v) of section B of the 1986 Ministerial Declaration that reiterated the principle of differential and more favourable treatment for developing countries and, further, prescribed that less-developing countries need not make concessions that are inconsistent with their developmental, financial and trade needs. Later, in the Uruguay Round negotiating process and, more particularly, in the TRIPS negotiations, developed countries' conceded differential treatment mostly in terms of flexible implementation schedules, with longer time periods for least developed relative to developing countries. These procedural arguments on mandate and forum stalled negotiations on substantive issues on TRIPS through 1988. Developing countries were, however, not united in their opposition: Korea and ASEAN countries abstained kom>ny open attacks on provisions which favoured developed countries. This was principally a result of unilaterally determined threats of trade sanctions by the US. With the opposition splitted, the objections raised by India and Brazil &%t make any headway. As a part of the mid-term ministerial review of the Uruguay Round, , w u l e d for the end of 1988 in Montreal, a text had to be prepared on the w e r course to be set for each negotiating group. For this, four alternative texts - by Sweden, Brazil, US and Switzerland - were forwarded to the qdpkters in Montreal but no decision could be reached there. However, an @portant development took place -Brazil abandoned its opposition to a text similar to the one finally adopted. It was ultimately left to the Trade Negotiations Committee meeting in Geneva in April, 1989 to resolve differences on TRlff along with other contentious areas. In the meantime, the national positions of leading developing country opponents were softened through consultations at the bilateral level. -:: m e ~ ~ r 1989 i l , text, also called the Ozal text, signalled a significant victory f s f i e US and other developed countries as all the parties agreed that negotiations Would encompass the provision of adequate and effective standards for Worcement of and dispute settlement on IPR1s.Although the prefix 'trade*ted'continued to be used with IPR's, it was far from clear from the proposals %&table as to what non-trade related IPR's were. Developing countries were given transitional arrangements (i.e. time derogations) to adhere to the RNlts of the negotiations. Unfortunately, developing countries missed an $portant opportunity to bargain for a sufficiently long transition period, in for conceding the inclusion of standards and a similar transition ;

EVOLUTION OF PATENT LAWS

period on textiles. As a further concession, there was also an agreement to give 'consideration' to developmental and technological objective underlying the national systems for the protection of IPR's. However, considering that both the US and EC submissions of 1987-88 had already argued that strengthened IPR protection was the key to attracting foreign technology and investment and to economic development, this did not seem to hold muchpromise for developing countries. Further, developing coontries gave away on crucial points such as inclusion of substantive standards without even trying to extract any concrete assurances either on limitations on IPR's, on transitional periods or even on the forum for lodging the final agreement. This can be attributed to both poor negotiating tactics and to the fear of US trade reprisals. This 1989 text laid the framework for the final stages of the TNPS negotiations. India played an important role in finalizing the April, 1989 text for which the Government of India received fair amount of criticism at home. At this time, business interests in India were sharply divided, with industry associations dominated by MNC's demanding amendments in India's patent laws and others rejecting any suggestion of India even joining the Paris Convention. Beginning from July '89 till December '90, TRIPS negotiations made quick progress During this period, while accepting the inclusion of IPR norms and standards in the negotiations, developing countries restated their preference for lodging the agreement in WIPO. In retrospect, it appears that some developing countries paid more attention to the forum-aspect than in taking coordinated positions on substantive norms and standards of IPR's. Although there was no I institutional mechanism for coordination of developing country positions in GATT, unlike in UNCTAD or WIPO, informal coordination would still have been possible for countries with similar interests. It appears that, by this time, many had already resigned themselves to the acceptance of standards being demanded by developed cauntries, on account of unilateral pressures of Section 301 provisions, and were only hopeful of keeping the resulting agreement outside the GATT. India was the first developing country to state its views on each substantive issue raised by developed countries. Through a detailed submission made in July, 1989, India signalled that even while agreeing to discuss the substantive matters under IPR's, only restrictive and anti-competitive practices of IP owners could be considered 'trade-related'. Other IPIZ matters should be left to sovertlign governn~ents to decide according to their technological and developmental ; pr~oritiesPatents, India argued, are linked to critical developmental priorities I such as food production, poverty alleviation, nutrition, health care and disease : prevention. During this period, other developing countries such as Korea, Peru ; & Brazil also made written s~lhmissionsarguing for a balance between rights and obligations of IPR owners.

1

-

5. PATENT LAW STANDARD-SETING BY DEVELOPING-COUNTRIES _--_ 63

Developed countries, too, responded with different yet sim~lartexts, individually by EC, US, Japan and Switzerland. ~t this stage, one of the problems faced by developing countries was an merit on a detailed common text that effectively countered the texts put agree forth by developed countries. With help from UNCTAD Secretariat and coordination amongst some Geneva-based developing country delegations, the famous 'Talloires text' was produced. This text -W/71, filed in May, 1990 and sponsored by fourteen developing countries, separated the discussion on trade in counterfeit and pirated goods from other IPR's, a distinction that followed fromearlier positions of developing countries. The preparation of this common text already revealed fissures in the ranks of developing countries, with some countries reluctant to take a hard line. By this time, many Latin American ~ountries,particularly, Brazil, Mexico & Chile, were already liberalizing their trade and investment policies, mainly due to unilateral US pressures. Thus, there was a marked lack of fervour by 1990 on the part of Latin American countries in pursuing earlier stated negotiating objectives, even though the): contigued to take the same formal positions. This lack of coherence revealed itself in their formal stands which lacked clarity. Thus, the text of W/71 was far too general against detailed texts presented by developed countries. There was no realistic assessment of negotiating objectives to coordinate positions on each substantive issue. There was no agreement, for instance, on a common term of protection to patents. The need ofthe hour was the ability and foresight to present a common draft of developing countries. This, however, required a two stage effort - one, finalizing national positions by hammering an accord among diverse economic interests and two, adjusting these national positions so as to suit the other plurilateral interests beneath the developing countries' umbrella. Further, it also called for greater technical expertise, time and coordination which could have been made available by active domestic business forums. AS a result, W/71 could not form a sound basis for negotiations whereun-

&r developing countries could demand limitation on IPRs, reasonable transition periods or moderation of the more extreme demands. Yet, W /71 laid a solid foundation for negotiating Articles 7, 8, 27, 29 and 40 of TRIPS. ~ r t i c l e s7 and 8r laying down Objectives and Principles, form an important interpretative tool wherever TRIPS provisions are ambiguous or silent. Under Article 40, granting to control anti-competitive practices in contractual licences pertaining topR's, developing countries wrested a landmark concession from developed for the first time in a binding treaty. The draft of the TNPS Agreement Was drawn up by an informal drafting group of 'ten - plus - ten' i.e. ten developed and ten developing countries, in the second half of 1990. The following Crucial stage of negotiations exhibited a few less skilled negotiators from doreloping countries pitted against a larger group of skilled negotiators. An

64

EVOLUTION OF PATENT LAWS

important contribution was made by India when developed countries were converging to a more restrictive US position of confining compulsory licences to cases of adjudicated anti-trust and declared national emergencies while allowing for more liberal standards on government non-commercial use. This was altered so that there was to be no restriction on the available grounds for such measures, both in cases of government use and compulsory licences of patents. Thus, from November, 1990 onwards, the successive TRIPS texts did not refer separately to non-voluntary licensing and government use but used the broader term 'other use without the authorization of the right holder'. By insisting on the same set of conditions for both types of non-voluntary use of patent rights, the Indian negotiating tactic forced some dilution of conditions and achieved considerable flexibility for developing countries in having no restrictions on the grounds of such authorization. At this stage, the negotiations were carried forward in December, 1990 to Brussels, in order to tackle the remaining issues. Here, the developing countries conceded, with fairly little debate, to extend the patent term of all the existing patents, as on the date of application of TRIPS, to twenty years. Negotiations continued on the unresolved issues through March, 1991 but it went into a high gear from September '91 till the conclusion of the negotiations in December, 1991. Before the end of 1991, important politically sensitive issues on patents, such as scope of protection, patent rights, exceptions allowed, compulsory licensing and government use, term of patent, reversal of burden of proof, transition period and test data were settled, at the official level, by the Chairman, throughextensive consultations with interested delegations. Having effectively isolated India through the successful use of Section 301 on others by US, developed country negotiators obtained their demands on this set of issues, although intra-North differences did help in retaining some flexibility, particularly on patent exclusions, compulsory licences and on burden of proof. After this point in the TRIPS negotiations, the activity shifted from delegations to the GATT Secretariat and to the Chairman of the TRIPS negotiating group. There, in December 1991, the infamous Dunkel Draft was prepared. It was a 'no-options' text as all options were dropped. As a result, the final text was not very different from the Dunkel Draft. During the last two years preceding the finalisation of text, not much of great significance was actually achieved by the developing countries. This was because once the negotiating mandate had been set at Punta del Este, developing country negotiators had the choice of either obstructing the TRIPS negotiations and preventing consensus or engaging constructively to get the best possible result. The risk they faced with the obstruction strategy was that they could be marginalized in the finalization of the text. The risk they faced with the constructive strategy was that, even if they overcame the immense problems of technical expertise in these areas, they would concede too soon, thus raising

5. PATENT LAW STANDARD-SETTING BY DEVELOPING COUNTRIES /

65

spectre of demands being pitched even higher. Eventually, while developdid begin by obstructing TRIPS at the initial stages, they engaged % insome constructive negotiations during 1990-93 and obsequiously accepted the developed countries' position on significant issues towards the end. This surrender was perhaps related to other developments such as collapse of Berlin waU, the breaking up of the former USSR and US victory in the Gulf War. These factors certainly made it more difficult, psychologically, for developing countries to oppose the US, which was by the end of 1991, a formidable and the only global super power. Thus, Hoekman and Kostecki (1995)are correct in holding that the principle of consensus used for decision-making in G A n , and now in WTO, in fact, means the absence of express dissent by those present in the negotiations. A reia ted cause for this state of passivity was that the developing countries did not develop adequate mechanisms for consulting with civil society and business interest groups during the negotiating process, leading to subsequent difficulties in TRIPS implementation. Added to this was the further structural reality of these various developing countries falling in different zones of the development rainbow so that there was little unity of interest to strive for on specific issues. Yet, there was certainly a commonness as regards the need for a reasonable transition period for adaptability but, no compromise solution could be achieved even here. As a result, developing countries had, in later years, difficulties in accepting many changes introduced by TRIPS to existing national standards of protection and enforcement of IPR's. Changes in provisions concerning pharmaceuticals, chemicals and biotechnology evoked the greatest resistance. Some large developing countries with some imitative capacity in these sectors feared that new, innovative and more effective products and technologies would become inaccessible to the vast majority of consumers or users if product patents were Permitted in these sectors. These countries had entrenched domestic interests pr&ucing and profiting from credible equivalents of products produced by Patent-holders elsewhere. For instance, in India, the pharmaceuticals scctor Comtituteda powerful lobby. Some developing countries experienced problems in implementing the T m ~ b l i g a t i o n to s accept product patent applications for pharmaceutical and agricultural chemical inventions by the January, 1995 deadline. This was par%brly true of the three "hardliner" countries in the early phases of negotiahomviz. Argentina, Brazil and India. To minimize the perceived disadvantages such patent protection, the underlying negotiating objective of some of these developing countries was to ensure as great a flexibility as possible in imposing limits to the rights enjoyed by such patent holders and to have fairly long transitional periods for implementing these obligations. In the end, TRIPS does flexibility in defining patentability criteria, in defining and targeting

I

I

I1 t

I

I I I 1 "

I

;

,

1

1

1

I

I

~

II

I

'

EVOLUTION OF PATENT LAWS

5. PATENT LAW STANDARD-SETTING BY DEVELOPING COUNTRIES

abusive use of patents and in imposing price controls or other measures necessary to protect public interest, but the transition period allowed was effectively reduced to zero for these sensitive sectors. While certain developing countries which did not yet have product patents, were to get ten years to comply with patent provisions, in the most sensitive sectors viz. pharmaceuticals and agricultural chemicals, in effect, they didn't get even one day's transition period as they had to begin accepting such product patent applications from the date of entry of the WTO Agreement, viz. by 1 January, 1995. Developing countries could, in the hindsight, have taken advantage of the differences amongst developed countries to form alliances on separate issues even at earlier stages, as they attempted to do between 1990 and 1993. A more effective strategy of counter proposals or 'linking' proposals to other areas in the Uruguay Round could have at least limited or countered developed countries' ambitions at theearly stages of the negotiations. These linkages were indeed made by developing countries between agriculture and TRIPS. Had such linkages been made more effectively between TRIPS and textiles at the preparatory stages of the Uruguay Round and continued at Punta del Este, at the mid-term review and, particularly, on parity on the transition periods, at the end of 1991, the results may have been more equitable. Thus, a clear failure to synergize their individual strategies into a coherent force resulted in a situation where "developing cotintries are largely left to ptirstie their agendas zvithin the interstices of an 1P paradign~donzinated by the U S and EU" (Drahos). There were many reasons for the lackof unity among developing countries at the TRIPS negotiations, some of which are: the absence of any formal coordinating mechanism such as G-77 in GATT; the effective use of Section 301 and other bilateral means by the US to obtain key concessions and win the silence of major developing countries; the differing expectations of gains in other areas of the Uruguay Round, notably agriculture and textiles; the expectation of gains in attracting FDI through unilateral liberalization of trade and investment policies, of which strengthened protection of IP was considered an essential component; the diversity in legal systems and specific intellectual property laws. However, developingcountries did attempt, both prior to Brussels meeting and after it, to participate constructively in the TRIPS negotiations. However, this constructive engagement was attempted in a random way. They did make issue-based alliances on parallel trade, compulsory licences, biotechnology and non-violation. They exploited weaknesses and inflexibilities in US law and

practice on government use of patents and made timely concessions, such as on conditions of compulsory licensing inexchange for the larger benefit of freedom as regards availabilitv of grounds for invoking such licences. A comparison of the July 1990 text, Brussels text and the final text will show that much of the progress was made by developing countries from the second half of 1990.With the support of key developed countries, some limits to IPR's were introduced into the TRIPS text. Also, on some occasions, developing country negotiators helped constructively to move the negotiations forward, thus gaining credibility in the group. Given the relatively united assault by the North against the largely weak . and divided South, the achievements of developing countries in maintaining a certain balance between public interest and strengthened IP protection were small but yet significant. Their main contribution is reflected in Articles 6,7,8, 13,29,30,31,32,40 and 41. Of these, the freedom on grounds and the flexibility on conditions allowed under compulsory licensing can be considered to be the most substantive advantage gained by them, despite not achieving their demand on 'working' of patents. In the final analysis, while TRIPS has substantially strengthened intellectual property protection, it has also allowed some crucial limits to such protection, giving developing countries the flexibility necessary to bring about some balance between protection and use of IPR's. Developing countries have to now strive to defend the hard-won negotiating victories in future Ministerial meetings as well as attempt to gain same favorable interpretation of existing provisions of TRIPS in the light of its Objectives and Principles.

I

67

6. BASIC FRAMEWORK OF TRIPS AND ITS IMPLICATIONS

BASIC FRAMEWORK OF TRIPS AND ITS IMPLICATIONS In this Chapter, it is proposed to discuss the salient features of patent regime under TRIPS Agreement. As the operational details of the mandate of the Final Act, '94 are still being worked out in the biyearly Ministerial Conferences, a look at the Doha Agenda of 2001 is quite relevant. With this background, it would be easier to appreciate the subtle moves by US at getting TRIPS-plus benefits, both by bilateral treaty making as well as parallel negotiations under the original and respectable forum that WIPO was which will be dealt with in Chapter 12.The recent efforts by developing countries, notably Brazil and India, to cut down on their losses will be examined in Chapter 13. TRIPS has rightly invited opprobrium from public interest groups all over the world. Its adverse consequences, therefore, will be looked into in Chapter 8. However, what is of a greater significance is that despite the best efforts of developed countries, TRIPS still contains a number of redeeming features, beneficial for the developing countries. This aspect is proposed to be examined in Chapter 9. In fact, US and other developed countries seem to be worried on this count which explains US'S moves at a second forum-shifting, this time from GAIT to WIPO. The developing countries, however, have been unable to take advantage of such provisions due to an inadequate knowledge as also a lack of political courage to d o so. This aspect will, therefore, be critically examined in Chapters 9 and 10.

I. SALIENT FEATURES OF PATENT REGIME UNDER TRIPS (a) Preamble It sets the tone for the substantive provisions which are to follow. It accords primacy to 'individual rights' over 'community rights', as it expressly recognizes IPR's as private rights though elsewhere such rights are promoted so as to reduce distortions in the international trade. So that different nations mayn't treat such rights differently, it recognizes the need for a multilateral framework of principles for working as well as for settlement of disputes. In order to please the developing nations, it recognizes "the underlying public policy objectives of national systems for the protection of intellectual property, including developmental and technological objectives". This can be availed by the nation states to uphold their constitutional provisions while changing the patent laws to accord with the TRIPS Agreement. In passing, the "special needs of the least

69

developed country Members", who anyway don't pose any competition to the developed nations, have been recognized. (b)Ceneral provisions (Articles 1 - 6) It lays down minimum standards for protection of IPR while exhorting the members to grant higher levels of protection. Even though many countries are not yet members of the Paris Convention, according to Article 2 of the TRIPS Agreement, "the members shall comply with Articles 1 through 12 and Article 19 of the Paris Convention (1967)". This automatically brings all the Member countries within the framework of the Paris Convention. The Final Act of 1994 and Marrakesh Agreement are based on TRIPS and "Convention plus" approach. This means that the TRIPS Agreement incorporates the existing provisions of all the four Conventions relating to IPR's (the Paris Convention, the Berne Convention, the Rome Convention and theTreaty on I.P. in respect of Integrated Circuits). These provisions clearly amplify the designs of the MNC's who conceived and shaped the global and monopolistic IPR system in the TRIPS Agreement. Equality before law is sought to be achieved by "National Treatment" (Article 3) - foreigners to receive "no less favourable" treatment than own nationals and "Most-Favoured-Nation Treatment" (Article 4) - privilege granted to any foreign member is to be granted to all, immediately and unconditionally. (c) Objectives and Principles (Articles 7 and 8 ) These two articles form an oasis, capable of spreading its own boundaries, of laudable objectives and principles. Thus, Article 7 recognizes the societal needs of promotion of technological innovation and transfer and dissemination of technology. Further, Article 8 expressly accords protection to public health and nutrition and promotion of socio-economicand technological development in other vital sectors. It also recognizes the need to prevent the monopolistic and restrictive practices in relation to IPR practices. Taken together, these two articles may provide an effective bulwark against other substantive provisions such as Section 5. They are, therefore, quite relevant for safeguarding public interest effectively. . /

(d) Scope of Patentability When the Uruguay Round started, there were many countries that did not confer product patents on chemical and pharmaceutical products and, therefore, it was the central aim of US and other technologically advanced countries toextend the scope of product patentability to such products globally. This was achieved under Article 27(1), which accorded patents to both products and Prmesses for any invention in all fields of technology provided they satisfied 'he triple conditions of novelty, inventive step and industrial application. This WaJ. indeed, a landmark capitulation by the developing countries in favour of Patentees of transnational corporations.

70

EVOLUTION OF PATENT LAWS

-

Further, as per Article 27(3)(b),protection was extended to: Micro-organisms; Non-biological and micro-biological processes and Plant varieties either by patents or by and effective sir1 generis system or by any combination thereof. Thus, the scope of patentability has been extended to the entire industrial and agricultural sectors and also to the life forms. No flexibility is available to any country to exclude certain vital areas of economy from the scope of patentability in the domestic laws.

I

I I

(e)Non-Patentability Article 27(2)specifically provides for the following exclusions from patentability: commercial exploitations of inventions prevented by the Member countries within their territory (i) to protect ordre public or morality, including to protect human, animal or plant life or health; or (ii) to avoid serious prejudice to the environment; provided that such exclusion is not made merely because the exploitation is prohibited by the law. Article 27(3) also excludes the following from patentability: diagnostic, therapeutic and surgical methods for the treatment of humans or animals; plant and animals (other than micro-organisms); and essentially biological processes for the production of plant or animals (other than non-biological and microbiological processes). The conditions for exclusion under Article 27(2) to protect ordre ptiblic and serious prejudice to environment are quite complicated ones and in legislating on these aspects special care will have to be taken by the Member countries to make them really effective. (fl Invention not defined The TRIPS Agreement does not define 'an invention' leaving Member countries free to draw the line between non-patentable 'discoveries' and actual 'inventions' in the biological field. It is necessary, therefore, to provide in national laws that substances found in nature, changing of dosage form, usage form and new combinations as such should not be categorized as 'inventions' for grant of patent protection.

(g) Working of Patents - a Non-Issue

Imports were generally not regarded as amounting to 'working' of the patents under the various national laws of Member countries. In fa& this aspect constituted a major difference between colonial and post-colonial patent re-

1

6. BASIC FRAMEWORK OF TRIPS AND ITS IMPLICATIONS /

71

gimes. All along, the patentees incurred an obligation to work the patent in the cowtry which granted the patent. Even the Paris Convention in Article 5 the failure to work the patent in the country granting the patent as an &use of exclusive right. In view of this, the provision, under Article 27, for providing patent protection for imported products at par with locally produced is a major deviation in the patent system, as followed hitherto. Even while granting exclusive rights under Article 28 for products and processes, such rights have been extended to importation for the purposes of making, using, offering for sale or selling the patented products. The implication of this is that the patent holders can resort to imports on long-term basis and enjoy unimpeachable rights and, thus, will have no obligation as such towards the nation state conferring the patent rights. There will be, thus, free flow of imports of patented products. Further, the right to import patented product or ~ a t e n t e dprocess shall vest solely with the patentee. As a result, such products, devoid of any competition and price-regulation, would be sold at monopolistic prices. This weakening of the obligation to work the patent has strengthened the internationalization of production and marketing by MNC's. Having chosen to locate production at a convenient place, their strategy would be to supply global markets under monopolies conferred by patents, rather than transferring technology or making direct foreign investment. The footnote under Article 28 refers to Article 6 which permits Member countries to provide for exhaustion of intellectual property rights subject to national and most favoured nation treatment. According to Dr. Carlos Correa, recent legislative reforms in a number of countries had established the principle of international exhaustion with the aim of introducing a certain degree of Competition into the market. He gave an example that if a patented product was sold in country A at a price of US$100 and in country 8, the same (legitimate) product was sold at US$ 80, this principle allowed any interested party in COuntryA to import the product from country B without the consent of patent's Owner. This important provision, if incorporated in national laws, partly neuhalizes the losses caused by monopolistic price-behavior under a 'non-working' Patent regime. Another point to be noted is that no Article of TRIPS expressly debars the Member countries from enforcing working of the patent in their countries. On the other hand, Articles 7 and 8 mandate transfer and dissemination of technology and protection of public health as well as prevention of monopolistic and practices. Adopting a p ~ ~ r p o s i vconstruction e of statute, Articles 7 and 8 may lend force to stipulate in the national laws for local working of the Patent.

EVOLUTION OF PATENT LAWS

6. BASIC FRAMEWORK OF TRIPSAND ITS IMPLICATIONS

(h) Non-Authorizeduse of Patented product Article 31 deals with "other use without authorization of the right holder". This provision is in no way comparable to the positive prescriptions of "compulsory licensing" or "licences of right" for non-working and other situations. However, this article doesn't proscribe grant of a compulsory licence "where the law of a Member allows for other use". This right can be gainfully exercised in aid of Objectives and Principles under Articles 7 and 8 respectively. The procedure to be followed by member government in this regard is as follows: (i) The concerned government has to specifically consider the application of an individual on merit which may relate to his technical capabilities [Article 31(a)]. (ii) The individual enterprise, prior to application, had made direct efforts for authorization with the right holder on reasonable commercial terms and that such efforts were not successful within a reasonable period of time [Article 31(b)]. (iii) The scope and duration of such use, if granted, shall be limited to the purpose for which or till such contingencies exist under which it was authorised [Article 31(c)]. (iv) Such authorization of use would be non-exclusive a n d non-assignable. This would imply that there is scope of granting such authorization by the patentee or the Government to more than one party [Articles 31(d) and 31(e)]. (v) Authorisation is so restricted as to be available predominantly for the supply of the domestic market only. Thus, it negatives the plea of inadequate exports [Article 31(f)]. (vi) The patentee has to be paid adequate royalty taking into account the circumstances and economic value of authorization [Article 31(h)]. Article 31 also enables for grant of licensing by the government, without a reference to the patentee by the applicant, in certain special circumstances: in cases of national emergency; in cases of extreme urgency; in cases of public non-commercial use; in cases to remedy a practice determined after judicial or administrative process to be anti-competitive; in cases where second patents are permitted; and in cases of government use. Evidently, the scope and duration of grant in such cases are limited. In its July, 96 Report on the implications of TRIPS for developing countries, UNCTAD had commented about compulsory licensing as follows:

"Compulsory licences remain available, but on strict terms and conditions that are more favourable to patentees than under prior law."

72

f

73

In view of above, developing countries need to strike a balance between

the needs of innovative firms for protection from easy appropriation of their intellectual property on the one hand and the needs of legitimate competitors

and consumers on the other. (i)Term of the Patent 1

1

AS per Article 33, the term i.e. period of protection available to both types ofpatents, product and process, is 20 years. This period is uniformly applicable to all the countries, be they developed or developing or least developed. Such a long period of monopolistic privilege will result in disproportionate benefits to the patentee, thereby becoming an investment guarantee. This has been criticized as being unfairly long and prejudicial to the interests of poor developing countries. With the abusive process of 'evergreening' being rampant, there is a danger of perpetuation of patenting over long periods. (j)Reversal of Burden of Proof Article 34 lays down the principle - "you are guilty till proved innocent" -for civil proceedings in respect of infringement of rights of the process patent owner. The onus of proving on the legal complaint that an impugned process used by another enterprise is totally different from the patented process would &on the user-defendant. This provision would certainly be misused by powedul MNC's to curb competition from others, particularly the small companies, w e n when their process may be different. Serious legal objections might also be raised in the case of imported products covered by the process patent. Keeping these aspects in view, the legal system to check infringement has to be carefully evolved so that it is not misused. (k)Control of Anti-Competitive practices Article 40 provides that the countries may specify in their domestic legislation the commercial licensing practices that constitute an abuse of intellectual Property protection, and take steps to address these through appropriate measures. (1) Enforcement - general obligations Article 41 provides that Members must provide effective means of action for any right holder, foreign or domestic, to secure the enforcement of rights while, at the same time, preventing abuse of the procedures. Similarly, Articles 43-50 specifies procedures for civil and judicial action, including means to produce relevant evidence. Civil remedies that must be available should include injunctions, damages and destruction of infringing goods or its disposal outside the channels of commerce. Provisional measures

74

EVOLUTION OF PATENT LAWS

too are available to prevent infringing activity and to preserve relevant evidence. (m) Dispute Settlement Article 64 provides that the new WTO dispute settlement procedures will apply to the TRIPS Agreement, except for the initial 5 years of transition period. (n) Transitional arrangements (i) Article 65 allowed a general grace period of one year from 1.1.95 to all countries for applying the provisions of TRIPS Agreement. The developing countries were allowed further four years to implement the Agreement. However, the developing countries that did not extend product patent protection to certain areas of technologyinits territoryon 1.1.95were granted a further period of 5 years to give effect to the provisions of product patent. Thus, India obtained a grace period of 10 years to apply product patent for chemical based products including pharmaceuticals, food alloys etc. where earlier only process patent was permitted. The 10-year grace period was also extended to atomic energy where no patents were available under the existing laws. (ii) Article 70(3) provides that Member countries shall be under no obligation to restore protection to subject matter which on the date of application of TRIPS Agreement had already fallen into the public domain. The cut-off date for the developing countries is 1.1.2000. (iii) Article 70(8)provided for an obligation to receive mailbox applications from 1.1.95in respect of product patents for pharmaceuticals and agrochemicals if the domestic law, as on 1.1.95,didn't provide for product-patenting in respect of those products. (iv) Article 70(9) provided for the grant of Exclusive Marketing Rights (EMR's) to the applicants of product patents for pharmaceuticals and agrochemicals. EMR was, however, to be available on fulfillment of certain conditions. In Chapter 3, the salient features of the unamended 'The Patents Act, 1970' (India) were examined. It would now be useful to have a comparison between the said Act and the equivalent provisions under the TRIPS Agreement. Certain glaring differences between the two are listed hereunder: The Indian Act excluded nuclear energy, methods of agriculture and horticulture and bio-technological processes and products from patentability. The TRIPS Agreement makes all these methods and products patentable. Under the Indian Act, only process patents could be granted to food, medicines, drugs and chemical products. The TRIPS Agreement provides for granting product patents also in all these areas.

-

,

6. BASICFRAMEWORK OF TRIPS AND ITS IMPLICATIONS --

75

The duration of patents according to the Indian Act was 5 to 7 years for goods for which only process patent was granted. Under the TRIPS Agreement, it is 20 years in all cases. In the Indian Act, there were reasonable and effective provisions for the compulsory licensing of patents, called "licences of right" and there was a provision even for the revocation of patents in public interest. In granting such "licences of right", all that the Controller of Patents had to d o was to satisfy himself that "the reasonable requirements of the public with respect to the patented invention had not been satisfied or that the patented invention was not available to the public at a reasonable price". The Controller could also, on application by the Government, give on a patent an endorsement of "licences of right". As regards food, medicines, drugs and chemicals, the process patents granted for them was deemed to be endorsed with the words "licences of right", which could be worked on the expiration of three years from the date of sealing of the patent. Finally, the Controller had the authority to make the grant of compulsory licensing effective at any time without waiting for three years to expire. On the other hand, under the TRIPS Agreement, there is no specific provision for compulsory licensing or licences of right or revocation of patents. ...................................

11. SIGNIFICANT PROGRESS AT DOHA The fourth Ministerial Conference held at Doha (Qatar) in November, 2001 issued a Ministerial Declaration which, irzter alia, dealt with the Doha Work Programme. A number of other issues besides the Trade Related aspects of Intellectual Property Rights (TRIPS) were included in the Work Programme. TheTRIPS issues, as relevant to Patents, incorporated in the Work Programme, Were as under: 1. Review of Article 27.3(b) relating to patentability of micro-organisms and non-biological and micro-biological processes; 2. Review of the implementation of the TRIPS under Article 71.1 and other relevant new developments raised by the members pursuant to this Article; 3. TOexamine, inter al,a, the relationship between the TRIPS Agreement and Convention on Biological Diversity and protection of traditional knowledge and folklore; 4. TO examine the relationship between Trade and Transfer o f Technology and increased flows of technology to the developing countries.

76

!

EVOLUTION OF PATENT LAWS

The Ministerial Declaration, in para 19, also stipulated that in undertaking the Work Programme as mentioned above, the TRIPS Council shall be guided by the objectives and principles set out under Articles 7 & 8 of the TRIPS Agreement and shall take fully into account the development dimensions arising from the mandate of this Work Programme. Para 12(b)of the Declaration also provides that the outstanding implementation issues shall be addressed as a matter of priority which shall be reported to the Trade Negotiations Committee by the end of 2002 for appropriate action. It is observed from deliberations in the General Council during its meetings on July 27 and 29, 2005 that progress in regard to the negotiations on TRIPS related issues has been rather slow or incomplete. The relevant aspects on the vdrious issues are dealt with hereinbelow:

(a) Patentability of Micro-organisms and Non-biological and Micro-biological processes The TRIPS Agreement, in Article 27.3 (b), provides that, "plants and animals other than micro-organisms and essential biological processes for the production of plants or animals other than non-biological and microbiological processes are excluded from patentability". This sub-article also provides that the above quoted provisions shall be reviewed four years after the date of enforcement of the Agreement establishing the WTO. The review process, accordingly, began in 1999 but, till date, there is no final decision on this subject. As this issue is quite complex, therefore, it will be dealt with exhaustively in a separate Chapter.

(b) Review of TRIPS Under Article 71 of the TRIPS, the Council for TRIPS was mandated to review the implementation of TRIPS Agreement after the expiration of the transitional period referred to under paragraph 2 of Article 65 of TRIPS. As the transitional period for developing countries ended on 31st December, 1999, the TRIPS Council was supposed to have undertaken the review of implementation process in respect of these countries, including India, after such date. This was to be followed by mandatory biyearly reviews. Further, review process could be undertaken at any point of time in the light of any new development which may warrdnt a modification of the Agreement. The aforesaid mandated review has to be successfully performed by the TRIPS Council as there are a number of problematic issues which require immediate resolution. Some of these issues are mentioned herein below: (i) Article 27.1 provides that a patent holder will enjoy patent rights without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced Thus, the patentee has been absolved of any obligation to produce

-

6. BASIC FRAMEWORK OF TRIPS AND ITS IMPLICATIONS

the product in the country where patent was granted. Such a provision may be fair in case of LDC's having a low industrial base but not for a leading developing country like India. In fact,Sec. 83 of the amended 'The Patents Act, 1970' (India)outlines, interalia,the following general principles to be applied to the working of patented inventions: "83. General principles applicable to working of patented inventions(a) that patents are granted to encourage inventions and to secure that inventions are worked in India on a commercial scale and to the fullest extent that is reasonably practicable without undue delay; (b) that they are not granted merely to enable patentees to enjoy rl monopoly for the importation of the patented articles; ............." The clear implication of the above provision is that in India, patent holders incur an obligation to produce the patented product in the country. This provision can't be said to be consistent with the TRIPS provisions, thus, it is in India's interest to pursue for a review of Article 27.1. , (ii) Article 31 provides that even without an authorization for the patent holder, right of use, say, by grant of a compulsory licence, can be made available to another person. This was, indeed, a significant achievement for the developing countries towards attenuating the adverse effects of strong patent protection. The TRIPS negotiators could not, however, agree to a commcn set of grounds which could qualify for such use. Thus, the final text of Article 31 places no restrictions on the purposes for which such use could be authorized. One view is that such an absence of purposes gives considerable leeway to policy-makers in the developing countries. That may be correct for other purposes but, in view of Article 27.1, there is a doubt whether grant of a.compulsory licence for failure to work a patent locally is TRIPS-consistent. There are two alternative methods for the developing countries - one, amendment of Article 27.1 so that importation of a patented product is not equivalent to its 'working'; or, if it is not possible to do so this, then, two, amendment of Artid(. 31 to incorporate, apart from eleven strict safeguards, certa~n purposes which will permit invocation of right of cornpul5or.r licensing. One such enumerated purpose could be n o n p r o d a c t ~ o tof~ patented product within the local countrv .--1 Developing countries can also draw strength from the nre-TRII'S " Paris Convention which recognized that countrips could grant compulsory licences for correcting abuse of patents, includinrr the - failure to work the patent. -

1

1

, L ,

78

EVOLUTION OF PATENT LAWS 6. BASIC FRAMEWORK OF TRIPS AND ITS IMPLICATIONS

In fact, Sec. 84(l)(c)of the amended 'The (India) Patents Act, 1970' recognizes it as one of the three grounds available for making an application for compulsory licence. It states, "84. Compulsory licence(1) .......... (c) that the patented invention is not worked in the territory of India .........." Read with Sec. 83(a)& Sec. 83(b),it clarifies that the intended purpose behind local working in Sec. 84(l)(c) is indeed local production of patented product. Being an issue of paramount importance as well as capable of being challenged before WTO Settlement body, it is in India's interest to pursue for a review-amendment of Article 31. (iii) Another important aspect relates to the 'term' of compulsory licences. Article 31 (c) states, "the scope and duration of such use shall be limited to the purpose for which it was authorized .........." Further, Article 31(g) states, "authorization for such use shall be liable, subject to adequate protection of the legitimate interest of the persons so authorised, to be terminated if and when the circumstances which led to it cease to exist and are unlikely to recur. The competent authority shall have the authority to review, upon motivated request, the continued existence of these circumstances." In this regard, it may be stated that a grantee of a compulsory licence would have to invest significantly in research, production, strategic planning, marketing and promotion of the product. Thus, if there is a continuing threat of withdrawal of such licence contingent upon ceasing of a set of circumstances, beyond the control of a grantee, no domestic enterprise would be interested in seeking such a compulsory licence. Therefore, it is necessary to provide, that the term of the licence would be co-terminus with the term of the patent, to make it a workable proposition. In this regard, the provision of Section 90(l)(vi)of the amended 'The Patents Act, 1970' (India) provide for one of the conditions of such a licence as under: "that the licence is for the balance term of the patent unless a shorter term is consistent with public interest." This important issue should, therefore, be taken up for a review without any delay.

I

79

(iv) Article 31(f) provides that: "any such use [compulsory licence] shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use." The use of the word 'predominantly' has become a subject matter of discussion. Although it doesn't negate the possibility of grant of a compulsory licence at least partly for the export market (needy LDC's), yet this aspect needs to be specifically incorporated. In this regard, it may be mentioned that as per Section 84(7)(iii)of the amended 'The Patents Act, 1970' (India), the reasonable requirements of the public, a permissible ground for the grant, is deemed not to have been satisfied "84 Compulsory licence(7)..... (a) if, by reason of the refusal of the patentee to grant a licence....on reasonable terms(iii) a market for export of the patented article manufactured in India is not being supplied or developed ......" Also, Section 90(l)(vii) of the amended Act specifies one of the conditions to be fulfilled by the licensee as, "that the licence is granted with a predominant purpose of supplying in Indian market and in the case of semi-conductor technology, the licence granted is to work the invention for public non-commercial use and in the case, the licence granted to remedy a practice determined after judiciql or administrative process to be anti-competitive, licensee shall be permitted to export the patented product." Under pressure from LDC's, India can be expected to liberally use these provisions. Thus, to avoid litigation before WTO Dispute Settlement bodies, it is necessary in our interest to pursue for an amendment of Article 31(f). (v) Article 31 (h) provides that: "the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization." This provision is not explicit in the sense that neither is there a fixed royalty nor a prescribed ceiling thereto. This can be a cause for litigation to avoid which there is a need for industry-specific empirical research database which can form a basis for introducing necessary amendments.

8_0_

-

-

6. BASIC FRAMEWORK OF TRIPS A N D D IMPLICATIONS

EVOLUTION OF PATENT LAWS

that each contracting party shall take legislative, administrative or policy measures, as appropriate, with the aim of sharing, in a fair and equitable manner, fie of research and development and the benefits arising from the conunercial and other utilization of genetic resources, with the contracting party providing such resources and, thus, sharing shall be upon mutually agreed -s. h accordance with CBD, Biological Diversity Act, 2002 was enacted in India, wherein a major challenge lay in adopting an instrument which could help in realizing the objectives of equitable sharing of benefits. Consequently, Section 21 stipulates that the National Biodiversity Authority shall grant approval~subject to such terms and conditions so as to secure equitable sharing of benefits arising out of the use of accessed biological resources, their by-products, innovations and practices associated with their use and applications and knowlidge relating thereto. h order to legalize the benefit-sharing, it has been suggested by several countries that applicants may be required to reveal the source of any genetic material or traditional knowledge used in developing their claimed invention. This, suggestion must be examined in the wider framework of relationship between TIUPS and CBD as part of the Doha Work Programme. In this regard, there is hardly any progress in the relevant Working Group. Further, US is against any benefit-sharing accruing later out of commercial working of the patented product and advocates that the benefit aspect should be settled at the time of approving the access to biodiversity material.

Article 33 provides that, "the term of protection available shall not end before the expiration of a period of twenty years counted from the filing date". This term appears to be on a higher side. Earlier, national legislation provided for varied terms such as 5 years or 14 years or 17 years etc. The argument advanced for the enhanced term of 20 years was that it was taking 8-10 years for the grant of a patent so that the holder was hardly ever able to enjoy its commercial benefits for a period exceeding ten or twelve years. The process of examination of patent applications in the recent past has speeded up so that a patent is granted within a period of 1-2 years. Moreover, the product cycle is also fast changing. In view of this, there is merit in suggesting for a reduced period by amendment of Article 33 on the following lines: "The term of protection available shall not end before the expiration of a period of twenty years counted from the filing date or ten or twelve years from the date of sealing of patent, whichever period is shorter." Such a stipulation, as above, should satisfy the commercial concerns of the patent holder. (vii) Article 27 provides that, " ......... patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application". I he crucial terminologies used here - 'invention', 'new', 'inventive step' and 'capable of industrial application' - need to be defined explicitly in order to filter out frivolous claims. As regards 'invention', it would be appropriate to define the same as 'patentable basic invention' so that patent rights, which are exclusive rights whereby other persons are legally prohibited from exploiting the patent, are granted for basic research alone and not for any subsequent incremental modifications of such basic invention. For example, in case of pharmaceutical products, patentability ought to be restricted only to new drug moirlcules An extensive process of review needs to be carried in the area. (c) Relationship between TRIPS Agreement and Convention on (\TI)

Biological Diversity

81

(dl Trade and Transfer of Technology Para 37 of Doha Ministerial Declaration deals with trade and transfer of technology. The Declaration stipulates that the working group under the auspices of the General Council will examine the issues relating to the rela tionship between trade and transfer of technology and on steps that might be taken within the framework of WTO to increase flows of technology to developing countries. The General Council was supposed to submit its report to Cancun Ministerial Conference on the progress made. It is pertinent to recall the provisions of Article 7 - stating the objectives of TRIPS: -

-

"The protection and enforcement of intellectual property rights should contribute to the promotion of technological innova tion and to the transfer and disseminationof technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations."

i

The Convention on Biological Diversity (CBD) was contracted at Rio de Janeiro in 1992. The Convention reaffirms that States have sovereign rights over their own biological resources. Articles 15 provides that access to such resources, where granted, shall be on mutually agreed terms and prior informed consent of the contracting party providing such resources. It is also provided

view of such unambiguous provisions of Article 7, what was required to provide for a specific provision for transfer and dissemination of techn o l as~ and ~ when a compulsory licence was granted on product or process IL

&

82

-

EVOLUTION OF PATENT LAWS

--

patent. There was, thus, no need for its examination in any Working Group as this fell within the domain of national governments for a consideration for its implementation. It may be pointed out that even the amended 'The Patents Act, 1970' (India) does not provide for such a provision. This is, indeed, an issue of serious concern but limited to the potential recipients of technology viz. the developing countries. These countries may straightaway avail of Article 7 of TRIPS to appropriately legislate in their municipal legislations. To sum up, it is evident that almost all the patent related issues of Doha Work Programme are in limbo and for which the blame lies with the developing countries. Being not alive to their self-interest, they have failed to adopt a pro-active approach. Apart from the Doha Work Programme, the 4th Conference adopted a separate declaration, called "Declaration on the TRIPS Agreement and Public Health1'-hereinafter, the Doha Declaration. The Doha Declaration was conceived in an extremely complex global scenario where some developing and least developed countries having significant sectors of their population infected with HIV/AIDS, malaria, tuberculosis or other epidemics, proposed for implementation of policies such as compulsory licensing or the application of the international exhaustion regime to reduce the cost of patented medicines to treat these diseases. Evidently, these policies were adverse to the interests of the patent holders which provoked conflicts and tensions at both bilateral and multilateral levels. In such state of affairs, the Doha Declaration constituted a milestone in the history of the TRIPS Agreement for two reasons - first, because it ensures balance between the right of the Members to implement policies intended to safeguard public health and patent rights; second, it amplified and set forth new standards to translate such policies as compulsory licensing and exhaustion of intellectual property rights more meaningful. The Declaration acknowledges the importance of intellectual property for the development of new drugs but it also recognizes the concerns about the effects of IPR on prices. (para 3) Paras 4, 5 and 6 of the Declaration constitute its nucleus so far as the interests of the developing countries are concerned. The provisions of paras 4 and 5, being part of the same scheme, shall be taken up first for a detailed analysis. The main points of agreement between WTO Members, emerging out of paras 4 and 5, are as under: (1) Recognition of Member's rights to protect public health and pro~note availability of medicines to its people;

6. BASIC FRAMEWORK OF TRIPS AND ITS IMPLICATIONS

-

, I

-

(2) TRIPS Agreement to be interpreted in the light of its Objectives (Article 7) and Principles (Article 8) so as to support point (1); (3) Recognition of in-built flexibilities within TRIPS Agreement; some of such flexibilities are: (a) each provision of the TRIPS Agreement to be interpreted in the light of provisions of Article 7 and Article 8 of TRIPS. (b) freedom to determine the various grounds for granting compulsory licences, as per peculiar needs, is unfettered. (c) freedom to determine various contingencies, which may constitute national emergency or circumstances of extreme urgency enabling grant of compulsory licences, is unfettered. In particular, public health crisis and epidemics are clearly included here. (d) freedom to establish the most appropriate regime for exhaustion subject only to national and MFN treatments of Article 3 and 4 of TRIPS. Thus, the Declaration emphasized on the importance of objectives and principles of the TRIPS Agreement in providing the requisite context for interpreting the various other substantive provisions of the said Agreement. Such an object-oriented approach is in accord with the Purposive Rule of Construction of a statute, as per which a correct interpretation is based both on the text and the context. One may well say that if the text is the texture, context is what gives thecolour. Neither canbe ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. An Agreement is best interpreted when we know why it was framed. With this knowledge, the Agreement must be read. If an Agreement is looked at, in the context of its framing, with the glasses of the negotiators, provided by such context and its scheme, the sections, clauses, phrases and words may take colour and appear different than when the Agreement is looked at without the glasses provided by the context. With these glasses, we must look at the Agreement as a whole and discover what each section, each clause, each phrase and each word meant So as to fit into the scheme of the entire Agreement. No part or word of an Agreement should be construed in isolation. Agreements have to be construed that every word has a place and everything is in its place. Such an object-oriented approach of interpretation reversed the practice followed by the Dispute Settlement Body (DSB), of resorting, in the first place, b a w o r d by word analysis and then, in a second stage, provided no satisfactory " ~ l t was obtained, to the context-analysis. The wide acceptance of this new approach was evident from the following O-unication of the European Community to the Council of TRIPS,

"

1

"it should be borne in mind that the p;inciples of the Doha Declaration can also be carried through to issues other than

84

EVOLUTION OF PATENT LAWS

-

---

compulsory licensing or parallel imports, such as exceptions to exclusive rights or other policy options." In concrete terms, the operative context for interpreting the modalities of compulsory licensing (Article 31) or principle of exhaustion (Article 6) will be furnished by the following objectives under Articles 7 & 8: (i) promotion of technological innovation, (ii) transfer and dissemination of technology, (iii) protection of public health and nutrition, (iv) socio-economic & technological development, and (v) present monopolistic abuses of IPR's. Thus, the various 'conditions precedent' as well as 'safeguards' prescribed for the grant of compulsory licences have to be so structured and implemented as to effectuate the fulfillment of aforesaid five objectives and to suppress all mischiefs which may attempt to frustrate its realization. It may be clarified that Members may grant compulsory licences to prevent or overcome public health crisis caused by other diseases not included in paragraphs 1 and 5(c) of the Declaration. Subparagraph 5(d) sets forth that the effect of the provisions in the TRIPS Agreement~isto set each member free to establish the most appropriate regime for exhaustion - whether national, regional or international - leaving this issue out of the WTO dispute settlement procedure. Thus, the Doha Declaration, by providing a guideline for interpreting the TRIPS Agreement in the context of its stated objectives, established a clear mandate for the Council for TRIPS, the Appellate Body and the future panels. Notwithstanding the enhanced empowerment in respect of compulsory licensing, there is still an unequal relationship between the developed and developing Members. The truth is that many Members have insufficient or no manufacturing capacities in the pharmaceuticals sector, which would render this important tool ineffective. The Ministers acknowledged this situation in paragraph 6 of Declaration and pointed out that, "WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement." Therefore, the Ministerial Conference instructed the Council for TRIPS, "to find an expeditions solution to this problem and to report to the General Council before the end of 2002." Additionally, in paragraph 7, it was agreed to extend, until January 1,2016, the transition period for the LDC's to grant patents for pharmaceutical products and to grant protection to undisclosed information related to these products,

I

6. BASIC FRAMEWORK OF TRIPS AND ITS IMPLICATIONS

85

without prejudice to the right to seek other extensions as established in Article 66 (1) of the TRIPS Agreement. In compliance with the mandate of para 6, the Chairman of the Council for TRIPS, Mr. Perez Motta, submitted a draft to the General Council which culminated on 30th August, 2003 into an agreement, titled "Implementation of paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health". This Agreement was quite an achievement as it was achieved against heavy pressure from the US based pharma industry, which feared that the use of licences for exports would open a Pandora's Box in terms of weakened patent protection. In brief, the Decision states that an "eligible importing Memberu-a LDC or any other Member - who has notified the TRIPS Council of its intention to use the system and lacks the capacity to produce within the country, may issue a compulsory licence for the required quantity of medicines under circumstances of national emergency or extreme urgency etc. The exporting country then issues a "back-to-back" Compulsory Licence to a third party to meet such requirement and to ensure that the entire production, made under the licence, was exported to the importing Member. Under this scheme, the holder of the patent cannot exercise the itis exclliendi as regards the import of such products. However, a set of conditions and control measures are prescribed to ensure that the system was not misused. Thus, the "exporting Member" must clearly identify the product through specific labelling or marking or colouring or packaging etc. and notify the Council for TRIPS of the grant of such licence. Similarly, the "importing Member" must ensure that the products are not re-exported to other markets. The decision does, however, recognize the need for free circulation of such products within neighboring countries who share the same health problems and with whom the importing country has a regional trade arrangement. In the above scheme, the exporting member pays the obligatory licence fee to the patent holder taking into account the economic value to the importing member, while the normally poorer importing country is relieved of this burden. It may be noted that this decision constitutes a waiver of the provisions of clauses (f) and (h) of Article 31 of the TRIPS Agreement with respect to pharmaceuticals products only. Being in the nature of a political undertaking, it needs to be translated into a formal amendment of Article 31. Also1national laws will have to be amended to reflect this Decision. Canada was the first WTO member to amend its laws enabling it to export under a compulsory licence. However, pending the finalization of the TRIPS text, WTO members have agreed not to initiate dispute settlement proceedings against other members making use of the system. It is not clear that the current decision on "paragraph 6" will on its own significantly improve access to medicines especially since as the system is The uncertainty and inconvenience of being required to apply for

6. BASIC FRAMEWORK OF TRIPS AND ITS IMPLICATIONS

EVOLUTION OF PATENT LAWS

87

-

not amend the obligations under the TRIPS Agreement. Assuming it to be the -' w e c t position and regardless of the formal mechanisms of the WTOto adopt . ,&cisions", the Doha Declaration was, at least, an "agreement" among the ~0 members. . Article 31 of the Vienna Conventions on the Law of Treaties sets forth that -ties should be interpreted "in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light ofits object and purpose." Paragraph 3(a) of Article 31 of this Convention provides that there "shall be taken into account, together with the context.......any subsequent agreement between the parties regarding the interpretation of the treaty or the application ofi& provisions." The International Law Commissions has pointed out that "an agreement astothe interpretation of the provision reached after the conclusion of the treaty an authentic interpretation by the parties which must be read into tfie treaty for purposes of its interpretation." To summarize, even if the Doha Declaration was not a "decision", it contained an "agreement" among the Members as to how the TRIPS Agreement should be interpreted in general and how some rules in particular should be interpreted. The panels, the Appellate Body and the Council for TRIPS, among others, should apply the guidelines set in the "Agreement" that includes the Doha Declaration.

4,

a compulsory licence each time they produce for exports is likely to discourage generic manufacturers from investing and producing for exports. It is expected that a handful of countries may explore the route as importing countries in order to make a difference to their populations. These are developing countries of a certain standing i.e. with sufficient funds to buy large quantities and possessing negotiating power to achieve the best possible prices. The exporting countries, too, stand to gain but have to be competitive both when it comes to prices and quality. In fact, simpler solutions were possible, for example, the solution based on Article 30 which provides for limited exceptions to the exclusive rights enjoyed by the patentees. What could have been done was to agree to consider exports to countries without manufacturing capacities as an exception under Article 30. In that case, such exports of patented drugs would not be considered to have infringed on the patent rights. In fact, WHO as well as a coalition of NGO's (MSF, Oxfam, Third World Network, Consumer Project on Technology, Health GAP) had actively supported such a solution but it was thwarted by the coalition of developed countries. Compared to the agreement actually reached on the basis of Article 31(f), the Article 30-based solution would have had the following advantages: (i) Administratively and procedurally simpler; no need for case-by-case compulsory licensing, which is time consuming and may inbolve litigation. (ii) Only one compulsory licence - in the country importing it, is requied; n o need to rely on a n exporting country to issue a compulsory licence. (iii) Since the generic manufacturers would be free to produce for exports without any specific compulsory licence, there would be greater competition among them and, hence, prices would be more affordable. The Doha Declaration on the TRIPS Agreement and Public Health, which stands on its own separate from the new WTO Development Round that was initiated at Doha, was important for many reasons. Firstly, it was the first time that the developing countries, with Zimbabwe in the forefront, initiated an issue at WTO level that members could react toswiftly. Secondly, it set a badly needed example for the Development Round. Thirdly, and most importantly, it brought security to many developing countries in their efforts to develop health policies including provision of patented medicines, for the benefit of their populations.

111. LEGAL STATUS OF DOHA DECLARATION The legal status of the Doha Declaration is controversial since some believe that it was a mere "declaration" and not a "decision" of the Ministerial Conference. Thus, being a simple political declaration with no legal authority, it does

I

I I

1 I

'

-

I

7. OTHER MULTILATERAL TREATIES & INTERNATIONAL CONVENTIONS

Y

OTHER MULTILATERAL TREATIES & INTERNATIONAL CONVENTIONS I. PARIS CONVENTION The history of the patent system would be incomplete without a mention of the Paris Convention administered by the World Intellectual Property Organization (WIPO). In view of ever increasing globalization of trade and commerce, the international character of 'intellectual property rights' was recognized early on. It was realized that in the absence of any international Convention, it was difficult to obtain protection in many countries due to diversity in national laws. Globalization necessitated harmonization of industrial laws. The Paris Convention for the protection of industrial property was established in 1883 and has been revised six times. The amending Conventions are: 1. Brussels Convention 1900 2. Washington Convention 1911 3. Hague Convention 1925 4. London Convention 1934 5. Lisbon Convention 1958 6. Stockholm Convention 1967 Through these series of amendments, the freedom of countries to impose sanctions on patentees, who fail to work the inventions, was considerably diminished. Yet, the Paris Convention is the starting point for a consideration of any intellectual property rights in virtually any part of the world. (a) Salient features of Paris Convention The Paris Convention established the fundamental principles of national treatment, territoriality, the right of priority and the guarantee of a certain minimum protection. The national treatment rule, under Art. 2(1), guarantees that the nationals of a country, belonging to the Convention, must enjoy in other countries of the Convention the same rights with regard to intellectual property as their own nationals and that they will not be discriminated against. The rule is extended to nationals of non-member countries provided they are domiciled or have an industrial or commercial establishment in a member country. The origin of this rule can be traced to the desire to attract foreign technology. As to the areas covered by the national treatment rule, it has been opined that as the Paris Convention deals only with matters relating to the acquisition of patents,

89

their scope, duration and termination, the national treatment principle would alsobe limited to these matters [E. Ulmer, "IPRand the Conflict of Laws" (1978)] and would not, for example, apply to the taxation of intellectual property [S. Ricketson (1987)l. Art. 2 implies territorial scope of national intellectual property statutes so that the rights granted uilder these statutes are restricted to the territory of the state concerned. Art. 4bis and 6(2) reinforce the conclusion by stipulating that various national rights are independent of each other. Thus, what happens to one of them has no influence on the other rights. If one national patent is revoked, that fact, as such, has no influence on all other parallel patents in other Member-States of the Paris Union. It follows logically from this system that the national legislations only apply within their respective national territories. Another significant feature of the Paris Convention is that it allows an applicant to obtain a priority date by filing an initial application, often in the inventor's home country. The applicant many, thereafter, file a patent application in any country bound by the Convention within twelve months and maintain the earlier priority date. Thus, the later application enjoys a priority status with respect to all applications relating to the same invention filed after the date of the first application. This way, the Convention gives applicants in Member countries a period in which they can file applications in other countries after filing in their own country and obtain valid patents notwithstanding its publication or use in the interregnum before the filing of the foreign application. 7hk provides a protection against patent-defeating provisions of national laws based onevents intervening between the time of filing at home and filing abroad. Another redeeming feature is that the contracting states have the right to enact measures providing for compulsory licences for abuses of the patent, in particular, for failure to work. Such licences are not to be applied for before the expiry of four years from the date of filing of patent application or three years from the date of grant of the patent, whichever is the later. Yet, the Convention has its share of criticisms. It is pointed out that all the Conventions, held at the behest and strong pressure from the developed countries, have provided for stiffer provisions granting more protection to the patent holders. The developing countries have been concerned about social obligations from the Patent holders whereas the Paris Convention does not provide for any such obligatioris. It provides for the maximization of individual rights. Thus, Art.5(1) Providff that, "Importation by the patentee into the country where the patent has been granted of articles manufactured in any of the countries of the Union (members) shall not entail forfeiture of the patent". Similarly, Art. 5(4) t a k e away what Art. 5(2) offers by grant of compulsory licences to prevent abuses. Thus, Art. =(4) provide that compulsory licence on the ground of failure to work or insufficient w o r h g "shall be refused if the patentee justifies inaction by legitimate reasons.''

90

EVOLUTION OF PATENT LAWS

The Paris Convention has provided the framework for the Patent Co-operation Treaty, the European Patent Convention and the Community Patent Convention. Contracting states are allowed to enter into separate treaties provided that these agreements d o not contravene the provisions of the Paris Convention.

(b)Relationship between Paris Convention and the TRIPS Agreement The TRIPS Agreement dynamically interacts with the Paris Convention in certain ways. Some of these are: (1) The TRIPS Agreement incorporates, by reference, provisions of Art. 2.1 of the I'aris Convention. In respect of the subject-matters of Parts 11,111 & IV of the TRIPS Agreement, compliance with the aforesaid provisions is mandatory. In effect, the said provisions have become part of the TRIPS Agreement. Failure to comply wi th those provisions may be subject to disputes under the WTO dispute settlement mechanism. (2) The TRIPS Agreement has certain so-called "Paris-plus" provisions, such as, prohibition of discrimination as to the field of technology (Art. 27.1),the restrictions on exclusions from patentability (Art. 27.2), possibility of judicial review of any decision to revoke or forfeit a patent (Art. 32 ) and the minimum term of protection (Art. 33 ). WTO members are bound by these provisions. (3) O n the other hand, TRIPS Agreement provides for several "Paris-minus" obligations, as it permits WTO members to decrease the level of protection to patent right holders. Thus, Art. 6 of TRIPS, by permitting international exhaustion, diminishes patentee's rights that are otherwise protected under Art. 4bis of Paris Convention. (4) TRIPS Agreement restricts the legislative policy options. The following examples illustrate this aspect: (i) Art. 5(2) of the Paris Convention allows for compulsory licences to be granted if the patentee fails to manufacture the patented product locally. However, this option is no more available to Paris Convention members that are WTO members. Under Art. 27.1, WTO members must now accept that importation constitutes working for the purposes of Art. 5(A)(2)of the Paris Convention. (ii) Under Art. 5(2) of the Paris Convention, Members could provide in their laws that patents in any field of technology would be subject to compulsory licences "to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent, for example, failure to work." But, under Art. 31(c)of TRIPS, compulsory licences of patents on semi-conductor technology can be granted on two grounds only: public non-commercial use and to remedy anti-competitive practices.

7. OTHER MULTILATERALTREATIES & INTERNATIONAL CONVENTIONS

91

(iii) Under the Paris Convention, a party was not prevented from granting compulsory licences for predominately export purposes. Art. 31(f) of TRIPS, on the other hand, has banned compulsory licences linked to that particular purpose.

11. PATENT CO-OPERATION TREATY (PCT) The Patent Co-operation Treaty (PCT) is a multilateral agreement for international co-operation in the field of patents. The agreement, envisaged under the Paris Convention, is a procedural treaty designed to simplify and to make economical the filing of the patent applications for a series of countries. TO achieve its objects, the treaty enables the filing with the receiving office a single application called the international application. The actual grant of patent, however, is by the national patent offices. Countries that have acceded to this treaty are deemed to belong to the International Patent Co-operation Union. PCT was concluded in Washington in 1970 and entered into force in 1978. The treaty, administered by WIPO, is designed "to simplify and render more economical the obtaining of protection for inventions where protection is sought in several countries". The PCT procedure consists of two main phases. It begins with the filing of an international application and ends with the grant of a number of national patents. (a) International Phase of PCT Procedure The PCT offers as a first stage the chance to make a single "international application", leading to an international search conducted by one of the international searching authorities. The international phase consists of four main steps of which the first three occur automatically and the last is optional for the applicant. The first three steps consist of the filing of the international application by the applicant and its processing by the "receiving office", the establishment of the international search report by one of "the International Searching Authorities" and the publication of the international application together with the international search report as well as their communication by the International Bureau of WIPO to the national offices which the applicant designates in the international application, the so-called "designated offices", for obtaining Protection. There is a prescribed form for the international application. This form must be accepted by all designated offices for the purposes of the national phasel so that there is no need to comply with a great variety of widely differing formal requirements in the many countries in which protection may be sought. The following information is required in an international application: (i) the title of the invention (ii) a petition that the application be processed according to the PCT (iii) the designation of at least one Contracting State (iv) the name and State of the applicant and if applicable, his agent

92

7. OTHER MULTILATERAL TREATIES & INTERNATIONAL CONVENTIONS

EVOLUTION OF PATENT LAWS

(v) the name of the inventor if such information is required by a law of one of the Designated States at the time of filing (vi) choice of type of protection (vii) an abstract, a description, a claim or claims and drawings where required (viii) a signature by the applicant. The international fees payable in respect of the filing of an international application may be paid at one time, at one office and in one currency. Any patents subsequently granted on the application by the designated or elected offices can be relied on by the applicant to a great extent than would have been the case without the benefit of the international search report and the international preliminary examination report. International publication serves to disclose to the public the invention and to set out the scope of the protection that may be ultimately obtained. There is also an optional fourth step, namely, the establishment of an international preliminary examination report by one of the "International Preliminary Examination Authorities". International preliminary examination is available subject to certain conditions and qualifications being met. I (c) National Phase of PCT Procedure On completion of the international phase, further action is required in each of the designated offices. In particular, the applicant has to pay to those offices the required national fees, furnish them with any translations that are required. There are time-limits within which those steps must be taken if the application is to proceed in the national phase. If thesteps arenot taken within the applicable time-limi t, the effect of the international application may cease in the designated St xies concerned. The designated off ces then examine the application and grant or refuse the national patent on the basis of their national laws. The PCT permits the claiming of priority from one or more earlier applications. There is a grace period of 12 months during which the applicant may claim priority of an earlier application.

*,CBD

as a means of bargaining access to those resources for royalties, whology and research data. salient Features of CBD :. - m e CBD contains articles on access to genetic resources (Art.15); access to bd the transfer of technology (Art.16);informed consent and the distribution &benefits of biotechnological innovations (Art.19).The industrialised group of countries, obviously the principal source of biotechnological innovation, indMed that the CBD did not conflict with intellectual property rights. Thus, for &pie, Art. 16(2)contains the statement that "In the case of technology subject to patents and other intellectual property rights, such access and transfer shall be provided on terms which recognize and are consistent with the adequate and ernti& protection of intellectual property rights". Reflecting the uncomfortable political deal which was struck in bringing &e CBD to conclusion, the language of the Convention is unfortunately vague. f i e positive affirmation to principles in a number of areas is qualified by vague m c e n d e n t a l values. Thus, the respect for intellectual property affirmed by Afi.16(2) is counterbalanced by the phrase in the same provision that "access to and the transfer of technology ...shall be provided and/ or facilitated under fair and most favourable terms...". ' '- .More importantly, Art. 16(5) engages the parties to the Convention to cd;operate, subject to national legislation and international law, in order to di$bethat patents and other IPR's "are supportive and d o not run counter to ebbjectives". Similarly, Art. 15(4) provides that "access (to genetic resources) where granted shall be upon mutually agreed terms". Art. 19(2)provides that "access -.:tothe results and benefits arising from biotechnologies ...shall be on mutually aw* terms". Since mutuality is a precondition for an agreement of any sort, provisions may be mere rhetoric. On the other hand, they may be t b(rarantee against unilateral expropriation. (i) Scope of the CBD access regime ... ",, ,, .Art. 1 of the CBD envisages "appropriate access to genetic resources" and ,@fair and equitable sharing of benefits arising orit of the utilization of genetic -urces". "Genetic resources" are defined in Art. 2 as meaning "genetic or potential value". The term "genetic material'' is then mean "any material of plant, animal, microbiological or other containing functional units of heredity". On a strict analysis of this it is suggested that biochemical extracts which do not contain DNA be outside the scope of the CBD. Thus, the Convention would cuttings and DNA extracted from a plant, such as a chromogene. plasmid or any part of these such as the promoter part of a gene. "the conservation of components of biological diversity habitats", for example, in germplasm and seed banks. ' I - .

111. THE CONVENTION ON BIOLOGICAL DJM3RSITY (CBD) The Rio Earthsummit, which was convened in June 1992, promulgated the Convention on Biological Diversity (CBD),the Rio Declaration on Environment and Development and Agenda 21. The CBD represented an attempt to establish an international programme for the conservation and utilization of the world's biological resources and for the "fair and equitable sharing" of the benefits arising from the utilization of genetic resources. The single most divisive issue in the negotiations was the relationship between intellectual property rights and access to genetic resources. The developing countries of the South, generally speaking the ones with substantial source of genetic resources, sought to use

I

i

93

:',-

94

botanical gardens, museums, laboratories and agricultural research institutions. This Article calls for a national legislation to provide for the acquisition, conservation, storage and management of these ex situ collections. The access and benefit-sharing provisions of the CBD do not apply to genetic resources of a country which were collected prior to the entry of the CBD into force in that country. Thus, a country with a pre-existing collection of genetic material has the sovereign right to control access to that collection, but has no legal right to insist upon a share of any benefits derived from the use of that collection. Also, the CBD applies to those genetic resources which originate in the country of a contracting party. (ii) Sovereign rights over genetic resources (Art. 150)) Art. 15(1) of the CBD affirms "the sovereign rights of States over their natural resources" and provides that "the authority to determine access to genetic resources rests with the national governments and is subject to national legislation". This provision, dealing as it does with access to genetic resources, does not refer to the question of the ownership of genetic resources. This leaves unanswered the ownership issues raised by the creation of the CGIAR germplasm collections. (iii) Mutually agreed terms, prior informed consent & benefit- sharing Art. 15(4) of the CBD envisages that where access is granted, it will be subject to mutually agreed terms. Currently, the conventional form ofiaccess agreement is the Material Transfer Agreement (MTA).A number of the provisions of the CBD refer to the equitable sharing of benefits arising from the utilization of the genetic resources of a signatory. Art. 15(7) requires each Contracting Party to "take legislative, administrative or policy measures, as appropriate" and in accordance with a number of specified provisions of the Convention, "with the aim of sharing in a fair and equitable way, the results of research and development and the benefits arising from the commercial and other utilization of genetic resources with the Contracting Party providing such resources". Article 8(j)envisages the "equitable sharing" of benefits with indigenous and local communities, arising out of the use of the traditional knowledge, innovations and practices of those communities. Art. 21 provides for the establishment of a "mechanism" for the provision of financial resources to developing country parties to the CBD. Complementary to the equitable sharing of benefits, the CBD provides for the access of developing country signatories to technologies which may result from the utilization of the genetic resources which they may provide. Art. 16(1) recites the importance of access to biotechnologies to attain the objectives of the CBD and Art. 16(2) provides for the access to technologies by developing countries on "fair and equitable terms, including on concessional and preferential terms". Art. 19(1)requires parties to take appropriate measures to "provide for the effective participation in biotechnological research activities by those

--

7. OTHER MULTILATERAL TREATIES & INTERNATIONAL CONVENTIONS

EVOLUTION OF PATENT LAWS

-----

I

I

95

Contracting Parties, especially developing countries, which provide the genetic resources for such research". Art. 19(2)requires parties to "take all practicable measures to promote and advance priority access on a fair and equitable basis ... especially developing countries, to the results and benefits arising from biotechnologie~based upon genetic resources provided by those Contracting parties" on mutually agreed terms. The concept of "fair and equitable sharing" of "the results of research and development and the benefits arising from the commercial and other utilization of resources" has generated a good amount of debate. The concept appears wide enough so as to embrace participation in the spread of applied techno-scientific know-how and development of new industrial and commercial activities. Thus, in Prof. Jerona H. Reichman's words, "governments in developing countries should ... regulate the manner in which foreign firms obtain access to local germplasm, with a view to sharing in both the technical knowledge that may result and the proceeds of commercial exploitation". This seems indeed the appropriate balance of interests: the developing countries release to developed countries their traditional knowledge as embodied in the biologics! resources and, in turn, the developed countries reciprocate by transferring their technical and commercial knowledge as embodied in the newly developed biodiversity-based products and processes.

(b)Relationship between CBD and TRIPS Agreement The negotiation leading to agreements on CBD and TRIPS were guided by differentconcerns. During Uruguay Round negotiations, the contracting parties had not yet acquired any experience on the protection of biotechnological inventions. In fact, inventions relating to biological and genetic resources were, indeed, peripheral to the TRIPS debate. Art. 27.3(b) was accepted, therefore, as an agreement in principle but subject to be reviewed after further experience was acquired on its practical implications. CBDl on the other hand, was clearly a product of broader environmental movement. In fact, it took birth during the famous Rio Earth Summit in 1992 d ~ g s i d the e Rio Declaration on Environment and Development. Its broader Objectives were conservation and sustainable utilization of biodiversity-related "urces. The references to IPR'S were marginal and with a limited objective to its aforestated objectives. The salient points of differences between TRIPS and CBD may be outlined as under:

96

Differences between TRIPS and CBD 7

C

I

Ownership

-

EVOLUTION OF PATENT LAWS

-

I

--

1 CBD I

Biological resources should be Communities and countries t r e a t e d a s intellectual have sovereign rights over roperty that is privately biodiversity.

1

I

"We instruct the Council for TRIPS, in pursuing its work programme including under the review of Article 27.3(b), [...I to examine, trlteralin, the relationship between the TRIPS Agreement and the Convention on Biological Diversity, the protection of traditional knowledge and folklore [...I. In undertaking this work, the TRIPS Council shall be guided by the objectives and principles set out in Articles 7 and 8 of the TRIPS Agreement a n d shall take fully into account the development dimensions."

-

-

Access

Benefit-sharing

--

Public Interest

97

Accordingly, the WTO Ministerial Conference at its fourth session, at Doha, approved a specific framework for the review of Art. 27.3(b) thus, 7

I

Indigenous knowledge Patent or

7. OTHER MULTILATERAL TREATIES & INTERNATIONAL CONVENTIONS

requires protection

G e n e s , cells, p l a n t s a n d animals can be freely traded. There is no provision for seeking prior consent from governments and communities.

Access to biological resources requires the disclosure of country of origin a n d the approval and involvement of local communities.

Companies claiming patents on biological resources and their p r o d u c t s h a v e no obligations to share benefits with the country or communities t h a t a r e the source of the biodiversity.

Commercialization cqn only be carried out after mutually agreed benefit-sharing arrangements are in place.

Steps to protect biodiversity and public health should no1 interfere in free trade. The WTO rules govern trade and the Biosafety Protocol.

Activities and organisms that can have adverse impact on biodiversity and public health should be regulated and if necessary prohibited.

Sotirce: , Research Fotindation for Science, Technology and Ecolopj In view of such sharp differences, during the course of review meetings held post-1999, the developing countries stressed towards a harmonization of TRIPS with CBD. For this, two proposals were made by them: 1. New provisions should be added to the TRIPS Agreement specifying the intellectual property rights of indigenous and local communities & 2. Patent applicants should be required to identify clearly the source and the country of origin of biological material so that patents inconsistent with Art.15 of the CBD are not granted.

Thereby, the Ministerial Conference has recognized the useful linkages that may exist between the TRIPS Agreement (and not only Art. 27.3(b)) and the CBD.In fact, a deeper analysis reveals the following intersections of the TRIPS Agreement with the CBD: 1. The preamble of the CBD states the so-called "precautionary principle", "where there is a threat of significant reduction or loss of biological diversity, lack of full scientific certainty should not be used as a reason for postponing measures to avoid or minimize such a threat."

This unambiguously directs that immediate positive measures for the protection of the environment are to be taken where a serious threat is present. On the other hand, Art. 27.2 of TRIPS Agreement states that, "Members may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment .....'I

This, therefore, laces an embargo on the granting of patent rights wherever the subject-matter, such as a polluting industry, is likely to cause environmental damage or loss to plant or animal lives. Art. 27.2, in this sense, Supplies negative or defensive measures towards protection of biodiversity. There is, therefore, no conflict between the preamble to CBD and Art. 27.2 of rather, they are complementary. 2. Article 8(j) of the CBD provides:

?FK,

"Each contracting party shall, as far as possible and as appropriate:

.k: ;.

.

.. :

,::: -:,

,

1,

... .

'

.

[...I "(jj Subject to its national legislation, respect, preserve and maintain knowledge, innovations and practices of indigenous and local communities embodying traditional lifestyles relevant for the conservation and sustainable use of biological diversity and promote

98

EVOLUTION OF PATENTLAWS

7. OTHER MULTILATERAL TREATIES & INTERNATIONAL CONVENTIONS

99

/

their wider application with the approval and involvement of the holders of such knowledge, innovations and practices and encourage the equitable sharing of the benefits arising from the utilization of such knowledge, innovations and practices."

While Art. 8(j)calls for respect, preservation and maintenance of traditional knowledge that is associated with biodiversity at the national level, it does not call for the legal protection of traditional knowledge in the sense of establishing exclusive, enforceable proprietary rights. The TRIPS Agreement, as will be discussed later, does not stand in the way of WTO Members that wish to establish a legal regime for the protection of traditional knowledge. In fact, patents and geographical indications have been used to protect inventions based on traditional knowledge. This fact explains the specific inclusion of protection of traditional knowledge and folklore in the working programme of the WTO in the Doha Declaration. Therefore, in the area of traditional knowledge too, there is no direct conflict between the CBD and TRIPS though this aspect remains debatable. 3. Paragraph 7 of Art. 15 of the CBD provides: "Each Contracting Party shall take legislative, administrative or policy measures, as appropriate, and in accordance with Articles 16 , and 79 [...I with the aim of sharing in a fair and equitable way the results of research and development and the benefits arising from the commercial and other utilization of genetic resources with the Contracting Party providing such resources. Such sharing shall be upon mutually agreed terms."

This provision is applicable to a situation where a bioprospector has obtained and used traditional knowledge to identify useful genetic resources which are translated by the processes of R&D into commercially useful new products. There is a meeting point between TRIPS & CBD in the above scenario, in cases of bad faith or unclean hands, as the TRIPS Agreement and patent laws as a whole is about appropriation of inventions, not about misappropriation of knowledge. Thus, where traditional communities perceive that their intangible (although formally unprotected) assets have been misappropriated by bioprospectors, firms and research institutions, they may seek the invalidation of IPR's unduly obtained by unethical bioprospectors. Although TRIPS Agreement does have a relationship with Arts 8(j) and 15.7 of the CBD, yet the holistic character of traditional knowledge puts it beyond and outside the scope of the TRIPS Agreement. Thus, there is a need to establish a stii generis legal regime for the protection of traditional knowledge as a separate subject-matter without prejudice to the supplementary uses of existing IP regimes.

4. Art. 16 of CBD imposes upon the developing countries the responsibility conserving their biodiversity and using their biological resources in a sustainable manner. Meeting these responsibilities requires sophisticated and expensive technologies, which are not available in those countries. Further, CBD makes it clear that access to and transfer of technology which is necessary to the attainment of the objectives of the Convention "shall be povided on terms which recognize and are consistent with the adequate and effective protection of intellectual property rights" (Art. 16.2) and "in accordance with the international law" (Art. 16.3) including, obviously, the TRIPS Agreement. Access to technology, under Art. 16.2, shall be provided and facilitated "under fair and most favourable terms, including on concessional and preferential terms when mutually agreed". This means that, under the CBD, the transfer will generally be provided under the terms that prevail on the international market, without price discrimination and/or market segmentation. ,f

.

.

1.

.

Further, Art. 16.3 mandates Contracting Parties to "take legislative, administrative or policy measures, as appropriate, with the aim that Contracting Parties, in particular those that are developing countries, which provide genetic resources, are provided access to and transfer of technology which make use of those resources." In developed countries, technology is mostly in the hands of private companies. So, all measures that are to be taken in order to implement Article 16.3 must be the subject o f n e g o t i a t i o n s between d e v e l o p e d c o u n t r y governments and private companies and must fully recognize and respect private property rights. The implementation of Article 16.3 requires, therefore, the approval by tax payers, under democratic rules, that their governments subsidize other countries. To some extent, Article 76.3 of the CBD is parallel to the provisions of Article 66.2 of the TRIPS Agrezment, except that the latter applies only to the least-developed country WTO Members, while the former may apply to countries in all stages of development (including developed countries), even though a clear preference is given to developing countries ("in particular those that are developing countries").

5. Art. 18 of the CBD deals with technical and scientific cooperation in the field of conservation and sustainable use of biological diversity, including the and use of indigenous and traditional technologies. Such technical depends on the partnerships between scientific institutions and Private companies. It also requires capacity-building and licensing of rights. Such mechanisms may be effectivelyestablished in an environment of trust only which is created where the rightholders are confident that their rights shall be Pmtected and effective enforcement mechanisms are available.

f

100

EVOLUTION OF PATENT LAWS

iy

-: . 7. OTHER MULTILATERAL TREATIES & INTERNATIONAL CONVENTIONS

--

Art. 30 of TRIPS may have some impact on the implementation of Art. 18 of the CBD to the extent that i t may create some opportunity for scientific and academic research in the field of patents without the need for authorization from the patent owners. In conclusion, it may be stated that although TRIPS and CBD are outcomes of different types of international movements, the TRIPS Agreement can yet be implemented so as to support the objectives of CBD.

In UPOV-1978, restrictions on the exercise of the breeders' rights are "for reasons of public interest"; in UPOV-1991 exceptions are spelt out in functional terms, such as acts done for experimental purpose, acts done for the purpose of breeding other varieties etc. The latter category includes use by farmers for propagating purposes on their own holdings, the product of the protected variety obtained by planting on their own holdings. But this exception must be "within reasonable limits and subject to the safeguarding of the legitimate interest of the breeder". In the Article on the rights of breeder (Article 5 of UPOV-1978 and Article 14 of UPOV-1991) UPOV-1991 mentions the following additional acts in respect of the propagating material of the variety, whch shall require the authorization of the breeders: "reproduction", "conditioning for the purpose of propagation", "exporting", "importing" and "stocking" for the purposes specified in Article 14.These might have been implied in Article 5 of UPOV-1978, but are not specifically spelt out. The period of protection under UPOV-1978 is 15 and 18 years; under UPOV-1991, it is 20 and 25 years.

IV. INTERNATIONAL CONVENTION FOR THE PROTECTION OF NEW VARIETIES OF PLANTS (UPOV) The UPOV Convention provides a unique system for the protection of plants varieties. It draws some provisions and principles from existing regimes and adapts them to the specific characteristics of its subject-matter. The Convention, originally adopted on December 2,1961 was subsequently revised on November 10,1972, on October 23,1978 and on March 19,1991. The 1978 and 1991 versions of UPOV have been a subject of animated discussions.

(a) Salient Features of UPOV-1978 & UPOV-1991 Both UPOV-1978 and UPOV-1991 are designed basically to p r o t e t the breeder's rights as the very title of the Convention suggests and not the farmer's rights. In UPOV-1978, there are some provisions for measures to be taken in the public interest. Breeder's rights provided in UPOV-1978 permits the use by the other breeders of a protected variety as a basis for the development of a new variety ("the breeder's exception") and the re-use by the farmers of seeds obtained from their own harvests ("the farmer's privilege"). But in UPOV-1991, this loophole has more or less been plugged and a much higher level of protection is provided to the breeders, generally at the cost of the farmers. Farmer's exception has lost its character as a general principle and has become a real exception to be established in each case. A comparison between UPOV1978 and UPOV-1991 is attempted in the Box below. COMPARISON BETWEEN UPOV-1978 AND UPOV-1991 UPOV-1991 dispenses with the Preamble of UPOV-1978 which refers to "the limitations that the requirement of public interest may impose on the free exercise of breeders' rights." UPOV-1978 makes its provisions applicable within 8 years to at least 24 genera or species in all, while underlining the objective to cover progressively all genera; UPOV-1991 obliges a member state to apply its provisions to all plants and genera within five years after it becomes a party to the treaty.

101

[Source: "An Unequal Treaty"

- Mtichktind

Dtibeyl

r _ The so-called "the farmer's privilege" and "the breeder's exceptions" shall

now be scrutinized in detail. (i) The Farmer's Privilege The farmer's privilege was implicit in the definition of breeder's rights under UPOV-1978. Art. 5 states: "(1) The effects of the right granted to the breeder is that his prior authorization shall be required for - the production for purposes of commercial marketing - the offering for sale - the marketing of the reproductive or vegetative propagating material, as such, of the variety."

1 I

..

Given that this right did not cover acts of third parties with a non-commerpurpose, such third parties could practice acts without needing the prior authorization from the rightholder. Therefore, where a farmer saved seeds and used those seeds for resowing on his/her farm, there was no breeder's rights wringement. This concept has been expanded to comprise some acts that may have some commercial implications, such as traditional bartering among small h e r s , but in the light of the 1978UPOV Act's narrow scope, those acts d o not m t i t u t e marketing as such. This is what is called "the farmer's exemption" (from liability for infringement) or the "farmer's exception'' (to the rights

102

7. OTHER MULTILATERAL TREATIES & INTERNATIONAL CONVENTIONS

EVOLUTION OF PATENT LAWS .

conferred to breeders) or the "farmer's privilege". The 1991 Act defined the breeder's rights more extensively than the 1978 Act so as to include any acts of production or reproduction (multiplication), regardless of their purpose or commercial nature (Art. 14 (l)(i)).Furthermore, the breeder's rights comprise acts in respect of the harvested material obtained through the unauthorized use of propagating material of the protected variety (Arts 14(2)and (3)).Therefore, the farmer's exception could no longer be implied. For this reason, the farmer's exception has become the subject of a specific provision, Art. 15(2),which states:

I ?

of the right holder should be requested, such as producing or qeproducing the protected variety, conditioning it for the purposes of propaga*- tion, offering for sale, selling or marketing, etc. In contrast with the farmer's which is optional, the breeder's exemption is mandatory. The breeder's exemption is proof that the UPOV Convention does not raise any legal OFeconomicobstacle to the research and development of new varieties. On the contrary, the UPOV Convention actually promotes such development, which results in agro-diversity and, consequently, food security.

(b)Relationship between UPOV and TRIPS Agreement

"[ ...I [Elach Contracting Party may, within reasonable limits and subject to the safeguarding of the legitimate interests of the breeder, restrict the breeder's right in relation to any variety in order to permit farmers to use for propagating purposes, on their own holdings, the product of the harvest which they have obtained by planting, on their own holdings, the protected variety or a variety covered by Article 14(5)(a)(i)or (ii) [that is, an essentially derived variety]."

What UPOV-1991 changed as regards the farmer's exceptions was to establish some protection for the breeder. Here, the exception only covers the use of the saved material (a) that has been obtained by planting, (b) on the own holdings of the farmers benefitted by the exception'and (c) that can be used for propagating purposes only, (d) on their own holdings (that is, it cannot be used for bartering or otherwise be transferred to others). Thus, under UPOV-1991, the farmer's exception could not be used by UPOV Members to make the breeder's rights meaningless. Many adversaries of the UPOV Convention have challenged the wisdom of following its standards because these might affect food security, given the risks that small traditional farmers would no longer be able to save seeds and maintain their traditional crops and farming techniques. Of course, UPOV only applies to protected varieties. Farmers who buy unprotected seeds are free to do whatever they want to do with them, unless. they are bo~mdby contractual clauses to do otherwise. But, even as regards protected plant varieties, there is no mechanism that may prevent small farmers from continuing their traditional practices of saving and resowing seeds. Small farmers are not seed traders, and, therefore, they may not be affected by the limits imposed by Art. 15(2)of the UPOV Act of 1991. (ii) The Breeder's Exception Under the breeder's exemption, which was provided for in the UPOV Act of 1978 (Art. 5(3)) and renewed in the UPOV Act of 1991 (Art. 15(l)(iii)in conjunction with Art. 14), there is no need to obtain the prior authorization of the breeder's right holder for the use of the protected variety as an initial source of other varieties. The exception reaches all acts for which, in principle, the prior

,..

103

I

!

I

1 I

When the TRIPS Agreement was being negotiated, some developing co~mtries were opposed to the inclusion of a reference to UPOV in the TRIPS Agreement on two grounds: firstly, it was argued that UPOV had a small membership, so the uPOV Convention could be deemed as lacking international acceptance, and secondly, a number of Members were hesitant in accepting a reference to the UPOV version of 1991, because they understood that the UPOV text of 1978 was more flexible, particularly as far as the farmer's exemption was concerned. Under TRIPS, Art. 27.3(b) allows WTO Members to adopt a combination of patent protection and a siti generis system of protection for plant varieties. This leads to two possible interpretations. One, WTO Members may adopt a single system under which they combine standards extracting from both the patent regime (as defined by Sec. 5 of part I1 of the TRIPS Agreement) and the UPOV or other sui generis regime. For example, plant varieties could be protected through patents with a 20-year term, subject to the farmer's and breeder's exceptions. Alternatively, WTO Members may put more than one regime in place for the protection of plant varieties at the same time. The UPOV Convention, although admitting exceptions to breeder's rights, establishes a system that, in many respects, is more effective and provides more legal security than the patent provisions of the TRIPS Agreement or the Paris Convention. This is true both under the 1978and the 1991revisions of the UPOV Convention. The 1978 text, for example, limits the grounds on which plant variety certiiicate may be annulled and cancelled b!? governments. It also prohibits governments to restrict the free exercise of the right accorded to breeders "otherwise than for reasons of public interest" and establishes that all measures shall be taken to ensure that the breeder receives equitable remuneration (Art. 9). The provision that private rights may only be diminished on Pounds of public interest, in principle, also applies to patents and compulsory licences, but the TRIPS negotiators unfortunately have failed to make that kckrification. Furthermore, breeders are entitled to a provisional protection in & period between the filing date and the date on which they obtain the P e r t i f h e .Under the 1978 text, provisional protection is optional and applies toabusive acts of third parties only (Article 7(3)).Art. 28 of the TRIPS Agreement fails to provide for such an important measure. '

104 -

7. OTHER MULTILATERAL TREATIES & INTERNATIONAL CONVENTIONS

EVOLUTION --- OF PATENT LAWS

It can be seen that the UPOV provides standards of plant variety protection that are considered effective and, thus, TRIPS-compliant. But, WTO Members may yet design different standards of protection, provided they are likewise effective. So far, no such different standards have been developed outside the UPOV or the patent system. There have been some recent attempts of including in plant variety related legislation some provisions on access to genetic resources e.g. the African Model Law for the Protection of the Rights of Local Communities, Farmers and Breeders, and for the Regulation of Access to Biological Resources, 1998, drafted by Organization of African Unity (OAU). However, that does not necessarily mean that a new system has been created. What the OAU Model Law or other such laws contain is a combination of UPOV-like provisions with some norms on how to share benefits with local governments and traditional communities derived from the use of plant genetic resources which are either wild or non-stabilizedvarieties and, therefore, could not be protected under a UPOV-like system in the first place.

V. International Treaty on Plant Genetic Resources for Food and Agriculture (PGRFA Treaty) The Food and Agricultural Organization (FAO), the central UN body dealing with agriculture, has played an important role in setting up the legal frameworks for various activities linked to agriculture. It has adopted two main legal instruments, determining the principles which govern the use and conservation of plant genetic resources for food and agriculture: (i) The International Undertaking on Plant Genetic Resources, 1983 (International Undertaking); and (ii) The International Treaty on Plant Genetic Resources for Food and Agriculture, 2001 (PGRFA Treaty). These will be discussed in some detail hereunder. The International Undertaking was adopted in 1983 as a non-binding resolution of the FA0 Conference. It formalized policies concerning the use of plant genetic resources as they existed until the 1980's. More importantly, it affirmed the principle that plant genetic resources are a heritage of humankind which should be made available to everyone. Further, traditional cultivars, wild varieties and laboratory-developed varieties too were covered within its scope. Such free availability of plant genetic resources and derived products, predictably, upset the developed countries having significant interests in genetic engineering. This led to the search for an alternative formulation, which could be achieved after the FA0 Conference passed certain interpretative resolutions in 1989 and 1991. These resolutions recognized the rights of formal innovators (as breeders of commercial varieties) and the rights of informal innovators (as developers of farmers' varieties), even while reaffirming the principle of common heritage.

y---

105

The next major development took place in 1992with the Agenda 21 calling for the strengthening of the FA0 Global System on Plant Genetic Resources and its in accordance with the outcome of negotiations on the CBD molution 3 of the CBD recognized that certain issues such as access to ex slfti allection~ not acquired in accordance with the Convention, and the realization &the farmers' rights, were to be dealt with by the FAO's Global System on Plant Genetic Resources, of which theInternationa1 Undertaking was the cornerstone. pursuance of this, the FA0 Conference requested the opening of the negotito revise the International Undertaking in harmony with the CBD. :,

8alient Features of The International Treaty on Plant Genetic !.>.Resources for Food and Agriculture ' The negotiations for a revised International Undertaking were concluded 'with the adoption of a binding treaty, the International Treaty on Plant Genetic Kesources for Food and Agriculture (PGRFA Treaty), which has objectives quite different from those of the 1983International Undertaking. The treaty, reflecting the ethos of CBD, emphasizes the conservation of plant genetic resources, their sustainable use and benefit-sharing. It affirms that states have sovereign rights over their genetic resources for food and agriculture and that these are a common concern of mankind. It also casts general obligation on member states to survey as well as promote the collection and conservation of plant genetic resources for food and agriculture. States are also under an obligation to promote the sustainable use of these resources. '"'AS regards farmers' rights, Art. 9 of the Treaty furnishes a political state: ~ & tthat Member states recognize the immense contribution of farmers to the cbkervation and development of crop diversity. More particularly, Art. 9 can be said to merely recognize the existing residual rights such as rights of farmers ?save, use, exchange and sell farm-saved seed or propagating material. Morewer, even these limited rights are granted subject to the provisions of national laws. While the PGRFA treaty does not define positive farmer's rights, it specifically delegates the task of doing so to Member states. The treaty gives an indicative list of the elements that states can consider in seeking to realise farmer's rights at the national level. These include participation in national dwision-making concerning the management of plant genetic resources as well asbenefit-~harin~ and the protection of traditional knowledge. In practice, the most important contribution of the PGRFA treaty is likely : bbe the establishment of the Multilateral System for the access and benefit*ng. The Multilateral System is the practical mechanism which serves to h~lement the recognition that plant genetic resources for food and agriculture -Common concern of humankind. The recognition of the sovereign rights of 'htes is linked to a duty to facilitate access to the plant genetic resources they

.&'

106

--EVOLUTION OF PATENCAWS

hold, for instance, by according access expeditiously and, preferably, free of charge. The Multilateral System extends only to crops, such as rice, wheat, maize, potatoes, bananas etc. that have been included in Annx. I of the treaty. However, Annx. I fails to include such important crops as soyabeans, groundnuts, tomatoes, onions etc.. Another limitation of Multilateral System is that it covers holdings of Annx. I crops only if they are under the management and control of states and in the public domain. Under the Multilateral System, access is provided for the limited purposes of use and conservation for research, breeding and training for food and agriculture. The entry by the formal mechanism of access has to be availed not only by other states but also by natural and legal persons under the jurisdiction of a Member state. Further, the access will be provided in accordance with the standard Material Transfer Agreement (MTA).Such access is complimented by a benefit-sharing agreement. Recipients of material under the Multilateral System cannot claim intellectual property rights that limit the facilitated access to the material, or their genetic parts or components, in the form received. Further, such accessed material must also be made available to other interested parties by the recipient under the conditions laid down by the Treaty. This provision which prohibits the appropriation of isolated componentL from the accessed material has been apposed by USA and Japan on the ground that this would stifle innovation.

(b) Relationship between PGRFA Treaty and the TRIPS Agreement Under the PGRFA Treaty, bio-agricultural diversity is a means to achieve food security. This is a practical improvement over CBD, where preservation of biodiversity is an end in itself. There is a limited intersection of PGRFA treaty with the TRIPS Agreement because the former does not provide for intellectual property rights. Art. 9 of the Treaty provides for certain "Farmers' Rights" thus: "9.2 'The Contracting Parties agree that the responsibility for realizing Farmers' Rights, as they relate to plant genetic resources for food and agriculture, rests with national governments. In accordance with their needs and priorities, each Contracting Party should, as appropriate, and subject to its national legislation, take measures to protect and promote Farmers' Rights, including: (a) protection of traditional knowledge relevant to plant genetic resources for food and agriculture; (b) the right to equitably participate in sharing benefits arising from the utilization of the plant genetic resources for food and agriculture; and (c) the right to participate in making decisions, at the national level, on matters related to the conservation and sustainable use of plant genetic resources for food and agriculture.

7. OTHER MULTILATERAL TREATIES & INTERNATIONAL CONVENTIONS

103

9.3 Nothing in this Article shall be interpreted to limit any rights that f a r m e r s h a v e t o s a v e , use, e x c h a n g e a n d sell f a r m - s a v e d s e e d / p r o p a g a t i n g material, subject to n a t i o n a l law a n d a s appropriate."

Art. 9.2, inspired by Art. 8(j) of the CBD, calls upon national governments to protect and promote farmers' rights. Art. 9.3 is more focussed as it establishes a type of farmers' exemption that is different from any existing exception to IPR'S conferred, given that the existing exceptions (including those under the uPOV-1978) do not permit third parties to engage in commercialactivities (such as selling farms-saved seed/propagating material). Even while farmers' rights to commercialize protected varieties is recognized, they do not have the right to prevent unauthorized use by third parties, of even wild varieties or landraces. It has, thus, been suggested that the legal protection of landraces as intellectual creations in their own right would trigger the application of Art. 12.3(f)(infra) of the PGRFA Treaty, thus avoiding the preemption of farmers' rights. Part IV of the PGRFA Treaty establishes a Multilateral System of access to plant genetic resources as well as benefit-sharing. On access, intellectual property is called into question in two subparagraphs of Art. 12.3, which establishes the conditions of access to plant genetic resources: "(d) Recipients shall not claim any intellectual property right or other rights that limit the facilitated access to the plant genetic resources for food and agriculture, or their genetic parts or components, in the form received from the Multilateral System;

(f) Access to plant genetic resources for food and agriculture protected by intellectual and other property rights shall be consistent with relevant international agreements, and with relevant national laws;[...I."

Under Art. 12.3(d), recipients are not forbidden from claiming IPR's in modifications and improvements introduced in accessed genetic resources. The PGRFA Treaty, therefore, does not violate the TRIPS Agreement. Another Provision,Art. 12.3(f),states that genetic resources covered by IPR's (i.e.patents or plant breeders' rights) may not be taken away from the ri,ohtholder's control. n i s , too, is TRIPS-compliant. Art. 19.3(f)provides that recipients, who commercialize products made out of accessed material obtained under the Multilateral System, shall pay to a trust accOUnt "an equitable share of the benefits arising from the commercia~ization" those products. This may lead to undesirable consequences is some cases. Unorganized traditional farmers do not have the right or might to oppose the inclusion of their wild varieties and landraces in the Multilateral System whenever they fall under the Annx. I of the Treaty. In these cases, therefore, the

EVOLUTION OF PATENT LAWS

benefits arising from the commercialization of products do not go to the farmers who have preserved and, eventually, improved them by natural breeding; they go to a trust account. Thus, once integrated into Multilateral System, traditional farmers cannot assert any rights in their traditional creations which become subject to a sort of paid public domain. 1he need for the creation of a new intellectual property regime that covers landraces (may be within the framework of a new sui generis system of IPR's in traditional knowledge - to be discussed later) becomes more relevant and urgent, both at the national and international levels.

PROBLEMS WITH TRIPS PATENT SYSTEM (FOCUS ON PHARMA SECTOR) The new patent regime under TRIPS Agreement has been severely criticised for its multiple failures. In this Chapter, it is proposed to dissect this destiuctive analysis into various segments, such as, ideological, procedural and substantive failures. Also, at various places, an "effect test" shall be employed to study its damaging sweep in actual practice. Since TRIPS Agreement has invited maximum adverse publicity on account of health concerns of poor people, living in developing countries and LDC's, therefore, it is entirely apposite that our analysis focusses especially on pharmaceuticals sector.

I. A PACTUM DE CONTRMENDO The Uruguay Round Act (of which TRIPS Agreement forms a part) is the greatest economic treaty with vast political consequences. The Act, which gave birth to WTO, is sui generis in establishing a closely structured contractual architecture with stipulated mandatory norms. This was not a conventionalconsensual engagement: it was a pacttim de contmhendo (D.P. O'conell, International Treaty, Vol l , Chapter 7). It involved an undertaking to negotiate or conclude a set of pre-fabricated agreements.

11. AN ASSAULT ON SOVEREIGNTY The Act reflected the ruthless might of the US-led corporate imperium and their sovereign satellites. The developing countries made sublime and dreary noise, but then they all fell in line. It is not surprising that its impact is deep and wide on all institutions, social, economic and political. The Report of the People's Commission on GATT [Centre for Study of Global Trade Systems and Development, New Delhi (1996)l has brought out the momentous importance ofthe Uruguay Round Act in these words of insight and power:

fr

"The extensive written a n d oral submissions which have been made before us by the learned counsels, academicians a n d scientists make it clear that one fact is undisputed: the Final Act is s l r i gclleris among modern treaties in that it does not limit its concerns to cross-border issues such as the levy of tariffs a n d quotas or boundary disputes. Instead, the Final Act intrudes extensively in every aspect of the domestic economy. The Final Act seeks to restructure vital areas such a s domestic food supply, production of essential medicines, sanitary

109

110

EVOLUTION OF PATENT LAWS

8. PROBLEMS WITH TRIPS PATENT SYSTEM

The fear expressed hereinabove as regards further moves towards an erosion of sovereignty has indeed proved prophetic by a recent proposal mooted by some powerful developed countries. A background is necessary to understand this proposal. Since the laws that govern IPR are essentially national laws, inventors are required to obtain patents separately in every country. In order to facilitate the process of obtaining patents in multiple countries without losing the priority date, several countries including India signed the Patent Co-operation Treaty (PCT) that allows Member nations to assign priority date based on initial examination conducted by the patent office in any one of the member countries. However, the right to grant or reject the patent still rests with patent officesof individual countries. Thus, the patent examiners in different countries can come to different conclusions regardinggrantingor rejectinga patent application. The developed countries are seeking to reform the PCT to limit the flexibilities available to the local patent offices in the PCT Member countries. According to a recent proposal, pending approval, among the several dozens of PCT Member countries, a smaller core group of about a dozen countries will be chosen to conduct preliminary examination of the patent applications on behalf of all the others. Once a patent application is declared valid by any one of these countries, other PCT Member countries will not be allowed to reject that application on local grounds, and will also be duty bound to assign the priority date accordingly. The adjudication of disputes under TRIPS already falls in the domain of DSB of WTO. Thus, if awarding of patent rights too is transferred out of national limits, the control of state over its IP affairs will be completely wiped out. The People's Commission Report has, thus, equated the new internationalism with a, vastly superior than before, form of economic colonialism. Under the WTO regime, the sovereignty of the state is recognised merely as a device to deflect criticism from the coercive control exercised by developed countries.

111

d

and health standards, manipulation of genes and creation of new life forms, investment parameters, infrastructure, te~ecommunications,air transport, banking, insurance, and the entire service economy. There is virtually no sector of economic life which remains untouched by the Final Act. The Final Act is, in short, an invasion of a new form, a transformed East India Company, which seeks to subject the structure and functions of the Indian economy to external diktat. This is revitalized and restructured economic colonialism in that the nation state is once again marginalized. This time, however, no single foreign power bears the mantle of colonial rule. The locus of control is instead masked and muted behind the veil of contractual consent by all nations to the new internationalism dovetailed in the euphoria of liberalization and privatization sweeping the world in the aftermath of the Soviet Union".

~hus, these countries can always take a plea that the treaty, after all, was the

deed of the national governments themselves. What has, in fact, been established is a regime based on unequal treaties, which, in the course of time, can wax ta incorporate within its terms even higher levels of protectionism. This eminently suits the neo-imperialists who desire to monopolise a country's economy rather than facing the problems inherent in case of a direct invasion.

m. NO DEMOCRATIC BARGAINING Thelegitimacyof the TRIPS Agreement has been challenged on the ground -.@dm not meet the minimal conditions of democratic bargaining. The t h a ~ ~ d & n ~ o c r a tbargaining ic argues that efficiently defined property rights -likely to emerge if at least three conditions are met:

'

-:I All relevant interests have to be represented in the negotiation process; 2 . w ' All those involved in the negotiation must have full information about the consequences of various possible outcomes; and 3. Non-dommatl on One party must not coerce the others. [Drahosthat and Braithwaitel . The first condition of democratic bargaining requires developing 4

. r.

)qtl!

4

s interests are represented at the TRIPS negotiations. On the face of it, seems to have been met. However, lying behind representation in democratic bargaining is the idea that the representatives have some continuity of voice in the process. In other words, exclusions must not be practised. the track record of G A R was not very good from a developing country w v e . A veiled process of exclusion involved a strategy in which a WM'epresentational circle of consensus was expanded to create larger circles until the goals of those in the inner circle had been met. . cd .. The second condition viz. full information, too, has not been met. The e b i e s i n the innermost circle, US and EU, together with MNC's monopolised >t&hfonnation about the strategic use of various IP portfolios in various .+wkeround ts the world. It is the third condition, the absence of coercion, where TRIPS lies most * , w e d . As already discussed, US and EU employed a series of unilateral l.Wafm?s, such as, "Watch-Listing" followed by trade sanctions under Special W Mwithdrawal of GSP benefits, to enforce compliance. . " n u s , it is obvious that TRIPS Agreement was signed in utter violation of f of democratic bargaining.

.

\

.

+., b<

we,

112

EVOLUTION OF PATENT LAWS

-

8. PROBLEMS WITH TRIPS PATENT SYSTEM-

-.

113

Y

IV.A HIDDEN AGENDA

VII. ALLOWING IMPORTS HARMFUL

The main reason for bringing the protections of IPR's under the trading system under GATT was to secure the right to use the GATT retaliatory trade sanctions since other enforcement mechanisms at the national and international levels were proving ineffective and inadequate.

The right to import has been incorporated in the patent system for the first time. Under Art. 27, patent shall be available for any inventions, whether the products are imported or locally produced. This provision, read with the rights against third parties even in respect of imports provided under Art. 28, would make the accessibility of patented products more and more difficult for the users. The dependence upon imports would go up substantially. Neither the price nor the quantum of supplies can be regulated, giving a total monopoly to the patentee. As a result, the developing countries shall have to import.such goods which were earlier being produced domestically through rserseengineering. Ahead in this chapter, thenexus of permitting imports with a rise in prices of specific drugs will be examined. In addition, there will be a sharp increase in the profits and royalties remitted abroad. Just to cite one example, in 1981, Mexico paid US$818 million or 1.5% of its manufacturing GNP by way of royalties [Reichman, J.H. (1993)J.All this will impose an additional burden on their balance-of- payments position.

V. PUBLIC INTEREST MISSING Having been carved in such an ideological and operational background, it is not surprising that the public interest criterion is totally missing in the operational provisions of the TRIPS Agreement. An ideal patent system implies reciprocity and balancing the interests of the society with that of the patentee. In the TRIPS Agreement, this ideal concept of IPR has been perverted in that its reciprocal character and that of disclosure and diffusion have not found any articulation in the form of specific provisions. The Agreement is virtually a "charter of rights" for the patent holders and there are no specific obligations towards the government which grants the patent rights. The interest of the consumers which, in fact, ought to be the primary consideration has been totally ignored. Thus, in this Agreement, the private protectionist character of IPR prevails over its social and diffusion components.

VIII. PROMISED TECHNOLOGY TRANSFER THROUGH FDI FALSE

I

VI. INSTRUMENT OF TECHNOLOGICAL PROTECTIONISM The TRIPS Agreement consolidates a new form of protectionism which is not exercised through tariff or non-tariff barriers. This is technological protectionism which operates through the appropriation of the knowledge, applied to produce goods and services. In the view of developed countries, this is a necessary condition to promote innovation and to stimulate technology and the capital flows to the developing countries. This assumption is questionable. It makes sense for society, as noted by Prof. Hettinger (1992), to grant exclusive rights to tangible objects because, by its very nature, the use by one person requires excluding others. But, this is not the case with a "public good" like knowledge. The net effect of the provisions in the Agreement on TRIPS will be to freeze the present technological asymmetry between developed and developing countries. It will consolidate a system of an international division of labour under which developed countries will generate technology and developing countries will provide the markets for the resulting goods and services. This will result in a perpetuation of the near monopoly of developed countries in knowledge and technology while preventing newcomers from threatening this monopoly position. On the other hand, the Agreement will impede the development, adaptation and absorption of technology in and transfer of technology to developing countries.

,

i

+

There is no evidence to show that a reinforced and expanded protection of IPR's worldwide shall increase the flow of technology and foreign private investment (capital) to developing countries. The 1991Trade and Development Report of UNCTAD had concluded that the protection of IPR's make only a marginal contribution to investment resources and technology transfer. Various other empirical studies done by the UN have found no positive co-relation between levels of IPR protection and flows of investment resources and technology. In fact, on the contrary, a 1993 study undertaken by the UN suggested that "innovatory companies in the North shall growingly opt, in the new pat-Uruguay scenario, to directly sell the products or services that incorporate theinnovations, rather than transferring the technology through foreign direct h t m e n t s and licensing agreements." Coupled with the scrapping of the form of compulsory licensing system available during the pre-TRIPS era, u e l y result would be: more exports by developed countries, and fewer W r t u n i t i e s for industrial and technological development for developing -tries. This clearly shows that higher levels of IPR protection can have a e effect on the inflow of foreign direct investment and transfer of

*

dials experience with drug MNC's, too, does not substantiate such Till the early-1970's. India essentially had a product patent regime in ceuticals and the overall industrial policy was also quite liberal towards Is. While the MNC's exercised their patent rights and prevented Indian es from manufacturing, they themselves-were not keen to undertake mg manufacturing. As a result, the industry remained underdeveloped.

114

--EVOLUTION -

8. PROBLEMS WITH TRIPS PATENT SYSTEM

OF PATENT LAWS

115

/

The MNC's were more keen to process imported bulk drugs into formulations and serve the market in India. When India abolished product patent protection in pharmaceuticals in 1972, the MNC's did not withdraw from India. In fact, basic manufacturing by the MNC's accelerated after product patent protection was abolished in India. This was because of the industrial policy restrictions, imposed by the government in the 1970's, which stated that, unless the manufacturers produced bulk drugs in specified ratios, they could not expand in formulations. But, in the 19901s,post-liberalization, as these restrictions were withdrawn, the MNC's started closing the plants that had been set up. They are now concentrating on marketing in the Indian market. Thus, rather than promoting it, liberalization had a negative impact on investment by MNC's in manufacturing plants. In the words of an analyst, "What manufacturing and pricing decisions the MNC's will adopt for the new patented drugs are not yet clear. But imports of high valued formulations have started. Indications are that the MNC's, as in the product patent regime before 1972, may be satisfied with high prices and low volumes in the Indian market and may not be keen to' undertake manufacturing in any significant scale". [Sudip Chaudhuri it1 "The WTO and India's Pharmaceuticals Industry" (Oxford, 2005)j

IX. NO R&D FOR UNREMUNERATIVE SECTORS It was a canard by developed countries that there would be an outburst of inventive genius in developing countries once they raise their level of IPR protection in their territories. The effect, in fact, may be just the opposite. There is a strong opinion among scientists that nothing is more important for invention than a free flow of knowledge, easy access to the sources of knowledge and wide dissemination of new knowledge. This is indeed borne out by a definitive role played by an unprotected internet database. In fact, the very role of patent in promoting innovation can be questioned. An invention is not just onestroke of genius: it is a result of centuries of research. Invention, above all, requires skilled manpower, technological infrastructure and investment in R&D. The MNC's of developed countries have a decisive advantage over the government and the private enterprises in developing countries. To cite just one example, it takes, on an average, over US$200 million worth of R&D investment to discover a new molecule. Thereafter, additional expenditure is required to bring it to the market. One can think of hardly any firm in a developing country whose total R&D investment approaches anywhere near this figure. According to a study carried out on ten leading global pharma companies in 1993-94 [quoted by B;K.Keayla in "TRIPS Agreement on

i

patent Laws: "Impact on Pharmaceuticals and Health for All" (1998)],their R&D investment as a percentage of their sales-turnover ranged from 11.5% to 19.2%. a the other hand, Ranbaxy, the largest Indian pharma company, could invest only5% of its sales-turnover on R&D while the average spending by Indian h a m a companies was a low 2%. This may explain why even in areas where patents are granted, there is not a single instance of genuine R&D P breakthrough in any developing country. The example of India shows that invention has been possible not by the grant of product patents, but by the dedicated effortof a group of scientists, by a mission approach and by selective delinking as in the case of nuclear and space technologies. Next, the relationship between TRIPS Agreement and R&D investment, both by MNC's and local entities, will be examined in detail in the context of international pharma sector, with a focus on India. The drug needs of the poor countries are, in many respects, different from those of the rich countries because of the different disease pattern. WHO'S estimates [quoted by Kremer (2002)lshow that infectious and parasitic diseases account for one-third of the disease burden in low-income countries, but only 3 percent of the burden in high-income countries. Non-communicable conditions such as cancer and heart problems account for more than 80 percent of the disease burden in high-income countries. There are a number of diseases (for example, dengue, leishmaniasis, Chagas disease, leprosy) wherein 99 percent or more of the burden falls on the low and middle-income countries [WHO, quoted in hnjouw and Cockburn (2001)l The MNC's which are involved in the business of developing and marketing new drugs, d o not find these diseases attractive enough for R&D invest-tsbecause of the small size of the markets. The people in the poor countries ~ ~ ~ s u from f f e such r diseases d o not constitute a profitable market because of their Poverty. Private R&D is driven by market considerations. Hence, efforts MNC's are primarily directed towards developing new drugs for the large country markets [Correa (2001)l. Based on the above statistics, the diseases affecting the world's population -be classified into three " ErouDs: 1. Global Diseases: (forexample, cancer, cardiovascular diseases), which affect people everywhere and constitute the major focus of the R&D by MNC's; 2- Neglected Diseases: (for example, malaria, tuberculosis, HIV/ AIDS), which mainly affect people in poor countries, but there is a small market in wealthy countries which prompts some R&D efforts; Most Neglected Diseases: (for example, Chagas Disease, dengue fever, .I -9-1 leishmaniasis, leprosy), which almost exclusively affect people in developing countries and LDC's who are too poor to pay for treatment, hence no R&D. 1

a

116

EVOLUTION OF PATENT LAWS

The TRIPS Agreement does not seem to have changed matters much internationally. This is borne out by the results of the following surveys: A survey by the DND Working Group and The Harvard School of Public Health, shows that out of the eleven MNC's which responded, accounting for about 28.8 percent of the world pharmaceutical market in 2002, eight companies incurred no R&D expenditure at all on the three most neglected diseases included in the survey (Chagasdisease, leishmaniasis and sleeping sickness). Only two companies reported spending on malaria and three companies on tuberculosis. Seven companies spent less than 1 per cent of their R&D budget on these five diseases [DND Working Group (2001)l. Out of the 1393drugs marketed between 1975 and 1999, only thirteen (1 percent) were for tropical diseases. Of these, only four were developed by commercial pharmaceutical companies. Five came from veterinary research, two were modifications of existing medicines and two were produced for the US military [Trouiller (2002), Kremer (2002)l. Only 10 per cent of the global health research is devoted to conditions that account for 90 per cent of the global disease burden - an imbalance that is referred to as the 10/90 disequilibrium [Drugs for Neglected Diseases (DND) Working Group (2001)l. Less than 5 per cent of worldwide pharmaceutical R&D expenditure is spent on diseases which predominantly affect developing countries [CIPR (2002)l. The market failure to generate R&D for neglected diseases has not been compensated for by public funding of such R&D. Public funding in developed countries has also been determined more by market considerations and, hence, is directed towards R&D for diseases of wealthy countries. Pharmaceutical R&D can be broadly classified into three types: (i) development of New Chemical Entities (NCE's); (ii) modifications of existing NCE's (new chemical derivatives, new formulations, new combinations); and (iii) development of new processes for manufacturing drugs (whether old or new); Till recently, R&D in the Indian pharmaceutical companies has been primarily of the third type. Despite the inadequate stress on R&D for new drug development, some new drugs did emerge in India. Most of these drugs came out from the central Drug Research Institute (CDRI), which is one of the few public sector organizations in the world which have their own drug development infrastructure.

I i

8. PROBLEMS WITH TRIPS PATENT SYSTEM

117

However, these drugs could not survive in the market because of competition horn similar products of MNC's. Since the mid-1990's, the Indian private sector has started investing in R&D for new drugs. A number of NCE's have also been developed, which are at diEferent stages of development. But, none of the Indian companies is engaged intheentire process of drug development. The model that the Indian companies seem to have adopted is to synthesise new compounds and license these out to the MNC's at early stages of clinical development. As a result, the Indian are effectively targeting diseases which interest the MNC's and not the diseases. TRIPS may have prompted these Indian companies to go for new drug R&D. If any of these compounds are successful, the Indian companies involved will reap tremendous financial returns. But such gains, if any, would be incomparably small compared to the costs that developing countries would be incurring for the high prices resulting from the product patentrights granted to the MNC's. And, hence, this can hardly be a justification for a country such as India to grant such patent protection. As regards R&D spending by MNC's in India, it has been observed that none of the new drugs marketed globally by MNC's have been developed in India. Only three MNC's - Ciba-Geigy (now part of Novartis), Hoechst (now part of Aventis) and Boots - set up facilities for new drug development in India but, in course of time, either they discontinued research (Ciba-Geigy) or d w g e d ownership (Hoechst) or changed ownership as well as discontinued research !Boots). Thus,MNC's in India disprove the hypothesis that strong IPR's are necessary for their investment in R&D. The three MNC's started R&D for new drug dwelopment when India did not provide product patent protection. After however, hardly any MNC is involved in any significant R&D for new drugs.

m,

Z N O BINDING MEASURES AGAINST ABUSES IPR protection is anti-competition and anti-liberalisation, as it is intended bguarantee the rentier's income to the monopolists in this area. . L' lhat such protection of IPR's could itself be a barrier to trade, was ! W i s e d in the TRIPS Agreement in the first paragraph of its Preamble where stated:

-

II

''' I*.

"Desiring ......... to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade."

m s is further recognized in Art. 8(2) which states:

,.. .

"Appropriate measures ......... may be needed to prevent the abuse of intellectual property rights by right holders or the resort to practices

118 -

8. PROBLEMS WITH TRIPS PATENT SYSTEM

EVOLUTION OF PATENT LAWS

the right holder not to work the patent locally and go on supplying the market byimports. As a result, it will no longer be possible to use prolonged non-working as a ground for giving a compulsory licence. Such a limitation is unfortunate and it is, in fact, not in consonance with thespirit of the provisions of Arts 7 and 8. The 'Objectives' under Art. 7 provide that, "The protection and enforcement of intellectual property rights should contribute to the pron~otionoftechnological innovatinrz and to the transfer and dissenrinntion of technolopj, .............conducive to social and economic welfare, and to a balance of rights and obligations". [Emphasis supplied]

which unreasonably restrain trade or adversely affect the international transfer of technology." However, in spite of this eloquent recognition of the existence of the problem of the abuse of IPR's, the Agreement does not contain any binding or enforceable measures to prevent such abuses. On the contrary, the text of the Agreement is weighted heavily in favour of patent holders who will have, under the Agreement, all the rights they claim but hardly any obligation.

XI. NO EXPLICIT COMPULSORY LICENSING The TRIPS Agreement contains no explicit provision for compulsory licensing for commercial purposes. Although a measure of involuntary licensing is implicit in Art. 31 under the title "Other Use Without Authorization of the Right Holder", but there are fundamental differences between the traditional provision of "Compulsory licensing" and those in Art. 31. The most fundamental difference is that whereas the former is intended to serve the public interest, the whole purpose behind the latter is to protect the interest of the right holder even while allowing for "use without authorization" of the patent under exceptional circumstances. The scope of authorization under Art. 31 is for a limited purpose of non-commercial use only and limited duration. This will not serve the purpose of meeting the requirements of the general public. A number of conditions must be fulfilled before "use without authorization" is made. The proposed user must make "efforts to obtain authorization" ................."on reasonable terms and conditions" and "over a reasonable period of time". The right holder should be given "adequate remuneration in the circumstances of each case". Further, all these various stipulations i.e. reasonableness of terms and conditions and of the time period, adequacy of the compensation offered, etc. are justiciable or subject to judicial review. Moreover, the use without authorization should be predominantly for the domestic market. Both the scope and duration of the authorization "shall be limited to the purpose for which it is granted". The authorization is liable to be terminated if there is a change in the circumstances in which it was given. Given these rigid terms and conditions in favour of the right holder and the cumbersome procedure involved, it is doubtful whether any potential user will have the incentive to resort to "use without authorization". Moreover, it is unlikely that a manufacturer would come forward to seek an authorization and take the risk of working the patent when he knows that the authorization will be withdrawn if the circumstance in which it was allowed has undergone a change. This provision of "use without authorization" is virtually pre-empted by Art. 27(1), as per which for patent rights, the import of the product will be as good as producing it by locally working the patent. This gives carte blanche to

1 2

I

i

Similarly, Art. 8, which deals with 'Principles', provides that, "Members may .........adopt measures necessary to protect public health and nutrition ..........socio-economic and technological deoelopnrent ..........., [Emphasissupplied] Arts 7 and 8, thus, envisage fulfillment of transfer of technology by, say, establishment of manufacturing units and R&D and social and economic welfare by, say, job-creation and cheaper prices etc., and enable employment of all necessary measures to achieve the same. However, Art. 31 effectively takes away what Arts 7 and 8 gave.

I

1

XII. 30 AUGUST, 2003 DECISION ON PARA 6 OF DOHA DECLARATION ONEROUS

!

.

It was noted earlier in Chapter 6 that in compliance with the mandate of paragraph 6 of Doha Declaration, an agreement titled "Implementation of paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health" was hammered on 30th August, 2003. This decision constitutes a waiver of the obligations under Art. 31(f) of TRIPSI which otherwise mandates that compulsory licence can be granted predominantly for the supply of the domestic market. It, thus, permits countries Producing patented drugs under compulsory licence to export these to counwith no or insufficient manufacturing capacities. However, this decision is hedged by many onerous conditions and cumbrous~rocedures,which threaten to prejudicially affect the effectiveness of this +portant mechanism. ; Some of these cumbrous procedures and onerous conditions are as under: (i) An importing country (if it is not a LDC) will have to establish that it has insufficient or no manufacturing capacities for the products and @

120 -

EVOLUTION OF PATENT LAWS

whether economic efficiency will be considered to be a ground for determining manufacturing capacities. (ii) An eligible importing member can use this facility only under circumstances of national emergency, extreme urgency or public non-commercial use. (iii) In cases of drugs which are patented in the importing country, two compulsory licences will have to be issued, one in the importing and another in the exporting country, for specified drugs and specified quantities. While granting compulsory licences, the procedures specified in Art. 31 of TRIPS, for example, that the applicants must first try for a voluntary licence, will be applicable. (iv) Only the specified quantity of product as per licence can be manufactured, the whole of which must be exported. This constitutes a handicap as regards economies of scale and profitability. (v) Suppliers owe an additional obligation to specifically label or mark or package the products, so as to prevent chances of re-exports. This will increase the cost and would be a time-consuming process, dissuading prospective licensees. (vi) The licensees are further likely to be repelled by obligations to post on a website, before the shipment begins, the information p6rtaining to quantity and distinguishing features of the product. The aforementioned obstacles are a result of hard stands of developed countries, which all through had been opposed to a simple and effective solution. If the solution was easy to use, then generic manufacturers from countries like India could continue to do after TRIPS what they had been doing before TRIPS, which was to produce and export patented drugs to poor countries in bulk quantities. Now, the uncertainties and various inconveniences associated with applying for a compulsory licence each time they produce for exports will all the more discourage generic manufacturers from investing and producing for exports. As a result, even when some countries want to import, the supplies may not be available.

XIII. UNSCRUTINISED EMR REGIME Although, as on this date, the regime of Exclusive Marketing Rights (EMR) is a past event, yet it needs to be examined for it had generated a great deal of controversy. Under TRIPS Agreement, a patent-like protection was to be provided for five years to the patent applicants of pharmaceuticals and agrochemicals sector on their new products in the form of 'exclusive marketing rights' (EMR) from 1.1.95. Art. 70.9 provides that such a right shall be given if the following conditions are met:

I I

I

\

1

8. PROBLEMS WITH TRIPS PATENT SYSTEM

121

#

(i) that a patent application has been filed in the concerned Member country after the entry into force of the WTO Agreement i.e. 1.1.95; (ii) that a patent application has also been filed in another Member after the entry into force of the WTO Agreement and a patent has been granted; (iii) that marketing approval has also been obtained in the concerned Member country mentioned above. The above conditions implied that any MNC, obtaining a patent and marketing approval for a drug in any small country having no proper system of scrutiny could get exclusive marketing rights for that product in a country, & hdia, without following the normal procedure of examination of validity ofthe claim. Thereby, EMR's could be obtained even in respect of drugs which k d , in the meantime, become off-patentin a country like US. EMR was, thus, opposed on the following grounds: (a) the patent applicants would be able to build statutory monopoly through EMR for their products even before the grant of patent rights ,. in the Member country concerned and, may be, also in the country of origin of the research; (b) the Government would not be able to enforce local production (during EMR) as marketing of the product would be based upon imports at high prohibitive prices; (c) the Government would not be able to apply strong compulsory 1.; licensing/licensing of right provisions for manufacturing by the domestic industry of products covered by the EMR as the right available under EMR was only for marketing and, as such, only the same right could be granted by the Government to other enterprises; (d) the procedure for processing of EMR applications was not stringent in view of limited conditions stipulated for grant of EMR under Art. 70.9. Thus, it was not possible toexamine the crucial novelty and other -(el it would have been difficult for the Government to prevent the right holder from using the local population as the experimental ground for their new product during the initial period of the introduction of such products in the developing markets by taking advantage of the EMR and their superior marketing infrastructure and the aggressive marketing practices. the ten-year transition period, patent/EMR applications filed keeping the provisions of Art. 27 in view. In actual re than 4790 applications for pharmaceuticals have accumulated in the x'which will, from 1stJanuary, 2005, be considered for grant of patents. ge number of these applications raise a doubt as to whether they pertain

-122

EVOLUTION OF PATENT LAWS --

to such products which have already fallen in the public domain or relate to dosage form, usage form and new combinations or even herbal remedies etc. Contrary to widespread apprehensions, only 13applications for EMR were filed in India. But the one granted to an MNC, Novartis, for an anti-cancer drug, Gleevec, has created a controversy. This will be discussed in the following section in the context of a rise in prices.

8. PROBLEMS WITH TRIPS PATENT S E E M

123

<:!

XIV. RUNAWAY PRICES A strong patent system establishes monopoly of the worst kind by charging as high a price as the market can bear with the sole purpose of maximizing profits. This has been the historical trend as evidenced by many empirical studies. As an illustration, sample the following: After the introduction of pharmaceutical product patents in Italy in 1979, the prices of medicin;: increased on an average by more than 200% i.e. consumer suffered a net welfare loss [Pablo Challu in "The Consequences of Pharmaceutical Product Patents (1991)l. An economist, A. Subramanian (1992) noted that drug prices in Malaysia, where patent protection existed, were from 20% to 76% higher than India, which reflected a profit-maximizing behaviour based on "what the market can bear". Again, there are a large number of studies which show how, for the same product, the prices are much lower in countries such as India which did not earlier provide a product patent protection to drugs, compared to those in countries where such protection was granted. The following table (Table 1) of price comparison of medicines between India, Pakistan, Indonesia, UK and US will bear this out: Table 1: Price comparison of medicines (Prices converted into Indian Rupees) Corn-

India

Pakistan

[Source: B. K. Keayla i n "TRIPS Agreement o n Patent Larus: Inlpact o n Plzarma'&uticals and Health for All (1998)l The above scenario is on account of the type of 'patent system' practised in these countries. It is the same enterprise which was charging highly differential in differentcountries as it was possible to exploit the markets on the basis of patent monopoly available. of There is one more study which is quite incisive and throws even more light on the price dynamics on a global level. The results are given under Table 2. Table 2: International Price Differential of , Drugs Under Patents in Mid-1999 (Price in US$ per 100 units) drug and

Price Cheap- Cost- Chea- Cost- Ratio Ratio Ratio Ratio in est liest pest liest of of of of other other Indian Indian Indian Indian ice coun- coun- price price price price col to col to coI coi to(4) try try to(3) price price (5) (6) (5)

Indo?imvastatin2omg

32

-

290

524

340

118

210 -

117

(6)

(7)

262

1:3.7

'

Notes: Cheapest and costliest OECD prices refer to those in the ten OECD corntries as mentioned in the text. Cheapest and costliest other-country prices 'Dfer to those in the ten developing countries which gave product patent Protection to these drugs as mentioned in the text. [Source: Derivedfronz Table l a of Bala and Sagoo 20001

',

124

EVOLUTION OF PATENT LAWS

~t is interesting to note that the "costliest other country price" (Col 6) exceeds that of "costliest OECD price" (Col. 4). This shows that product patent system has ravaged the developing nations, with lower paying capacit~/even more than the richest of the developed nations. This is truly ironical.'It manifests the exploitative character of the patent system at its pinnacle. ~ opoor ~ people t in developing countries pay for their own medicines public health provisions and insurance facilities are low. In view of the fact that the extraordinarily high prices under the patent regimes have no correlation with the purchasing capacity of these poor consumers, drug prices become even more critical for accessibility. Next, the role of TRIPS in causing a rise in prices in the Indian context will be considered. Under Art. 27.1, TRIPS does not insist that the MNC's work their patents within the country. As a result, there have been imports. by theMNCrs. high-priced products for which there are no generic equivalents in the of country. Sample the following two examples in this regard: Imports of the imrnuno-suppresant drug, Cyclosporin by Novartis (brand name: Sandimmum), exceeded Rs. 400 million within a Year of its introduction. The cost of the drug to the patient is as high as Rs. 1000 to k.3000 per month and the treatment duration is normally one to two years. There is practically no competition for this drug in themarket. Eli Lilly recorded a turnover of over Rs. 400 million for its cardiovascular drug, Abxicimab (brand name: Reobro). This is alsoa high-pric&dmonopoly product with cost per patient amo~lntingto Rs. 30,000 to 50,000. These examples support the view of industry experts that particularly for low-volume high-priced patented products, the MNC's may not undertake production in the country but, rather, rely on imports. In the previo~lspatent regime, the indigenous companies would have developed processes for these drugs and put them in the market, forcing the prices to fall. But, this is possible in the new product patent regime. SO, unless the MNC.5 themselves decided otherwise, prices may not fall. It the prices fall, it is possible that a large number of consumers will be buying it. But, for those who can afford such high-priced drugs, the demand may be inelastic. SOfar as India is concerned# the MNCIS may be satisfied with low volume and high prices And in such a case, it may not be worth the trouble for them to go for its production in the country. There were other kinds of instances wherein the price of quasi-patented drug has been found to be much in excess of its generic equivalent. Pending the full implementation of TRIPS, Novartis had sometimes back obtained in India an exclusive marketing right for its anti-cancer drug, imatinib mesylate (brand

8. PROBLEMS WITH TRIPS PATENT SYSTEM

125

name: Gleevec).Compared to the cost of Rs. 1,20,00Opermonth for the Novartis' generic versions cost between Rs. 9,000 and Rs. 12,000. The aforesaid statistics justify the findings made in a number of studies on the likely 'welfare loss' to developing countries upon introduction of TRIPS regime. In one such study ["Social Costs &Benefits of Introducing Patent Protection to~harmaceuticalDrugs in Developing Countries", Julio, Nogues (1990)],it has been calculated that the welfare loss to a sample of developing countries i.e. Argentina, Brazil, India, Mexico, Korea and Taiwan would range from USS3.5 billion to US$ 10.8 billion, while the income gains by foreign patent owners would tie between US$1.2 billion to US$14.4 billion. Country-wise mnual welfare losses, according to another estimate [ "Economic Implications of the Uruguay Round, IMF (1994)", Harmsen Richard and ~ w i n d~ubramanian(1994)Jwould be US$ 67 million to US$ 387 million for Argentina, US$220 million to US$1.3 billion for India, US$ 153 million to US$ 879 million for Brazil and US$75 million to US$428 million for Mexico.

.

XV*ACCESS DENIED TO MEDICINES AND HEALTH CARE O n account of various factors, as discussed hereinabove, it is no surprise that *e serious apprehension of experts that developing country's and LDCfs population would be denied access to essential medicines and overall health care facilities have come out to be dangerously true. In his October, 1995 letter to Michael Kantor (USTR), Ralph Nader and James Love, while rejecting TRIPS approach, had warned thus, " ....... there would be no generic drugs - every drug would have

'

monopoly patent protection for ever. The poorest consumers including large portions of citizens in the poorest countries would suffer from ever greater barriers to access to medical care ........... "

'

Pursuant to Uruguay Act '94 followed by a TRIPS-plus approach by the dwelo~edcountries which nullified, to a great extent, the formal transitional to developing countries and LDC's, the TRIPS regime's baneful eIkcb had a Premature birth. This has been SO pointed out in a detailed study Frederick M. Abbott (2002) in "WTO TRIPS Agreement and its Implications ,b.*ccess to Medicines in Developing Countriesu, thus:

*;

"Access to essential medicines has been substantially inhibited by patent Protection. The most striking evidence is from sub-Saharan Africa where prices of pa tented antiretrovira] medicines (ARV's) were maintained at OECD levels until large scale international pressure forced Pharma to move towards approximating prices offered by generic producers in India and Brazil. OECD-based pharmaceutical manufacturers have actively opposed introduction of generic A R V , ~ South Africa, Kenya, Uganda and elsewhere ........... "

EVOLUTION OF PATENT LAWS -

8. PROBLEMS WITH TRIPS PATENT SYSTEM /

The most disturbing example of abuse of the TRIPS Agreement occurred in South Africa. Shortly after Nelson Mandela's government came to power in South Africa, the government began to take steps to reform its health care sector and to address a growing HIV/AIDS crisis. Following adoption of the 1996 National Drug Policy, Parliament approved the South African Medicines Amendment Act (1997).This legislation: (i) granted the Health Minister the power to prescribe conditions for the parallel importation of drugs; (ii) created a mandatory generic substitution obligation requiring pharmacists to dispense a lower-price generic equivalent; and (iii) authorised the Health Minister to adopt regulations to introduce a transparent pricing system that would include a single exit price for medicines; At this stage, US pharmaceuticals industry persuaded its government to initiate an aggressive campaign to force the South African government to withdraw this legislation, and to threaten trade sanctions if it failed to d o so. The US was later joined by the European Union. In February 98, a lawsuit was brought by 39 Pharmaceuticals Company against the government of South Africa alleging various violations of the TRIPS Agreement and the South African Constitution. Although the lawsuit was without merit, it was not legal argumentation that brought about the withdrawal of the lawsuit. It was dropped because a coalition of NGO's in and outside South Africa brought public attention to the situation, exposing the public health impact of the MNC's action. While the principal objective of the complainant-MNC's may have been to force a withdrawal of the legislation, delaying its implementation indefinitely would serve the purpose of protecting patent rents. In the event, as a result of US and EU government's pressure and the MNC's lawsuit, the implementation of the Medicines Amendment Act was suspended. Thus, Pharma MNC's pressures together with pressures from USTR and EU Commission on the government of South Africa may have indelibly altered the way in which HIV/AIDS pandemic in that country has been addressed. On the other hand, it is interesting to study US'S paradoxical stand, as against its stated position in South African case, during its own ''Baverfs Ciprofloxacin" controversy. Thus, both the US and Canada negotiated very substantial discounts off the patent holder's normal price for a pa tented essential medicine (ciprofloxacin) under an explicit threat of granting compulsorY licences in the event that satisfactory pricing arrangements were not achievedIn both cases, the government acted promptly following the emergence of a medical threat, which i t propagated as a "bioterrorism".

-

-

-

-

-

-

In addition to negotiating substantial discounts under threat of compul-

sory licence, the government Commission in the US that studied the responses to bioterrorism (the "Gilmore Commission") recommended that the Department of Defence needs to substantially enhance publicly funded research on vaccines and medicines that might be used in addressing future bioterrorism threats. From a technical legal standpoint, the actions by the governments of the US and Canada stands justified under the terms of A r t s 31(b) and 73(c) of the TRIPS Agreement. However, it is a clear instance of "double-standard" that when developing country governments have proposed to use compulsory licensing legislation to provide more affordableaccess to medicines to address public health crises within their borders, they have come under intense diplomatic and economic pressure from the government of the US.

XVI. ONE-SIDED HARSH MEASURES TO HURT LOCAL PRODUCER-INFRINGER There are certain provisions that have been so designed as to clearly harm fhe local producers operating under a process patent. Art. 34, which lays down the doctrine of "reversal of burden of proof" in cases of alleged infringements of process patents, is one such provision. The various ways in which it can be misused was adverted to in Chapter 6. Coupled with Art. 46, it acquires a sinister proportion. According to Art. 46,infringing goods produced in units, which may include goods produced on the basis of process patent, and the resources and implements used for producsuch goods may be ordered to be destroyed or dismantled. This is likely to adversely affect the sizeable export of pharmaceutical products that Indian companies have built up recently by successfully exploring alternative technological routes to producing the same products, made possible by the process Patent only regime. It may be noted that Art. 46 is clearly discriminatory since there is no Cmelative punitive provision for punishing a rightholder in cases of patent at)uses.

4

'

fhI. PATENTING OF PLANT VARIETIES One of the most far-reaching provisions in the TRIPS Agreement is the one d t i n g to the patenting of plant varieties.

1x1developing countries, agriculture is both a way of life and the principal ustenance to the economy. Protecting the farmer's rights to use their ds and propagate high-yielding and pest-resistant varieties to other key to increasing agricultural production and attaining food self-sufthese countries. They have, therefore, a right to claim their legitimate virtue of their past contribution to the development of new plant es. It will be unfarr if a breeder who effects some mutation in the plant

128

8. PROBLEMS WITH TRIPS PATENT SYSTEM

EVOLUTION OF PATENT LAWS /

already discovered and brought to the present stage by farmers, is allowed to acquire an exclusive right on the new plant variety. But, this is precisely what Art. 27(3)(b)provides by way of "protection of plant varieties". The discretion to individual countries to have an effective sui generis system of their own should not be a source of much comfort. For, it is impractical for each country to have its own effectivesui generis system different from the system adopted by other countries. This can only lead to an international anarchy in this field. Therefore, the effective slli generis system adopted by individual countries will be expected to conform to an international norm and that norm is provided in the Convention for the Protection of New Varieties of Plants, which is commonly known as UPOV. Most of the developed countries adhere to UPOV as amended in 1978.The treaty has, however, been further amended in 1991. Both UPOV-1978 and UPOV-1991 are designed basically to protect the breeder's rights and not the farmer's rights. UPOV-1978 did contain certain redeeming features such as: (a) the breeder's exception - permitting the use by other breeders of a protected variety as a basis for the development of a new variety; and (bj the farmer's privilege - re-use by the farmers of seeds obtained from their own harvests; But, in UPOV-1991, these loopholes have more or less been plugged and a much higher level of protection is provided to the breeders, generally at the cost of the farmers. The provision on the protection of plant varieties will inflict incalculable harm on the agriculture of developing countries. Once farmers decide to use a protected variety, they would no longer be able to make seeds out of their produce of this variety and make it available to other farmers on a commercial basis. Other farmers will, therefore, have to go to the firm which supplied the protected variety. Apart from increasing the cost of seeds, this might cause a disruption in the agricultural system because of the prevailing practice among farmers, in most of the developing countries, of obtaining a large proportion of their seeds requirement from other farmers. Moreover, if they want to produce for exports, then they would be obliged to use the seeds of varieties that are globally traded, internationally standardized and quoted in the global market. Further, because of rapid environmental depredation, a process of fast depletion of plant varieties has already set in motion. Thus, for both commercial and ecological reasons, the future trend is going to be towards the use of fewer and fewer varieties of plants and seeds. And these will be varieties developed, produced and marketed by MNC's and their

129

Whatever natural varieties are left after the continuing ecological depredation, will become less popular and less profitable and, hence, will gradually vanish. ~ h r o u g hthe patenting of plant varieties, the patent holder will be able to replace the plant itself, thereby rendering infructuous the provisions of the TRIPSAgreement on non-patentability of plants, animals and biological material found in nature.

~ ~ 1 1PATENTING 1. OF LIFE FORMS

.

,

, 1

I

1

I

'

I

giotechnology has revolutionary potentials for bringing about economic transformations. Because of their rich biodiversity resources, developing countries have the best chance of catching up with the developed countries through the biotechnological route. But, the TRIPS Agreement, by allowing patenting of plant varieties and micro-organisms and mutations involving non-biological and micro-biological processes, will prevent the diffusion of advances in the field of biotechnology. More dangerously, it is the first step in the direction of patenting of life forms themselves. This is so since patenting of micro-organisms can lead to the patenting of all life forms. In the US, patenting of micro-organisms and of life forms created by gene manipulation has already become a part of law [Diamond v. Chakrabarty, 447 US 303 (1980)l. There is a strong opinion among scientists that the so-called manipulated genes are the naturally occurring genes of one species put into the other and that this process does not involve the creation of new genes. Hence, the claim by gene-patent holders of their right over particular genes may not be sustainable. The ground reality is that developing countries possess most of the bio-diversity available in the world. These are the sources of most of the genetic resources of great value for agriculture and industry. Traditional farmers have contributed a great deal - and are still continuing to contribute - in improving phnt varieties and preserving the bio-diversity. Patenting of plant varieties, genes, genetic materials and genetically engineered crops and plants will accelerate the process by which plant and agricultural diversity is eroded. Any erosion of bio-diversity poses a serious threat to the environment as well as to d ~ e l o p m e n tThe . TRIPS Agreement, thus, is in contradiction with the objective the Bio-diversity Convention to "conserve biological diversity and make use of its components."

-

NDOGENOUS CONSTRAINTS

131

I \ J D ~1978 , imposed restrictions on the FERA companies, which were not

IN-BUILT FLEXIBILITIES IN TRIPS AND ENDOGENOUS CONSTRAINTS (FOCUS ON PHARNIA SECTOR) It was not a matter of surprise that the TRIPS Agreement contained many provisions that were adverse to the interests of developing countries and LDC's. This was a fait accolizyli since it was cast in a mould prepared by a coercive consensus, enforced by the brute power of developed countries. Although a huge literature exists on its various insidious provisions, yet the fact remains that TRIPS has now arrived with full force, beginning from 1st January, 2005, in all the developing countries. The focus, therefore, should be on discovering or inventing its salutary or meritorious features as well as foreseeing beneficial dimensions of a strong patent regime. In theory, there are different economic benefits which can be expected from the introduction of stronger IPR standards. The more important of these are: 1. MNC's that have IP portfolios should increase FDI once they realize that their IP assets are more secure. l d to increased levels of 2. A more secure legal framework s h o ~ ~ lead transfers of technology, know-how and expertise, thereby contributing to local economic growth. 3. This should stimulate local innovation in relevant fields. The Indian experience, in this regard, though, does not support the above outcomes as anything more than a wish-list. Consequent upon the introduction of a lower IPR regime vide the Patents Act, 1970, a spurt in FDI, by drug MNC's, was noted. This spurt, however, has to be linked mainly to the provisions under Foreign Exchange Regulation Act, 1973 (FERA) and the New Drug Policy (NDP), 1978. Prior to 1970, Patent laws were highly protective under Indian Patents and Designs Act, 1911 wherein a product patent was granted in pharmaceuticals sector, whereas 1970 Act granted merely a process patent. Till 1970, though pharma industry was dominated by MNC's with 68 percent market share (in 1970), they were keener to process imported bulk drugs than develop the industry from basic stages. In 1973, FERA was introduced to regulate foreign capital in India. Section 29 of FERA made a distinction between firms with foreign equity of more than 40 percent (FERA companies) and those with foreign equity at 40 percent or below and to restrict the activities of the former to specific areas. Further, the

f

.t

.

-,

applicable to other sectors. The pharmaceuticals MNC's, which were manufacw i n g formulations only or bulk drugs not involving 'high technology' were required to reduce foreign equity to 40 percent or below. Thus, unlike in the past, now the extent to which the FERA companies could operate and grow in the formulations market, depended on the extent of bulk drug production. From a policy environment which favoured them in the 1950's and the 19601s, the scales were turned against the MNC's in the 1970's. The FERA pharma MNC's had two options - either to conform to these investment restrictions or reduce their foreign equity to 40 per cent or below. ~ l t h o u g hthe reaction of MNC's was not uniform, yet, overall MNC investment in India went up - they invested more during 1972-94than they had done in the earlier period. But, after the mid-19901s,with the withdraw1 of such policy restrictions, the MNC's started disinvesting in manufacturing operations. Thus, the first generation reforms have led to a withdraw1 of FDI. This was so since the earlier influx of FDI was not voluntary but under the influence of coercive policy. Let there also be no illusion that a stronger IPR regime simpliciter will lead to an inflow of durable FDI. The Indian experience prior to 1970 supports such a view. Therefore, unless the stronger IPR regime was to be supported by a second generation reforms, including in labour laws and judiciary, MNC's would not be willing to invest in India. Otherwise, India meets other essential conditions for FDI investments, such as a vast, cheap and talented work-force, a stable political environment and a buoyant economy. After all, the MNC's, driven by a profit motive, would like to lower their cost of production and, here, India offers them an appropriate base for setting up greenfield projects. The above analysis points out that the strongest patent regime, in the present global scenario, may, after all, work to India's advantage, provided the necessary appurtenances are concurrently secured. Having, thus, exorcised the impending threats from the existing patent regime, let it not be forgotten that the Agreement fortunately contains a number of in-built flexibilities. This, in fact, has been a cause of concern to the developed World. The develop~ngcountr~esneed to work towards consolidating upon these various flexibilities in the future Ministerial - level negotiations.

loAN EVOLVING TREATY "

One of the characteristics of WTO treaties is that they are evolving treaties.

.This is visible at two different levels. Firstly, at the WTO-wide level, the ay Round of trade negotiations was only one among a series of such s. The establishment of the WTO as a result of the conclusion of the ay Round did not imply an end to trade negotiations and, in fact, the

132

9. IN-BUILT FLEXIBILITIES IN TRIPS AND ENDOGENOUS CONSTRAINTS

EVOLUTION OF PATENT LAWS

IV.BALANCING OBJECTIVES AND PRINCIPLES

Doha Ministerial Conference proposed substantive negotiations which have been taking place over the past three years. During this Conference, the epochmaking Doha Health Declaration was adopted. The Declaration's central importance stems from its recognition that the existence of patent rights in the health sector does not stop States from taking measures to protect public health. More specifically, it affirms that TRIPS should be 'interpreted and implemented in a manner supportive of WTO Member's right to protect public health and, in particular, to promote access to medicines for all'. The Declaration is important for developing countries and LDC's in so far as it strengthens the position of countries that want to take advantage of the existing flexibility within TRIPS. It does not open new avenues within TRIPS but confirms the legitimacy of measures seeking to use, to the largest extent possible, the in-built flexibility found in TRIPS. Secondly, at the level of the TRIPS Agreement, Art. 71 provides for amendments to the treaty. We shall be discussing in Chapter 11 on adopting possible strategies to avail its benefits.

The importance of Art. 7, entitled 'Objectives', and Art. 8, entitled )principles1,to the interests of developing countries and LDC's is profound. ~ l t h o u g hno specific obligation ensues from these provisions, they set the framework for the TRIPS Agreement in terms that are consistent with developing country's and LDC's interests. Art. 7 lays down a general principle that the protection and enforcement o f ~ ~ Rshould 's serve the social needs of 'promotion of technological innovation and to the transfer and dissemination of technology'. This should be to 'the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations'. This Article essentially establishes a balanced framework for TRIPS in which the private rights of IPR owners are balanced against the communal needs of users or consumers. Art. 8 permits WTO Members to take appropriate measures to enhance public interest including measures to prevent abuse or resort to practices which unreasonably restrain trade or adversely effect the international transfer of technology. This provision is quite significant for developing countries and LDC's, particularly in formulating TRIPS-consistent policy measures, aimed at mitigating the adverse effects of IPR's. Thus, Art. 8 may be used to justify the provisions of Competition law to deal with areas where TRIPS is silent, such as, ZPR's abuses arising out of dominance. Similarly, it can furnish a ground for compulsory licensing of patents. Also, Members may adopt measures, such as price control, which are necessary to protect public health and nutrition. Members may also impose restrictions or conditions on the terms of transfer of proprietary technologies.

II. A DEVELOPMENT-ORIENTEDPREAMBLE The preamble accords primary recognition to developmental and technological progress as two particularly relevant public policy objectives of intellectual property rights system that countries may wish to emphasize. In addition, the various countries are allowed to adopt a non-uniform effective and appropriate enforcement mechanism, taking into account differences in their respective national legal systems. Further, it specifically recognizes the special situation of LDC's and the need to give them sufficient flexibility in implementing their TRIPS commitments.

111. DIFFERENTIAL IMPLEMENTATION SCHEDULES One of the main concessions granted to developing countries and LDC's has been at the level of implementation deadlines. All the countries take similar commitments but some get a longer period to prepare for its implementation. Implementation of the common minimum standards of protection was, thus, scaled over a period of time. Developed countries had one year from the entry into force of the Agreement to put their systems in full compliance with their commitments, developing countries had five years and LDC's, ten years. A few more specific relaxations were adopted either in the original agreement or later on. Thus, in the case of product patents on pharmaceuticals, food and alloys, countries like India benefitted from a ten-year window, made available for such categories of products on which product patent was not available as on 1st January, 2000. Another case concerns the introduction of medical patents for LDC's. In this case, the Doha Ministerial Conference agreed to extend the deadline by another ten years upto 1st January, 2016. This was confirmed by the Council for TRIPS in 2002.

133

V. NARROWING THE PATENTABILITY CRITERIA

1 I

Under Art. 27(1) of TRIPS, patents will have to be provided for inventions, which are 'new, involve an inventive step and are capable of industrial application'. The Agreement, however, does not define these terms. This can be assumed to have provided some flexibility, yet, in the immediate context of "uguration of full product patent protection in pharmaceuticals from 1st h u a r y , 2005, this lack of clarity has led to an apprehension of various negative Comquences such as a rise in prices of essential drugs and closure of various 8emric companies. This, therefore, necessitates an immediate construction of P m e t e r s which may serve as a guide before grant of patents. The pharma sector, as always, provides a useful base. Innovations in the p h a industry for which patents are claimed vary widely. It ranges from b*thr~ugh discoveries to minor modifications of existing medications. A -nt study by the US-based National Institute of Health Care Management and Education foundation (NIHCM) is quite revealing. Using the

134

9. IN-BUILT FLEXIBILITIES IN TRIPS AND ENDOGENOUS CONSTRAINTS

EVOLUTION OF PATENT LAWS

criteria adopted by US Food and Drug Administration (USFDA), it classified the new drug applications into three categories: (i) New Chemical Entities (NCE's). (ii) Incrementally Modified Drugs (IMD's) i.e. drugs which contain an existing NCE which has been modified by the manufacturer. Such modifications could be: (a) New formulations i.e. new dosage forms or routes of administration or a new delivery system. (b) New combinations of existing NCE's. (c) New chemical derivatives of existing NCE's. (iii) Other drugs, based on mere new pharmaceutical uses - either first or second medical indication [Grubb (1999), pp. 217-181 for which identical versions have already been approved. During a 12-year period from 1989 to 2000, out of a total of 1035 new drugs approved by USFDA, only 35 percent contained a new active ingredient. The study revealed that highly innovative drugs i.e. drugs which contain an NCE and also provide significant chemical improvements were few - only 17percent belonged to this category. It was found that some drugs belonging to the IMD category- 9 percent of total approval - also offered a clinical improvement. Thus, only 26 percent provided chemical improvement. The remaining 74 percent did not offer any clinical benefits. As per strict criteria of patentability, only 17percent were eligible for patent rights. But, as the study shows, most of the patented new drugs were not more than unnecessary combinations of existing drugs or simple modifications of existing drugs or new uses, especially second medical indications, all of which represent practically therapeutic advance. This practice of patent grant is routinely used for anti-competitive purposes mainly for extending the patent period and blocking generic entry. There is no reason why the developing countries and LDC's should provide patents for these products. It has been suggested that a country can interpret the various ingredients of patentability viz. 'new', 'inventive step' & 'capable of industrial application', so as to restrict the number of patents [Correa (2000), Abbott (2001),CIPR (2002)l.WHO (2001),in fact, has warned that if the patentability standards are too broad, i.e. the terms 'new' or 'inventive' are defined to include all-the new forms of the same NCE, then, effectively, the patent life can be extended beyond the 20 years period. WHO has advised governments to exercise discretion in this regard. CIPR (2002) has pointed out that there is no compulsion under TRIPS for the developing countries to follow the liberal patent standards of developed countries. It has been the demand of not only the generic pharmaceuticals industry, but also of Indian scientists, lawyers and NGO's that patents may not be granted for 'a new molecular modification or a

i

135

salt or ester or a derivative or a formulation or a dosage form of a new chemical entity having the same or similar pharmaceutical activity' or new uses or new combinations of existing NCE's [People's Commission on Patent Laws in India (2003)l.The aim should be to ensure that patents are granted for true technical contributions and not for blocking innovations and legitimate competition by producers [Correa (2000)l.

VI. EXCEPTIONS TO EXCLUSIVE RIGHTS

1 4

1

1 t . ..

While TRIPS lays down stringent and largely harmonized requirements for the patent laws of Members, it recognizes that there has to be exceptions where the patented product or process could be used without the authorization of the right holder. These exceptions can be placed under two categories: (a) where the use would be for limited purposes which d o not unreasonably prejudice the legitimate interests of the right holder (Art. 30); and (b) for use authorized to third parties or to government under specified conditions (Art. 31). The text of these exceptions provides some elbow-room to such developing countries and LDC's who want to set up a more bearable patent regime. In this section, it is proposed to discuss category (a) - Art. 30 exceptions while category (b) - Art. 31 exceptions shall be the subject-matter of the following section. Art. 30 allows WTO Members to provide limited exceptions to a patentee's , exclusive rights provided that such exceptions comply with the same three-part test as given in Art. 13 of TRIPS: such exceptions are limited, such exceptions d o not unreasonably conflict with a normal exploitation of the patent, and d o not unreasonably prejudice the legitimate interests of the patent owner. In allowing for such exceptions, the legitimate interests of third parties may be taken into account. TRIPS does not contain any other explanations on the terms, 'limited ptions', 'unreasonably conflict' and 'legitimate interests'. Neither is there a f specific acts for which an exception can be provided. Hence, the use of 3 0 depends on the interpretation of the various terms used therein. Most commentators agree that these limited exceptions, flowing from arious patent laws, are: 1. Early Working or "Regulatory use" Exception; 2. Research and "experimental use" exception; 3. Parallel imports exception;

136

EVOLUTION OF PATENT LAWS-

9. IN-BUILT F L E X l B l L B IN TRIPS AND ENDOGENOUS CONSTRAINTS

-

4. Bonafide private and non-commercial use exception; and 5. Use on ships, aircrafts or other vehicles temporarily in foreign jurisdiction (Watal, 2000). In this section, it is proposed to study the three exceptions at (I), (2)and (3) in detail.

-

(a) Early Working - Regulatory use Exception

The 'early working' provision is popularly referred to as the 'Bolar' provision or exception, after the court case involving Roche, an MNC and Bolar Pharmaceuticals, a generic company. The US Court denied Bolar the right to develop and submit a generic product for regulatory approval before the expiry of the patent. At this stage, The Drug Price Competition and Patent Term Restoration Act, 1984 (popularly known as Hatch-Waxman Act) amended the Patent Act of 1952 to overrule the court ruling. Under the Bolar provision (introduced by Hatch-Waxman Act, 84) of the Patent Act, 1952, non-patentees could start using the patented product for regulatory purposes even before the expiration of the patents. Moreover, generic applicants were no longer required to repeat the clinical studies to prove the efficacy and safety of the product. They were permitted to rely on the innovator company's safety and efficacy data and could file only an Abbreviated New Drug Application (ANDA). The generic applicants were, however, required to demonstrate that the generic equivalent had the same ingredient, route of administration, dosage form and strength and that it was bioequivalent (the rate at which the drug becomes available for absorption in the patient) to the relevant branded product. By, thus, enabling generic entry soon after the patents expire, the Bolar provision allows the consumers to benefit from competition and lower prices without delay. In its absence, the generic companies would have to wait till the patents actually expire before they can begin the tests necessary for getting regulatory approval. During the several months or even years that it takes to get such approvals, the patentee will effectively enjoy monopoly status even in the absence of any legal barrier. Yet another dimension of this exception was brought forth in the CanadaEC dispute where the WTO dispute panel, while upholding the use of Ijolar exception as conforming to the TRIPS provisions, struck down the stockpiling exception. Thus, the generic drogs can't be manufactured commercially and stockpiled before the end of patent term. The amended Patents Act in India provides for Bolar exception. Under Section 107A(a),use of a patent for development and submission of information for regulatory approval will not be considered as an infringement of the patent right. Other countries need to follow suit.

137

(b) Research and Experimental use Exception The research and experimental use exception is aimed at ensuring that research aimed at generating new knowledge is fostered and is not impeded by patents. It is a longstanding exception which is justified on the basis that one of the main aims of patent laws is to facilitate the dissemination of knowledge, promote innovations and thereby facilitate the advancement of science. This is supported by the Doha Declaration which affirmed, "the TRIPS Agreement shall be read in the light of the object and purpose of the Agreement as expressed, in particular, in its objectives and principles". Such possibilities of experimentation will help realize the objectives mentioned in Art. 7, namely, ~romotionof technological innovation and transfer and dissemination of technology. This is also important for maintaining and developing efficient alternatives to protect public health and to prevent patentees from abusing patent rights (Art. 8 on 'Principles'). More particularly, it is useful for inventing around the initial invention, improving on the invention or for the purposes of evaluating the invention and determining if it works [Correa (2000)). This is so as R&D is a continuous process. Thus, if the indigenous sector is asked once in a while to develop a process, it may not be possible to do so. Such research options, using the patented product, will enable the indigenous firms to be ready with efficient processes and use these whenever they are permitted to d o so. As UNCTADICTSD 2002 has pointed out that the exception can not only be for scientific 'research with no commercial intent, but also for experimentation made for commercial purposes. To avoid any ambiguity, the national legislations should clearly provide that the non-patentees can experiment with the patented product and develop their own processes of manufacturing for commercial purposes, the same or a different product. In 'The Patents Act, 1970' of India, Section 47 provides that the patented product/process may be made or used by any person for 'purpose merely of experiment or research including the imparting of instructions to pupils'. This not be enough and needs to be amplified to also include research/experi11 . :: imay . ::'Oentation for commercial purposes to avoid any scope for litigation. (c) Parallel Importation and Exhaustion of Rights !..:.- . . ' under Art. 28 of TRIPS, the patent owner has the exclusive right to prevent .'1'. . - . - Others not only from making, using or selling the invented product or process country, but also from importing from other countries. This is, however, Ct to Art. 6 on 'exhaustion' which does not restrict the freedom of WTO ers on the question of exhaustion of IPR's as long as national treatment .F.N. are accorded. What it basically means is that the patent holder in a cannot legally prevent parallel importation. ,

I

EVOLUTION OF PATENT LAWS

Parallel importation refers to a situation where a third party, without the authorization of the patent holder, imports a foreign manufactured product put on the market abroad by the patent holder, his licensee or in another legitimate manner in competition with imports or locally manufactured products by the patent holder or his licensee. The practice is based on the principle that the patent holder has been remunerated through the first-sale of the product and his further control over the resale of the product would unreasonably restrain trade and stifle competition. In other words, having been remunerated once, the right holders are said to have exhausted their rights. Under Art. 6 of TRIPS, as clarified by the Doha Declaration (paragraph 5[d]), each country is 'free to establish its own regime for such exhaustion without challenge'. Parallel importation is used as a measure to prevent market division and price discrimination on a regional or international scale [Correa (2000)l. Since pharma companies set prices for the same product at different levels indifferent countries, parallel importation enables consumers to gain access to the product without affecting the right of the patent holder to receive remuneration in the country where the product is first sold. Thus, consumers in countries facing higher prices than prevalent elsewhere could gain from such a policy. This policy concern has been translated in the various national legislations. Thus, the controversial South African Medicines Act, 1997 allowed for parallel imports of medicines. Similarly, Thai patent law allows the importation of patented products if the patentee has consented to the manufacture or sale of the product elsewhere. Under the amended 'The Patents Act, 1970' of India, Section 107Ab provides that, "importation of patented products by any person from a person who is duly authorized under the law to produce and sell or distribute the product shall not be considered as an infringement of patent rights". This, therefore, permits parallel importation. This issue has one more important dimension which has not received enough attention. Although the responsibility to establish the necessary legal regime to permit importation consequent upon recognition of an international exhaustion of rights falls upon the importing country and, further, it is mainly the public of the importing country who are the target beneficiaries, yet, the exporting country too benefits from such a regime, due to foreign exchange earnings. Therefore, during the TRIPS negotiations, countries like Hong Kong, Singapore, New Zealand and Australia had strongly supported the freedom to establish appropriate parallel import regimes. Yet, while so establishing a parallel import regime, the restrictive condition under Art. 31(f) has to be kept in view. Thus, the cheaper patented product, manufactured or imported into the exporting country under a compulsory licence, must not be permitted to be imported. Such as exclusion in law is necessary to avoid litigation. There is one more suggestion to make the implementation of Art. 30 more effective. The Argentinean patent law ingeniously

-

9. IN-BUILT FLEXlBlLlTlES IN TRIPS AND ENDOGENOUS CONSTRAINTS

139

in Art. 47 that the National Institute of Industrial Property (NIIP) can limited exceptions which do not unjustifiably hamper 'the normal working of the patent' or be unjustifiably detrimental to the legitimate interests of third parties. A similar provision in a country's patent laws will enable it to meet new challenges being unfolded by the new patent regime.

VII. COMPULSORY LICENSING A compulsory licence is a licence granted by an administrative or judicial body to a third party to exploit an invention without the authorization of the patent holder. The concept of compulsory licensing has a long history. One of the earliest legal instruments to incorporate the concept was the UK Statute of ~ o n o p o l i e sof 1623 [Correa (1999)] At the international level, compulsory licences were first recognized and provided for vide Art. 5A of the Paris Convention of 1883. This licence, also referred to as a non-voluntary licence, is an important way for governments in developing countries to drive prices down by competition among manufacturers while compensating innovators with royalty which would provide them funds and the incentive for R&D [CIPR (2002)) Correa (2000)).This strikes a balance between promoting access to existing drugs and promoting R&D for developing new drugs. TRIPS nowhere uses the term 'compulsory licence'. Art. 31 refers to 'use without authorization of the right holder', and includes both - use by third parties (popularly referred to as compulsory licences) and use by government. There has been an extensive debate on the possible grounds which are a prerequisite for invoking compulsory licensing. Although there is a reference to some grounds in Art.s 7,8 and 31 of TRIPS, these are by no means the only &rounds allowed [Correa (1997), Gervais (1998)l. Art. 31, in fact, places no restrictions on the purposes or grounds for or on which alone such licences could be issued. This is a significant achievement for developing countries against the mighty US insistence to limit its application to only two cases - to remedy an adjudicated violation of Competition law or to address a declared mtional emergency. Doha Declaration has made it quite clear that 'each Memberhas the right to grant compulsory licence and the freedom to determine the grounds upon which such licences are granted'. In ordinary circumstances, Art. 31(b) prescribes a drill, before grant of such licence, as under: (i) that authorization of such use will have to be considered on its individual merits, (ii) that before permitting such use (except in cases of national emergency, extreme urgency or public non-commercial use), the proposed user will have to make efforts over a reasonable period of time to get a voluntary licence on reasonable commercial terms,

140

EVOLUTION OF PATENT LAWS

g. IN-BUILT FLEXIBII-ITIES IN TRIPS AND ENDOGENOUS CONSTRAINTS

141

/

(iii) that the legal validity of the compulsory licensing decision and the remuneration will be subject to judicial or independent review, (iv) the compulsory licence can be terminated if and when the circumstances which led to it cease to exist and are unlikely to occur. Inclusive of above procedure under Art. 31(b), Art. 31 lists a total of eleven conditions, which have been referred by some as 'strict safeguards' [Gervais (1998)l.However, these conditions are dependent on the g o u n d s or purposes for which licence is granted in the first place. Thus, these g o u n d s as well as procedure can be so constructed that conditions d o not amount to restrictions. Towards the end of this section, we will take up for study, certain model conditions and procedures employed successfully elsewhere. Of course, the patentee can ask for a review of the compulsory licensing decision. TRIPS allows a non-judicial review viz. by a simple administrative process. Next, we shall study some of the crucial conditions under Art. 31 and ways to make the grounds or purposes compatible with such conditions: (a) According to Art. 31(a), authorization of such use should be considered on individual merits. Such merits could be whether the entity is qualified to work the patent and, if so, then, whether the terms are reasonable. Alternatively, these could be as to whether the market is being supplied and whether the sale price is reasonable or whether a compulsory licence is indispensable to public interest. (b) The provisions under Art. 31(b) that the proposed user should have made efforts to obtain the authorization on 'reasonable' commercial terms over a 'reasonable' period of time, implicitly recognizes that unjustifiable refusal to give a licence can be a valid ground for grant of compulsory licence. There is n o requirement to judge 'reasonableness' by global standards. Several factors, including the ability of the licensee and, eventually, that of the domestic consumers e here can to pay, may be taken into account. The ~ r o c e d u r prescribed be waived in cases of national emergency, extreme urgency, public non-commercial use or to remedy an adjudicated anti-competitive practice [Art. 31(k)]. ( c ) As per Art. 31(c),the scope and duration of such use should be limited to the purpose for which it was granted. A similar view emerges from Art. 31(8), seeking termination of the licence when the circumstances that led to its grant cease to exist. Both the conditions, ex-facie, appear to be dependent on the purported grounds of grant. While theoretically such conditions may appear restrictive, in practice, its mischief can be suppressed by citing no particular purpose or circumstance but, rather, relying on very general purposes or simply a n undefined 'public interest'.

(d) Art. 31(f), which provides that such use shall be predominantly for the supply of the domestic market, does not rule out exports. Moreover, this clause now has to be read with the 30th August, 2003 Agreement titled "Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health". This Agreement, by General Council of TRIPS, states that when a LDC or any other Member does not have the capacity to produce medicines, it may issue a compulsory licence under situations of national emergency etc. in favour of an 'exporting country'. Such 'exporting country' may then issue a "back-to-back" compulsory licence to a . third party to meet the requirement by producing and exporting the medicines to 'importing country'. In this scheme, the 'exporting country' pays the obligatory licence fee to the patent holder, taking into account the economic value to the 'importing country', while the normally poorer 'importing country' is relieved of this burden. This decision, therefore, constitutes a waiver of the provisions of clause (j) and (h) of Art. 31. Further, the provisions of this clause don't apply to cases involving adjudicated anti-competitive practices under Art. 31(k). (e) Article 31(h), which provides for remuneration to rightholders, provides a continuity with pre-TRIPS national laws in this regard. It now speaks of 'adequate remuneration', 'taking into account the economic value of such authorization'. It is significant to note, however, that it avoids using 'compensate the right-holder fully' as proposed by the US or 'an equitable remuneration corresponding to the economic value of the licence' as originally proposed by the EC. Moreover, as noted in the foregoing para, the mischief of this clause is inapplicable to a situation covered by the 30th August 2003 Agreement. Further, this provision does not apply to cases where licence is issued to remedy anti-competitive practices [Art. 31(k)].In such cases, remuneration may be low or even zero. (f) Under Article 31(i), only the 'legal validity' of the decision to authorize such use, and significantly not the merits of the case, is subject to review. This means that, ordinarily, the administrative decision will be upheld, save any exceptional cases of gross misuse of power or malafide etc.

'

The detailed analysis of the various clauses of Art. 31 demonstrates the ehsticity which needs to be availed by policy makers of developing countries, while drafting their national laws. Further, under ordinary circ~~mstances, Art. . : provides a still higher level of flexibility or favourable treatment to cases of - :* . .public non-commercial use and adjudicated cases of anti-competitive practices. ---: re, special focus needs to be given to frame an appropriate regime to

142

EVOLUTION OF PATENT LAWS 9. IN-BUILT FLEXIBII-ITIES IN TRIPS AND ENDOGENOUS CONSTRAINTS

save the public interest for these two situations. Thus, if the patented drugs are too expensive, the government can produce or authorize others to produce and distribute through public health centres on a no-profit-no-loss basis. While framing TRIPS-compliant laws under Art. 31, national governments possess wide latitude. However, unless this is translated in the national legislations by adopting a simplified procedure, the scheme is likely to remain,a paper tiger. Here, the success of compulsory licensing regime in Canada between 1969 and 1992 is a useful guide. This became possible due to a simple and easy to use procedure. Its main features were: (i) Any one could apply for a compulsory licence - the applicant was not required to prove that he or she was capable or competent to exploit the licence and handle the pharmaceutical products. (ii) To prevent delays, time limits were specified. The Commissioner of Patents would notify the patentee about the application and the latter would have two months to file a counterstatement and affidavit; the Commissioner would take, at most, eighteen months after the date of notification to decide whether or not to grant a compulsory licence. Six months after submitting the application, the applicant could petition the Commissioner for a six-month interim licence pending the final decision. This was rarely denied. (iii) The Commissioner had to check whether there was any good reason not to grant a compulsory licence. But, apart from bankruptcy and false statements, nearly all other arguments were rejected. The compulsory licences were available almost for the asking, as a matter of right. The Commissioner seemed to take the view that a compulsory licence enhanced competition and reduced price and that is why the law provided for it and this formed the conclusiveevidence of the fact that normally the grant of compulsory licence was in public interest. (iv) As in all laws, appeals against the decision of the Commissioner granting compulsory licences were permitted. But, the Federal Court of Appeal never set aside thecommissioner's decision and invariably took the view that it would not interfere with the compulsory licensing decisions of the Commissioner. In the very first case, the Commissioner fixed a royalty of 4 per cent of the net selling price. This was routinely applied in virtually all subsequent cases. The Canadian example shows that a liberal compulsory licensing regime may, in fact, encourage voluntary conclusion of licences on reasonable terms.

143

VIII. TECH-TRANSFER FROM DEVELOPED COUNTRIES TO LDC'S Art. 66(2) recognizes the need to take specific measures to promote technology transfer to least developed countries. Developed countries are supposed to provide incentives to their enterprises in this regard. In Chapter 13, certain concrete suggestions, in this regard, would be discussed under the new WIPO Development Agenda.

M.LIMITING TEST DATA PROTECTION National health authorities require, before registering new pharmaceutical the test data relating to the quality, safety and efficacy as well as information on the composition and physical and chemical characteristics of the product [Correa (2002)l.Once the data is submitted by the innovator company, generally the regulatory authorities do not require the companies seeking registration of generic versions of the original product to repeat the studies that were carried out by the innovator company, but instead rely on bio-equivalence tests to grant marketing approval. This practice avoids additional costs, which would have been borne by the consumers. It can also be said that the requirement for generic companies also to carry out trials on equivalent products would have been socially wasteful [Abbott (2001)].But, if the law of a country provides for data exclusivity, that is, grants exclusive rights to the innovator company to prevent subsequent applicants from using the data submitted, then, generic companies cannot use such data till the data exclusivity period ends. Data exclusivity has various implications for generic products entry into market. This requires an explanation. A patent is taken immediately after a new drug (new chemical entity) is developed. But, usually, it takes several years of clinical trials and testing before a drug is approved for marketing. Thus, where a drug was invented and patented in 2000, it may actually be approved for marketing in, say, 2010. With a 20-year patent term under TRIPS, the monopoly Patent rights shall expire in 2020 whereafter it is possible for generic companies toenter the market. But, if the developing country provides for data exclusivity f~r20years, then generic companies cannot use the test data before 2030 because generic companies usually lack resources to conduct such costly studies. This \borne by the very slow market entry of generics before 1984 when they were fequired to conduct their own tests. As a result, data exclusivity effectively extends the monopoly beyond the patent term. In recognition of these factors, Art. 39 requires protection of test data only to new chemical entities and where the origination of the data - Lnvolvesconsiderable effort and provides for exceptions, such as, where disclonecessary to protect the public. Art. 39, thus, leaves room for each r to determine how to protect test data. In other words, in so far as ric medicines lower the prices and increase the availability and access to

144

9. IN-BUILT FLEXlBlLlTlES IN TRIPS AND ENDOGENOUS CONSTRAINTS_-_ 145

EVOLUTION OF PATENT LAWS

y---

In addition, Members have agreed to consult, upon request, and cooperate

essential medicines, it is in the public interest to limit the extent of test data protection. Further, test data protection is subject to certain other qualifications. Thus, protection is not necessary if regulatory authorities d o not require the submission of such data for marketing approval or if the data is already public. Protection is required only for new chemical entities. This gives the countries considerable discretion in defining what is 'new' and may exclude the different formulations based on the same chemicals. Thus, Art. 39.3 can't be invoked for protection of even those data which are otherwise required to justify a new formulation. On the other hand, developed countries insist that under Art. 39.3, WTO Member countries are required to grant data exclusivity for a specific period of time. Watal(2001) has correctly pointed out that if that was the intention, then the term "exclusive rights" would have been used, as in Art. 70.9. Further, Correa (2002)has correctly highlighted the main object of Art. 39.3 as protecting data against 'unfair commercial use'. This, Correa argues, can be effectively done by prescribing situations where a competitor obtains the results of test data through fraud, breach of confidence or other 'dishonest' practices. India has availed of this important flexibility in TRIPS. Thus, neither the Drugs and Cosmetics Act, 1940 nor the amended 'The Patents Act, 1970' contains any provision relating to test data protection. This abodes well for generic competition and lower prices for drugs.

in resolving issues relating to the violation of laws covering such ant]-cornpet-

X. CONTROL OF ANTI-COMPETITIVE PRACTICES The TRIPS Agreement, in general, envisages a balance between opposed interests. The basic concept of balance is exhibited in its 'Objectives' and 'Principles'. Thus, Art. 8.2 provides that Members may adopt appropriate measures to prevent the abuse of intellectual property rights by right holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology. This should be interpreted in favour of adoption of measures deemed necessary for the promotion of competition and the prevention of the abuse of the monopoly position by patent holders including engaging in anti-competitive licensing arrangements. Art. 40 specifically establishes a regime for the control of anti-competitive practices in contractual licences, which, otherwise, could have adverse effects on trade and the transfer and dissemination of technology. Art. 40.2 gives Members the freedom to adopt 'appropriate' measures to prevent and control such practices provided i t is not in conflict with the other provisions of TRIPS. By prohibiting the use of terms such as exclusive grant backclauses, clauses that preclude challenges to the validity of the patent and coercive packaging, countries can reduce the concentration of market power and improve competition in the market.

r

a

L

itive practices. This cooperation includes the supply of relevant, publicly available, non-confidential information and other relevant information, subject to national law and agreements for safeguarding confidentiality. These constitute steps forward in dealing with restrictive business practices of MNC'S. Art. 40 is, thus, an important policy instrument in the hands of developing country governments. Although this is only a permissive provision without giving an exhaustive list of conditions that can be considered per se anti-competiti~e,it is for the first time that the subject has been incorporated in public international law. This represents a landmark progress, given the earlier reluctance of developed countries to any mention of the subject during discussions in other fora such as UNCTAD. This brings us to the substantive provisions that are required to be enacted by way of Competition law to tackle the abuse of monopolistic position or a position of dominance. Dominance needs to be appropriately defined in the Competition law in terms of " the position of strength enjoyed by an undertaking which enables it to operate independently of competitive pressure in the relevant market and also to appreciably affect the relevant market, competitors and consumers by its actions". The definition needs to be also in terms of "substantial impact on the market including creating barriers to new entrants" [Quoted portions are from the Report of the High Level Committee on Competition Law in India that submitted its Report in 20001. Abuse of dominance which prevents, restricts or distorts competition needs to be frowned upon by Competition law. Certain instances which may constitute an abuse of dominant position or anti-competi tive practice are enumerated below: (a) A practice which may result in expanding the scope of IP rights, either spatially or temporally, beyond those envisaged by law; (b) Conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their vary nature or according to commercial usage, have no connection with the subject of the contracts; (c) Limiting or restricting (i) production of goods or provision of services or market therefor, or (ii) technical or scientificdevelopment relating to goods or services to the prejudice of consumers; (d) actions by an incumbent in a dominant position to protect its position of dominance by making it difficult for potential entrants and competitors to enter the market. Here, however, it is important to distinguish between growth due to product superiority or efficiency

146

-

EVOLUTION OF PATENT LAWS

leading to a larger market share and the wilful restriction of' acquisition and maintenance of market power; (e) exploiting its dominance by charging higher prices, restricting quantities or, more generally, using its position to extract rents; (f) predatory pricing, which is defined as a situation where a firm with market power prices below costs so as to drive competitors out of the market. The situation is generally prejudicial to consumer interest in the longer run. This is because there is a possibility that after the competitiors are eliminated, the firm would start functioning as a monopolist. This possibility exists where compulsory licences are granted to smaller players.

XI. WIDE GROUNDS FOR REVOCATION/FORFEITURE OF PATENTS Art. 32, which is entitled 'Revocation/Forfeiture', only calls for the judicial review of decisions to revoke or forfeit patents. What is remarkable here is not what the Art. 32 says but rather what it does not say. In failing to define the grounds on which alone patents can be revoked or forfeited, it has opened the possibility for a large number of grounds which may cause a patent to be forfeited. 'To revoke' means 'to annul or make void by recalling or taking back' (Black's Law Dictionary, 6th ed., 1991).Revocation of a right is generally caused by a failure in meeting the legal requirements for the grant of the right. In contrast, 'to forfeit' has a more specific meaning. According to Black's Law Dictionary, 'to forfeit' means 'to lose, in consequence of breach of contract, neglect of duty, or offense,some right, privilege or property to another or to the State'. In the law on patents, right may be forfeited when the patent owner fails to pay maintenance fees, subject to the period of grace established by Art. 5bis(l) of the Paris Convention, and when it fails to comply with legal obligations imposed upon him as a condition for the maintenance of patent rights, such as the use of patent rights in a non-abusive manner (including the obligation of exploiting the patented invention). It is this meaning which is reflected in the first sentence of Art. 5(A)(3)of the Paris Convention: "Forfeiture of the patent shall not be provided for except in cases where the grant of compulsory licences would not have been sufficient to prevent the said abuses." However, the next sentence uses the word "revocation" as a synonym of "forfeiture": "No proceedings for the forfeiture or revocation of a patent may be instituted before the expiration of two years from the grant of the first compulsory licence."

Thus, the language of Art. 5(A)(3)is not conclusive on the grounds available for the revocation or forfeiture of patents. However, an authentic interpretation of the Paris Convention suggests that the revocation of patents, on grounds other than abuse, in particular, in public interest, is not ruled out. [Bodenhausen (1968),Watal(2000)l.On the other hand, developed countries, led by US, have consistently held that the grounds must be limited to Art.s 27,29 & 33. However, it has correctly been pointed out that a limitation on available grounds ensues not from Art.s 27/29 & 33 but, rather, paragraph four of the Preamble in conjunction with Art. 28.1 [Nuno Pires d e Carvalho in "The TRIPS Regime of Patent Rights", 2nd ed. (2005)l.This is so as patent rights are private property rights, and the TRIPS Agreement provides for a system that protects those rights against confiscation. The logical conclusion is that although the TRIPS Agreement does not explicitly identify the grounds on which governments may revoke patents, those grounds are implicitly limited to the following [Nuno Pires d e Carvalho (2005)l: grounds admitted by the Paris Convention (and incorporated into the TRIPS Agreement), such as the insufficiency of compulsory licences to prevent abuses and the failure to timely pay the maintenance fees; invalidity of the patent because its subject-matter does not qualify as an invention (either because it does not fulfill the condition of alternativeness of inventions, or because it does not reach the minimum level of inventiveness required by national law); invalidity of the patent because the invention fails to meet the substantive conditions of patentability, as established by Art. 27.1; invalidity of the patent because its specifications d o not comply with the mandatory formal requirement of full disclosure (and best mode, where required), under Art. 29.1; i 'r invalidity of the patent because the invention falls under one of the exclusions from patentability under national law and in accordance with the provisions of paragraphs 2 and 3 of Art. 27.2; revocation on the grounds of protection of national security interests under Art. 73. In addition, Watal (2000) too has pointed out that Members may directly 'evoke patents on grounds not related to the patent abuse, such as public interest or to protect the environment. Developing countries need to incorporate into their national legislations . this important flexibility. Thus, 'The Patents Act, 1970' of India provides for : wvocation of patents by the Controller for non-working after two years of grant Of a compulsory licence or non-availability at an affordable price or on the +a

EVOLUTION OF PATENT LAWS

9. IN-BUILT FLEXlBlLlTlES IN TRIPS AND ENDOGENOUS CONSTRAINTS

p p

149

/

ground that the reasonable requirements of the public has not been satisfied i.e. on the established ground of "public interest".

Under such misguided assistance program, there is a strong likelihood that frivolous patents or even patents on excluded subject-matters will be issued. the TRIPS Agreement, States may exclude from patentability diagnostic, and surgical methods for the treatment of humans or animals as well as plants and animals, other than micro-organisms, and new uses of known These exceptions are smokescreened by the glare of a biased technical assistance program. In The Philippines, for instance, the patent law is vastly different from those of US and European laws and yet the patent examiners have been trained to rely on the issuance of US or European patents as a precondition to the grant of a Philippine patent. Another dimension of this problem is that while an effective assistance is provided on the best practices to protect the patent right, there is never a best practice guide on compulsory licensing to curb abuse of patent rights and serve other public interest purposes though US itself extensively uses this instrument fReichman and Hasenzahl(2003)l. Another problem is the inability to access information on the best practices followed or measures undertaken by other countries placed under similar circumstances. Even countries within a region adopt very different strategies. This factor exacerbates the lack of techno-legal expertise.

XII. ENDOGENOUS CONSTRAINTS ON NATIONAL EFFORTS TO IMPLEMENT TRIPS FLEXIBILITIES There are two levels of constraints that need to be addressed if developing countries are to effectively exploit TRIPS flexibilities. The first level relates to constraints associated wi th the incorpora tion of flexible provisions under TRIPS into the national legislations. In cases where the first level is overcome, there is a second level which relates to constraints due to inadequate supporting legal and policy measures (such as concerning local innovation and production) during the actual implementation process. For example, in case of pharmaceuticals, legal and policy measures are needed to assure the quality of the medicines; to ensure expedited registration of essential generics; and to ensure cost effectiveness of the resources spent in the procurement of medical supplies. The constraints in implementing these secondary legal and policy measures at the national level have the effect of inhibiting the effective use of the TRIPS flexibilities. The principal constraints at the second level are both exogenous and endogenous. Thus, bilateral and other political pressures against the use of TRIPS flexibilities constitute a major exogenous constraint. However, this shall be taken up for detailed scrutiny in Chapter 12. Then, there are various endogenous constraints including a lack of R&D and manufacturing facilities; insufficient technical and infrastructure capacities for product regulation; inefficient product management and procurement system; incapacity to address anti-competitive practices and patent right abuses; and, also, difficulties in accessing information on patent status and pricing. These are being taken up for detailed analysis hereunder.

(b)Insufficient Domestic Research And Manufacturing Capacities

(a) Lack of Techno-Legal expertise to incorporate and implement TRIPS Flexibilities in National Law and Policy The first necessary condition in utilizing the flexibilities is to enact appropriate legislation. However, many developing countries & LDC's are yet to incorporate the TRIPS flexibilities into their laws for various reasons. A major reason is lack of techno-legal expertise. It is noted that a majority of national patent systems, particularly those of LDC's, are either modelled on European or US patent laws (i.e.colonial statutes) or based on laws crafted with the technical assistance from WIPO or patent offices of developed countries (eg. USPTO of US) [Love (2001)l.Such technical assistance is provided so as to facilitate compliance with the provisions relating to the right of patent holders rather than the application of flexibilities within the multilateral framework to promote and protect social objectives such as public health.

L

In many developing countries and most of the LDC's, there is insufficient research and manufacturing capacity. This negatively affects their ability to use certain flexibilities, such as compulsory licensing or even Bolar provisions. These aspects are proposed to be examined, particularly, in relation to pharmaceuticals sector. Developing countries and LDC's have, for long, faced a challenge in regard tocapacity enhancement for research, through an increased investment in basic sciences, R&D and technological innovation. In the 1990's, the Commission on Health Research for Development proposed that all governments allocate 2 Percent of health expenditure to research. However, due to a lack of resources, few developing countries have allocated more than 0.5 percent national income to health R&D. There are two sides to this problem. On the one hand, it is an established fact that as technology is increasingly becoming a means of competitive advantage, the question of research standards for pharmaceutical manufacturing and its quality has gained an importance. This cannot be brushed aside. There cannot be a case for lowering the quality of diagnostics or medicines etc- On the other hand, however, there is a need to guard against protectionist research and quality standard setting. Thus, stringent WHO pre-qualifications Process in certain cases have resulted in creating barriers which may block moderate R&D standards adopted by developing countries. Next issue pertains to inadequate manufacturing base. Pharmaceutical manufacture includes all operations - purchasing of material, processing, pro-

EVOLUTION . .- OF PATENT LAWS -

duction, packaging, quality control, release and storage of medicinal products and related control [Kaplan (2003)l.According to the United Nations Industrial and Development Organization (UNIDO), various countries could be categorized with respect to pharma manufacturing as under [J. Pogany and H. Forstner (1992)l: (1) no manufacturing facilities and are dependent on imported finished medicines; (2) package already formulated medicines; ( 3 ) make formulations of drugs in final dosage form and engage in some production from imported intermediates; (4) manufacture of some intermediates from local materials; and (5) production of active substances and processing to produce the required pharmaceutical dosage forms. Certain crucial factors have been identified as general preconditions for economically viable domestic production of pharmaceuticals [Kaplan (2003)l. These are: (a) there should be a high ratio of domestic R&D to gross domestic product (GDP) since production in the pharma industry is technology-driven; (b) size of the economy which gives an advantage of economics of scale and an opportunity for product variation and improvement; (c) income level in the domestic market; (d) availability of infrastructure and amenities at competitive prices; (e) policies governing local production and their enforceabilitv; and (f) a structure of tariff and non-tariff barriers that may promote investment in the local pharma industry. The overall impact of above factors in causing or alleviating constraints shall also depend on whether the production is low-end manufacture and repackaging or high-end manufacture and whether the production is for raw materials or final products. (c) Insufficient Technical and Infrastructural Capacities for

Product Regulation One of the major challenges relates to product registration and regulation. This affects the effectiveness with which TRIPS flexibilities can be used to improve availability and access to, for instance, essential medicines. Thus, slow speed or, even worse, an inadequate registration process denies generic companies the benefits of an early working exception. Many developing countries and LDC's lack the facilities and expertise needed to review the safety, efficacy and quality of drugs and, therefore, remain dependent on foreign authorities to set the necessary standards as well as perform the necessary testing. In a 1993 study of 36 African countries, WHO found that while only three had a "limited

-

9. IN-BUILT FLEXIBILITIES IN TRIPS AND ENDOGENOUS CONSTRAINTS

151

capacity", none had a "comprehensive drug r e g ~ r l a t o capacr~ drug it." [Love (2001)I. Another regulatory issue is lack of proper post-marketing surveillance which makes it difficult to prove abusive behaviour by the patent holders. This licensing on this ground more difficult. yet another problem is caused by a lack of advertising regulations. Aggressive advertising for promotion of brands coupled with a misinformation campaign against generics has an adverse effect on consumers. Therefore, proper guidelines need to be set and enforced so as to avoid the advertisements that are false or misleading.

(d) Difficulties in Establishing Efficient Product Management and procurement Systems Another challenge in the use of TRIPS flexibilities to improve availability and access to essential medicines relates to establishing efficient ~harmaceutical management and procurement systems. This is a costly process requiring vast resources and technical know-how. The cost of taking care of quality and supply chain issues is also high. The lack of efficient and cost-effective management and procurement systems has, therefore, an adverse effect on prices, on quality, on rational use of drugs as well as on availability of medicines generally. (e) Difficulties in tackling Anti-Competitive Practices and Abuse

of IPR's Patent abuses are rampant in developing countries and LDC's. These include monopoly pricing which limits access, especially to poor sections, and non-price predation whereby IPR's are used to bring in bad-faith litigation and opposition proceedings in order to harass competitors. Art. 40 permits countries to use competition measures subject to permitting opportunities for administrative review and bilateral consultations to deal with abusive behaviour. Yet, the lack of adequate competition policies and enforcement mechanisms has the effect of undermining the potential for the use of TRIPS flexibilities to prevent abuse of patent rights and thereby improve access to, say, essential medicines. Moreover, the prohibitive costs of patent litigation and of administering a patent-competition system present a substantial barrier to obtaining timely and just resolutions of disputes over patent validity or abuses of patent rights. This is accentuated in small national markets, where little financial incentives exist for generic drug companies to challenge bad patents, unlike in the US, Japan and European Markets. The net result is a pletl.lora of bad patents in absence of the requisite capacity or economic incentives to evaluate and l j tigate against overreaching patent claims.

152

EVOLUTION OF PATENT LAWS

(0Information Asymmetry There is no ready or easily accessible information on what drugs are patented in which country. This lack of information discourages local companies from manufacturing generic drugs for fear of lawsuits from patent holders who are overzealous in litigating even invalid patents. Such lack of information resulted in blockage of generic production of ddI, a drug for HIV / AIDS, in Thailand. Bristol-Myers Squibb (BMS) succeeded in obtaining patents for formulation claims in Thailand even after the same had earlier been rejected by the USPTO.

"SELF-HELP" (SOME INSTITUTIONAL PROPOSALS) In this Chapter, it is proposed to take up for consideration certain suggestions for realizing the goals, of particular relevance to developing countries, permitted by TRIPS flexibilities, especially in the Pharma sector. These proposals are essentially related to activities at the institutional level. Thus, these could pertain to either an intra co-ordination between various institutions within a country or varying degrees of inter-country co-ordinations at multilateral or regional forums. The significant role of NGO's, in this regard, will also be discussed. In the context of pharmaceutical sector, the world market is divided into two segments - commercially significant and non-commercially significant. In the commercially significant segment, pharmaceutical firms address the needs mostly of high-income developed country consumers who have the ability to pay for expensive R&D, advertising budget, executive compensation, returns to shareholders and so forth. Accordingly, pharma MNC's direct their R&D investment to cancer, cardiovascular disease or even skin diseases. On the other hand, very limited investment is undertaken by the private firms in the noncommercially significant segment. Thus, drugs that are primarily of interest in poor developing markets are dependent on public sources of funding for R&D, including funding from government budgets and from charitable contributions. This is because production of low-cost medicines and vaccines is not possible without subsidization from some public source. Such a perceptible withdrawal by private firms from a sector of critical importance can be explained by the ethos of an open economy patent regime which, while attempting to promote innovation, is basically concerned with identifying market place winners and losers. The TRIPS agreement is principally designed to protect private rights in intellectual property while allowing the governments some flexibility to take into account public health interests in regulating those private rights. It is obviously not designed to direct R&D to diseases of particular concern to public health officials in develOping and least developed countries. Similarly, while it is designed to liberalize markets and to promote generalized economic growth for the world economy, the WTO is neither designed to promote or manage pharmaceutical develop-

154

EVOLUTION OF PATENT LAWS

10. "SELF-HELP

ment nor the health care systems. Thus, neither the TRIPS Agreement as a legal instrument nor the WTO as an institution is designed or is capable of addressing this market failure. In view of this, the question confronting policy makers is how to increase the development and supply of medicines and vaccines to poor populations principally located in developing and least developed countries.

derived from an analysis of the country's industrial structure, modes of agricultural health care and education needs etc. The ability of developing countries to co-ordinate their policies across the various government departm e n t ~while undertaking IP-related reforms is, therefore, crucial. The evidence in this regard suggests that while some countries have established mechanisms toimprove the co-ordination of policy making, with the main participants being the very ministries most involved i.e. health, justice, science, environment, education, etc., these mechanisms are often only embryonic and their degree of effectiveness is yet to become apparent - particularly in respect of integration of IP issues with other areas of economic and development policy. ~nmany cases, this may reflect the fact that such co-ordinating bodies are not able to draw readily on a supply of the necessary technical advice and expertise, but often it reflects divergent interests within the government. There is a need for a broadbased, extensive system for public consultation and debate (including public workshops on controversial topics such as protection of biodiversity and traditional knowledge), as well as a high level of expertise within the academic, business and legal communities. At present, in many developing countries, there is still a substantial room for improvement in terms of building a genuinely participatory process for IP policy reform. In this regard, the UK's CIPR Report (2002) has suggested the following:

I. DIRECTED R&D BY GOVERNMENT OWNED RESEARCH FACILITIES The approach to the search for a vaccine for, say, malaria is quite different from usual cases of a relatively unchanneled R&D producing a substantial aggregate amount of innovation that the market place sorts through rewarding the inventor at the right place at the right time. This is because here the public health community knows "what" should be looked for, and thus, R&D efforts must be channeled in that direction. A concrete suggestion, in this regard, has been advanced by Gilmore Report (2001) thus, "We recommend the establishment of a government-owned, contractor-operated national facility for the research, development, and production of vaccines for specified infections, especially contagious diseases. The private sector is unlikely to be the answer to some of the more difficult vaccine issues. Direct government ownership or sponsorship is likely to be the only reasonable answer for producing vaccines for certain bio-organisms, anthrax and smallpox being at the top of the list. Limited production capabilities for small-market (i.e, military useful) vaccines are currently the largest hurdle facing DOD. The problem is significantly compounded for civilian bioterrorism preparedness."

Accordingly, many experts including Frederick M. Abbott (2002) have recommended an enhanced role for the public sector in this area.

11. INTEGRATED POLICY MAKING COORDINATION

-

N E E D FOR INTRA-

A greater role for Pharmaceutical units in public sector towards the development of essential vaccines must entail cooperation between nodal agency for IP policy and Ministry of Health. Thus, within the government, IP is a classic "cross cutting issue" affecting the interests of several government departments who will have different positions which will need to be reconciled. In addition, there is the factor of lobbying by various interest groups and other civil society organizations, each of whom have their own interest or view to foster on a given matter. Thus, in many cases, developing countries face particular difficulties in developing a comprehensive and co-ordinated policy on IP. Ideally, the formulation of IP policy in a developing country would be based on a sound appreciation of how the IP system might be used to promote development objectives,

"Developing countries and donors should work together to ensure that national 1P reform processes are properly "joined up" with related areas of development policy. Likewise, greater efforts are needed to encourage more participation by national stakeholders in IP reforms. In providing technical assistance, donors must be mindful of the need to help build the capacity of local institutions to undertake IP policy research and dialogue with stakeholders, in addition to providing international experts and legal advice."

111-A DEVELOPING COUNTRY "QUAD" Even while pursuing an integrated policy-making as well as an enhanced level of participation by national stakeholders in the process of domestic IP reforms, the developing countries will have to be very tightly organized on any future negotiations. In the last round, developing countries had no equivalent to the Quad i.e. they had no counter weight to the agenda-setting powers of the Quad or its ==pacityto manage the crucial stages of a trade negotiation. Even at present, the loose 'like-minded group' structures employed by developing countries do not maximize the capacities of developing countries nor d o they provide the kind of leadership that is badly needed during the course of a multilateral trade round. More ominously, these groups of develop,.%countries are susceptible to divide and conquer tactics of stronger developed 'states. By pooling their resources by means of a more formal structure, devel-

157

EVOLUTION OF PATENT LAWS

10. "SELF-HELP

oping countries would be enhancing the capacity of all the developing countries. In view of this, immediate consideration should be given to creating a counter-weight to the developed country Quad even at this stage. One possibility, as suggested by Peter Drahos, is that four developing country leaders such as India, Brazil, Nigeria and China could form a group that would represent developing country interests during the crucial stages of a multilateral trade negotiation. Each of these countries could chair a working group on some of the key negotiating issues of a given trade round. The emergence of such a countervailing power would bring WTO negotiations closer to the ideal of democratic bargaining. Apart from a pro-active role during the course of biyearly Ministerial Conferences, this new Quad could turn the Council for TRIPS into a forum where the states begin to address distortions that are occurring in global information markets because of excessive levels of intellectual property protection. As a beginning, developing states adopting a TRIPS-plus standard must be compulsorily made to explain why they were departing from IP standards that have the multilateral endorsement of the world's trading community. A second strategy to consider is a more determined use of the WTO Trade Policy Review Body (TPRB).The objectives of the TRPB include an "increased transparency and understanding of countries' trade policies" as well as "to enable a multilateral assessment of the effects of policies on the world trading system". Thus, it would be entirely appropriate for developing countries to begin reporting on and debating the effects of the global IP ratchet on development before TPRB under the aggressive leadership of the proposed Quad.

capabilities. In addition, it will result in lower consumer drug prices due to hcreased economies of scale in procurement and distribution. Finally, a regional approach can also help to improve cross-border disease control. ~t this stage, it may be beneficial to study the main form of regional framework viz. regional economic integration schemes. Regional economic integration as an idea and means of achieving economic growth and development has been common to all the developing regions of the world. This was based on a desire to overcome the economic disadvantages of fragmentation. Establishment of regional economic integration is viewed as a vehicle towards industrialization, market expansion, economies of scale, diversification oi economic base and efficiency through competition. We shall discuss, in brief, the main regional economic groupings in Africa, Latin America & Caribbean and Asia.

156 -

IV.

ESTABLISHING FRAMEWORKS

SOUTH

-

SOUTH

(a)Africa

REGIONAL

Public health is a shared concern in all the developing regions of the world. However, developing countries need significant additional resources and technical inputs to take maximum advantage of the TRIPS flexibilities. A regional approach to use the TRIPS flexibilities is, therefore, a logical and beneficial approach to complement the national efforts. This can provide creative solutions founded on a common purpose, cooperation, collaboration and collective action. Politically, a collective regional position can provide much needed bargaining leverage for developing countries in their dealings with developed trading partners. It can also facilitate the sharing of information among countries as well as the pooling of resources and expertise. From an economic standpoint, a regional approach can provide incentives for establishing regional pharmaceutical production and help expand research

-

Today, there are over ten regional economic communities with the major ones being: the Common Market for Eastern and Southern Africa (COMESA); the Southern African Development Community (SADC); the Economic Community of West African States (ECOWAS) and the East African Community (EAC).These organizations emphasize upon the coordination and harmonization of macroeconomic policies, the lowering of trade tariffs, removal of nontariff barriers, facilitation of capital mobility and the free movement of persons. Inaddition, they are paying more attention to cross-cutting development issues such as those related to health. (b)Latin America & Caribbean In Latin America &Caribbean,regional integration has been a long running theme. During the 1960gs,the Latin American Free Trade Association (LAFTA) and the Central American Common Market (CACM) were launched. The Andean Group was founded in 1969 and the Caribbean Community (CARICOM) established in 1973. The central objective of these agreements, consldered today as "old regionalism", was to support the prevailing state-led import Substitution industrialization model of development. By the second half of the l97@s,all of them were in difficulty, falling into open crisis in the 1980's. Thus, a new preferential trade arrangement, referred to as "new regionalism", was re-launched in the 1990's. The central features of the "new regionalism" included ar. opening to world markets, promotion of private sector lnitialive and feinforcing competition in the international markets. Consequently, a new 'ntegration process emerged, by way of Common Southern Market ME^^^^^^) in 1991. The already existing Regional Economic Communities RE^'^) viz. Andean Community, CARICOM & CACM were also revitalized and transformed.

158

EVOLUTION OF PATENT LAWS ---p_._-.

10. "SELF-HELP" p p p

(b)Regional Intellectual Property organizations are established as

( c ) Asia

Regionalism in Asia is relatively new as compared to Africa, Latin America & Caribbean. Asian regionalism began from political and security considerations before extending to other areas of cooperation such as economic integration. Owing to great diversities, Asian regional economic integration has developed along a pluralistic line, with the proliferation of rival organizational expressioni of regionalism but no single dominant organization across the continent [Rosamond (2003)l.At present, the main regional groupings include the Association of Southeast Asian Nations (ASEAN),South Asian Association for Regional Cooperation (SAARC), Asia Pacific Economic Cooperation (APEC), the Asian Regional Forum (ARF), the East ASEAN Growth Area (EAGA) and the Commonwealth of Independent States (CIS). Regional organizations in Asia are, therefore, more loosely institutionalized and have not involved the creation of separate supranational institutions. In other words, the sentiment of regionalism is not strong in Asia. Apart from the various regional economic integration schemes, there are other forms of South-South cooperation mechanisms that are useful such as regional health organizations. Examples include the Commonwealth Regional Health Community Secretariat in Eastern and Southern Africa, the African Association of Central Medical Stores for Generic Essential Drugs (ACAME) for French-speaking West African countries and the Organization of East Caribbean States (OECS) in the Caribbean. The regional economic groupings, considered together with regional health organizations, in particular, provide a solid institutional and legislative framework for cooperation in matters of health and the use of TRIPS flexibilities. There are a number of measures that can be taken by developing countries at the regional level to overcome the constraints that they face at the national level in using TRIPS flexibilities for public health purposes. These include measures that are aimed at operationalizing the TliIPS flexibilities themselves as well as measures aimed at tackling the challenges in relation to supporting legal and other policy areas. Such an approach would benefit from pooling of financial,human and other resources that currently exist in each country. Access to information through sharing of expertise and best practices can empower countries to take a more determined position on public health and access to medicinal issues. There are two alternative models of regional cooperation that could be considered for developing local expertise in intellectual property matters generally and, in particular, the use of TIUPS flex~bilities.These are: (a) A Regional Economlc Community (REC) is established to deal with the broad economic and development issues. 1P issues are dealt with as a component of the broad regional economic integration; and

independent organizations with no linkage to regional economic and development organizations.

&:.%. v d . m ~ ~ O N AECONOMIC L

I

1

COMMUNITIES

, Under the first model, REC or other regional body would establish within ,*:Secretariat, a division to help the Member countries address matters of IP d, in particular, assist them in training and research and act as a forum for :msionand exchange of information on the best practices on the use of TRIPS adbilities. This approach has most commonly been adopted among the REC's . in tin America and the Caribbean region. The best example where members pted to work together on incorporating TRIPS flexibilities munity. Decision 486 on Industrial Intellectual Property tents, industrial designs and trademarks provides the legal an Community for dealing with compulsory licences, parallel search exception, patentability and data protection. Similarly, anESA has already been carrying out studies and responding to equests for assistance on the use of TRIPS flexibilities and on ns in the WTO. While there may be a number of such activities s REC's, there is a need to develop a more institutionalized

*,++ suggestion to insititutionalize the mechanism is through the establishWt m the region of a high level Permanent Advisory Council on Trade-Re-

LBed Innovation Policies (ACTRIPS) or a functionally equivalent mechanism. rst advanced by Reichman, Watal and Okedji (2000) and April, 2004 report of South Centre. The ACTRIPS or its ould become the focal point within the structure of the REC or ional body for policy-making about the integration into domestic law flexibilities and adopting these flexibilities to evolving international s in the context of a broader innovation policy. The ACTRIPS a supervisory and policy-making role that requires inputs but that locates such inputs within a broader policy-making for the countries of the region. It could serve to institutionalize a alition from the Member countries, focussing on both existing new issues, monitor development in different fora including WIPO and and serve as a vehicle for rapidly responding to TRIPS-plus pressures in systematic fashion. It would make it possible for governments eceive technical assistance from varied sources and process assistance in a more systematic fashion. Establishing ACTRIPS vel will, therefore, if properly implemented, empower develtries to maximize the benefits of intellectual property while reducing nomic costs of existing international legal obligations.

160

10. "SELF-HELP"

EVOLUTION OF PATENT LAWS

However, as evidenced by the case of AndeanCommunity, this mechanism should not be used for harmonizing IP standards generally or with respect to the use of flexibilities. This is because different countries in the region could have different needs. Consequently, this mechanism is likely to work better where expertise is developed through training, exchange of information and sharing of best practices in the use of flexibilities at the regional level, but each country is allowed the requisite space to frame the actual flexibilities and their use to suit its specific needs. This coordinated but non-harmonizing approach is also less likely to encounter ~oliticaland institutional resistance from the individual countries.

.

VI. REGIONAL INTELLECTUAL PROPERTY ORGANIZATIONS Under the second model, the regional intellectual property organizations are stand-alone organizations with no linkages whatsoever to other regional econolrllc and development organizations. The problem with this model is that the regional IP organization tends to operate outside the broad policy framework 011 research, technology development and innovation that should inform IP policy formulation. In the absence of policy supervision by economic development bodies in the region, very little expertise on the use of TRIPS flexibilities, as an instance, for public health purposes, has so far been developed in these organizations. In fact, their mandate is limited to procedural matters such as patent grants, examination or registra tion while failing to include issues relating to exercise of patent rights. Another significant handicap is their tendency towards harmonization as opposed to coordination. Such type of organizations are mostly in Africa in the form of African Organization for Intellectual Property (OAPI)and African Regional Intellectual Property Organization (ARIPO). Thus, issuing of patents in OAPI Member states is regulated by the Bangui Agreement, which has the status of national patent law for all Members. OAPI receives all patent applications and registers regional patents which have a binding effect in all 16 Member states. Once the patents have been issued by OAPI, they are then regulated at the national level by each respective state. Bangui Agreement has also harmonized the rules on compulsory licensing by requiring that no compulsory licence can be issued before the expiry of three years from the date the patent was issued or four years from the date of application. The Agreement also provides that compulsory l~cencesdo not extend to acts of importation which defeats the whole purpose, for example, of paragraph 6 negotiations. The Bangui Agreement, which is the effective law for the countries concerned, both in terms of procedural matters and substantive patent law, has the net effect of limiting the powers of the Member states to use very essential TRIPS flexibilities such as compulsory licensing. In view of the foregoing discussions as regards relative merits of the two models, it is not surprising to note the following recommendation of South Centre in its April, 2004 Report:

161 -

/

I

.

"REC's and other similar regional bodies should establish regional ACTRIPS or functionally equivalent mechanisms as a central feature of an institutionalized approach to regional research a n d innovation including essential health research and, in particular, as a focal point for training, research, information exchange and political coordination in the use of TRIPS flexibilities for public health promotion a n d protection. As far as possible, however, developing countries should avoid a harmonization approach or using regional patent or industrial property organizations with no broader economic and development mandates as a basis for regional cooperation on the use of TRIPS flexibilities in general and for public health in particular." There are a number of steps that can be taken in the regional context to facilitate the enhancement of the pharmaceutical research and manufacturing of developing countries as well as facilitate the implemt~~tation of 6(i) of the WTO 30th August, 2003 decision. Thus, where there are regional patents, such as in OAPI countries, regional compulsory licences could be issued. Where there are no regional patents, there could be a system of mutual recognition where REC members can issue their own compulsory licence based on the issuance of a licence in another REC member country. This system could be strengthened in terms of transparency, legal security and efficiency by tying it into the ACTRIPS so that ACTRIPS would advise members when to consider issuing the licences based on the scheme. Such a system of mutual recognition for patent grant is already employed in ARIPO under the Harare Protocol. The system has another advantage since, being non-mandatory, it involves a certain levelof national action. Thereby, it would also be in conformity with Article 4bis of the Paris Convention on independence of patents. With respect to developing research and manufacturing capacity, regional cooperation offers several advantages and can help establish factors necessary for local production and removing barriers that make local production difficult. Indeed, regional cooperation in manufacturing is in progress in the ASEAN which can serve as a model, with appropriate adjustments, for other regions and with respect to pharmaceutical production in particular. The Basic Agreement on the ASEAN Industrial Cooperation (AICO), "igned in 1996, has the objective of promoting joint manufacturing activities of by establishing large-scale ASEAN industrial plants to meet regional requirements of essential commodities. The Agreement enables participating and companies to enter into a cooperative arrangement whereby they %age in some form of resource-sharing such as technology-sharing, marketh n n g or consolidated purchases of raw materials. An approach modelled on the AICO scheme with enhanced research focus Qnbeadopted with respect to the development of the pharmaceutical industry mthecountries of the South. Such a modified scheme can be crit~calin helping Prioritize investments in pharmaceutical research and production and in

162

EVOLUTION OF PATENT LAWS

evaluating performance t o ensure greater public health impact i n developing countries. It can also h e l p to facilitate a n d rationalize technology transfer arrangements from other countries of the South s u c h a s Brazil, C h i n a a n d India in the case of pharmaceuticals.

VII. REGIONAL MANAGEMENT A N D P R O C U R E M E N T MODELS There is another important issue as regards regional procurement. There a r e four possible levels of cooperation, d e p e n d i n g o n t h e state of integration ill the region (Table - 1): (a) I n f o r m e d buying: w h e r e m e m b e r countries s h a r e information a b o u t prices a n d suppliers b u t procure individually; (b) Co-ordinated i n f o r m e d buying: w h e r e m e m b e r countries undertake joint market research, s h a r e supplier performance information a n d monitor prices b u t they continue to procure individually; (c) G r o u p contracting: w h e r e m e m b e r countries jointly negotiate prices a n d select suppliers a n d agree to b u y f r o m t h e selected suppliers although each country eventually purchases individually; a n d ( d ) Regional pooled procurement: w h e r e m e m b e r countries jointly conduct tendering through a n organization acting o n their behalf a n d a central purchasing agency m a n a g e s the p ~ ~ r c h a s oe ns behalf of all the m e m b e r countries. TABLE 1 R E G I O N A L PHARMACEUTICAL M A N A G E M E N T A N D PROCUREMENT MODELS i

1

Informed Buying

1

Member countries share information about prices

Description

I

II

I

1

~

-

Coordinated Informed Buying

Group Contracting

Member countries undertake joint market

Countries conduct procurement individually

1

I Regional Pooled Procurement

Member Member countries jointly countries jointly negotiate prices conduct tenders and award and select suppliers. contracts Member through an countries agree organization to purchase acting on their from selected behalf. Central suppliers. buying unit manages the Countries purchase on conduct behalf of purchasing countries. individually.

,

i

163

~

Country roles and responsibilities L:

B

--

.

Country t ca ; ! with a Forum for e g i o n a 1 Facilitate the harmonization delegates meet 1 r o l e s gathering and to jointly designated of information respon- dissemination conduct price central buying requirements of supplier and Sibilities negotiation and unit to conduct and systems; price supplier and adjudicate mechanism for information tenders. selection on market among member behalf of research, countries member dissemination (clearing countries. of findings house); Sharing of information. among member Alternatively, an agency may countries and be contracted potential for this purpose. provision of drug information. Focus on coordination of information 1 I gathering and sharing.

1

1

10. "SELF-HELP

-R

.-

-

Share procurement information for selected items.

Collect Provide accurate and information reliable related to quantification of pricing and needs for supplier selected items. performance Provide timely based on payment to harmonized suppliers. requirements; Prov~de provide accurate and resources to reliable conduct joint market research information on supplier quality activities for selected items. performance and product monitoring.

Provide accurate and reliable quantification of needs for selected items. Provide funds to procurement unit/agency for supplier payment. Provide accurate and reliable information on product quality monitoring.

~

[Source:Adaptedfrom M S H (200311 D e p e n d i n g o n t h e state of health cooperation i n each region, a different model c a n b e chosen. T h e existence of different possibilities also m e a n s that countries c a n m o v e o n to closer cooperation a s they gain experience a n d build confidence. H e r e again, there already exist regional institutional f r a m e w o r k s to I

A*.

164

EVOLUTION OF PATENT LAWS

facilitate the speedy implementation of whatever model is chosen. It could be done through regional health organizations such as the Commonwealth Regional Health Community Secretariat (CRHCS), regional procurement organizations such as OECS, GCC and ACAME or through the health committees and similar mechanisms in the REC's. Evidently, the maximum benefits can be obtained by the mechanism of regional pooled procurement. These are: 1. It results in lowering of prices. For example, at the beginning of the East Caribbean Drug Service (ECDS),the unit cost of drugs dropped an average of 44 per cent in the first tender cycle, which was sustained in subsequent tenders and was reported as more than 25 per cent lower than individual country prices for the year 2001-02. 2. It results in an improved quality resulting from an improved access to information about drug quality through exchanging information about supplier performance with respect to quality of drugs, coordinating technical aspects of quality assurance through a centralized quality assurance laboratory and coordinating and cost-sharing Good Manufacturing Practices (GMP) inspection through a centralized procurement body created specifically for the purpose of pooled procurement. 3. It results in an improved availability by providing better information on the states of the market and drug availability, particularly with respect to anticipated short-supply of drugs which are difficult to obtain. This allows countries to increase lead time allowances and exercise multiple supplier options to obtain secure supply routes and to locate previously unknown sources for orphan and difficult to obtain drugs. 4. It assists in eliminating erratic or rogue suppliers. An errant supplier may not worry much about the threat of being barred from future supply to a single country, which may be buying only small quantities. However, the possibility of being barred from future supply to an entire region carries much greater weight both in lost reputation and sales. 5. It offers rapid dissemination of information on techniques and especially of adoption of methodologies appropriate to developing country settings. 6. With the advent of pandemics such as HIV/AIDS, countries have to suddenly gear up for buying many essential drugs w h c h are expensive and with which they have little previous procurement experience. Ln view of this, the earlier lukewarm approach has given way to a perceptible level of enthusiasm towards adopting this mechanism.

10. "SELF-HELP"

, ! I

7. There is an improved rational use of drugs as it increases the incentive for coordinating drug selection and use, for example, drug medical supply registration procedures, essential drugs lists (EDL's) and standard treatment guidelines (STG's). 8. It also helps in policing of commodity supply chains which is an expensive exercise. 9. Some other advantages include related training and technical assistance, drug utilization studies and improvements in quality control. Ln view of the above significant advantages, developing countries should w k to put in place regional procurement systems where they would jointly tendering through an entity acting on their behalf and a central purchasing agency managing the purchases on behalf of all the member countries. Regional coordination also offers benefits to developing countries and helps them overcome current constraints as regards regulatory issues such as challenges in drug registration and post-marketing surveillance, development of essential medicine lists, development of medicine policies and rules on pharmaceutical advertising and labelling. With respect to the quality issues, a basic requirement of well-equipped, well-maintained, well-staffed quality control laboratory can be successfully achieved more easily at the regional level. In hddition, this will also facilitate development of a coordinated regional warning/ drug recalls system. Existing South-South REC's in Africa, Asia, Latin America and Caribbean offer ready institutional frameworks for this purpose. In ASEAN, the Pharmaceutical Product Working Group is already undertaking activities related to pharmaceutical regulations. The primary objective of the ASEAN Drug Regulatory Harmonisation project is to strengthen national regulatory authorities in order to ensure improved access to safe and good quality pharmaceutical products in all the ASEAN countries. In Latin America and the Caribbean, there are also similar aims and objectives with respect to medicines regulations and quality issues. In MERCOSUR, for example, thecommission on Health, which deals with matters related to the production and registration of medicines, has established harmonized rules on goods practices and quality inspection of medicines; requirements for pharmacel~ticalproducts registration; good fabrication practices and control in establishments of pharmaceutical industry; information and documerits required for pharmaceutical products registration; validity, renovation, cancellation and modification of pharmaceutical products registers; among Others. These provisions constitute a significant step towards MERCOSUR integration in this field, because they allow mutual recognition between govemmental agencies which authorise medicines for the domestic markets. In CAR^^^^, these matters can be addressed both in the context of the Coopera-

166

EVOLUTION OF PATENT LAWS

tion in Health Initiative (CCH) and in the context of the OECS procurement scheme. The CACM also has a commitment towards mutual recognition of medicines and issues related to technical regulations and safety under the Guatemala Protocol.

VIII. RESISTING BILATERAL AND OTHER TRIPS-PLUS PRESSURES Regional cooperation is necessary if individual developing countries are to withstand political pressure exerted upon them by developed countries and multi-national corporations to forgo the use of flexibilities for public health and other socio-economic purposes and/or to adopt TRIPS-plus standards. It has the potential of enhancing the political capacities, bargaining leverage and economic clout of developing countries in their dealings with their developed trading partners and enabling them to resist pressures to forgo the use of TRIPS flexibilities and/or to adopt TRIPS-plus standards. Regional cooperation in this area has, in fact, begun to emerge in the South. During the ASEAN Workshop on increasing access to HIV/AIDS Drugs and Reagents, held in Indonesia in June, 2002, it was agreed that ASEAN would focus on the review of TRIPS and patent laws in ASEAN member countries with a view to using appropriate legal mechanisms available in the region, such as, parallel importation and compulsory licensing.

IX.REGIONAL COMPETITION ENFORCEMENTMECHANISMS A strong link exists between patent protection and anti-competitive behaviour in the pharmaceutical market since patents grant their holders monopoly privileges. Competition enforcement is, therefore, critical in ensuring a competitive pharmaceutical industry both in terms of lowering prices and ensuring availability of essential medical products. This is possible by an intervention through regulatory and strong judicial institutions so as to curb anti-competitive behaviour in the pharmaceutical industry where nearly 40 per cent of the estimated worldwide market for pharmaceuticals is held by 10 companies. However, because of such heavy concentration in the industry, taking action to deal with anti-competitive and other abusive behaviour by companies means that the government is going against very powerful entities. Such an undertaking requires high levels of investigation and negotiating sophistication, economic and political clout and strong judicial institutions. This is very difficult to achieve is small developing countries, which have neither the expertise in competition regulation nor the economic and political clout. A regional approach provides a sound basis for developing countries to undertake joint investigations and information exchanges into the business practices of pharmaceutical companies generally and their use of their market power. It is seen that the various REC's in Africa, Latin America & Caribbean and Asia have institutional frameworks through which such a mechanism can be operationalized. At the same time, all the major REC's in Africa and Latin

10. "SELF-HELP"

167

~ ~& the Caribbean ~ ~ have regional i ~Courtsaand/or regional dispute settlement mechanisms. In Africa, all the four main REC's together with the AEC hilve established courts of justice or tribunals along the lines of European Court Justice.Enforcement action can, therefore, be undertaken through adminisand where necessary, through court procedures. trati\'e In Asia, countries like Thailand and China have established specialized national courts to hear IPR-related cases as a means of improving their capacities for national enforcement, though such a measure is not mandated under TRIPS.

X. LIMITATIONS O F REGIONAL COOPERATION \Z'Iiile regional co-operation offers advantages for developing countries, it pri~lc-ipall~. focus<ed in the area of IPR administration. This still leaves the r c ~ ~ ~ ~ i r ~ . m cnational n ; f o r institutions to perform the important functions related to policymaking, participation in international rulemaking, enforcement and reWllation of TPR's. IZegional organizations, therefore, may complement, rather than whollJ' replace, an effective national IP infrastructure. i3

XI.ENHANCED ROLE FOR NGO'S

Often, power is not a matter of imposing a sovereign will, but of enrolling the coopt.ration of chains of actors. International agreement s ~ m e t i m e arises s Lvhcn minority factions from many states, joined in cross-national alliwith NGO's), defeat majority factions. ance (~vorking In the context of TRIPS, NGO's have been the single most important factor in 1-aising the issue of impact of international IP standards on development issues such as health, food and agriculture, as illustrated by their active participation in the discr~ssionsleading to the Doha declaration and the implementation of its paragraphs 6 and 7. Although the crucial role of enhanced civil society participation in IP processes is already well recognized, there is a further need for the establishment of regional NGO and community-based organization (CBO) networks which should be linked to regional ACTRIPS. An important e"c1mple of an existing regional civil society network that has played a crucial r ~ l cin intellectual property and public health as well as other trade and del.elopment issues is the Southern and Eastern African Trade Information and xcaotiations Institute (SEATINI). It has been at the forefront of promoting refilonal coordination and in publicizing pressures by developed countries or \'rican governments. The network has also helped governments with technical 5L1PP('rtto resist bilateral and other pressures. Other organizations such as Third LA'orld Network (TWN), which has offices and activities in both Asia and "friccl, have also played a critical role. Howwer. to remain effective in the long run on intellectual property issues, x('O's will have to become more engaged in the intellectual property policy process itself. .Such engagement is possible by gaining membership of those polir! cldvisory committees that inform the thinking of key national patent At present, these committees draw their members from the biggest users

EVOLUTION OF PATENT LAWS

168

of the patent system, the MNC's as well as patent law experts. The result is a policy community dominated by a narrow, insular, technocratic culture that is disconnected from the broader welfare issues and that fails completely to take into account development issues. It is vital, therefore, that NGO's seek membership of these committees both nationally and internationally as part of a long-term engagement with the intemational standard-setting process. To date, NGO's have neglected this long term game. 'fie NGO MSF, which has led the campaign over access to medicines, has a seat at WIPO, but to date has not occupied it. It is in such a background that Drahos andBraithwaite have appropriately drawn attention to the need for NGO's to s h f t from the romance of campaign to the dullness of occupying seats on the many committees that work on international standards, including intellectual property. ["Information Feudalism" - P. Drahos and J. Braithwaite (2002)l. Further, the NGO's canset for themselves a strategic objective of campaigning in a classic hard-cop-soft-cop fashion [Drahos and Braithwaite (2002)l for reform of patent laws. The soft cop NGO's can take their seats on policy committees within the walls of the patent officesseeking to persuade changes in patent administration. The hard cop NGO's, on the other hand, can attack the patent offices from outside the walls, accusing them of regulatory capture. Experience in other domains such as environmental regulation suggests that persistence over a long period with this strategy of hard cop and soft cop NGO1s yields the desired kind of reform. Furthermore, hard-cop strategy has yielded rich dividends when it has captured the imagination of mass publics in powerful states. However, as already noted earlier, this has often been employed in a reactive sequence, as a sequel to, say, HIV/AIDS pandemic in South Africa. However, in order to secure global regulatory change of a durable character, the hard-cop strategy needs to be employed in a proactive sequence as under: Individual entrepreneurship regulatory innovation Enrolment of organizational power

C

with

Early

mover

\ regulatory costs

Modellinp: the r e ~ u l a t o r vinnovation

J Global standardizing of the innovation

organizations

suflcer

Early mover organizations lobby for glob~lizationof costs Early-movers

get

adjustment

and

\ technology transfer benefits from being an early mover

[Sot~rce: P. Drahos (2002)l

ROADMAP FOR FUTURE NEGOTIATIONS Today, intellectual property laws are the legal sinews of the information age as they affect practically everything from the availability and price of

I

!

-tial drugs, to the pattern of international development, to the communications of the internet. Traditionally, the creation of these limited legal monopolies was with a view to serve a bouquet of purposes - a way of protecting and rewarding innovators in art and technology, encouraging firms to produce quality products, allowing consumers to rely on the identity of the products they purchased and to aid dissemination of knowledge and setting up of local technological infrastructure in the longer run. To the extent the concern for "public interest" wasexpressed, it was mostly limited to the eventual ability to purchase the end products. This was due partly on account of an absence of an avalanche of negative fallouts and partly, perhaps, due to a lack of full understanding or articulation of the complexity of issues in a highly protectionist intellectual property rights regime. The exponential expansion in breadth, scope and term of the intellectual &rty protection over the last forty years or so coincided with the epochal process of decolonization of developing and least developed countries and consequent thrust on local development needs. In such an atmosphere of I @asnost'' and "perestroikaf', where the more powerful among the developing countries were putting up a united front at the international foras and, later, even NGO's based in developed countries began aggressively playing the role

0fa watchdog, the fundamental principle, holding the rationale for a higher IPR p ~ ~ t i o ofn balance , between the public domain and the realm of private PrOPerty, was easily exposed to have been lost. ?'he traditional idea of intellectual property wound a thin layer of rights Mund a carefully preserved public domain. Thus, patents were supposed to mnfer~ropertyrights strictly on invention per re. The layer of ideas above, and dfactsbelow, remained in the public domain for all to draw on, to innovate that is to say, ideas and facts could never be owned. Yet, contemporary hwetual property law is rapidly abandoning this central principle. The trend to be that the public domain should be eliminated wherever possible. 'Ihus, fiere exist monopolistic database rights over facts, gene sequence, busimethods and software patents that enclose public domain together with

-#-

170 -

- EVOLUTION

OF PATENT LAWS

-

the realm of private property. And while the rules vary from nation to nation, the pressure is to harmonize them only upwards, adopting the strongest protection of facts, thus, increasing greatest scope for patentability.

I. MAXIMALIST "RIGHTS CULTURE" It can be correctly inferred that intellectual property policy is in the sway of a maximalist "rights culture" [Prof. James Boyle (2004)j. This is based o n the twin assumptions - the fundamental one, that to promote intellectual property is automatically to promote innovation and, in the process, the corollary, the more rights the better. Both these assumptions are questionable. Even where intellectual property rights are the best w a y to promote innovation, it is s o only by designing such rules that set the correct balance between the public domain a n d the realm of private property. Yet, the multilateral a n d bilateral treaties require very high "floors" of international intellectual property protection while rarely imposing "ceilings", even though too much intellectual property protection is just a s harmful, and a s distorting to trade flows, a s too little [Prof. James Boyle (2004)l. In fact, the maximalist agenda is not a good policy even for the developed world a s it represents the vested interests of a narrow range of businesses. This agenda is, therefore, set without any effective participation by wider civil society a n d evidently, with little democratic scrutiny. Though both WTO a n d WIPO keep making claims to a n in-built and progressive flexibility i n the various operational and contemplated treaties, the actual practice has been to push the developing countries and LDC's to adopt "TRIPS-plus" levels of protection. In the words of Prof. James Boyle (2004), "Again and again one finds the same assumptions: Rights are always the best path to innovation. More rights mean more innovation. International treaties should set minimums (but not worry about maximums). One size fits all. And it is "extra large"." This "one size fits all" attitude has been widely condemned, in both the developed and developing world. In the words of UK Commission o n Intellectual Property, "Intellectual property systems may, if we are not careful, introduce distortions that are detrimental to the interests of developing countries. Developed countries should pay more attention to reconciling their commercial self-interest with the need to reduce poverty in developing countries, which is in everyone's interest. Higher IP standards should not be pressed on developing countries without a serious and objective assessment of their impact on development and poor people. We need to ensure that the global IP system evolves so that the needs of developing countries are incorporated and, most importantly, so that i t contributes to the reduction of poverty in developing countries by stimulating innovation and technology transfer relevant to them while also

11. ROADMAP FOR FUTURE NEGOTIATIONS

171

/ #

making available the products of technology at the most competitive prices possible." It is further noted that even where flexibilities a n d exceptions are built into the international regime, developing countries often lack the technical a n d legal expertise to take full advantage of them. In intellectual property law, in the words of Prof. James Boyle (2004), "...exceptions and limitations are deeply important. They are part of the policy rather than merely a suspension of it."

In view of this, it is a n important function of WTO and WIPO to enable the developing countries to make use of the flexibilities. A still wider level debate is in full swing o n the issue that, after all, intellectual property rights are not e n d s i n themselves. Their goal is to give us a decentralized system of innovation i n science and culture. With this ultimate objective inview, alternatives within the current system - without deviating too much from the rights and obligations provided a t present - may have to be gainfully explored. In this regard, it will be useful to refer to the UK Commission o n Intellectual Property Rights Report of 2002. In the sixth chapter o n "Patent Reform", it is stated: "The patent system is designed as a tool to provide an incentive to technical progress. The effectiveness with which it can do this will depend on the fit between the nature of the incentive and the processes by which technological development takes place. But whereas the patent system has uniform criteria to judge, patent applications, the pattern of technical progress may vary significantly in different fields. The patent system fits best a model of progress where the patented product, which can be developed for sale to consumers, is the discrete outcome of a linear research process. Thesafety razor and the ballpoint pen are examples, and new drugs also share some of these characteristics. By contrast, in many industries, and, in particular, those that are knowledge-based, the process of innovation may be cumulative, and iterative, drawing on a range of prior inventions invented independently, and feeding into further research processes by others. Knowledge evolves through the application of many minds, building often incrementally on the work of others. Sir Issac Newton modestly wrote a long time ago: "If I have seen further, it is by standing on the shoulder of giants." Moreover, much research consists of the relatively routine development of existing technologies. For instance, gene Sequencing, formerly a labour intensive manual technique, is now a fully automated process, involving little creativity. The development of software is very much a case of building incrementally on what

=a?,'-

172

- . -

--- - -

EVOLUTION OF PATENT LAWS

11. ROADMAP FOR FUTURE NEGOTIATIONS

173

/

exists already. Indeed, the Open Source Software Movement depends precisely on this characteristic to involve a network of independent programmers in iterative software development on the basis of returning the improved product to the common pool.

innovation, while reducing effects which might discourage follow-on innovation. But, the administrative and enforcement requirements of such a system need to be tested to assess its practicality in developing countries."

In practice, it is often difficult to distinguish between "discrete' and "incremental" or "cumulative" research process, because research is carried out in so many waysand there is often a serendipitous element. But, for the most part, the "cumulative" model now seems to f i t more research than the "discrete" model. A patent system, which evolved with the latter concept in mind, may not be optimal for the former."

m e n source software and collaborative efforts in science and medicine have shown that there are many ways to produce high quality innovation. In spite of this, policy makers have resisted this proposal, as if the intellectual property system required fidelity to a certain business model of innovation. When some national governments proposed that WIPO should also explore the potential of these open and collaborative efforts, one high ranking US official argued that this would be contrary to WIPO's goal, which is to promote intellectual property rights. To hold a meeting which has as its purpose to disclaim or waive such rights is contrary to the goals of WIPO. This is a clear manifestation of a "rights culture" which imposes a blindness that curtails our imagination to think on alternatives. The world of real invention and innovation, on the other hand, presents a remarkably different picture in certain areas. As an instance, today Internet allows us to dream of offering, to a truly global audience, access to the educational, cultural and scientific materials of the world. Thus, intellectual property rules need to embrace this fact, and ought to encourage innovation and facilitate dissemination of cultural and educational materials, rather than so legislating that the Internet becomes like some more familiar and less democratic medium. It is no less remarkable to consider that the areas where the Internet has succeeded most - as a giant distributed database of facts on any subject - are those in which there are little or no intellectual property rights. The software on which Internet runs is also largely open source.

This may also explain why the nationals of low income developing countries file so few patent applications. This is not due toa lack of innovativeactivity in these countries but because the type of inventions does not possess the threshold level of inventiveness, recognizable under the current patent system. 'The UK CIPR Report (2002) has, therefore, advocated for an alternative utility model. The report says: "Many countries, both developed and developing, have recognized the need to protect the inventions, which result from what might be termed a "sub-patentable" type of innovation, and have, therefore, introduced a second tier of patent-like protection. Such systems are usually referred to as utility model or petty patent systems. In comparison with the normal patent system, utility model or petty patent systems typically require a lower level of inventive step, provide a shorter period of protection and, in not being subject to any substantive examination prior to the grant, are cheaper to obtain. Such characteristics are intended to make the system more attractive to small and medium size enterprises (SME's) which typically have neither the desire nor the capacity to use the normal patent system. The type of innovative activity in such organizations may be more focused on relatively small incremental improvements to existing products rather than the development of completely new products. Such improvements, whilst not necessarily having the level of inventiveness for normal patent protection, doneverthelesscontribute to technological advancement and should be encouraged. They are nlosi !ikcly to be beneficial for products, such as medicinal products, of a type likely to be produced domestically "

The UK CIPR Report (2002)has suggested the possibility of another model under certain circumstances. It says: "Apart from those systems in current use, various other proposals have been suggested to encourage sub-patentable or incremental ~nnovation.One of these 1s based on the provision of a right to a small royalty when the invention is used by others, but would not allow the pr,>l-~lxtiorlof that use. 7 his approach seeks to provide a reward for

n. BROAD PRINCIPLES FOR ADOPTION BY WTONIPO Therefore, if we want an intellectual property policy that genuinely promotes innovation, international development and human well-being, we n ~ e d to expose the assumptions of the maximalist rights culture to a process of democratic scrutiny. We also need to analyse it on a wider canvas. Just as environmentalists taught us to connect development to an interconnected system called the environment so that a successful development could only Proceed if it were sustainable, similarly, intellectual property laws require a different perspective towards balancing of interests. It is useful to remember &traditional concept that i t is not rights that generate prcgrcss, hut the balance b e e n rights and the public domain, a balance that is highly context-dcpen' k t . This calls for an orientation in WTO1s and WIPOfs functioning in the Doming future. Towards that end, these organizations need to forgo the tunnel %ion of maximalist rights culture and quickly adopt the following broad Principles [Prof. James Boyle (2004)l:

174

EVOLUTION OF PATENT LAWS

(a) Balance Intellectual property policy must maintain a balance between the realm of protected material and the public domain. Too many rights will slow innovation as surely as too few. There is, therefore, a need to perform an "Intellectual Environmental Impact Statement" on each new proposal for the expansion of rights, detailing its effects on the public domain, and the commercial, innovative activities that depend on the public domain. (b) Proportionality Each intellectual property legislation imposes costs as well as benefits on the public. Evidently, massive costs cannot be exchanged for tiny benefits. Thus, a formal, detailed and specific statement of costs and benefits should accompany any proposed action. (c) Developmental Appropriateness The principle of maximalist rights culture as well as "one size fits all" must be abandoned. In any case, "TRIPS-plus" standards must not be imposed under any condition. (d) Participation and Transparency When intellectual property has enveloped everything from access to essential drugs to online privacy, it cannot be made according to the assumptions of a narrow coterie of lawyers and industrialists. Thus, the present trend at WIPO to increase the participation of civil society groups in the discussions and debates needs to be carried forward. (e) Openness to Alternatives and Additions It has to be realized now that although intellectual property is indeed a remarkable human invention, yet it cannot solve all the problems. Thus, pharma patents have actually failed to address the urgent drug needs of global poor. The R&D efforts of MNC's have been selectively directed to such diseases only that affect the global rich. This is a pointer towards a search for alternatives or additional methods to the traditional IP system, in other words, a paradigm shift is called for in order to encourage innovation in certain specific areas. It wes earlier noticed that innovation and research through Internet, without any IP fetters, has been widely acknowledged. Clearly, then, imposing a traditional IP regime on internet transactions is bound to create a barrier to continuing innovations. Similarly, a totally different approach is called for in the area of traditional knowledge. (0Neutrality Intellectual property rights are mere tools. Thus, WTO and WIPO need to respond creatively and flexibly to the new ways in which those tools can be used. Within the realm of existing intellectual property rights, the policy must be neutral between different methods of using those rights to encourage innovation, not view any new method of innovation as somehow illegitimate. AS an

----

'

11. ROADMAP FOR F U T U E E G O T I A T I O N S

instance, WTO and WIPO should be as concerned about the impact of software p t e n t s on open source software development, as it is about the impact of software piracy on closed source software development. Before we advert to a detailed analysis of specific provisions of TRIPS, it is necessary to understand an underlying concept, which ought to fuel as well as p i d e the TRIPS vehicle along the road of change in future negotiations. This is thenotion of preferential or differential treatment which provides a background for discussion on some of the specific challenges associated with the internationalization of intellectual property protection in a context where developing countries remain at a significant disadvantage in their relations with developed countries in matters concerned with technological development. Although sovereignty is one of the most basic principles around which inter-state relations have been organized for centuries, yet the principle of sovereign equality has never been an accurate representation of the international community which has always been made of smaller and bigger powers. Thus, while formal equality has been at the root of most modern international law, some exemptions have developed over time. 'Differential treatment' refers to instances where this principle of formal equality is bypassed to accommodate extraneous factors, such as divergences in levels of economic development or unequal capacities to tackle a given problem. Thus, it refers to non-reciprocal arrangements which seek to foster substantive equality among states. In practice, this many include deviations in favour of developing and least developed countries. The most obvious application of differential treatment is where different categories of states undertake different levels of commitments. There is another significant application, albeit, at a reduced level of this principle, which is at the implementation level only i.e. where commitments are equal but implementation schedules are staggered. This may also include, for instance, technology transfer or aid mechanisms which are meant to foster the implementation of the treaty by countries with comparatively lesser ability to implement it. The differential treatment concerns in the TRIPS Agreement can be put in Perspective by analyzing developments which have taken place over the past twenty years in the field of international law of sustainable development, wherein developed countries have agreed to differentialtreatment measures in favour of other countries. Its main impact is that countries which lack resources %meet basic needs can avoid diverting necessary resources from these essential *h for the benefit of the global environment while still contributing to solving environmental problems. This differential treatment, in practice, as-es a number of different forms. Firstly, there is a weak form of differentiation, found in treaty provisions, *ere commitments are 'contextualized'. These are provisions which apply to Member states similarly but are qualified by recognition that countries

176

EVOLUTION OF PATENT LAWS

_____

should implement them only to the extent that is actually feasible. Examples include commitments which can be implemented by states in accordance with their 'particular conditions and capabilities'. Secondly, differentiation can constitute a tool to foster more widespread participation and more effective implementation of commitments such as when financial assistance is provided to developing countries as an incentive for them to ratify the international treaties. This also implies that developed countries have agreed to subsidise compliance by developing countries. This is today the most common form of differential treatment at the implementation level. Accordingly, an important financial mechanism, Global Environment Facility (GEF),specificallydevoted to global environmentalproblems, has beencreated. It provides the funding promised to developing countries for complying with the obligations they take under some global environmental treaties such as the Climate Change Convention. Thirdly, differentiation can also be introduced in the governance of international bodies by introducing a differential voting structure. One of the interesting examples is the GEF where the voting pattern seeks to balance out the power of donors and the recipients of aid. The main decision-making organ, the Council, includes 16 members from developing countries, 14 from developed countries and 2 from East European countries. Though most of the funds come from developed countries, the decision-making mechanism ensures that decisions are adopted by a majority of donors and a majority of recipients. In fact, the principle which underlies most of the differential measures granted in the context of sustainable development treaties is the principle of common but differentiated responsibility. This is founded ipon responsibilities of states in different measures according to their respective historical and current contributions to the creation of global environmental problems and their respective capacities to address these problems. The principle, as incorporated in the Rio Declaration on Environment and Development, provides that states have differentresponsibilities because of their different contributions to global environmental degradation. It also specifically provides for developed countries' responsibilities in taking the lead on the realization of sustainable development because of the pressures their societies place on the global environment and of the technologies and financial resources they command' [Principle 7, Rio Declaration on Environment and Development, 14th June 19921. Although the principle of common but differentiated responsibility was developed in the context of environmental treaties, but it is of much broader relevance. In fact, it is, in large part, an economic principle. Despite i t being in essence an economic prirtciple of great import, differential treatment has not had much of a direct or specific role to play in the development of international intellectual property rights regimes. Certainly, treaties like the Paris Convention were conceived broadly enough so as to give

11. ROADMAP FOR FUTURE NEGOTIATIONS ---- ---. .----

p p

7

-

-

--

-

-

177

less economically developed countries the possibility to be part of the treaty without implementing the same protection standards as other Mernber stdtts ?fiese gave countries some leeway in determining the point at which their intellectual assets were sufficiently worthwhile to require protection. Thus, several courltries like Italy, Japan or Switzerland introduced medical product only in the 1970's. In a non-coercive international atmosphere, the absence of a specific mandate for differential treatment was never felt acutely. So far as TRIPS Agreement is concerned, it definitely accords some flexibility to Member states but includes little actual differentiation. As an instance, 30 and 31 allow Member sates to take measures which restrict the rights of patent holders. Thereby, the Member states are enabled to take some limited measures to circumvent the obligation in Art. 27(1) to provide patentability in all fields of technology. However, while these provisions provide flexibility, they are not necessarily differential.In fact, provisions like Arts 30 and 31 allow all the countries to introduce some restrictions, taking into account the public interest element, on the use of patent rights. While there is a correlation between [he public interest and differentiation in favour of developing countries in intellectual property rights, the two cannot be equated. In fact, the only visible differential provision is the slli generis option under Art. 27(3)(b)which gives developing countries the possibility to choose their own system of plant variety protection. This brings us to a stage where we need to explore the rationale of introducing differential concept in the intellectual property rights regime. It is seen that some of the important underlying issues, which caused a rapid development of differentiation in global environmental treaties, are the same in the context of intellectual property. Thus, if developing countries are exempt from taking up emission reduction commitments under the Kyoto Protocol, this isdue partly to the fact that they havemuchless capacity to address the problem. Similarly, developing countries are at a fundamental disadvantage in the introduction or strengthening of patent rights standards because their starting point in terms of technology ownership, patent ownership and R&D is, on an average, extremely low. To be able to compete with developed countries in a system where they introduce the same standards of patent protection, developing countries would either need to be at the same technological level as developed countries or be helped through technology transfers in the alternative. It 1s noteworthy that technology transfer is one of the direct links between differentiation in environmental law and in patent law. Environmental treaties have acknowledged the need for financial assistance in the form of technology transfer in order to secure better compliance. This was indeed the major issue in the Montreal Protocol on the Ozone Layer which involved the question replacing ozone depleting substances through new technology solutions, which was available only in developed countries at the time of the adoption of

178 --

E W T I O N OF PATENT LAWS

11. ROADMAP FOR FUTURE NEGOTIATIONS

-

the Protocol. Art. 7 of the TRIPS Agreement, although it recognizes the direct like between intellectual property rights and-technology development, does not mention, at all, the special situation of developing and least developed countries. In future, intellectual property rights frameworks must adopt the language of differentiation and apply it in concrete ways. There is, for instance, the need for a Global Patent and Technology Facility which could mirror the work of the Global Environment Facility in the patent field [Philippe Cullet (2005)l.Of late, there has been at least an infrequent recognition that there are certain aspects of the intellectual property rights regime which should take into account the differential principle, such as levels of economic development, with regard to enforcement [World Bank, Global Economic Prospects, 2002 (Washington, DC: World Bank, 2001)]. But, there is a dire need for a much more systematic and principle-based initiative that would address all the problems, arising in the context of intellectual property rights, from the platform of differential principle. Next, we take u p concrete suggestions for amendments in the TRIPS provisions in the ongoing negotiations. This is guided both by the initial distortions in the TRIPS provisions as well as the negative fallouts of the functioning of TRIPS during the past few years.

111. PRECISE DEFINITION OF SUBJECT-MATTER AND INGREDIENTS OF PATENTABILITY The central concern of civil society groups, both in developed and cleveloping countries, is on account of a vague definition of the subject-matter of patents. Art. 27.1 of TRIPS requires that, "... patents shall be available for any i?lz~entions, whether products or processes, in all fields of technology provided they are new,i~zvolveall irlaentive step and are capable ofilldustria2 application ..." [Emphasis supplied] TRIPS, however, does not define the term "invention", nor does it prescribe how the three ingredients for patentability are to be defined. This has, predictably, caused a number of problems in the actual implementation of the patent regime and, consequently, has led to patent abuses. A recent Research Report (2002) by US National Institute for Health Care Management Research and Educational Foundation (NIHCM) on "Changing Patterns of Pharmaceutical Innovation - New Patents" has observed as under: "Drug manufacturers patent a wide range of inventions connected with incremental modifications of their products, including minor features such as inert ingredients and the form, color and scoring of tablets. In some cases, these patents may discourage generic

-

179

companies from trying to develop a competitive product. In others the generic company may be able to 'design around' the new features". "The Federal Trade Commission has opened a formal inquiry into patent and Orange Book abuse, with a view to determining whether the practices of late and improper listing of patents are hindering in the pharmaceutical market." The above observations by an important organizations of USA points to

me fact as to how frivolous patents are hindering competition. Thus, the scope *fPatentability has to be carefully determined so that frivolous claims are not &ytained. In another recent Report (2003) by US Federal Trade Commission, it has been commented as follows: "A poor quality or questionable patent is one that is likely invalid or contains claims that are likely overly broad. Hearings participants raised concerns about the number of questionablepatents issued.Such patents can block competition and harm innovation in several ways." "Once a questionable patent has issued, the most effective way to challenge it is through litigation. Litigation generally is extremely costly and lengthy, and IS not a n option unless the patent owner has threatened the potential challenger with patent infrignment litigation." "Patent applications have doubled in the last twelve years and are increasing at about 10 per cent per year. With yearly applications approximately 300,000, they arrive at the rate of about 1,000 each working day. A corps of some 3,000 examiners must deal with the flood of filings. Hearings participants estimate that patent examiners have from 8 to 25 hours to read and understand each application, search for prior art, evaluate patentability, communicate with the applicant, work out necessary revisions and reach and write up ~onclusions." "Finally, the PTO (Patents and Trade Office) grants patents based only on the "preponderance of the evidence"." The above comments reveal that because of the scope of patentability being flexible i n u s , questionable patents are being granted and that is the main reason fOra rise in the volume of patent applications. In yet another recent Report (2002)by Washington based National Science b d a t i o n , it was brought out that there had been an acceleration in the grant Patents of late. Thus, during the last five years (1997-2001),the rate of growth of patents granted was 50% compared to a modest increase of 14% only during Previous five years (1992-1996). This increase reflected a growth in the r h i t y o f patenting (for example, per dollar spent on R&D),rather than a 50% in the number of inventions. This is corroborated by the fact that in

the

EVOLUTION OF PATENT LAWS

19901s,while the US R&D expenditures increased in real terms by nearly 41%, patents granted rose by over 72% during the same period. In view of the above alarming proportions of negative fallouts, it is necessary to limit the scope of subject-matter that can be patented and apply such standards that only such claims which meet the strict requirements of patentability are granted patents and further that the breadth of each patent is commensurate with the inventive contribution and the disclosure made. In order to limit patentable subject-matter, it is suggested that following definition of "invention" may be adopted in TRIPS: ""invention" means a basic new product or process involving an inventive step and capable of industrial application."

[Source: "Amended Patents Act, 1970: A Critique", Centrefor Study of Global Trade System and Development, Aug, 20021 This definition is required to be supplemented by providing an exhaustive set of exclusion clauses, the subject-matter of which are not allowed to be patented. An example is provided by Art. 52 of European Patent Convention (EPC)which excludes the following from patenting: (a) discoveries, scientific theories and mathematical methods; (b) aesthetic creations; (c) schemes, rules and methods for performing mental acts, playing games or doing business, and programmes for computers; (d) presentations of information. In addition, where the patenting of drugs has resulted in problems of access and high costs that prevent or hinder the treatment of diseases and the saving of lives, there has been a demand that an option should be available to developing countries and LDC's to exclude medicines from patenting on public health grounds. In this regard, a proposal has been made by Malaysia Based Third World Network in its September 2001 Report entitled, "TRIPS, Drugs and Public Health: Issues and Proposals". It suggests that a clarification may be made under Article 27 as follows: "Article 27.2 enables Members to exclude from patentability medicines or certain categories of medicines, including medicines that are essential, life-saving, vitally needed or used for treatment of poverty-related diseases." As regards the three ingredients of patentability, they need to be further clarified and strengthened. Necessary guidelines will have to be issued to remove all ambiguities. Thus, it has been suggested that an absolute standard of novelty be provided such that the prior art against which novelty is judged includes disclosure through use anywhere in the world [UK CIPR Report (2002)l.

11. ROADMAP FOR FUTURE NEGOTIA-rlONS

181

In order to tide over the prevalent low standards of inventive step, one suggestion that has been made would be to require the patent applicant to demonstiate that the proposed invention reflects a standard of inventiveness higher than that which is normal in the industry involved [Barton J. (2001) "Non-Obviousness"]. The objective of any standard should be to ensure that routine increments to knowledge, involving minimal creative input, should not generally be patentable. As regards industrial application, guidance towards a harmonization may be sought from USPTO guidelines on cases involving DNA sequence [USPTO Utility Examination Guidelines Federal Register Vol. 66 No.4 January 5,20011. In such cases, utility can be established only if the patent application discloses a specific, substantial and credible utility. Such a requirement is also being applied by EPO. [EPO Opposition Decision revoking EPO 630405 (ICOS Corporation) 20 June, 20011. These standards, if adopted in TRIPS, will prevent patents from being granted on inventions for which only a speculative application is disclosed. Another area of concern in patentability is as regards new therapeutic uses for known substances. In R&D on pharmaceuticals, when compounds are screened for likely therapeutic effects, new uses are found sometimes for chemical substances already known. Although TRIPS is silent about such new uses, yet some jurisdictions interpret these claims on uses to be processes that are required to be protected. On the other hand, others interpret these uses as methods of treatment that can be excluded. In view of the prevalent abuse of evergreening of patents practiced by MNC's, specific exclusion of these mere new uses must be incorporated in Art. 27.1. There should also be a proper disclosure requirement in TRIPS. The contract with society for the granting of a patent is that a limited monopoly period will be awarded in return for which the applicant will fully disclose his invention. In practice, the extent of the disclosure considered necessary to satisfy the applicant's part of the contract varies amongst countries in absence of any TRIPS guidelines. Ideally, as in the US, the applicant should be required not only to fully disclose his invention in a manner that would enable another party to put it into practice, but must also disclose the best mode of doing so. Developing countries should adopt the best mode provision to ensure that the patent t applicant does not withhold information that would be useful to third parties [UKCIPR Report (2002)l. The relationship between the extent of the disclosure and the scope or breadth of protection sought is another important issue. There is an ongoing Problem of broad claims. This hampers research and competition. Thus, regu, lations should provide that claims be limited to the uses effectively disclosed in 1 ;-the patent specification, so as to encourage further research and commercial application of any new uses of the

-

1 ~

i I I I

I

I

i

1

I

I

I

EVOLUTION OF PATENT LAWS

IV. ARTICLES 7 & 8 AS AN INTERPRETATIVE TOOL Art.s 7 & 8 lay down broad Objectives and Principles of the TRIPS Agreement. These are generally pro-developmental. However, various other substantive provisions don't carry TRIPS forward towards the goal set by these Objectives and Principles. In fact, often they seem to veer away or even run opposite to the direction of Arts 7 & 8. In view of this, it is necessary that Arts 7 & 8 may be gainfully employed as an internal aid to construction of various TRIPS provisions, in particular, those provisions which lend themselves to multiple interpretations. Such an effective operationalization of Arts 7 & 8 would greatly enhance the credibility of TRIPS. There is, however, a problem as regards Art. 8.1 which must be remedied before it is used as aneffective and purposive interpretative tool of construction. Art. 8.1 offers some scope to WTO Members to take necessary measures, in their national laws, in the context of public health and access to medicines. However, the extent of its usefulness is limited by the phase "provided that such measures are consistent with the provisions of this Agreement". If the public interest intention of Art. 8 is safeguarded, the Members will have a certainty when they adopt measures like compulsory licensing, parallel imports, etc. to protect public health. Accordingly, a revision of Art. 8, should be pursued, on following lines: "No provision in this Agreement shall have the effect of pre\renting or limiting the rights of any Member to adopt measures necessary to protect public health and nutrit~on,and to promote the public interest in sectors of vital importance to their socioeconomic and technological development." ["TRIPS, Drugs and Plrblic Health: Issiles and Proposals" - Third World Network - Septenzber 2001 Report]

I

I

Frederick M. Abbott (2002) has, similarly, suggested in a Study Paper prepared by UK CIPR that Art. 8.1 should be amended to permit the adoption of necessary public health measures inconsistent with the TRIPS Agreement. I

I\ ' ' I

I

~I I'

1

1 1

1

I

V. SPECIFIC EXCEPTIONS TO PATENT RIGHTS Although Art. 30 provides for limited exceptions to exclusive rights conferred by patents, yet, this, in practice, lends itself to no uniformly acceptable interpretation with the result that frequent litigation is not uncommon. Therefore, many academics and various Commissions on IPR have often suggested for incorporation of certain specific exceptions e x abtillcfantz cautela. Thus, countries may be allowed to introduce the so called "Bolar exception" to facilitate early entry of generic drugs upon expiry of patented products. Similarly, in order to encourage further innovation by enabling others to build or design around the patented invention, certain acts done for private and non-

-

11. ROADMAP FOR FUTURE NEGOTIAT_IONS

183

commercial purposes or those relating to experimentation on the subject-matter of the patent may not be considered as an infringement. Most European countries provide for this in their national laws. A further exception may provide freedom to use patented inventions for teaching purposes. Justification for such anexception is derived from the Copyright field where "fair use" of copyrighted works for educational purposes is well established.

v.BEEFING UP COMPULSORY LICENSING PROVISIONS Although compulsory licensing as a policy option has clearly been allowed under the TRIPS Agreement, yet the problem of divergent opinion on its provisions has remained. This requires to be addressed in a manner that allows developing countries the maximum flexibility in interpreting and implementing the provisions. In the context of access to medicines, Members must have clear and agreed guarantees that the TRIPS Agreement does not prevent or limit their obligation to protect public health and to respond effectively to outbreaks of diseases or pandemics and other health priorities. It is also critical that developing country Members be able to make national policies so that they do not find themselves in situations of uncertainty, including being at risk of being taken before the dispute settlement system of the WTO. Moreover, the effective implementation of compulsory licensing should encourage generic competition and local production of life saving drugs. The TRIPS Agreement refers specifically to five possible grounds for the grant of compulsory licences. It, therefore, falls short of laying down an exhaustive list of grounds. Though there is a view that it does not limit the rights of countries to issue such licences on other grounds not explicitly mentioned [Correa (2000)], the usefulness of Art. 31, as a tool to balance against unduly broad patent rights that hinder access to affordable medicines, will be greatly enhanced if developing countries are enabled to grant compulsory licences on a wider range of gounds. In particular, failure to work or insufficient working of the patent must be a specified ground for this purpose. The practical and legal rationale for this is too well known. From a developing country perspective, the local working of a patent is desirable as it presents opportunities for technology transfer to promote domestic manufacturing capacity. The ability to produce domestically will also help in reducing the outflow of foreign exchange incurred on imports. The Paris Convention for the Protection of Industrial Property recognizes the right to grant compulsory licences on the ground of failure to work or insufficient working, in order to prevent abuses arising from the exclusive rights conferred by patents. This provision of the Paris Convention is incorporated into the TRIPS Agreement. Therefore, the failure to work, or insufficient working of, a patent should be a legitimate ground for the issuance of compulsory licences.

EVOLUTION OF PATENT LAWS

However, some countries advocate a vezy restrictive interpretation in this regard that seeks to prohibit compulsory licensing on the ground of non-working of a patent. They rely on Arts 27 & 28 as per which patent rights are available even if goods are imported and patentee has an exclusive right to import the patented product. In view of an apparent conflict between the two coordinate sets of legal provisions, a clarification is essential on the following lines: "Members may issue compulsory licences for the exploitation of a patent where the patent fails to be worked or is insufficiently worked in the country." ["TRIPS, Drtlgs alzd Public Health: lsszles axd Proposals" - Third World Network - September 2001 Report] But, it is necessary to remember that a compulsory licence for exploitation of a patent on the grounds of non-working or insufficient working is appropriate where a country already has a reasonably advanced industrial base. At present, very few developing countries have this capacity. This calls for extending the width of compulsory licensing so that the TRIPS Agreement does not prohibit the option of using compulsory licenses for the importation of a patented product as this may often be the only viable means in countries where domestic manufacturing capacity does not exist or where the size of the local market does not justify local production or where there is a need to promptly address an emergency situation. The compulsory licensee may import from a compulsory licensee who has been granted a licence to produce a patented product in another country. In addition, for compulsory licensing to be effective and to respond speedily to a national health need, WTO Members should also have the right to issue a compulsory licence to obtain medicines from a generic manufacturer in another country that has the necessary production capacity. In this regard, a suitable clarification on the following lines may be in order: "Members may issue compulsory licenses for: (1)importation of a patented product or a product directly made with a patented process; and (2) importation of a patented product or a product directly made with a patented process from a compulsory licensee in another country or a producer in another country where the product is not protected."

ITRIPS, Drugs n ? ~ dPtlblic Healtlt: 1ssllc.s altd Proposals" - Third World Network - Septev~ber2001 Report]

Such a clarification, if incorporated in TRIPS, shall constitute an advance over the 30th August 2003 Agreement titled "Implementation of paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health" in more than one ways. For one, the said Agreement is limited to the import of medicines

--

11. ROADMAP FOR FUTURE NEGOTIATIONS

185

and to no other product and, that too, only under circumstances of national emergency or extreme urgency etc. Secondly, the said Agreement is circumscribed by various procedura!vrequirements such as obligation on "importing member" to notify the TRIPSCouncil of its intention to issue a licence, obligation on "exporting member" to clearly identify the product through specific labelling or marketing or colouring or packaging etc. and further to notify the TRIPS council of the grant of a back-to-backlicence. Finally,even the 30thAugust 2003 Agreement has not been translated into a formal amendment of Art. 31 which is necessary in view of the fact that the said Agreement constitutes a waiver of the provisions of clauses (f) and (h) of Art. 31. A related question arises as to whether and to what extent a compulsory licensee could be allowed to export the product which he is licensed to produce. The TRIPS Agreement stipulates that a compulsory licence must be "predominately" for the supply of the domestic market except where it has been granted to remedy an anti-competitive practice [Art. 31(f)]. In many countries with small populations, it may not be economically viable for a local manufacturer to produce only for the local market, and thus, the producer should be enabled to export upon obtaining a compulsory licence. If a restrictive interpretation is applied, there is a danger that compulsory licences may only be of use to countries with large enough markets to justify domestic production. In such a case, countries with smaller population would be penalized as smaller local markets often deter potential compulsory licensees from accepting licences. Therefore, a licensee in a developing country or LDC should be allowed to export his product so as to enjoy economies of scale and, thus, be cost-effective. Another significant benefit of allowing export would be a greater volume of medicine supply at more affordable prices globally. It is unrealistic to except every WTO Member to be able to develop technologies and investments required for domestic production capacity. Therefore, these countries would automatically be enabled to import from compulsory licensees. This will result in an overall welfare gain globally. Accordingly, the following clarification may be in order: "Members may issue compulsory licences that authorize the licensee to produce for the domestic market and to also export a portion of its production, and this portion can be significant and should not be unduly restricted [by Article 31(f)]. l"TRIPS, Drugs ar~dPl~blicHealth: Issues atld Proposals" - Third World Network - Septevzber 2001 Report] There also has been a suggestion by Third World Network to grant recognition of compulsory licences issued to a foreign manufacturer This may be

186

EVOLUTION OF PATENT LAWS

-

'

-

8

helpful in case of few LDC's to tide over the constraints of a viable industrial base. While proposing a slew of suggestions in regard to compulsory licences, it is necessary to sound a caveat. In the wake of demands by developing countries, the developed countries, particularly, the US, may want to review their original proposals to limit the grounds for compulsory licensing. Thus, 'developing countries would do well to leave this provision untouched as there is adequate flexibility on interpretation, as shown by implernentation by developing countries such as Argentina and China'. [Watal(2000)].

VII. PARALLEL IMPORTS Parallel imports are of particular importance in the health sector since, as already seilnearlier, same pharma company charges different prices in different countries for the same medicines. Parallel importation can prevent market segmentation and price differentiation by patent holders on a regional or international scale. Such importation from a country where it is sold more cheaply will enhance access of the medicines tomorepatients. Thus, it is a useful policy tool by which developing countries will be able to provide quick access to life-saving drugs, and to respond speedily to a health crisis. No provision in the TRIPS Agreement prohibits parallel importation. In fact, Art. 6 allows each Member country the freedom to incorporate the principle of international exhaustion of rights in its national legislation. Nonetheless, it should be properly clarified that parallel importation is allowed under the TRIPS Agreement. Further, parallel importation should be permitted for patented goods in all fields of technology and not only for health-related inventions [Correa (2000)l. The following clarification, if made in the TRIPS Agreement, should serve the purpose: "Members shall be allowed to implement parallel importation policies and regulations in the following manner: (1) importation of a patented product originating in any country, where the productwas marketed insuch acountry by the patent owner or his licensee, or where it was sold under a compulsory licence; or (2) importation of a patented product in a foreign country in a legitimate manner, including in the case of non-authorization by the patent holder, such as where the product was not protected in the exporting country." ["TRIPS, Drugs aild Public H t ~ ~ l t lsslles h: and Proposals" - Third World Network - September 2001 Report]

VIII. TIERED OR DIFFERENTIAL PRICING It is well known that prices of branded or patented products are often far higher than prices of generics. A comparison of HIV/AIDS medicines in 2001

'

11. ROADMAP FOR FUTURE NEGOTIATIONS

187

show that the US price of 3TC (lamivudine) by Glaxo was US$3,271 per patient per year while the Indian generic producer Cipla's price was US$190. In view of this, when a drug company sells the same product in different countries, it differentiatesthe prices according to "what the market can bear". Where alternative or generic medicines are available, a branded product is usually priced lower; the same brand will sell at higher price levels in countries where there is no competition. These findings are borne out by the following The drug 'Simvastatine' was sold in branded version in Malaysia (where there was no generic competitor) for US$1,050 per 100 units; in India, the same brand was sold for US$18 as there was a generic . competitor which sold at US$11 [K. Balasubramaniam (2002)l. In Brazil, when the government started producing generic versions of AIDS drugs, the prices of equivalent branded products dropped by 79% [Medicins Sans Frontieres (2001)l. The same brand 'Zantac' sold at varying prices in different countries: Chile - US$ 196; Mongolia - US$ 183; South Africa - US$ 150; El Salvador - US$ 132; Tanzania - US$ 97; Canada - US$ 77; The Philippines - US$63; Sri Lanka - US$61; Malaysia US$55; Thailand - US$37; Vietnam - US$30; Australia - US$23; Bangladesh - US$9; Nepal - US$3. In India, where it faced a severe generic competition, the same brand was sold at US$ 2. [Health Action International (1998)l. Some surveys, in fact, show that drug companies can charge more in developing countries than in developed countries for the same branded products. For example, in 1998, retail price of 10 out of 13 commonly used drugs were higher in Tanzania than in Canada; the average retail price of 20 commonly used drugs in 10 countries of Central and South America were all higher than the average retail prices of the same drugs in 12 OECD Countries. [Health Action International (1998)l. From 1st January 2005, there would be no cover of generic drugs available for fresh patents. In such a situation, a tiered or differential pricing system may make a limited contribution to addressing the problem of access to medicines at affordable prices. To be effective and equitable, initiative on tiered pricing must be approached on a multilateral basis, with the participation of patent holders and generic producers in transparent negotiations. The negotiations, however, should not prejudice the rights of countries to adopt policy options permitted under TRIPS viz. right to implement compulJ O T licensing, parallel imports, etc. A suitably phrased proposal on tiered pricing ~ithnoconditionalitiesattached to it, must be incorporated in theTRIPS Agreement at the earliest opportunity.

188

EVOLUTION OF PATENT LAWS

IX.CLARIFICATION ON TEST-DATA EXCLUSIVITY The interpretation of the exact obligation on test data in Article 39.3 of TRIPS has been controversial. While obligating the protection of test data for 'new chemical entities' against 'unfair commercial use', the crucial terms have been left as undefined. Citing the fact that pharma MNC's have to invest considerable time and money to obtain regulatory approvals, there is a strong demand by developed countries to read into the language of Article 39.3, an obligation to grant a market exclusivity for at least ten years. However, developing countries point out that generally regulatory approvals are required in cases of equivalent generic medicines. Therefore, protecting the test data against disclosure in cases of 'pipeline' products (i.e.before the patent is granted) or the 'patent-expired' product, would amount to the grant of market exclusivity for a number of years in addition to the patented years. It is further pointed' out that the concept of 'pipeline' protection was clearly rejected by developing countries in the Uruguay Round negotiations. As to the interpretation of 'unfair commercial use', it is pointed out that there is no specific provision in TRIPS on not relying on the test data for subsequent approvals of equivalent products. If the intention had been to have such exclusive marketing rights, this term, which is used in Article 70.9, would have been used here too. Therefore, a reasonable interpretation of Article 39.3 should be as under: (a) There is an obligation on the authorities to keep the test data secret and to prohibit others from accessing this test data for unfair commercial use, such as rival firms, during the period of patent. (b) However, the authorities themselves are not precluded from using such data, albeit, without disclosing it, while clearing subsequent equivalent generic products for marketing. (c) Finally, the bar against disclosure must be vacated with the expiry of the patent period so as not to perpetuate the monopoly of the patentee.

X. MARCHING TOWARDS A COMPETITIVE REGIME Patent law and competition law are complementary legal tools that, from a macro economic point of view, contribute to establishing an efficient environment for the promotion of economic growth and wealth distribution. Patents, from an individual perspective, are about the protection of entrepreneurs' differentials;on the societal level, these are metering devices that help society better evaluate technology through the interplay of competitive market forces. It becomes obvious, then, that market competition is of crucial importance for an efficient operation of the patent system. It is competition (or the prospect thereof) that determines the right price for the patented invention. Any use of the patent system that hinders competition will both undermine the

-

11. ROADMAP FOR FUTURE NEGOTIATIONS

189

metering capacity of patent as well as artificially inflate the entrepreneurs' differentialsand, therefore, will necessarily frustrate the very purpose for which patents are granted in the first instance. There is no dearth of evidence to show that often the patentee, alone or in collusion with others, is able toprevent competitive forces from operating freely upon the invention. Hence, the patentee can artificially set the value of the invention, and the meter will not operate properly. In that event, the patentee has broken the meter. In other words, patent rights have been misused or ['The TRIPS Regime of Patent Rights' - 2nd ed. by Nuno Pires de ~arvalho].MNC's are now resorting more frequently than before to restrictive business practices, and to cartels and collusion on a global scale, in their constant search for gaining a competitive edge over their rivals, combined with the current gaps in the national and international anti-trust laws and the absence of an international regime on this subject. These insidious practices, which constitute a barrier to trade, have been recognized and provisions made on how to deal with them in the Agreement on TRIPS. Thus, Article 8 states as a general principle that "appropriate measures provided that they are consistent with the provisions of this Agreement, may be needed to prevent the abuse of intellectual property rights holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology." The machinery provision to execute this principle into practice is Article 40. However, this Article merely enables the Member states to specify in their legislation "licensing practices or conditions that may in particular cases constitute an abuse of intellectual property rights having an adverse effect on competition in the relevant market." The Article a h provides that "a Member may adopt ... appropriate measures to prevent or control such practices." Three examples of such practices are given in the Article. These are: "exclusive grantback conditions", "conditions preventing Challenges to validity" and "coercive package licensing". Article 40 is utterly inadequate to deal with the restrictive business practices of the MNC's for the following reasons: (a) It is confined to providing flexibility in the national legislations. Thus, it does not specify all the restrictive practices which could be involved and which remedies could be used against such distortions. Only three examples are given against a list of fourteen practices as per para 28 of the Brussels Draft. (b)An absence of provisions in terms of specific obligation imposed on Member government means that it is basically a reactive rather than a pro-active policy. (c) Moreover, the flexibility provided is subjected to a number of conditions. The country taking appropriate measures to deal with a particular practice has to prove that the practice constitutes an

190

-

EVOLUTION OF PATENT LAWS

"abuse" of IPRand that it has an "adverse effect on competition". This severely restricts its amplitude and is a significant comedown from the posturing of developing countries during the negotiations wherein they had argued for separating these two criteria by an "or". It has also to satisfy the overarching condition that the measures are "consistent with the other provisions of this Agreement". (d) No practice is deemed to be a priori anti-competitive which is what is the need of the hour. Thus, on the whole, TRIPS Agreement addresses competition issues in a piecemeal and ineffective manner. Besides, they d o not deal with such anti-competitive practices as export cartels, market exclusion etc.. They d o not provide for any mechanism at the multilateral level to monitor restrictive business practices affecting competition, let alone establishing an international regime to deal with them. Following the reduction or removal of governmental trade barriers during the successive rounds of trade negotiations under GATT, including the Uruguay Round, the next logical step forward in the progressive liberalization of international trade will be to dismantle the private barriers to markets, such as anti-competitive practices, created by the MNC's. This is not an easy task. The test is to determine when aninvention's increased value results from an artificial or arbitrary conduct and not from the patent's natural exclusionary power. The following two rules may be employed for this purpose: (a) Patentees, acting alone, may not impose on licensees or buyers a restrictive behaviour that damages the existing competitive market conditions. "...[Platentees may not, for example, tie the sale of the patented products to the sale of staples. Otherwise, they would be able to affect competition in a market that existed prior to the patent grant, thus, raising the invention's worth ... Another example of unilateral misuse is price discrimination that puts licensees or buyers in a position of disadvantage in relation to competitors." ["The TRIPS Regime of Patent Rights", 2nd ed. - Nuno Pires de Carvalho]. (b) Patentees, in league with others, may not attempt to avoid competitive conditions that, but for the collusion, might decrease the value of the inventions. Thus, patentees "may not cross-license competitors in order to acquire a unified market control (i.e. to constitute a cartel). Nor are they allowed to discriminate among buyers or licensees by means of charging differential prices or royalties when the discrimination does not lead to a more accurate measurement of the invention, but instead restrains competition among those [non-consumer] buyers or licensees". ["The TRIPS Regime of Patent Rights", 2nd ed. - Nuno Pires de Carvalho].

11. ROADMAP FOR FUTURE NEGOTIATIONS

t

t

,

191

Using the above two rules as a guideline, a set of such restrictive practices at in future negotiations. may be These restrictive practices would have to be treated as per se anti-competihaving to satisfy the twin conditions of "abuse" so that it has an tive effect on competition". Article 40 can be unambiguously useful to developing countries only after the question of which licensing conditions or business practices can legitimately be considered to have anti-competitive effectsper se is clarified in TRIPS Agreement. This is because a "per se treatment is simpler to administer and monitor for enforcement authorities in developing cowtries and clearer for both IPR owners and users." [Watal(2000)]. There is, in fact, a long history, beginning from the Havana Charter, of the international community's efforts to evolve an international regime to deal with restrictive business practices. During the GATT Review session held in 1954 to 1955, a proposal to add a chapter on "Cartels" was rejected. Subsequently, a set of Multilaterally Agreed Equitable Principles and Rules for the control of Restrictive Business Practices was negotiated in UNCTAD and adopted unanimously by the UN General Assembly in 1980 (Resolution 35/63). The resolution provided for the creation of an UNCTAD Inter-governmental Expert Group on Restrictive Business Practices. It was expected to be a stepping stone to the elaboration of a legally binding instrument on competition linked to the rules of the international trading system. However, in the changed system of priorities forced upon UNCTAD by major developed countries, the process of moving towards a legally binding instrument has got derailed, and the work of UNCTAD on competition policy has been put on the back burner. The work done inUNCTAD and the UN Centre for Transnational Corporation provides a good basis to build a competition policy at the international level. The issue of the relationship between patent rights and competition policy may be a part of future trade negotiations outside the TRIPS context, under the broader framework of trade and competition in the WTO. While these negotiations may clarify the relationship and give developing countries guidance on how such matters could be resolved, they must not restrict action that can be taken under specific IPR laws on fair use, compulsory licences or use by governments.

XI- EXTENDING MORATORIUM ON NON-VIOLATION COMPLAINTS Under GAIT, the concept of 'non-violation' is meant to protect the reasonable expectations of the parties on benefits derived from concessions made in the area of trade in goods. There is considerable uncertainty on the meaning of this concept even in this context. It has generally been narrowly interpreted and to higher evidentiary standards than violation-type complaints. The Only benefits that can be reasonably interpreted to be nullified or impaired under TRIPS in any non-violation dispute are those that flow from competitive

192

-

EVOLUTION OF PATENT LAWS

193

It is important to remember that human rights instruments potentially represent a mechanism for establishing a global constitutional balance between interests of public and private right holders of IPR. But, incorporating the human rights dimension into analysis of the TRIPS Agreement and its impact on developing countries raises challenging legal issues. At the United Nations level, one of the bodies addressing the question of the impacts of intellectual property rights on the realization of human rights has been the Sub-Commission on the Promotion and Protection of Human Rights. In a strongly worded statement, the Sub-Commission indicated in 2000 that:

relations that TRIPS establishes. Such competitive relations are founded on the negatively specified right of IPR owners to exclude third parties from the exploitation of the protected subject-matter, as given under each IPR. It would, anyway, be not easy to prove that the benefit extends to freedom to set prices or to prohibit regulation of the use of the invention in any particular way. There is, however, an apprehension that some of the flexibility gained during the TRIPS negotiations, where US was pushing for its inclusion while many other countries, both developed and developing, argued for its exclusion, could slip dway in the future through the 'activist' interpretation on 'nonviolation' of TRIPS by panels and other WTO bodies. Though this fear may be exaggerated, yet, there is a strong support of a range of WTO members from Canada, EU and Japan to countries in transition and developing countries, to extend the present moratorium on non-violation in TRIPS.

"Since the implementation of the TRIPS Agreement does not adequately reflect the fundamental nature and indivisibility of all human rights, including the right of everyone to enjoy the benefits of scientific progress and its applications, the right to health, the right to food, and the right to self-determination, there are apparent conflicts between the intellectual property rights regime embodied in the TRIPS Agreement, on the one hand, and international human rights law, on the other." [Resolution 2000/7 dated 17.08.20001

XII, SUBORDINATION OF IP RIGHTS TO HUMAN RIGHTS Human rights and intellectual property rights have, on the whole, evolved largely independently. From a legal perspective, the sources of human rights relating to TRIPS are in customary international law, the Universal Declaration of Human Rights and in various other human rights instruments including the International Convention of Civil and Political Rights and the International Convention on Economic, Social and Cultural Rights (ESCR). The intellectual property protection framework is generally concerned with providing incentives for technological innovation rather than specifically concerned with the realization of individual or collective human rights. Its links with human rights stops at noting the socio-economicdimension of intellectual property protection. It is only in the context of emerging crises linked to the role of IPR in the realization of rights to food and health, in particular, that links between the two fields have been explored in a much more systematic way. With regard to the human right to health, the link has become clearly apparent in the case of relationship between medical patents and the realization of the right to health, in particular, in the context of the HIV/AIDS epidemics. This is due to the fact that HIV/AIDS drugs being new, are still secured by patents. This, therefore, establishes a direct link between patents, the price of drugs and access to drugs. With regard to the human right to food, an analogous link exists between patents in the field of genetic engineering, the limitation of farmers' rights introduced by patents and access to food. Despite the above links, there remains an imbalance in as much as the notion of human rights has not penetrated intellectual property rights institutions while the notion of intellectual property is now regularly addressed in human rights institutions.

11. ROADMAP FOR FUTURE NEGOTIATIONS

t

1

The ESCR Committee, formed to address the links between economic, social and cultural rights and intellectual property rights, went further and adopted in 2001 a statement on intellectual property rights and human rights. Though non-binding on Member States, this statement has properly analysed the relationship between human rights and the TRIPS Agreement. It has emphasized that intellectual property regimes must serve the objective of human well-being by promoting and protecting all human rights. Even more significantly, it stated that any intellectual property rights regime that would make it more difficult for a state to comply with its core obligations in relation to the right to health and food would be inconsistent with the legally binding obligations of the concerned state. Although the right to health as a human right has been included in a number of international instruments but it is often vague in content and intersecting with too many other rights ["International Law and Infectious Diseases" (1999), David P. Fidler]. Thus, a detailed pronouncement of this right in the ESCR Covenant of 1996 is significant as it recognizes everyone's right to the 'enjoyment of the highest attainable standard of physical and mental health'. Accordingly, the States are to refrain from interfering directly or indirectly with the enjoyment of the right. Further, they should take measures to prevent third Parties from interfering with the guarantees provided and they should adopt legislative, administrative and other measures towards the full realization of the right. By indicating that each state should take these measures as well as through international assistance and cooperation, the

194

.

EVOLUTION OF PATENT LAWS

Covenant recognizes that the full realization of the rights may require more than domestic measures. This international dimension is supported by ESCR Committee in its authoritative interpretation of the right to health that states have an obligation to facilitate access to essential health facilities, goods and services in other countries and to provide the necessary aid when required. Further, states are to ensure that other international agreements they accede to do not adversely impact on the right to health, such as making drugs available at affordable prices. The core obligations of the right to health, as expounded by the ESCR Committee, include the necessity to ensure the right of access to health facilities, especially for vulnerable or marginalized groups. More specifically, it includes the promotion of a safe and adequate food supply and proper nutrition; an adequate supply of safe water and basic sanitation; immunization against major infectious diseases; appropriate treatment of common diseases and injuries; and provision of essential drugs [Declaration of Alma-Ata, WHO (1978)l.Similarly, the UN Human Rights Commission has stated in its resolution on HIV/AIDS, that access to medication is a fundamental element for achieving the full realization of the right to the enjoyment of the highest attainable standards of physical and mental health [Resolution 2001/33,23rd April, 20011. The ESCR Committee has also indicated some circumstances when the right to health is said to be violated. This includes adoption by states of legislation or policies manifestly incompatible with pre-existing domestic or international legal obligations in relation to the right to health. Similarly, there is a violation of the obligation to respect the right to health if a state fails to take into account its legal obligations when entering into bilateral or multilateral agreements. As noted above, one of the essential components of the right to health is access to drugs which has gained an importance in the context of introduction of the product patents on drugs. This is also illustrated by the fact that one-third of the world's population does not have access to basic drugs. This brings us to an emergent need for a human rights approach to an analysis of pharma patents. When an attempt is made to find solution through the legal framework to foster better access to drugs, the divergent and contrasting goals of the TRIPS Agreement and the ESCRCovenant is starkly in evidence. From the TRIPS viewpoint, the question of health is one that can be tackled through either some such exceptions as provided under Arts 30, 31 or 40, or through the two general provisions under Art.s 7 and 8. This, however, falls short of providing a balanced relationship between TRIPS and human rights. From the point of view of the human right's, the interest of the community at large should generally prevail over those of inventors. This does not imply a rejection of the interests of inventors but only their subordination to broader goals. A human rights perspective on health leads to questioning some of the tenets of intellectual property law as also its fallouts such as that patent protec-

11. ROADMAP FOR FUTURE NEGOTIATIONS

195

tion does not ensure that the most common diseases will attract most research. proceeding further, if compliance with TRIPS leads to reduced access to drugs, this might imply a substantive violation of the ESCR Covenant as Art. 2 of the Covenant indeed requires the states to take positive measures towards the hlfillment of the right. Accordingly, the introduction of product patents could be construed as a 'deliberately retrogressive' step if no measures are taken to limit the impact of TRIPS compliance on access to medicines. What is even more fundamental from a human rights approach is a focus on the most disadvantaged and marginalized individuals and communities. It has become clear over time that the incentives provided by the patent system do not lead the private sector to preferentially invest in the most common diseases of the poor. The issue is, therefore, not whether developing countries can afford patent rights in general but whether the majority of their poor populations will benefit. Therefore, it is of utmost importance that in any patent regime, all essential medicines remain free from patent protection. This understanding informs to a certain extent the Brazilian decree on compulsory licensing which seeks to provide an extensive definition of the public interest. States must generally endeavour, as far as possible, to reconcile their different international obligations but there are cases where the implementation of TRIPS directly results in a reduction in access to drugs, thereby affecting adversely the right to health. This situation is unacceptable under the ESCR Covenant and is, thus, indicative of the conflict between the two treaties. The issue of preeminence between the TRIPS Agreement and the ESCR Covenant is unclear as neither provides any rule of interpretation. The ESCR Committee has, nonetheless, indicated that a violation of the right to health can occur if states agree to international measures which are manifestly incompatible with their previous international legal obligations. In view of the f ~ cthat t ESCR Covenant provides more specific norms in the field of right to health while TRIPS only addresses health concerns peripherally, TRIPS must occupy a lower hierarchical Status compared to the Covenant along the axis of the right to health. Another potentially conflicting situation of a related kind and of general import is discussed next: "...suppose that a developed country - perhaps the Netherlands grants a compulsory licence within its territory solely for the manufacture and export of essential medicines that are urgently needed at low cost by developing country WTO Members. In the analysis of the legal issues posed by this act, would the WTO Dispute Settlement Body (DSB) be required to stay within the strict terms of the TRIPS Agreement, or would it be able to consult the UN Declaration on Human Rights, or the International Covenant on Civil and Political Rights? Could the DSB look at the legislation adopted in the Netherlands and say that the WTO must take into account that its

196

EVOLUTION OF PATENT LAWS

Members also affirmed the UN Declaratidn on Human Rights in deciding whether the Dutch are within their rights under that Declaration to supply developing countries with needed medicines." ["W T O TRIPS Agreement and Its Irnplicatiotzsfor Access to Medicines it1 Developing Cotintries" - CIPR Study Paper - Frederick M . Abbott (2002)l.

So far, the DSB in the Shrimps-Turtles case has acknowledged the relevance of international instruments outside the WTO texts for purposes of aiding in the interpretation of the TRIPS Agreement. But, the extent of such relevance has not been disclosed with any precision such as that whether the UN Declaration could be used in aid of the interpretation of Art.s 30 or 31 or still further, whether Art. 103 of the UN Charter could be invoked to take precedence over WTO commitments. Another useful concept to resolve such problems in international law is that of jus cogens. However, its use is limited in the present context since the human rights to health is not a part of non-derogable rights under the present international law. Therefore, in the ongoing negotiations, it is imperative that a clear prioritization is decided so that the right to health is awarded an unambiguous superior hierarchy compared to intellectual property rights.

XIII. TECHNOLOGY TRANSFER & STRENGTHENING R&D INFRASTRUCTURE IN DEVELOPING COUNTRIES There has been a demand that the TRIPS provisions (Art. 66.2), obliging incentives by developed country Members to enterprises and institutions in their territories for the purpose of encouraging technology transfer, be extended also to developing countries without prejudicing the current obligation for LDCfs. In addition, there is an obligation under Art. 67 for developed countries to provide technical and financial cooperation for the implementation of TRIPS, on request and on mutually agreed terms and conditions. Developing countries must seek to include the strengthening of R&D infrastructure to find practical and effective solutions to operationalize such obligations in TRIPS.

XIV. COMPLEMENTARY ROLES OF WTO & WIPO As a forum for future negotiations on IPR as also matters relating to implementation of TRIPS provisions, WTO and WIPO are often positioned as apparent rivals. However, in truth, each organization has a role to play based on its intrinsic strengths. The WTO is charged with monitoring and ensuring compliance, with TRIPS, of all Members. This is done through the review of legislation, discussions in the TRIPS Council and through its dispute settlement mechanism. Most of "[tlhese are 'sticks' - the WTO has no 'carrots' to ensure compliance" [Watal

-

11. ROADMAP FOR FUTURE NEGOTIATIONS

197

(2000)l.On the other hand, WIPO has enormous human and financial resources to assist the Member countries with such compliance. As WTO is a member-driven organization, its Secretariat is constrained in not being able to formally provide any interpretation on any ambiguous provision~of TRIPS that has not been approved by WTO Members. Moreover, WTO has little human resources. UNCTAD, an organization otherwise serving the interests of developing country Members well, is also constrained in interpreting another organization's negotiated agreement and has little in-house expertise on the subject. On the other hand, WIPO has a Developing countries' Division for offering legislative advice on IP and has also a separate division for Economic Analysis, Forecast and Research. WIPO has provided legislative advice to and also drafted laws for hundreds of developing and least developed countries and regional organizations. However, since the negotiating process of TRIPS was not open to them, WIPO officials prefer not to make any judgments onvarious ambiguities that dot the TRIPS text. They are muchmore comfortable with interpreting WIPO administered treaties. But, there is one area where WIPO is uniquely positioned to meet a most challenging task. The ongoing negbtiations in WTO are driven by review of implementation of TRIPS. This would involve dissemination of results of economic or legal research done on TRIPS implementation which WIPO, with its trained technical staff and adequate financial resources, is eminently capable of performing. Anticipating such complementary functions of WIPO, TRIPS negotiators had wisely envisaged a co-operation between WIPO and WTO. Thus, the agreement of December, 1995 was concluded between the two organizations which allows WTO to access the WIPO's collection of IP laws and regulations and vice versa. In addition, WIPO was to provide all WTO developing country Members, who are not members of WIPO, the same legal-technical assistance that it provides to its own members. Since then, WIPO and WTO have been inviting the other organization's officials to participate in each other's meetings, symposia, workshop and seminars. WIPO also calls upon international experts on these subjects to participate in its activities, including in helping developing countries in drawlng up TRIPS-compatible legislation. When TRIPS was finalized in the Uruguay Round, the widespread belief was that the initiative for further multilateral developments on IPR had effectively shifted from the WIPO to GATT. However, just a few years later, there was a spurt in activities of WIPO, interestingly because of TRIPS. Its pre-existing treaties, that were incorporated by reference into TRIPS, witnessed an increased membership. Its registration treaties, centred around Patent Cooperation Treaty, which facilitate IP protection simultaneously in many countries, have also seen an increased membership. Its technical and legal co-operation activities have increased tremendously in the course of TRIPS implementation process.

198

EVOLUTION OF PATENT LAWS

~t present, the centre of gravity for the next generation IP reforms has shifted to WIPO. This may have happened, inter alia, for the reason that "WIPO is seen as a more 'neutral' forum where different interest groups, from both the private sector and governments, can discuss all points of view more objectively with no pressures to concede to unreasonable demands on IP through linkages with market access on trade. Also, discussion on new subjects can be launched in WIPO without the highly political bargaining process that takes place in WTO Ministerial Conferences. Thus, when the international IP community needed new rules in the wake of new technological developments, it turned to WIPO and not to the WTO" [Watal(2000)]. Yet, for such issues which were caused by TRIPS, the resolution must be made at WTO which is the only forum where trade-offs can be made, not just within IP, but amongst other trade interests as well. This will enable developing countries to demand equally difficultconcessions on the part of their developed country trading partners whereas, at WIPO, there is no such quid pro quo. Thus, "the forum of future negotiations on controversial TRIPS-related issues is bound to be the WTO trade rounds, rather than WIPO. On the other hand, the WIPO will play an increasingly important role as an 'organization of the future' in dealing with complex, technical issues relating to new technologies where interests are more evenly balanced geographically or with procedural matters relating to international IP law." [Watal(2000)].

12 US APPROACH TOWARDS PATENT LAW STANDARD-SETTING POST-TRIPS As we have discussed earlier, even before TRIPS Agreement was conduded, US was applying pressures of different types on developing and least developed countries so as to break their resistance at GATT. Ultimately, when GATI 94 was ratified, it raised waves of dissatisfaction hitting the shores of LDC's and developing countries. What was surprising, however, was the fact the developed countries were left with a feeling that they could not extract the maximum that was possible. US was peeved at longer transitional periods having been made available to LDC's and developing countries. The laws on compulsory licensing and parallel importation gave enough room to thwart the patent holder's exclusive rights. And, yet, there was a consistent demand for a more humane interpretation in aid of public health and nutrition. A successful Doha Declaration ~ u s h e dthe developed countries' agenda back. In the meantime, there were related developments that US had to reckon with. Developing countries were separately thwarting US'S proposals at the TRIPS Council. Various public-spirited NGO's all over the world were highlighting the insidious provisions under TRIPS, so that any upward revision at GAIT was fraught with further negative publicity. The successive failure of three Ministerial Conferences at Singapore (96), Geneva (98) and Seattle (99) Convinced the US to look for alternative ways of norm-setting towards a desirable level of harmonization of IP laws. US had gained a wealth of expertise by practicing various stratagems during the days of GATTnegotiations. Its strategy of forum-shifting from WIPO to GATT in 88 had profoundly altered the traditional concept of IPR. A liberal use of unilateral measures such as under Special 301 had broken the resistance of various developing countries. Some bilateral trade treaties, too, had been concluded during the pre-TRIPS years with the weaker countries which had automatically left those countries with afait accompli at the GATT negotiations. US decided, under the changed circumstances, to sharpen its old tried and tested weapons for a fresh round of blood-letting. Thus, it employed a combination of mechanisms such as economic coercion, systems of reward, reciprocal non-reciprocal co-ordination, complaint filing at DSB ol WTO,

200

12. US APPROACH TOWARDS PATENT LAW STANDARD-SEalNG POST-TRIPS 201

EVOLUTION OF PATENT LAWS

enlisting the support of epistemic communities and forum-shifting to achieve its objective of globalization of IP regulations. There are various methods of economic coercion. While "watch-listing" followed by a slapping of trade sanctions under Special 301 is an overt way, there are various subtle ways of economic coercion such as cutting off foreign aid, IMF & development banks imposing conditionalities on loans to struggling economies and ensurers refusing coverage or imposing punitive premiums. Sometimes, there is a process of blackmail with the US Congress playing a hard-cop, threatening trade sanctions, while the Executive branch plays a soft-cop, resisting them, serving the same objective effectively. A system of carrot is put in place, such as, by favouring a grant of discretionary Generalized System of Preferences (GSP) or by arranging soft loans from IMF and World Bank, if the country reciprocates by strengthening its domestic IP legislation. Reciprocal adjustments and non-reciprocal coordination are achieved by formal bilateral treaties so that a carrot and stick policy of superior party is hidden behind the veneer of a formalized agreement. Reciprocal adjustment occurs where a globalization of regulation is achieved by non-coerced and cooperative negotiations where both the parties agree to adjust their rules. Non-reciprocal coordination occurs when movement towards common rules occurs without all parties believing that they have a common interest in that movement. It involves a non-reciprocity within an overall reciprocity of issue linkage. 'A' wins on this and loses on that; 'B' loses on this and wins on that. The mode of bilateralism, via which these mechanisms are put into practice, shall be discussed in some detail. Another form of external pressure is the threat of filing a complaint at the WTO. Argentina and Brazil are the most recent targets. This is done to push the developing countries into enacting TRIPS-plus legislations, or to discontinue the exercise of TRIPS flexibilities. US government works overtime to enrol the support of strategic actors for regulatory change. For this, it is necessary to work epistemic communities. Epistemic communities of actors are a large audiences of state, business and NGO actors who do meet sporadically with one another and share a common regulatory discourse based on shared knowledge, sometimes, technical knowledge requiring professional training. They are, thus, more than transgovernmental elite networks and include technically competent experts from science, professions, business and NGO's. The OECD is the single most important builder of business regulatory epistemic communities. But, the most remarkable and effective mechanism perfected into an art of sorts, has been forum-shifting. When the post-World War-II US has not been able to get multilateral agreement on what it wants, it either attempts to shift decision-making to an alternative multilateral forum or shifts to a sequence of

bilateral deals with other key states. These accumulated bilaterals often later set the framework for a new attempt at multilateral agreement. Coupled with a string of unilateral trade sanctions, all this produces a global IP ratchet-effect, facilitating ultimately a multilateral agreement, thus, formalizing the US agenda. There are three basic strategies of forum-shifting around international organizations: 1. moving a regulatory agenda from one organization to another; 2. abandoning an organization; and 3. pursuing the same agenda in more than one organization. Sornetimes, a fourth strategy of forum-blocking, preventing an international organization from acting as a forum for regulatory development in the first place, is used by major players. Of the various mechanisms as explained hereinabove, it is proposed to take up the new multilateralism, renewed bilaterals and sporadic unilaterials in some detail as these are the prime movers of new IP standard-setting juggernaut. The responses by developing countries to the agendas at new multilateral forum shall also be examined.

I. NEW MULTILATERALISM (FORUM-SHIFTING)

'

?'

*? +:

At the dawn of the new millennium, it was increasingly becoming clearer that US was no longer keen to confine negotiations at GATT and that it was veering towards the earlier abandoned form, WIPO. In order to appreciate its rationale, one needs to travel into the history of IPR. Strong states shift to a forum that embeds the principles most valued by them for the regulatory problems at issue. For example, the principle that knowledge is the "common heritage of mankind" was defeated by shifting IPR issues from UNESCO and UNCTAD to the WIPO in 1967 where it was treated as a source of property. By shifting IPR to GATT in 88, its unjustified linkage with trade in goods and services was established. Thus, these forum-shiftings have, apart from achieving gains for developed countries in concrete terms, have altered the very paradigm of IPR issues. WIPO was earlier considered an important institution till the 1980's. However, due to its weak enforcement mechanisms, the IPR negotiations were shifted to GATT where it was possible to apply trade sanctions against countries found as non-compliant. The TRIPS Agreement introduced the concept of minimum standards for IPR's in diverse areas and placed heavy obligations on national governments. However, there were still some 'flexibilities' available for the design and implementation of the patent regime at the national level. This was hurting the economic interests of MNC1s based in UK & Europe. This led to renewed activities at WIPO, where a new patent Agenda was launched in September,

202

12. US APPROACH TOWARDS PATENT LAW STANDARD-SElTlNG POST-TRIPS 203

EVOLUTION OF PATENT LAWS

2001. This ~ ~ e n contains d a proposals which are much more protectionist than the TRIPS regime. Developed countries realize that once higher standards were adopted at WIPO, either they would be automatically incorporated in the TRIPS Agreement as per Article 2 -which enables a legislation by reference, or pressure would build up at the WTO for further increases in IP standards for all the members, under Article 71 of TRIPS. Due to the existing international geopolitical situation, it would be extremely difficult to raise IPR standards at the WTO. Hence, the US - the prime driver of higher IPR standard - thought it prudent to adopt a two-stage procedure: to raise standards first at WIPO, and then, export these higher standards to WTO. The discussions and negotiations at WIPO are, therefore, extremely important for developing countries, as they set the agenda for the development and harmonization of IP standards at the multilateral level. The WIPO Patent Agenda was presented to and approved by WIPO Assembly, the Paris Union Assembly and the Patent Cooperation Treaty (PCT) Assembly in September, 2001. The patent agenda activities are taking place under three main processes in WIPO. These are: 1. The move to promote the ratification of Patent Law Treaty (PLT); 2. The effort to reform the PCT; 3. The ongoing negotiations on the draft Substantive Patent Law Treaty (SPLT). The processes are ultimately oriented to create an international legal framework for a universal patent. The three main pillars of the patent agenda are briefly described hereunder: (a) Patent Law Treaty (PLT) The PLT, adopted in Geneva on June 1,2000, mainly aims to harmonize the procedures for applying for, obtaining and maintaining patents by means of a set of standardized formal requirements for national and regional patent offices. The PLT is not yet in force. The PLT provisions attempt to reduce the risk of errors by patent offices, as well as the time and costs of procedures for patent applicants, thereby facilitating the acquisition of patent rights internationally. The PLT provides a clear linkage to the PCT for current and any future patent law harmonization. (b) Reforms of Patent Cooperation Treaty (PCT) The PCT, concluded in 1970, established the procedural standards (Paris Convention establishing the substantive standards). Its aim was to provide a single system under which patent applicants could file one international application that would be valid in all the contracting states designated by the applicant. The system allows for international publication, an international prior art search and even an international preliminary examination, if the

'

applicant so desires. The PCT system is seen as a great success upon which a truly international patent system can evolve. There are three mandatory PCT obligations. These are: (i) A regularly filed PCT application must have the effect of a regularly filed national application; (ii) A PCT application can't be processed by national authorities before the expiry of a certain time-limit, unless expressly requested by the PCT applicant; and (iii) A PCT contracting state cannot require, subject to certain exceptions, compliance relating to the form or contents of a PCT application, which differs from the requirements provided by the PCT. The process of reforming the PCT started in 2000 with the US championing it. The reform is geared towards simplifying and streamlining the procedures while at the same time aligning it to the new PLT standards. The anticipated amendments relate to coordination of international searches and international preliminary examination and time limits for entering the national phase. The objectives of these reforms, as advocated by its proponents, include: to streamline and simplify the procedures for patent applicants; to reduce the duplication of examination tasks and reduce the overload of patent offices due to a growth in patent applications; and to reduce the cost of filing for patent applicants and facilitate the acquisition of the same patent in a large number of countries. However, the proposed reforms have been opposed by many countries. Thus, Spain has objected to its scope by pointing out that the reform should not encompass changes of a substantive nature. Colombia is opposed to the central concept of grant of 'international patents'. Some others have emphasized that the reform should not only take into account the interests of applicants but also those of the third parties. ( c ) Substantive Patent Law Treaty (SPLT) The current negotiations on SPLT taking place at the WIPO Standing Committee on the Law of Patents (SCP)are aimed at drawing up a uniform and comprehensive patent law standards relating to issues of prior art, novelty, utility, inventiveness, requirements of proper disclosure, drafting and interpretation of claims, grounds for refusal of an application and for revocation and invalidation of patents. The SPLT differs from PLT, the PCT and the TRIPS in Several aspects. Unlike the PLT and PCT, it seeks to prescribe substantive Standards to determine what an invention is, how the patentability is to be established and what the scope of patent protection will be. It goes beyond which though indicates the requirements for patentability (novelty, %ventive step or non-obviousness and industrial applicability) but fails to

T m ~ ~

204

EVOLUTION OF PATENT LAWS

12. US APPROACH TOWARDS PATENT LAW STANDARD-SmlNG POST-TRIPS 205

y------

define such concepts as to what an 'invention' is or as to rules on the scope and interpretation of patent claims, essential toestablish the scope of protection. However, from the perspective of developing countries, the SPLT is, as discussed hereinbelow, the most troublesome building-block of the international patent system on the WIPO agenda. If this system is adopted, it would establish new binding international standards in critical areas of patent law which until now have been left to national governments. This also explains the very limited participation of developing countries in the present negotiations. Some of the main controversial issues under draft SPLT are discussed herein below: (i) Defining patentability requirements The draft SPLT, which contains specific definition on what is eligible for protection, is likely to lead to the disappearance of the freedom to determine patentability for biological materials, including genes. For instance, under the US laws, an isolated purified form of a natural product can be patented, while the Brazilian patent law (1996) stipulates that no patents shall be granted with respect to living beings or 'biological materials found in nature', even if isolated, including the 'genome or germplasm' of any living being. Thus, if the draftSPLT were adopted, the room currently available to limit the patenting of biological materials may disappear. (ii) Technical character of inventions As per current multilateral arrangements, for an invention to be patentable, it should show a 'technical character'. However, US and its allies argue that the expression 'in all fields of technology' in Article 27.1 of the TRIPS Agreement did not mandate any requirement of a technical character. However, in order to further remove scope for any ambiguity, one of the proposed ways is to define industrially applicable inventions as those which "can be made or used for exploitation in any field of commercial or economic activity". Analysts warn that if this proposal goes through, it will mean that anything used in commercial or economic activity except mere discoveries, abstract ideas, scientific theories, mathematical theories, laws of nature and even purely aesthetic creations would be patentable. This US proposal aims to export to the rest of the world its policy of patentability of software, business methods and research tools. Software is patentable as such in the US. In Diamond v. Diehr and Diamond v. Bradley (both decided in 1981), the US Supreme Court applied a liberal rule that permitted the patenting of Software algorithms. Business methods include those applied to business activities such as buying and selling, marketing techniques, financial schemes and strategies, generally supported on comp~ltersoftware and networks. The State Street Bank v.Si,pnatlire Fina17cial Corporation case also opened the way for the controversial

atentingof the business methods. However, the broad definitionof 'invention',

Pd o w i n g the patentability of business methods, is controversial even in the U.S.. 'Research tools' are methods or substances used to undertake research in spcifi~fields. Genes are an example of research tools used to identify possible molecules. Thus, patenting of substances like genes will restrict ~ e i use r as research tools and escalate the research costs. (iii) Exclusions from patentability Another important issue raised by some developing countries was the need to incorporate in the draft treaty, Article 27.2 and 27.3 of the TRIPS Agreement, and to include a general provision allowing for exceptions to patentability, which would be necessary for the protection of public health and environment. The US and the biotechnology industry opposed this proposal, particularly, in to plants and animals, by arguing that the TRIPS Agreement 'provides for minimum requirements under the WTO' while the SPLT, in contrast, would aim at establishing 'best practices at the international level'. If the US proposal is accepted, the national policy space of other countries will be curbed further. (iv) Infringement and doctrine of equivalents The issue of the 'theory of equivalence' to be applied has been outside the T ~ P Sstandards and left entirely to national laws. Thus, it is the national legislation that defines as to when products or processes that are not literally described in a claim, may be deemed 'equivalent' and, therefore, as infringing an patent rights. The approach adopted in this regard should provide adequate protection for the inventor's interests while leaving more room for third party innovations in the field covered by the patent. It is crucial for developing countries to have as much room as possible for inventing around patented inventions. Adopting a global approach in this area is fraught with danger and is also a further encroachment on the national policy space. (v)Prohibition against further conditions One of the most controversial provisions is one that would prohibit Member countries from imposing any further conditions to obtain a patent other than those specifically provided for in the treaty. Such a requirement would tie the hands of national governments in limiting or remedying the misappropriation genetic resources and traditional knowledge, as they would not be able to ask for more complete information on the 'prior art'. The negotiation process at the SCP, in its early phase, showed wide in the involvement and preparation of developing countries compared with that of developed countries. Also, while many NGO's were repreCorporations' and patent lawyers' interests, no one represented the of consumers or developing countries.

206

EVOLUTION OF PATENT LAWS

'7

12. US APPROACH TOWARDS PATENT LAW STEDARD-SE-TnNG POST-TRIPS

In the meantime, US & EU continued using webs of coercion (Drahos) and other stratagems to further increase their hold on the ongoing process. An 'informal consultation' of the few select countries only, organized by WIPO's Director General, in Casablanca in February, 2005 was a step in this direction. The Casablanca Statement called for the SCP to focus on four issues only (out of six issues). These pertain to prior art, grace period, novelty and inventive step, which are the subjects being pushed by the developed countries in the SPLT negotiations. The statement proposed that the two remaining issues sufficiency of disclosure and genetic resources - which are also on the agenda of SCP and being actively pursued by developing countries, should be dealt with instead in the Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional knowledge and Folklore (IGC). It may be mentioned that unlike SCP, the IGC is not a norm-setting or treaty-making body and thus, has a lower standing. The Committee further recommended that the next meetings of the SCP and IGC may endorse the objectives and work program set out at Casablanca. It is only due to the late initiatives by Group of Friends of Development (comprising of 14 Developing countries) towards adding a new Development agenda to the SPLT negotiations that the design of developed countries failed to achieve the TRIPS-plus objectives. In Chapter 13, these responses by developing countries will be discussed in some detail.

11. CONTINUED BILATERALISM (TRIPS-PLUS TREATIES) The mechanism of enforcing bilateral treaties, which afford high level of protection to IPR, with weaker nations, has been a hallmark of US policy even prior to the signing of GATT '94. Thus, North American Free Trade Agreement (NAFTA), which created a platform for US in '94 for extensive protection of its IPR, served as a model for the US in the TRIPS negotiations. NAFTA, in fact, when compared to TRIPS, sets stronger standards for IPR protection. There has been no apphrent decline in US bilateral activities on IPR since the signing of TRIPS. This is because major developed countries and their MNC's, who own more than 90% of the patents, are of the view that minimum standards prescribed under TRIPS are clearly not strong enough to prevent patent infringement by Third World firms. Since, at WTO, US has been unable to progress ahead as i t has been faced with recently formed assertive blocks of developing countries, i t has adopted a new strategy of ratcheting up global patentstandards through various mechanisms, including bilateral trade, investment and IP agreements, unilateral strikes and multilateral standard-setting. Thus, US government has been using bilateral trade or investment treaties and regional free trade agreements (FTA's) to impose such stringent IPR standards on developing countries that even go beyond the damaging requirements of GATT '94. These standards are referred to as TRIPS-plus as it either requires a Member to implement a more extensive standard or i t eliminates an option for

207

/

&Memberunder a TRIPS standard. These new TRIPS-plus obligations close off JLe public health safeguards available under TRIPS and will restrict access to ,ffordable medicines. In fact, the negotiation on TRIPS-plus patent rules also contravenes the WHO Doha Declaration on TRIPS and Public Health. In bilateral trade negotiations involving a strong and weak state, the strong state comes along with a prepared draft text which acts as a starting point for the negotiations. Very often, the weak and poor countries have little ability to negotiate or resist. On the other hand, countries like US have standardized their bilateral treaty standards so that they come along with model treaty, already ratified by the Senate. Thus, US-Nicaragua (1995) or US-Jordan (2000) treaties were based on earlier model agreement - NAFTA (1994). Each newly ratified .greement is then used as a template or model for future bilateral and multilateral agreements. Under the Most Favoured Nation provision in TRIPS, once countries agree to higher patent standards in an agreement with the US, they will have to automatically apply them to patent holders from other WTO members. US has used such treaties even in respect of a LDC who is not even a WTO Member. Thus, US-Laos treaty of 2003 contains quite extensive and damaging TRIPS-plus provisions. These bilateral trade, intellectual property or investment agreements are part of a ratcheting process that is seeing IP norms globalize at a remarkable rate. The two principal actors in this game are the US and the EU. This ratcheting process is dependent upon the following steps: 1. a process of forum-shifting - a strategy where the US and EU shift the s t a n d a r d - s e t t i n g agenda from a forum in which they are encountering difficulties to those fora where they are likely to succeed :e.g. from WIPO to the WTO to BIP's (Bilateral Intellectual Property Agreements) like in case of Nicaragua to be discussed subsequently]; 2. co-ordinated bilateral and multilateral strategies; and 3. the entrenchment in international agreements of a principle of minimum standards. The principle of minimum standards plays a vital role in this strategy. Each bilateral or multilateral agreement dealing with 1P contains a provision to the effect that a party to such an agreement may implement more extensive protection than is required under the agreement or that the agreement does not derogate from other agreements providing even more favourable treatment [see, for example, Article 1702 of NAFTA, Article 1.1 of TRIPS, Article 4.1 of the US~ordan FTA and Article XI of the US-Nicaraguan Bilateral Investment Treaty This means that each subsequent bilateral or multilateral agreement can establish a higher standard.

a

208

EVOLUTION OF PATENT LAWS

12. US APPROACH TOWARDS PATENT LAW STANDARD-SElTINGPOST-TRIPS 209 /

Bilateral agreements are being drafted in ways to ensure that developing countries are integrated into multilateral IP regimes with maximum speed. Developing countries are being obliged to comply with multilateral standards in conventions to which they are not a party, to ratify multilateral treaties or both. So, for example, the US-Jordan FTA requires Jordan to give effect to Articles 1-14 of the WIPO Copyright Treaty and to ratify International Conventions for the protection of New Varieties of Plants (UPOV) (see Articles 4.1 and 4.29 of the US-Jordan FTA). The global ratchet for IP consists of waves of bilaterals (beginning in the 1980's) followed by occasional multilateral standard-setting (eg. TRIPS, the WIPO Copyright Treaty). Each wave of bilaterals or multilateral treaty never derogates from existing standards and very often sets new ones. In some cases, such TRIPS-plus harmonization is aided by a biased technical assistance. Nigeria and Uganda are among the countries who have been reported to have received technical advice funded by the US Agency for International Development (USAID)to revise their patent laws in a manner not required under TRIPS. As a LDC, Uganda is not even required to introduce product patent protection in pharmaceuticals till 2016. But, the draft legislation not only makes product patent protection mandatory, it demands far more than what TRIPS requires, including, declaring pa tent infringement a criminal offence and limiting the use of compulsory licences. At this stage, it may be relevant to examine the role of WIPO in the global IP ratcheting process. While US had consciously abandoned WIPO in 1988 in favour of GAlT (since it wanted to club the IPR issues with those of trade in goods and services), it had not severed its ties with WIPO. WIPO had its own merits, such as it being a secretariat-driven organization possessing a wealth of database and legally trained manpower. This would serve the US designs well under the prevailing circumstances. The General Assembly of WIPO passed two resolutions, one in 1994 and the other in 1995, requiring the International Bureau of WIPO to provide advice and legal/technical assistance to WIPO members on matters such as the compatibility of a country's national IP legislation with TRIPS. In addition, there is a WIPO-WTO Co-operation Agreement (1995) wherein WIPO has assumed obligations to provide legal-technical assistance to developing country WTO Members on TRIPS matters whether or not those countries are members of WIPO. Demand for services of the International Bureau by the developing countries has been high as evidenced by following data: From 1996 to 2000, 214 draft laws on IP were prepared by the International Bureau for 119 developing countries (including some regional organizations); and

The International Bureau during the same period also commented on or drafted amending provisions for 235 drafts laws received from 134 developing countries (including some regional organizations). AS a concrete instance of the type of services rendered by International Bureau, it was found that the draft patent law submitted by WIPO to the Government of Cambodia did not take into account the TRIPS flexibilities. The a

govemment was not made aware of the Doha Declaration, particularly, that as a LDC,it need not introduce product patent protection in pharmaceuticals till 2016 (MSF report, 2003). The work of the International Bureau extends well beyond the drafting of laws for developing countries. Other forms of assistance included the provision ofworkshops on the drafting of IP Legislation and many meetings or seminars or training courses held in Geneva or in developing countries. For a variety of invisible reasons as well as visible (such as, majority of WIPO's NGO membership consists of Western NGO's of IP owners rather than users), International Bureau is led by a strong incentive to provide advice and laws that are of a TRIPS-plus nature. The WIPO standard-setting process goes through the following stages: 1. A working group of experts issues a report (convened by a Standing Committee); 2. The report is considered by a Standing Committee. The Committee is comprised of WIPO member states from different country regions such as Africa, Asia Pacific and so on. There are usually five members from each region. The Committee cannot make any binding decision; 3. The Standing Committee formulates recommendations for consideration by the WIPO General Assembly; and 4. A Diplomatic Conference is held. As one travels from stages 1 to 4; the process of standard-setting becomes more representative. Paradoxically, there is probably progressively less opportunity to influence the standard-setting process than at the working group of experts' stage. By the time of the Diplomatic Conference, the standards have obviously been drafted and WIPO itself, through the relevant standing Committee, has carried out a massive consensus-building exercise in order to ensure the success of the Diplomatic Conference. Stage 1, which is the most important stage as the framing of issues take place here, has no or poor representation from the developing countries and LDC's. This is because as per WIPO standards, these countries lack legal 'experts'. The involvement of WIPO, thus, Provides the correct type of legitimacy to the TRIPS-plus standard-setting Process. It can be seen that the IP standard-setting, thus, operates with a paradigm dominated by the US and EC and international business. Developing countries

21 0-

EVOLUTION OF PATENT LAWS

are encircled in the IP standard-setting process. TRIPS sets minimum standards. Bilaterally, the bar on IP standards continues to be raised. When developing countries turn to WIPO for legislative assistance, that assistance steers them down a TRIPS-plus path. Recent FTA's negotiated by the US include US-Chile (2003), US-Jordan (2000),US-Morocco (2004),US-Singapore (2003)and US-Central American Free Trade Agreements (CAFTA-2004).The US is also negotiating numerous new FTA's with other developing countries including the Free Trade Area of the Americas (FTAA deadline 2005), Andean Countries, Thailand, Panama, Bahrain and South African countries, with many others under consideration. There is a common thread running across all these agreements viz. the quality of their salient provisions are evidently TRIPS-plus; they many, however, be comparatively more or less stringent depending upon the negotiation skills or resistance of the weaker party. These TRIPS-plus provisions are being summarized hereunder: I . Doha Declaration violated The Doha Declaration was unanimously agreed by WTO members - including the US - in November, 2001. It affirms the right of all WTO members to use the safeguards and flexibilities in TRIPS to promote "access to medicines for all" and constitutes a commitment to favour public health over patent rights. The US Congress subsequently enshrined the Doha Declaration in the mandate granted to the USTR for negotiating ETA'S; the Trade Act of 2002 instructs the USTR to respect the Declaration in all trade negotiations. But, none of the FTA's refer to the Doha Declaration. Instead, the USTR has consistently violated its mandate by negotiating TRIPS-plus provisions in FTA's - including with developing countries - which limit and restrict the public health safeguards in TRIPS and delay or prevent the introduction of affordable generics. All of the bilateral and regional FTA's are TRIPS-plus. The impact will be diminished availability of cheap generic versions of expensive patented medicines which will further reduce access to medicines, in direct contrast to the Doha goal of "access to medicines for all". 2. Patent tern1 extension beyond 20 years IP laws are meant to reflect a balance between the rights of the inventor and broader public interests, for example, in having access to new products. The 20 year global patent protection provided by TRIPS already grants an unnecessarily long period of time to enable an innovator company to profit from its invention and recuperate investment costs. Yet, many FTA's allow adjustment of the patent terms to compensate for delays in granting regulatory approval. Moreover, the proposed FTAA requires the extension of a patent granted in one country based on the granting of a patent in a second country. Such extensions of monopoly, beyond the 20-year period, favours the patent holder and delays the availability of cheaper generic versions of patented products. Inthe case of

12. US APPROACH TOWARDS PATENT LAW STANDARD-SmING POST-TRIPS 21 1

medicines, this creates unnecessary suffering or death, particularly, for patients who are ton poor to afford expensive patented drugs. 3. Compulsoy licensing made restrictive Compulsory licensing is a key public health safeguard in the TRIPS Agreement whereunder a government is enabled to temporarily override a patent in the public interest and authorise the production of cheap generic versions of a patented product. FTA's restrict recourse to this policy tool by restricting marketing approval for generics and providing for test data exclusivity for either a few years or the entire duration of the patent. While TRIPS contained no limitations on purposes for which a licence could be issued, FTA's limit it to remedy anti-competitive behavior, public non-commercial use and national emergencies. This would restrict the export of generics produced against such licence, which is against the "paragraph 6" solution of August, 2003 at the WTO (US-Singapore FTA, FTAA). It also often sets a new, higher standard of compensation when compulsory licensing is used - "reasonable and entire" rather than "adequate" (US-Singapore). The Doha Declaration had affirmed countries' right to use compulsory licensing - and to determine for themselves the circumstances warranting this action - so any restrictions or limitations on it is violative of 2001 commitment by all WTO members to respect countries' right to use the safeguards in TRIPS and to prioritize public health over patent rights. 4. Parallel Importation curbed Parallel importation refers to the importation of a patented product that has been placed on markets both abroad and domestically but is sold cheaper abroad. It can be an important tool for developing countries to save money by importing patented drugs approved for domestic sale from other countries, where they may be sold at a lower price. Parallel importation is possible when patent rights have been "exhausted", meaning that once a patented product is placed on a market anywhere in the world, the patent holders' control over what can be done with that product has ended. TRIPS allows each WTO member to decide for itself whether patent rights have been exhausted under its laws once the drug is introduced anywhere in the world. On the other hand, US-Singapore FTA limits parallel importation by requiring that the US and Singapore provide patent holders with the means to block importation of patented drugs into the US or Singapore when the same is done in violation of a distribution agreement abroad (anywhere in the world). Patent holders can restrict all distribution agreements territorially in view of blocking of parallel importation into either the US or Singapore under this Provision. Similarly, the proposed FTAA obliges countries to set up regional exhaustion under their laws within five years. This would allow parallel imPortation within the FTAA Zone, while keeping the world market segmented.

212

-

EVOLUTION OF PATENT LAWS

A restriction of this right can limit access to affordably-priced medicines. 5. Test Data protection extended The TRIPS Agreement doesn't detail how WTO members must fulfil their obligations to protect test data from "unfair commercial use". This is left to Members themselves to determine. Protection is provided to test data for "pharmaceutical products that utilize new chemical entities". On the other hand, the data exclusivity provisions in the FTA's negotiated by the US are all TRIPS-plus, providing five to ten years of "non-reliance" on originator test data. Thus, Article 16.8 of US-Singapore FTA mandates five years of test data protection for "pharmaceutical products", rather than "new chemical entities" as in TRIPS or even previous FTA's. During this period of test data "non-reliance", it would not be possible for the Parties to use compulsory licensing, as generics companies would be unable to obtain marketing approval unless they repeated the time-consuming and costly safety and efficacy test for the product. Most would choose not to enter the market rather than repeat the testing, especially if the market in question is small. And, in an emergency situation, it would be impossible to repeat the tests, due to time constraints. Further, protection is provided not only to test data submitted to regulatory authorities in the US and Singapore, but also to test data submitted elsewhere; this is designed to prevent generic companies from using originator test data submitted abroad to skirt domestic test data protection. Protection is provided for five and ten years, for pharmaceutical and agricultural chemical products respectively, starting from the time of approval either abroad or in the Party, whichever is later. Article 16.8(3)of the agreement provides that where a product is subject to a system of marketing approval and is also subject to a patent in the territory of that Party, the Party shall not alter the terms of the protection that is provided at the time of granting marketing approval, in the event that the patent protection on a data terminates earlier than the end of the term of such protection. Thus, under Article 16.8(3),test data protection may even last longer than patent protection, blocking generic competition even in the absence of patent barriers. The provisions of US-CAFTA agreement are even more TRIPS-plus. Thus, Article 15.10(1) required that parties are to provide not only five years of non-reliance on test data when granting marketing approvals to generic products, but they must also refrain from granting marketing approval based on prior marketing approval given to the originator products. Test data protection is provided to "new pharmaceutical products" that use "chemical entities not previously approved in the Party"; this is in contrast to "pharmaceutical products that utilize new chemical entities" which is the language in previous FTA's except Singapore. Further, CAFTA provisions offer up to ten years of protection to originator drugs from generic competition, even in the absence of patent

r

12. US APPROACH TOWARDS PATENT LAW STANDARD-SWING POST-TRIPS 213

potection and even if a compulsory licence is issued. Under Article 15.10, the Parties must protect test data submitted to regulatory authorities anywhere in the world for five years. The company which owns the original test data then has five years in which to apply for regulatory approval in the CAFI'A country (during which time its test data submitted to regulatory authorities elsewhere enjoys protection and CAFTA country regulatory authorities are bound by an obligation of non-reliance). Once it obtains marketing approval in the CAFTA country for that product, the five year period of protection for test data submitted domestically begins. Depending on how the originator company times its market entry, this could result in ten years of test data protection. This is the most extreme test data protection seen to date in an FTA. In addition, test data protection is incorporated into the marketing approval provisions [Article 15.10(3)]which prevent regulatory authorities in the Parties from granting marketing approval to generics companies relying on originator test data for the entire duration of the patent term, unless they obtain the consent of the patent owner. This would render any compulsory licence as otiose for the reasons discussed already. 6. Unjustified linkage between Patent and Regulatory Approval Recent FTA's contain new TRIPS-plus provisions which link granting of regulatory approval to the status of the patent. This inappropriately involves regulatory approval agencies, whose focus should be on safety concerns, in the enforcement of patents. The TRIPS Agreement contains no such linkage. Under TRIPS, a generics company could "register" its product or "obtain marketing approval" (meaning approval to enter the market, following a determination that the product is safe and effective)before patentexpiryenabling them to enter the market as soon as the patent barrier is gone. On the other hand, TRIPS-plus provisions of US-CAFTA Agreement governing regulatory approval, set forth under Article 15.10,would defacto extend the period of patent monopoly. Article 15.10(3b)requires governments to notify the patent owner when a generic company applies for marketing approval during the patent term, including in preparation to enter the market upon patent expiry. This provision is more "TRIPS-plus" than previous FTA's, notably Chile and Singapore, which require governments to notify the patent owner when a generics producer seeks to obtain marketing approval "effective during the patent term" (marketing a generic product during the patent term would constitute a violation of the patent unless done under compulsory licence). Article 15.10(3a)would prevent generics producers from obtaining marketing approval while relying on originator test data at any time during the patent period - even if a compulsory licence were issued. The language actually goes beyond other FTA's, obligating the Parties to prevent generics producers from marketing" their products at any time during the patent period, rather than obligating Parties to prevent them from obtaining even "marketing approval". 8,

214

EVOLUTION OF PATENT LAWS

Also, this provision would delay the approval of generic drugs until patent expiry. This would de facto extend the patent monopoly by the period it would then take for the generic to obtain approval and actually enter the market. Further, this provision has been abused in the US context, where pharmaceutical companies have used frivolous infringement lawsuits to stall the granting of marketing approval for generic competitors. Thus, even US lawmakers have publicly called for not exporting this troubled system to other countries via FTA's. 7. Exception to Rights conferred but curtailed Article 30 of TRIPS, providing for limited exceptions to patent rights, provides important flexibility to countries seeking to balance patent protections with policies in the broader public interest. One important policy that countries have enacted under Article 30 of TRIPS is the "Bolar provision", a limited exception to patent rights that enables companies, seeking to develop a generic product, to obtain marketing approval (so as to enter the market upon patent expiry) to use, produce or copy patented materials during the patent term. In the absence of Bolar provisions, such use of patented materials would be unlawful until expiry. Although there is no express reference in Article 30 to a third party use of a patented invention for marketing approval purpose prior to patent expiry, a WTO panel ruled that this clause permits limited production prior to patent expiry, but no stockpiling. When the "paragraph 6" problem was under discussion at the WTO, developing countries argued that Article 30 should serve as the legal basis for generics producing countries to export affordable drugs to poor countries without their own manufacturing capacity. Although under various FTA's, language reflective of Article 30 of TRIPS provides a legal cover for policies in the public interest, but it may be offset by more restrictive provisions elsewhere in the text that spell out TRIPS-plus obligations. This is so with the proposed FTAA where although Section B.2e, Article 5.4 provides for Bolar provision, but it is more restrictive than the flexible language of Article 30. The FTAA provision requires the extension of the patent term, by a period sufficient to confer a reasonable term of exclusivity, in cases where granting of the patent precedes the granting of marketing approval. It also would require that governments notify the patent owners during his term of patent, of the identity of such generic producers, applying for marketing approval, who rely on originator test data. This type of provision has been abused in the US context by pharmaceutical companies and is under investigation. 8. Objectives and Principles missing The objectives and principles of international agreements are employed while interpreting the provisions of such agreement. The inclusion of Articles 7 and 8 - amplifying its Objectives and Principles - in TRIPS conveys an important message that private IP rights should also serve public interests such

12. US APPROACH TOWARDS PATENT LAW STANDARD-SmlNG POST-TRIPS 215

as technology transfer, economic welfare and protection of public health and nutrition. All FTA negotiating parties belong to the WTO and are, therefore, signatories of TRIPS. All of them adopted the Doha Declaration which affirms the importance of interpreting TRIPS in the light of its principles and objectives. Therefore, similar public interest-oriented Objectives and Principles ought to have been included in various FTA's. A perusal of NAFTA and US'S FTA's with Chile, Singapore and CAFTA indicates an absence of TRIPS Objectives and Principles. Hence, the basis for a public interest interpretation of these agreements is considerably weakened. The above analysis provides a deeper insight into the various TRIPS-plus features and their wider ramifications. Still, it shall be useful to take up one each of the two types of model agreements put up in place by US. Thus, we shall take up USJordan FTA and US-Nicaraguan Bilateral Investment Treaty (BIT) Program for a detailed analysis. (a) US-JORDAN FTA The Jordan FTA is an example of a model agreement. It is a wide-ranging ' agreement containing provisions on trade in goods, services, IPR's, em'ironment and labour, electronic commerce and government procurement. The provisions on IPRare long and detailed. Its TRIPS-plus features are summarized hereunder:

i 2 . US APPROACH TOWARDS PATENT LAW STANDARD-SE-TTING POST-TRIPS 217

EVOLUTION OF PATENT LAWS

216 --

11

I

Colnp~ilsory Licensing

Compulsory licences could be granted to private parties for commercial non-public use so long as TRIPS procedures and rules, including payment of reasonable compensation to the patent holder, were complied with.

Compulsory licensing would o n l y be p e r m i s s i b l e if the licences w e r e g r a n t e d to government entities or legal entities operating under the authority of a government.

Delays in enforcelllent

Members shall e n s u r e t h a t procedures for enforcement s h a l l n o t be unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays.

An obligation to provide for an extension of patent terms to compensate patent owners for regulatory delays in being able to exploit the patent.

Widedefinition of 'new chemical entities"

Article 39.3, which obliges a Member to protect d a t a submitted aspart of the process of getting regulatory approval for the marketing of /pharmaceutical or agricultural p r o d u c t s i n v o l v i n g "new chemical entities" leaves open the question of what is meant by a "new chemical entity".

Stipulates that "new chemical entity" includes "protection for n e w u s e s of old chemical entities for a period of three years".

1

1

Thus, the Jordan FTA illustrates how the US is using bilateral agreements to intervene in a detailed way in the regulation of a developing country's economy. This intervention is raised further by the MOU accompanying the FTA. The interpretation of what is meant by the exclusion of mathematical models in Jordanian Patent law would appear to be settled by the MOU rather than by the Jordanian judiciary. The scope of this exclusion has implications for the patenting of business methods and software inventions, areas in which US corporations patent heavily. Similarly, the MOU stipulates the level of criminal penalties for certain kinds of infringement of intellectual property. Generally, the level of criminal penalties in a state is a matter of domestic policy and culture. The Jordan FTA is an example of the way in which developing countries are being further drawn into a web of intellectual property treaties. It obliges Jordan to ratify the so-called WIPO "internet treaties" within 6 months of the FTA coming into operation. These treaties are of huge significance to US copyright-based industries such as software, film and sound-recording. The WIPO treaties require a certain number of ratifications before they come into operation. The probable sequence of evolution will be a series of bilateral agreements that bring the WIPO treaties into force, followed by further pressure

on developing countries to join these treaties. Eventually, when all the WTO have ratified the treaties, they will be folded into TRIPS (see Article 71.02 of TRIPS). While the FTA mechanism served the US' purposes of raising IP standard by successf~~lly linking trade in goods with protection of IPR's of MNC's, there is yet another mechanism of Bilateral Investment Treaties (BIT's) successfully performing the same function. This is based on the premise that foreign investment is intimately related with trade flows and, therefore, liberalizing the rules on investment will also enhance trade. Thus, if intellectual property were to be included within the definition of investment, it will enable US to invoke penal clauses against any move of weaker country to d o a damage-control exercise by, say, granting a compulsory licence etc. While this serves US' purpose of entrenching the IPR of the MNC's, it is done rather astutely under the garb of investment, so as to escape any adverse publicity. We shall now discuss in detail the salient features of a BIT, particularly in the context of Nicaraguan BIT. (b)The Nicaraguan BIT The Nicaraguan BIT is part of the US Bilateral Investment Treaty Program. Adequate and effective protection for IPR is an explicit goal of the US BIT Program. The Nicaraguan BIT, like other BIT's, does not set specific standards of intellectual property. Instead, it protects the rights of investors who use IP as a mode of investment. This is accomplished by including intellectual property in its definition of investment. The licensing of IP also falls within the meaning of investment since the definition of investment includes "rights conferred pursuant to law, such as licences and permits" (see Article 1.1 (d)(vi)). Typically, a BIT creates MFN obligations and national treatment obligations for the parties to the treaty. These obligations have the effect of equalising treatment but not of raising standards within a country. Thus, these principles are of little use to US investors if the developing country in question does not have IPR laws or has low standard laws or is taking advantage of the transitional provisions under TRIPS. It is for this reason that "prospective BIT partners are generally expected, at the time the BIT is signed, to make a commitment to implement..........TRIPS agreement obligations within a reasonable time." (see, US Bilateral Investment Treaty Program, Fact sheet, released by the Office of hvestment Affairs, Bureau of Economic and Business Affairs, November 1, 2000). If this expectation is not met, the US is ready to use its 301 process to secure the necessary commitment. BIT's d o not usually contain IP Standards, but rather depend on standards set in other agreements. But, the wide-ranging terms in which BIT's are drafted are likely to give international investors grounds for arguments, which, if successful, may well be TRIPS-plus in their effects. For example, a US company

EVOLUTION OF PATENT LAWS

may grant an exclusive licence to a company in a developing country to import its IP-related products (or, it may set up a subsidiary for the same purpose). The purpose of the licensing arrangement may be to give the local company an incentive to support and market the relevant goods. Assuming the developing country government has signed a standard BIT, the licensing arrangement would be a covered investment for the purposes of that BIT (Article l.l(e)of the Nicaraguan BIT). If the developing country passes a measure that undermines this contractual arrangement (e.g. the issue of a compulsory licence), then the US company would be able to argue a breach of some of the provisions of the standard BIT (see, for example, the obligation not "to impair by unreasonable and discriminatory measures the management, conduct, operation .........of covered investments" in Article 11.3(b)of the Nicaraguan BIT). Thereby, the BIT, by protecting the contractional exploitation of IPR as a covered investment, produces a TRIPS-plus effect. It is also worth noting that the standard BIT limits the capacity of governments to impose performance requirements on investment activity (for example, the Nicaraguan BIT does not allow for the imposition of a condition to transfer technology, a production process or other proprietary knowledge except to remedy a violation of competition law - see Article VI.l(e) of Nicaraguan BIT). In the context of IPR's, it means that governments have less capacity to impose restrictions on the ways the foreign companies choose to exploit their technology. An UNCTAD report of 1997 has observed that since TRIPS expanded the licensing possibilities for foreign companies in developing countries, it could result in "reduced inward technology flows at higher prices". The restrictions on performance requirements in BIT's may have the same effect. These restrictions may, in fact, be stronger in effect than the ones in TRIPS since BIT's do not contain the kind of clauses providing for exceptions to exclusive rights to be found in TRIPS (e.g - Article 30 of TRIPS). Next, we shall examine how the US has been using BIT's as a carrot to get developing countries to sign bilateral intellectual property agreements (BIP's). The case of Nicaragua is instructive on the interaction between BIT/BIP negotiations, the 301 process and TRIPS in the US context. Consider the following factual sequence of events: 1. July, 1995: The US and Nicaragua signed a BIT. The BIT was made conditional upon Nicaragua signing a BIP providing adequate and effective protection for USIPR. Nicaragua is a developing country for WTO purposes and, as such, it was not obliged to implement TRIPS until 1st January, 2000. 2. Nicaragua and US entered into negotiations over IPR. In 1996, the USTR reported that negotiations on a BIP were still proceeding. 3. April 1997: The USTR added Nicaragua to the Special 301 Other Observations list.

-

12. US APPROACH TOWARDS PATENT LAW STANDARD-SElTlNG POST-TRIPS 219

4. January 1998: US and Nicaragua signed a Bilateral Intellectual

Property Rights Agreement. The agreement was to be implemented by July, 1999, ahead of the expiry of Nicaragua's TRIPS deadline. The Agreement contained TRIPS-plus features (for example, the obligation to join UPOV). In this particular negotiating sequence, the BIT (which Nicaragua probably wanted) waslinked to BIP Agreement (which Nicaragua probably did not want ,certainly not its TRIPS-plus features). The 301 process was wheeled in presumably to speed up the negotiating cycle on the BIP which had been proceeding too slowly for US comfort-level. (c) EU and EFTA only a step behind While the US has been the most active country in seeking the adoption of bilateral agreements with developing countries, it is not alone in doing so. A 2003 survey conducted by a Europe based non-governmental organization, GRAIN, reveals that the European Union (EU) is making an extensive use of bilateral and regional trade and investment treaties to enforce "TRIPS-plus" provisions on developing countries. According to GRAIN, EU has forced "TRIPS-plus" commitments regarding intellectual property on life forms in almost 90 developing countries including ACP countries. Unlike the US, the EU does not have any set template for such bilateral trade agreements. Therefore, the language of the individual agreements differs from each other. While some countries must join UPOV and/or accede to the Budapest Treaty, in other cases the UPOV clamp is not so neat (see Table 2). Further, under some of the agreements, the parties recognize the need to provide adequate and effective protection of IPR's, sometimes to the level of the "highest international standards", which is not clear. These standards could refer to European standards, WIPO standards or new defacto standards emerging from the increasing number of bilateral treaties on trade and investment. Table 2 illustrates some of the bilateral trade agreements through which the EU seeks commitments to TRIPS-plus standards for intellectual property on life in developing countries.

-

PS - Plus and potential TRIPS - plus

220

12. US APPROACH TOWARDS PATENT LAW STANDARD-SE-TTINGPOST-TRIPS 221

EVOLUTION OF PATENT LAWS

2002

Algeria

1

Bangladesh

1

Lebanon

-I

I

1

2001

/

Bangladesh shall endeavour to join UPOV and to accede to the Buda~est'Treatv bv 2006.

2002

.

Algeria shall accede to and implement UPOV (1991 Act) within five years of entry into force, although accession can be replaced by implementation of an effective s t t i generis system if both parties agree. I Must accede to Buda~est Treatv.

I

Lebanon must join UPOV and accede to Budapest Treaty by 2008. -

I

-

2000

Mexico must accede to Budapest Treaty within three years and shall provide "highest international standards" of IPR ~rotection.

Morocco

2000

Morocco must join UPOV and accede to Budapest Treaty by 2004.

Palestinian Authority

1997

"Highest international standards". -

South Africa shall ensure adequate and effective protection for patents on biotechnological inventions. Must provide "highest international standards".

South Africa

Sri Lanka Tunisia

1

1995

"Highest international standards".

1998

Tunisia must join UPOV and accede to Budapest Treaty by 2002. "Highest

[Sotirce: TRIPS-yltis rtlust stop: The EU caught irr blatant contradictions, GRAIN, March, 2003.1 Interestingly, smaller organisations like the European Free Trade Agreement (EFTA) have also engaged in the practice of signing bilateral agreements with a limited number of developing countries. The pattern identified in the by the US and EU is also found here even though EFTA does agreements s ~ g n e d not have the capacity to extract the same kind of concessions from the developing countries. Thus, the agreement between EFTA and Jordan (2001) imposes on Jordan to join the UPOV Convention by 2006 while the agreement with Singapore (2002) imposes a 'compensatory' extension of the term of the patent u p to 25 years where the marketing approval process curtails the patent term. The time is ripe now toanalyse the aftereffectsof such treaties. Implications of these bilateral treaties on the two sides are not the same. While these trestles impose no additional commitments on developed countries (as their IP legal framework 1s already adjusted at the level of such treaty obligations), develop-

&g countries are made to offer new "advantages" to their developed country counterparts, which must then be extended to all WTO member states by the operation of Most Favoured Nation (Article 4) principle. A commitment taken towards one developed country to raise IPR protection standards, therefore, imposes an overall raise in protection. This makes bilateral agreements much more significant and insidious than they would otherwise be since they have the potential to limit developing countries' opportunities to useTRIPS flexibilities. The enforcement of TRIPS-plus standards through these agreements is progressively eroding not just developing countries' ability to set domestic standards, but also their ability to interpret their application through domestic, administrative and judicial mechan~sms. Developed countries can always say that individual countries have the right to agree or disagree with any "TRIPS-plus" proposal in bilateral treaties but the answer is not so simple and straight. They are practicing coercion politics through these bilateral deals - no patent, no trade or aid. This backdoor route strategy to enforce more stringent IP standards is undermining the credibility of multilateral decision-making at the WTO and WIPO. Countries should not have to expend huge amounts of time and political capital to gain consensus at the WTO and now, WIPO too, and then have these efforts undermined by a devious strategy that flourishes on an unequal negotiating power to pick up developing countries and LDC's one by one. Hence, there is an urgent need to put a halt on this unethical practice. Civil society groups have to play a major role not only in exposing such practices but also in stopping them.

111. UNILATERALISM - UNABATED, POSSIBLY LEGITIMISED Unilateral measures can be understood as measures taken to put pressure on other states to adopt certain policies and practices which suit the party seeking to impose such measures. The principle of sovereignty implies that each state has full control over all activities taking place within its borders and that any other country must refrain from doing anything that might restrict the state's capacity from exercising such control. Unilateral measures taken by one state to coerce another state for adoptinga certain practice are, therefore, viewed with great suspicion in international law. In the context of the strengthening of Standards of intellectual property rights protection, unilateral measures have, nevertheless, been used in a significant way by certain developed states, most Prominently by the US. This unilateralism has two limbs: rewarding carrot and punitive stick. We had discussed earlier in Chapter 4, in the context of pre-TRIPS negotiations, as to how successfully US had put both these instruments ~ n t opractice. n u s , on the one hand, it had dangled a carrot viz. Generalised System of Preferences (GSP) wllereunder duty-free imports benefit was selectively ac-

222

EVOLUTION OF PATENT LAWS

12. US APPROACH TOWARDS PATENT LAW STANDARD-SETTINGPOST-TRIPS 223

corded to only such countries who had adopted a highly protectionist IPR regime. Against the recalcitrant IPR regimes, on the other hand, it didn't hesitate to wield the big stick viz. Super 301 and Special 301 so as to "watch-list" them wherein they could expect a trade retaliation from US. In the initial phase during the 1980's, the use of unilateral measures by the US was linked to the perceived difficulties in bringing about changes through multilateral processes at WIPO in particular. That was a time when corporate pressure on the government rapidly increased and the response was the adoption of a set of tools enabling the government to put pressure on countries that were perceived as the main offenders. Subsequently, when the first forum-shifting in respect of IPR negotiation. took place from WIPO to GATT in 1988, it coincided with the US governmen! arming itself with the two most-feared fiscal weapons till date viz. Super 30i and Special 301. These two weapons acquired a machine-like efficiency, achieving at least two things in the run-up to the adoption of TRIPS Agreement. It softened the opposition of some of the countries, most forcefully trying to maintain their existing levels of intellectual property rights protection. It also eventually led a number of countries to believe that the adoption of minimum multilateral standards of protection would reduce the unilateral pressure to which they were subjected because this pressure would then be channelled through a multilateral organisation rather than through bilateral channels. The reduction of the risk of unilateral pressure which was one of the expected gains of the multilateral regime did not actually mertialise. In fact, Special 301 was not only not dismantled after the successful completion of the TRIPS Agreement negotiations but has remained as an additional tool that the US government liberally uses to put pressure on individual countries to implement their TRIPS obligations or any stronger commitments they may have undertaken. As part of the Uruguay Round Agreement Act, adopted on the 8th December, 1994,Special 301 was not only retained but also strengthened. Whiic fully maintaining the existing provisions, a new clause was added, clearly indicating that Special 301 was not going to defer to the TRIPS Agreement in the future. The new provision under Section 313 of the said Act indicated that '[a] foreign country may be determined to deny adequate and effective protection of intellectual property rights, notwithstanding the fact that the foreign country may be in compliance with the specific obligations' of the TRIPS Agreement. In fact, the objectives of US intellectual property rights policy are clearly indicated in Section 315 of the aforesaid Act. These include not only the implementation of the TRIPS Agreement but also the enactment and effective implementation by foreign countries of laws to protect and enforce intellectual property rights that supplement and strengthen the standards of the TRIPS Agreement as well as the negotiation of bilateral and multilateral agreements

that create obligations to protect and enforce intellectual property rights that cover new and emerging technologies. With the passage of time, Special 301 has covered a wide spectrum of countries.In the 2004 Special 301 Report by United States Trade Representative, for instance, the policies and practices of 85 countries were analysed. There was one country which was designated as priority foreign country (Ukraine), 15 countries were on the priority watch list and 34 countries were on the watch list. Unilateral measures of the type used in Special 301 are premised on the *rinciple that each country should be entitled to push its own policy agenda, both domestically and internationally. In the context of intellectual property rights standards, it is obvious that unilateral measures adopted by the US under Special 301 are to defend its own commercial interests. It would, therefore, be difficult to justify such measures on the basis of some greater common good being achieved by putting pressure on countries to implement their TRIPS Agreement obligations. While this may still be the predominant common perception, it would be interesting to analyse the outcome of different WTO disputes concerning US' unilateral measures. In the environmental field, the US has had to face several complaints from countries that had felt commercially aggrieved by unilateral measures destined to foster better environmental protecticn. In the WTO era, one of the main cases concerning environmental measures has been the Shrimp/Turtle case which involved measures taken by the US to restrict the importation of shrimps from countries which were not certified as having a regulatory programme requiring the use of turtle exclusion devices. The Appellate Body found that even though the turtles concerned by the measures were included in Appendix I of the Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES), 1973 which includes species threatened with extinction, the measures were unreasonable because they were forcing other governments to adopt the same measures as the US and were not the least discriminatory possible measures. However, even though the specific measures were struck down by the Appellate Body which found that the US should have seriously tried to reach an international agreement on the protection of sea turtles, i t did not completely exclude the use of unilateral measures as a measure of last resort and after extensive negotiations [see, United States -

Import Prohibition o f Certai,, Shrimp Products (India, Malaysia, Pakistan and Thailand v. U S A ) ~ e i 0 t - of t the Appellate Body, 12 ~ c t o b e r ,1998, W T O Doc

W/DSS~/A B/RI. The above decision is not an isolated instance. There is one more dispute which was brought by the European Communities against the US concerning Sections 301-310 of the Trade Act of 1974 and the unilateral determinations made by the USTR. The European Communities argued, in particular, that in situations where measures have to be taken to implement recommendations of

224_--

EVOLUTION OF PATENT LAWS

the Dispute Settlement Body, the Trade Act does not give enough scope to the multilateral processes provided under the Dispute Settlement Understanding. The Panel eventually found that none of the sections challenged were inconsistent with the Dispute Settlement Understanding or G A R , 1944 on the understanding that the US would comply with WTO dispute settlement procedures, where relevant [see, United States - Sectiotzs 301 -310 of the Trade Act of1 974 Report ofthe Panel, 8 Nouenrber, 1999, WTO Doc WT/DS152/R (1999)l. On the whole, the different challenges to unilateral measures taken by the US have not found that they are in principle inconsistent with the multilateral disciplines of the WTO. Restrictions have been placed on the margin of appreciation that the US can use when taking measures that are applied extra-territorially or that have an impact on the sovereignty of other states but the concept of unilateral measures having impacts beyond the domestic sphere has not been ruled out in the WTO context. This has wide-ranging implications in the field of IPR as well as in most other fields.

PATENT LAW STANDARD-SETTING BY AND ON BEHALF OF DEVELOPING COUNTRIES POST-TRIPS During the pre-TRIPS era as well as during the course of TRIPS negotiations, a North-South divide was evident. However, the Southern countries, who were in the forefront, mainly belonged to South Asia and Latin America. Thus, even during the heady days of TRIPS negotiations, the impoverished states of the vast African continent didn't play any significant role. Either they had not been able to cast away the colonial baggage from their mindset or they had been too ill-informed of the nuances of the forthcoming IPR regime. Also, it was seen during the course of TRIPS negotiations that a strong background support and initiative was available to developed countries from the NGO's representing various business interests. On the other hand, the governments of developing co~mtriesand LDC's lacked suchsupport by any NGO - domestic or international. The two most striking features in terms of actors involved in the post-TRIPS scene, on behalf of developing countries and LDC's, has been the leadership of Africa group on health and biodiversity issues and engagement of international NGO's in various TRIPS issues. Interestingly, these NGO's are based both in developing as well as developed countries. This involvement of developed country-based NGO's, guided by human rights considerations, in championing the cause of weaker developing countries and LDC's, is a welcome and landmark change. There is little doubt that the rise in the influence of the Africa Group has been enabled by a partnership with NGO's. The positive role played by these NGO's in the debate over TRIPS and access to medicines has unequivocally been acknowledged. In the words of a developing country negotiator: "what negotiators like me failed to accomplish, OXFAM and MSF have accomplished". This successf~ilworking of an alliance between developing states and NGO's has proved that under certain conditions, united minority factions can secure global regulatory changes (Drahos). Western NGO's have broadly followed the reactive sequence of regulatory change (Drahos). This is how it goes. The death toll in Africa from AIDS has created one of the greatest international public health crisis in recent history. Western NGO's drew the pro-active and vocal western media to become interested in the links between patents, price and AIDS drugs (despite the fact

226

EVOLUTION OF PATENT LAWS

13. PATENT LA-W STANDARD-SETTING - DEVELOPING COUNTRIES

that cartelism in pharmaceutical industry has been a problem for the health care system of developing countries for decades). Thus, by bringing the details of this crisis before mass western publics, NGO's have forced companies and governments to respond with initiatives, including a dialogue in the TRIPS Council concerning the impact of TRIPS on the sovereign capacity of states to pass public health measures to meet the crisis. The successful outcome of the 4th Ministerial Declaration at Doha, where the Doha Work Programme as well as the landmark Doha Declaration on "Public Health" was adopted, can be traced to these initiatives by NGO's in collaboration with the developing countries, particularly, the Africa Group. The various steps in the reactive sequence of regulatory change can be schematically represented in the following manner:

Outside of the debates of the TRIPS Council, an alliance between civil society and developing countries has seen a range of responses from -the R&D-based pharmaceutical industry (including the dropping of the lawsuit filed by a group of Pharma-MNC's against South Africa, voluntary drug donations, price drop in AIDS drugs), the involvement of other international organizations in the debate (e.g. the UN Commission on Human Rights) and policy proposals from key developed country actors (e.g. the tiered-pricing option being advocated by the European Commission). There have been visible concrete gains on other fronts too. Thus, the Organization of African Unity (OAU), Ethiopia, Kenya and organizations like Third World Network and the Institute for Sustainable Development have been prime movers in developing model legislation for African States which sets out regulatory principles for the ownership and use of biological resources and related local community knowledge. The model law initiative has informed the position of the Africa Group on intellectual property issues within the TRIPS Council and its accompanying review processes, as well as the Group's position in the negotiations on the International Undertaking. However, there have been difficulties caused by a lack of unity of interest both among various factions of developing countries as well as among NGO's. Analliance of minority factions is, anyway, difficult tobuild. It requires a strong unity among developing countries. Once intellectual property becomes mediated through monetary considerations and mentality of trade gains and losses, achieving that unity becomes more and more difficult. The Africa Group's stand of a prohibition on the patenting of life is not shared by India and similarly, India is much more supportive of extending protection for geographical indication than many other developing countries. Different NGO's also see the IP issues differently (e.g. 'seed' NGO's are strong opponents of patenting, while 'health' NGO's recognize a role for patents). All this partly explains why the alliance between food/seed NGO's and the Africa Group in the WTO has so far not been successful in using the review of Article 27(3)(b)to meet their goals of a prohibition on the patenting of living organism and a recognition of a broader CBD reading of the slli generis option for plant variety protection.

Disaster 1

Media Hype

Mass public want Regulatory innovation

Individual entrepreneurs pull regulatory innovation out of drawer Modelling the regulatory innovation

4

227

1. IP STANDARD-SETTING AT WIPO National publics placated

Global standardizing of the innovation Global publics placated

[Drahos]

(

In the previous section, the role of two principal players working on behalf of developing countries and LDC's, viz. Africa Group and International NGO's, were examined. Their role was indeed quite pronounced and productive during the course of events constituting fallouts of TRIPS implementation processes. Within the institutional setting of WTO, their role was no less remarkable as evidenced by gains at Doha. These successful initiatives gave a fillip to a more structured, broad-based and unified response by developing countries in a different institutional setting where the debate for further reforms had been shifted by developed countries viz. WIPO.

2_28-

EVOLUTION OF PATENT LAWS -

In order to appreciate these responses, a historical background is apposite A close nexus between the desired level of IPR protection and the current stage of development of society had always been recognized in all the leading developed countries. Thus, even some well-developed OECD countries had used a softer approach towards IPR protection until a threshold level of technological advancement was achieved. For instance, pharmaceutical products were excluded from patent protection in Germany till 1968, Switzerland till 1977, Italy till 1978, Spain and Portugal till 1972, and Finland till 1995. In countries with a longer history of pharmaceutical product patents, such as Canada, France and the UK, compulsory licensing provisions were quite liberal. India's pharmaceuticals sector is yet another example of benefitting from a more relaxed patent regime. This nexus with the developing needs of society explains the fierce opposition by developing countries and LDC's, during Uruguay Round of negotiations, against imposition of a uniform and harmonized IP regime. In 2004, ten years had elapsed since TRIPS came into operation. By this time, there was a broad feeling among civil society that the TRIPS minimum standards were too high for developing countries. This was so since TRIPS had removed many flexibilities that countries enjoyed (such as, exempting patents in some sensitive sectors such as food and medicines) and, instead, imposed a range of obligations on developing countries, many of whom were not in a position to undertake these obligations. As a result, many developing countries found themselves having to deal with problems such as high prices and limited access to essential goods such as medicines and educational materials, limited access to information and technology and other inputs that are necessary for production. Another problem was the misappropriation of genetic resources. These harmful outcomes as well as a failure to obtain the promised results led to a growing recognition that the regulation of patents could not be reasonably made with a unique, universal standard. Different socio-economic conditions and levels of development required different intellectual property systems. A 2001 World Bank report showed that the patent system may entail considerable 'short-term costs' for developing countries, mainly due to administrative costs and problems with higher prices of medicines and key technological inputs, while 'long-term benefits' may seem uncertain and costly to achieve in many nations, particularly for the poorest countries. Moreover, higher standards of patent protection were unlikely to have a possible effect on local innovation, save in those few countries (and sectors) that had reached a certain level of technological development and had the capacity to finance substantial research and development. In the meantime, while many developing countries were still grappling to implement the minimum IP standards prescribed by TRIPS, trying to understand their implications on society, the US ushered in a second generation of

13. PATENT LAW STANDARD-SETTING - DEVELOPING COUNTRIES

I

229

harmonisation process under the WIPO Patent Agenda. As already elaborated, it involved extensive norm-setting, both procedural and substantive, which in many ways went beyond TRIPS. Clearly, the developing countries were not in a position to absorb yet another shock. It was, thus, apparent that WIPO was taking on a maximalist IP agenda of "the more rights the better". In its quest to serve mostly the interests of TP right holders, the fundamental and delicate balance between the public and private was disturbed and was sought to be tilted even more in favour of right holders. While the immediate objective of the US and other proponents of the PCT-reforms was to streamline procedures and reduce duplication and costs, the final objective was to be able to grant a global patent. The adoption of such a system meant that most national patent offices would become superfluous. The adjudication of disputes already stood transferred to DSB of WTO under TRIPS. With this fresh attempt to transfer even the awarding of patent rights outside the country, the already fragile control of State over its municipal affairs relating to IP rights, would have been over. Such concerns were also raised by various NGO's. Thus, at a NGO meeting called the "Future of WIPO", organized by a forum that represented 65 consumer organizations from the US and EU, acute concerns were expressed that WIPO activities were disseminating a dysfunctional IP system to the developing world through the proposed WIPO treaties. At this point, there arrived a keen interest and will among many of the developing countries to begin undertaking the reforms within WIPO to incorporate a development dimension in all its activities. This was to ensure that as a specialized agency of the UN, it became a custodian to ensure balance between the public and private interests as well as between the realm of property and public domain. The final quest was to have a global IP system that truly promoted innovation, international development and human well-being.

11. A DEVELOPMENT AGENDA FOR WIPO A major development of potentially great significance took place during the 31st Session of the WIPO General Assembly (September 27 to October 5, 2004) when the delegations of fourteen countries - Argentina, Brazil, Bolivia, Cuba, Dominican Republic, Ecuador, Peru, Venezuela, Kenya, Sierra Leone, South Africa, Tanzania, Iran and Egypt - under the banner of "Group of Friends of Development", co-sponsored a proposal to establish a "Development Agenda" for the WIPO (tabled as Document WO/GA/31/11). This agenda contained eight major points, such as relationship between development and IP protection, role of development dimension in the new norm-setting exercise, technical co-operation, transfer of technology, IPenforcement and WIPO's other activities; and, finally, to transform WIPO into a member-driven organization. This was follo~ledby a comprehensive 30-page submission dated April 6, 2005. While elaborating the issues raised in the Document WO/GA/31/11, it

13. PATENT LAW STANDARD-SETTING - DEVELOPING COUNTRIES

231

EVOLUTION OF PATENT LAWS

contained many critical conceptual points and concrete reforms proposals. Four issues were dealt with under the headings: WIPO's mandate and governance, norm-setting, technical cooperation and transfer of technology. In order to appreciate the various dimensions of the new Development Agenda, it is proposed to be analyzed under six headings as under: (a) Integrating development dimension with intellectual property at WIPO; (b) Promoting pro-development norm-setting at WIPO; (c) Principles and Guidelines for WIPO's development-oriented technical assistance and evaluation; (d) Guidelines for future work on transfer and dissemination of technology and related competition policies; (e) Strengthening the role of Member-driven structures and facilitating the participation of public-interest groups to ensure the effective implementation of WIPO's development mandate; and (f) Development dimension and IP enforcement;

(a) Integrating Development dimension with Intellectual Property at WIPO At the dawn of a new Millennium, development undoubtedly remains one of the most daunting challenges facing the international community. The United Nations adopted the Millennium Development Goals, which established a firm commitment by the international community to address the significant problems that affect developing countries and LDC's. The Programme of Action for the LDC's for the Decade 2001-2010, the Monterey Consensus, the Johannesburg Declaration on Sustainable Development and the Plan of Implementation agreed at the World Summit on Sustainable Development, the Declaration of Principles and the Plan of Action of the first phase of the World Summit on the Information Society and the recent Sao Paulo consensus adopted at UNCTAD XI have all placed development at the heart of their concerns and actions. Even in the framework of the WTO, paragraph 19 of the WTO's Doha Ministerial Declaration refers explicitly to the need to take fully into account the development dimension. Thus, proposal for the establishment of a "Development Agenda" is based on the premise that development concerns should be given emphasis in WIPO's activities, so that the organization may comply with its UN mandate. The basic proposal of the "Development Agenda" is that development should be a central dimension in any negotiation involving IP systems. Experience demonstrates that WIPO has concentrated its efforts in the diffusion of standardized approaches to IP policies that assume, from an uncritical standpoint, that development and diffusion of science and technology and related knowledge and know-how follows suit as intellectual property rights protection is strengthened. Current worldwide debate questioning the

,

of such an approach has not been reflected in WIPO's work. It is important to promote critical examination of the implications, for developing countries, of the adoption of increased IPR protection, rather than seek to approach this highly controversial issue as if it were governed by absolute truths, solely under the one-dimensional perspective of the private rights holders, ignoring the broader public interest. Therefore, intellectual property should be regarded not as an end in itself, but as a means for promoting the public interest, innovation and access to science, technology and the promotion of diverse national creative industries. Promotion of intellectual property protection alone is not sufficient if unaccompanied by policies that respond to the specific development needs of each country. States at differentlevels of development face different challenges and have different needs. Serious disparities continue to exist in the levels of human, economic and technological development among different States. Despite the important scientific and technological advances and promises of the 20th and early 21st centuries in many areas, a significant "knowledge gap" and "digital divide" continue to separate the wealthy nations from the poor. Accordingly, '"Development Agenda" draws attention to the importance of public interest flexibilities provided for by the IP System itself and the role these flexibilities might play in fostering development-oriented policies. The impact of intellectual property has been widely debated in the past years. Its protection is intended as an instrument to promote technological innovation as well as transfer and dissemination of technology. However, such a protection cannot be seen as an end in itself, nor can the harmonization of IP laws, leading to higher protection standards in all countries irrespective of their levels of development, pursued in isolation. This is because IP protection has serious cross-cutting implications for several different areas of public-policy, including education, public health, nutrition, environment, cultural diversity and the promotion of scientific and technological development more generally. There is, therefore, a need to integrate the development dimension into IP policy-making. The role of intellectual property and its impact on development must be carefully assessed on a case-by-case basis. IP protection is a policy instrument, the operation of which may produce benefits as well as costs, which may vary in accordance with a country's level of development. Action is, therefore, needed to ensure, in all countries, that the costs d o not outweigh the benefits of IP promotion. In the above background, we shall analyze the WIPO's existing mandate and the proposed makeover. WIPO was established by the 1967 WIPO Convention as an independent international organization to "promote the protection of intellectual property" and "ensure administrative cooperation among the Unions". Paragraph 2 of the Preamble to the WIPO convention recognized that intellectual property is not

232

-

EVOLUTION OF PATENT LAWS

an end in itself but should only be used if it promotes creativity. This objective was explicitly clarified by the 1974 Agreement between the UN and WIPO, which established WIPO as a specialized agency of the UN family with the responsibility for: "taking appropriate action in accordance with its basic instruments, treaties and agreements administered by it, inter alia, for promoting creative intellectual activity a n d for facilitating the transfer of technology related to industrial property to the developing countries in order to accelerate economic, social and cultural development subject to the competence and responsibilities of the United Nations and its organs............." As a member of the UN System, although WIPO is already mandated to take into account the broader development-related commitments and resolutions of the UN system as a whole, yet, it has been proposed to consider the possibility of amending the WIIJO Convention so as to explicitly incorporate the development dimension into WIPO's objectives and functions. Accordingly, WIPO General Assembly has been called upon to take immediate action on the following lines. Since Article 4 ("Functions") of the WIPO Convention relates to its Article 3 ("Objectives"), paragraph (i) of Article 3 of the WIPO Convention could be amended to read as follows: "(i) to promote the protection of intellectual property tl~roughoutthe world through cooperation among States and where appropriate, in collaboration with a n y other international organization, fully taking into account the de\'elopmentneeds of its Member states, particularly developing countries and least-developed countries".

Furthermore, WIPO should undertake its activities, especially legal-technical and technical assistance with a development focus, based on the 1995 Agreement between WIPO and the WTO with respect to the implementation of the TRIPS Agreement. Under Article 4 of that Agreement, the International Bureau of WIPO and the WTO Secretariat are required to co-operate in matters of legal-technical and technical assistance "so as to maximize the usefulness of those activities". In thecontext of TRIPS, legal-technical and technical assistance activities have to ensure that the developing and least developed countries are able to implement the pro-development provisions of the TRIPS Agreement, for example, Articles 7,8,30,31 and 40, in addition to subsequent pro-development decisions, such as the Doha Declaration on the TRIPS Agreement and Public Health. In addition, WIPO should be open to examining non-intellectual propertytype and/or non-exclusionary systems for fostering creativity, innovation and the transfer of technology, for example, open collaborative models for research, open and free software development, and compensatory liability systems and

I

I

I I

13. PATENT LAW STANDARD-SETTING - DEVELOPING COUNTRIES

233

the development of technology for the public good, while recognizing the benefits and costs of each system. (b)promoting pro-Development norm-setting at WIPO Norm-setting at the international level has been dominated by the paradigm that regards intellectual property rights as the only and unequivocally beneficial instrument to promote creative intellectual activity. Thus, increased scope and levels for intellectual property protection have often become ends in while failing to take into account the need to promote and enhance access to Knowledge and the results of innovation. Rapidly growing international IP standards have been placing unprecedented limits on the ability of developing countries to tailor their IP regimes to meet their economic, social and cultural needs, and have also imposed significant implementation burdens. Challenges faced by developing countries in the enforcement of higher minimum international standards of protection favouring rightholders must be balanced by an effective use of flexibilities contained in the IP System, such as those of Articles 1.1 and 41.5 of the TRIPS Agreement, which explicitly recognizes that these countries have retained the freedom to determine the appropriate form of implementation of their obligations in the area of intellectual property. WIPO, as one of the principal international institutions responsible for negotiating standards and norms to promote creative intellectual activity and to facilitate transfer of technology, has a significant role to play in ensuring that intellectual property rules advance development objectives and bears a special responsibility in overcoming current limitations in international norm-setting. WIPO is currently engaged in norm-setting activities in various technical cornmi ttees, that largely exceed the existing obligations for developing and least developed countries under the WTO's TRIPS Agreement. The current discussions on a draft SPLT in the SCP are of particular concern. The proposed treaty would considerably raise patent protections standards, creating new obligations that developing countries will hardly be able to implement. In view of this, aset of concrete recommendations towards appropriate norm-setting have been made in the Development Agenda. These are: (1) Identifying interests behind norm-setting initiatives, assessing the costs and benefits of those initiatives in terms of sustainable development, promoting a balance between protection and dissemination of knowledge and the interests of developed and developing countries, fostering the participation of a broad range of stakeholders, and supporting the compatibility with broader international objectives and commitments constitute, in this regard, concrete and significant steps that can be taken in the context of WIPO norm-setting activities to ensure that their outcome reflects developinent needs and concerns.

9

-

- --

-

-

--

EVOLUTION OF PATENT LAWS -

p p

--

(2) All norm-setting should be based on available empirical evidence and on a cost-benefit analysis. Given that intellectual property protection will generate different costs in different circumstances, from implementation burdens to potential loss of public policy space from the economic, social, cultural and environmental perspectives, its necessity and desirability vis-a-vis other non-intellectual property types and/or non-exclusionary options should be thoroughly analyzed on a case-by-case basis. (3) One of the obstacles for norm-setting initiatives in WIPO to adequately respond to development objectives and concerns is the lack of information about the short-term and long-term objectives of these initiatives, as well as about their impact and the consequences of various possible outcomes. The WIPO Secretariat has often played an active role in norm-setting processes and, in general, there has not been an adequate debate on the feasibility and desirability of new, expanded or modified rules. The point of view of developing and least developed countries have been launched without a real consensus. To ensure that the concern of all WIPO Member States and relevant stakeholders are appropriately addressed in norm-setting, the WIPO Secretariat should not play a substantive negotiating role. On the contrary, the right and burden should be on Member States to propose initiatives and priorities for the work plan of WIPO and its different bodies. This will result in a balanced and informed debate. (4) Undertaking independent, evidence-based "Development Impact Assessment" (DIA) to consider the possible implications of each norm-setting initiative for core sustainable development indicators such as innovation, access by the public to Knowledge and products, job creation, poverty alleviation, equity, respect for cultural diversity, protection of biodiversity, health and education, particularly in developing and least developed countries. Such an independent evaluation could be carried out by a new proposed office called WIPO Evaluation and Research Office (WERO) with the effective participation and engagement of a broad range of key stakeholders. As part of the DIA process, a cost-benefit evaluation should also be requested from other relevant international organizations and bodies, including the UNCTAD, FAO, the World Bank, WHO, the South Centre and the Commission of Human Rights. (5) In order to tap into the development potential offered by the digital environment, in the interests of consumers and public at large, explore the relevance of open access models for the promotion of innovation and creativity with less monopoly of knowledge. Thus,

-

13,PATENT LAW STANDARDSETTING DEVELOPING COUNTRIES

235

WIPO should consider undertaking open collaborative projects such as Human Genome Project and Open Source Software. ( 6 ) Different levels of development of Member States should be an inherent consideration in WIPO norm-setting. Developing and least developed countries require special and differential treatment. This difference between developed and developing WIPO Member States should be recognized and translated into norm-setting initiatives to provide for longer compliance periods, promote transfer of technology and suppress anti-competitive pra~tices.In other words, intellectual property should strike a proper balance between the private rights and the public interest. (7) A consideration of the development dimension of intellectual property must be quickly brought to bear on discussions as regards the proposed SPLT in the SCP. Thus, provisions on "Objectives" and "Principles", reflecting the content of Articles 7 and 8 of the TRIPS Agreement, should be included in the SPLT and other treaties under discussions in WIPO. (8) In the course of norm-setting discussions and negotiations, active and effective participation of a broad range of stakeholders, including other intergovernmental organizations, academia, consumer groups, other civil society organizations etc., should be promoted. This will foster the consideration of the rights and interests of a broader range of stakeholders in WIPO's works. (c) Principles and guidelines for WIPO's Development-oriented

assistance and evaluation As developing countries continue to implement IP-related treaties, such as

TRIPS Agreement, WIPO administered treaties and to participate in new negotiations at the multilateral, regional and bilateral levels, appropriate and effective technical assistance and capacity-building will be crucial if these cou!ltries are to use intellectual property and other tools for fostering creativity and technological development effectivelyin the pursuit of their development goals. WIPO is the main multilateral provider of technical assistance in the field of intellectual property. As a UN specialized agency, it has an obligation to ensure that its technical cooperation activities are geared towards implementing all relevant UN development objectives, which are not limited to economic development alone. By virtue of the 1995 agreement with the WTO, it is mandated to play an important role in providing developing countries with technical assistance with a development focus with respect to the implementation of the TRIPS Agreement. Its technical assistance has come under criticism from various quarters including independent bodies such as UK Commission on I.P.R. which, in its 2002 Report, characterized WIPO's technical assistance as too often planned ;~d

236

EVOLUTION OF PATENT LAWS

delivered in isolation from development goals of developing countries. Some of the serious concerns raised are the following: (1)Solutions to the technical and capacity constraints tend to be identified and designed by the providers and not by the beneficiaries of the assistance; (2) Assistance is mostly targeted to a limited group of beneficiaries (mostly IP offices and certain business groups); (3) There is a tendency to over-emphasize the benefits of intellectual property whilegivingvery littleattention to the limitations and actual costs; (4) The content of the technical assistance programme has mostly focussed on the implementation and enforcement of obligations and not on the use of in-built rights and flexibilities in international treaties for developing countries; and (5) There is insufficient support for local input and capacity building when identifying solutions that are specific to the respective country and its economic structure. In order for WIPO's technical assistance to be useful in the long-term, and for there to be a basis for objective review and improvement, the Organization's activities and programmes in this field should be guided by pre-agreed principles and guidelines. Among others, the principles and guidelines could include the following: (1)The provisions of technical assistance should have as its objectives the fulfillment of the development goals of the recipient countries and broader development goals such as UN Millennium Development Goals; (2) WIPO's legislative assistance should ensure that national laws on intellectual property are tailored to meet each country's level of development and are fully responsive to the specific needs and problems of individual societies; (3) Special attention should be paid to developing the technical capacity of countries to fully use in-built flexibilities in international agreements to advance national pro-development policies; (4) Technical cooperation should contribute to ensuring that the social costs of IP protection are kept at a minimum so that they don't outweigh the benefits; (5) There is a need to expand its coverage to include matters related to the use of competition law and policy to address abuses of intellectual property and practices that unduly restrain trade and the transfer and dissemination of technology;

13. PATENT LAW STANDARD-SElTING - DEVELOPING COUNTRIES Y

237

(6) The provision of technical assistance should be neutral, impartial and of an advisory nature based on actual and expressed needs; (7) The assistance should correspond to the needs of various stakeholders in developing and least developed countries and not just the IP offices and rightholders; (8) WIPO's technical assistance staff and consultants should be fully independent and potential conflicts of interests should be avoided; (9) All information about design, delivery, cost, financing, beneficiaries and implementation of technical assistance programmes as well as results of internal and external independent evaluation should be publicly available; (10) A web page with all technical assistance information provided by WIPO and other relevant international organizations and donors could be created to enhance transparency and allow for objective monitoring processes; (11) Exploratory work should be undertaken to analyze options for separating norm-setting functions from technical assistance functions of the WIPO Secretariat. One welcome suggestion is creation of a wholly independent entity, not part of the WIPO Secretariat but funded by WIPO, along the model of the Advisory Centre on WTO Law (ACWL). The managing board of such an independent entity could be drawn from the WIPO Secretariat, UNCTAD, UNDP, UNESCO, UNIDO, WTO, WHO and F A 0 as well as other international organizations with expertise in development and intellectual property; and (12) Technical assistance activity of WIPO could be subject to the independent evaluation and monitoring of the proposed WIPO Evaluation and Research Office (WERO).

(d) Guidelines for future work on Transfer and Dissemination of Technology & related Competition policies Transfer of technology is a comprehensive term covering mechanisms for transmitting technical information across borders and its effective diffusion into the host economy. It refers to numerous complex processes, ranging from %ovations and international marketing of technology to its absorption and mitation. Transfer of technology may be realized through formal - market as well as informal - non-market means. A formal or market mechanism is a transaction, based on a legal arrangement between consenting parties. It includes, in the main, trade in goods, foreign direct investment (FDI), h~eming,joint research and development (R&D)arrangements. There are also important legitimate informal non-market channels of transfer of technology. Perhaps, most significant is the process of imitation through

238

13. PATENT LAW STANDARD-SETTING- DEVELOPING COUNTRIES

EVOLUTION OF PATENT LAWS

Fiscal incentives to encourage enterprises to train scientific, engineering and management graduates from developing countries, with a view to their knowledge being used for development of technology in their country of origin; Public resources, such as those from the National ScienceFoundation or National Institute for Health in the US, could be used to support research into the technology development and technology transfer needs of developing countries;

product-inspection, reverse engineering, decompilation of software and even simple trial and error. Another means is to study available information about new technologies. Patent applications are available for this purpose. Thus, patents are expected to provide both a direct source of technology transfer, through FDI and licensing, and an indirect form through inspection. To play this role, patent disclosures need to provide sufficient information for engineers to understand the technologies. In brief, under these various mechanisms, intellectual property protection can play a role, but not a unique role, for transfer and dissemination of technol-

Grant programs could be established for research into technologies that would be of greatest productivity for the purpose of meeting priority social needs of developing countries. Such programs may be based on a partnership between the research teams of developing and donor countries. Technologies developed under such programs could be made publicly available;

OgY. Hcwever, even in the case of formal technology transfers that occur mainly in voluntary transactions, it has been recognized that this process often does not work as intended and that the unwillingness to transfer technologies might pose a competitive threat. In fact, it is frequently the case that IP rightholders choose to exercise the monopoly rights conferred by patents and other forms of intellectual property in a manner that runs counter to the ~ u r p o r t e d~rinciplesand objectives of the IP System, including the transfer and dissemination of technology. Many of the developing countries and LDCrsthat have taken up higher IP obligations in recent years simply lack the necessary infrastructure and institutional capacity to absorb such technologies. Policies are thus needed to rectify this situation, by removing impediments to the transfer and dissemination of knowledge and to lower the costs and risks of technology acquisition. Already, the TRIPS Agreement, under Articles 7 & 8, recognizes that the transfer and dissemination of technology should be a fundamental objective of the global IP system. Moreover, under Article 1 of the 1974Agreement between WIPO and the UN, WIPO is recognized as a specialized agency with the responsibility for taking appropriate measures for facilitating the transfer of technology related to industrial property to developing countries to accelerate economic, social and cultural development. Thus, in view of necessary legislative mandate with WIPO, some new approaches weresuggested which could bedivided broadly into twocategories: -(i) Supportive policies by Developed Countries; and (ii) Multilateral supportive measures. The various proposed initiatives were as under: (i) Supportive policies by Developed countries Technical and financial assistance for improving the ability of countries to absorb technology; a The existing ambit of Article 66.2 of TIUPS (limited to LDC's) may be widened so as to accord fiscal benefits to firms transferring technologies to developing countries;

239

I

Universities should be encouraged to recruit and train students from developing countries in science, technology and management. Special trust funds could also be set up in this regard. (ii) Multilateral supportive measures Extension of commitments, like those contained in Article 66.2 of the TRIPS Agreement, so as to benefit all developing countries; Levy of a special feeon applications filed through Patent Cooperation Treaty, which would be earmarked for the promotion of R&D 1 activities in the developing and least developed countries; Establishment of an intermediary conduit to reduce the asymmetric information problem in private transactions between technology buyers and sellers - such a conduit could attempt later to develop a model technology transfer contract that could serve as a guideline for transfer of technology and would represent the legitimate interests of both buyers and sellers; A new subsidiary body within WIPO could be established, to look at what corrective measures are needed to address the inability of existing IP arrangements and treaties to promote a real transfer of technology to developing countries and LDC's, similar to what has already been done in other forums such as the WTO and the UNCTAD; A multilateral agreement where the signatories would place into the ?( public domain the results of largely publicly funded research - this would help in increasing the flow of technical information, especially 5,: to developing countries, through expansion of the public domain in '" scientific and technological information. Such a regime could take the form of a Treaty on Access to Knowledge and Technology. A concrete

.

(

240

EVOLUTION OF PATENT LAWS

-

suggestion in this regard by Civil Society Coalition (CSC),a network of over 25 public interest NGO's, was submitted on July 21,2005 at the Third Inter-Sessional Intergovernmental meeting on the WIPO Development Agenda. It may be mentioned that such Inter-Sessional Intergovernmental meetings are being held as per the mandate of General Assembly to discuss,onthe various proposals being received from the national governments as well as various NGO's in respect of proposed Development Agenda. The CSC's submission notes that there is an emergent consensus among many nations on the need for new initiatives to promote access to knowledge, as evidenced in the recommendation put forth by the 130 Heads of State and Governments of the G-77 countries and China, which met at the Second South Summit in Doha (Qatar)in June, 2005. This recommendation called upon WIPO to "include in all its future plans and activities including legal advice a development dimension that includes promoting development and access to knowledge for all". CSC's submission elaborates possible elements so far as relevant to patent rights, of such a treaty as under: provisions regarding initiatives to promote cooperation and investment in open access databases and scientific journals, free software, expanded access to government funded research, archives of public broadcasting and other projects that expand the knowledge commons; measures to facilitate the development of open standards, including those that are essential for free software and essential knowledge goods; agreements to ensure that patent rights do not inhibit certain research experimental uses, practical measures to ensure the implementation of Paragraph 4 of the Doha Declaration on TRIPS and Public Health; and cooperation to implement Article 40 of the TRIPS, concerning the control of anti-competitive practices. CSC has further suggested that the elements of such a treaty could be discussed in the Standing Committee on the law of Patents (SCP). (iii) Guidelines for Competition Policies Exploitation of intellectual property rights could give rise to anti-competitive behaviors, whether by individual firms or by concerted practices or agreement between firms. An individual may do this, for example, by exploiting the unique characteristics of certain protected products that prevent rival firms from developing alternative products or entering certain markets, and refusing to grant licences to prospective competitors.

-

13. PATENT LAW STANDARD-SETTING - DEVELOPING COUNTRIES

241

Three types of conflicts may arise between the pursuit of competitiveness

and intellectual property rights:

I

I

I

(i) intellectual property may be used contrary to the objectives and conditions of its protection, a situation called misuse; (ii) market power resulting from intellectual property may be used to extend the protection beyond its purpose, such as to enhance, extend or abuse monopoly power; and (iii) agreements on the use or the exploitation of intellectual property may be concluded in restraint of trade or adversely affecting the transfer or the dissemination of technology or other knowledge, a situation called restrictive contracts or concerted practice. The scope for abusing intellectual property rights depends on the competitive nature of distribution markets and entry possibilities. Where the efficient functioning of intellectual property is impaired by restrictive practices, the market-oriented incentives decline and social costs rise. Therefore, a pro-competitive intellectual property system needs to incorporate appropriate competition policies, among others, to prevent the abuse of intellectual property rights as well as prevent such practices that unreasonably restrain trade or adversely affect the international transfer of technology. In fact, many countries have enacted antitrust regulations or other competitive legislation to respond to such anti-competitive behaviour. The TRIPS Agreement, too, sets out general principles to establish and enforce anti-monopoly policies. The relevant provisions are Articles 8.2,31(k) and 40. However, this has not been found to be sufficient. There is an urgent need for a well balanced design of intellectual property treaties and national laws, as regards, for example, exceptions for prior users, experimental or fair use, exhaustion, adequate disclosure, efficient and working requirements and misuse defences, which may help both to unburden competition policy and encourage private action against undue claims for protection. this context, the proposed work on technology transfer in WIPO may also address elements such as: consideration of model approaches on how to implement the relevant provisions of TRIPS; inclusion of relevant provisions to deal with anti-competitive behaviour or abuse of monopoly rights by rightholders in the proposed SPLT; implementation of intellectual property policies in developing countries should be matched with appropriate enforcement mechanisms that adversely restrain anti-competitive behaviour; and

242

EVOLUTION OF

PATENT LAWS

developed countries authorities to undertake, at the request of affected countries, enforcement actions against firms headquartered or located in their jurisdictions. (e) Strenthening the role of member-drivenstructures and facilitating the participation of public-interest groups to ensure the effective implementation of WTO's Development mandate The governance and oversight structures.of WIPO, in particular, its Secretariat, needs to be adequate and properly balanced to ensure the implementation of the Development Agenda. Some concerns and misunderstandings have been expressed, in the past, with regard to WIPO's nature as an institution, due to its funding structure. In 2002, approximately 86 percent of WIPO's total funding came from fees. This situation has led some actors to argue that WIPO should be more responsive to the interests of the rightholders that use the global protection system and their associations, since WIPO appears to have become dependent on them for financing. This line of reasoning is not compatible with WIPO's intergovernmental nature. Additionally, it is not conducive to a development sensitive organization that should cater to a multistakeholder constituency of all member countries. In fact, WIPO's existence is not dependent on rightholders and rightholders do not fund WIPO. As an international organization, answerable to its Member States, WIPO's existence depends on its Members only. The global protection systems which contribute significantly to WIPO's income are systems that have been created by Member States themselves. Rightholders should, thus, in no way claim that they have the right to determine the agenda or priorities of the organization. WIPO should operate in a Member-driven manner, where the role of its Secretariat is focussed on facilitating the work of the Members and implementing decisions and instructions received from Member States. In order to strengthen the oversight function of Members, it has been proposed to consider establishing an independent evaluation and research office to be called the WIPO Evaluation and Research Office (WERO), which would report to the General Assembly. The Head of the office would be vetted and approved by the General Assembly and appointed for a fixed term after which time such a person may not be employed in the WIPO Secretariat. Similar conditions may also apply to the staff of WERO. This office would have unrestricted access to all WIPO documents. The World Bank, IMF, the European Investment Bank, the UN Development Programme (UNDP)etc. already have similar mechanisms. Such an office would provide a transparent, independent and objective mechanism, vis-a-vis the General Assembly, the WIPO Secretariat and all interested stakeholders, through which WIPO's programmes and activities would be evaluated with respect to their development impact in general, and

-

13. PATENT LAW STANDARD-SETTING- DEVELOPING COUNTRIES

243

their impact on innovation, creativity and access to, and dissemination of knowledge and technology. Its functions could include: Carrying out "Development Impact Assessments" with respect to each proposed norm-setting indicator for sustainable development, such as, innovation, access to knowledge and products, job creation, poverty alleviation, equity, protection of bio-diversity, health and education, particularly in devdloping countries and LDC's; Impact assessments and research on existing WIPO administered treaties; and Monitoring and evaluating the design, delivery and implementation of WIPO legal-technical and technical assistance activities based on the principles and guidelines established by the General Assembly. Next, we shall consider the need for facilitating the participation of other public-interest groups in WIPO processes. IP law regime relating to innovations and transfer of technology have implications beyond the regulation of monopoly rights over inventions. They impact on a much wider range of issues from access to education and learning materials to the availability and affordability of essential medicines as well as on the efforts to bridge the digital divide and the technology gap. In view of this, WIPO must take into account in all its policy and technical committees the interests of a broader range of stakeholders including the consumers, the rightholders and the public at large. Further, WIPO should foster an active participation of public interest non-governmental organizations ina'll its subsidiary bodies. This, in turn, calls for a re-evaluation of the role and relevance of the Policy Advisory Commission (PAC) and the Industry Advisory Commission (IAC). Both these Commissions were established in 1998. The mandate of the PAC is to "provide objective and informed external advice to the Director General, particularly with respect to policy-making, medium-term planning, processes and the needs of the market sector." The IAC,on the other hand, wasestablished for the purposes of ensuring that the "voice of the market sector is heard and that theorganization is responsive to its [market-sector]needs" and ensure that there is "a direct input of industry into the policy-making process in WIPO." While the role of the PAC and the IAC are purely advisory, the emphasis on the role of industry and the "market sector" has raised concerns among other stakeholders about the preponderant participation of industry vis-a-vis public interest groups in WIPO. It is important to ensure that these advisory bodies whose membership is not determined or vetted by Member States do not unduly influence the manner in which the organization determines its priorities or implements Member's decisions.

244

13. PATENT LAW STANDARD-SETTING - DEVELOPING COUNTRIES

EVOLUTION OF PATENT LAWS

(0Development dimension and IP enforcement IP enforcement should be approached in the context of broader societal interests and development-related concerns, in accordance with Article 7 of TRIPS. The right of countries to implement their international obligations in accordance with their own legal systems and practices, as clearly foreseen by Article 1.1 of TRIPS, should be safeguarded. In setting up the Advisory Committee on Enforcement (ACE) in 2002, the WIPO General Assembly clearly rejected a "TRIPS-plus" approach to enforcement matters, by deliberately deciding to exclude all norm-setting activities from the Committee's mandate. ACE should be guided by a balanced approach to IP enforcement. Accordingly, it should not approach the issue of enforcement narrowly on curbing the infringement of IP rights, rather, it must give consideration to the obligations imputed to the rightholders. There is an urgent need to ensure that enforcement procedures are fair and equitable and d o not lend themselves to abusive practices by rightholders that may unduly restrain legitimate competition. In this regard, it was noted that Article 8 of TRIPS states that corrective measures may be necessary to curb practices that may adversely affect trade and international transfer of technology. Article 40 of TRIPS addresses the issue of anti-competitive practices directly and mandates the WTO members to identify such practices and enact appropriate measures in their national laws. All of these provisions of the TRIPS Agreement should be brought into WIPO's framework. We have, hereinabove, dealt comprehensively with the proposed new WIPO Patent Agenda sponsored on behalf of all the developing countries and LDC's by a group of fourteen developing countries under the banner of "Group of Friends of DevelopmentU(GFD).These landmark proposals ought to have been discussed at a forum which was representative of all member-nations and other public-spirited NGO's. Instead, under pressure from US and its allies, Director General of WIPO organized on 14-15 February, 2005 a meeting of only select countries, most of whom are in favour of a TRIPS-plus harmonisation, at Casablanca to discuss on the proposed SPLT. The Casablanca Statement said that WIPO should deal with six issues in an accelerated way. SCP, a high-standing body of WIPO, should focus only on four issues - prior art, grace period, novelty and inventive step topics which are of concern to developed countries. On the other hand, two other issues - sufficiency of disclosure and genetic resources - topics which are of great concern to developing countries and LDC's, should be transferred from SCP to IGC, a body of lower standing. Casablanca represents a significant victory for industrialised nations, led by the US, which have been pressing for speedier upward harmonisation of patent laws and procedures at WIPO. The above proposals, particularly, that the SCP focus on only the four issues, have been sharply criticised by GFD. The Group said that the concerns

1

245

of all the parties had to be taken into account. Thus, not only that the two issues of significance must not be transferred out of SCP but, rather, SPLT should further include, inter alia, provisions on the transfer of technology, on anti-competitive practices, on the safeguarding of public interest flexibilities as well as specific clauses on principles and objectives. At present, apart from GFD, there are at least two more group of developing nations which are active. Thus, G-20 alliance, a group led by Brazil, India and Argentina, has been extremely successful in wresting concessions on a number of issues from the rich bloc. Then, there is the IBSA (India, Brazil and South Africa) initiative, a new trade axis aimed at harnessing the potential of the big players in three continents.

14. POST-TRIPS AMENDMENT OF INDIAN PATENT LAWS

POST-TRIPS AMENDMENTS OF INDIAN PATENT LAWS LACUNAE & SUGGESTIONS

-

The Patents Act (1970),which allowed only process patents and not product patents in respect of food, drug and chemical substances, provided shorter protection periods and excluded agricultural methods, processes of medicinal, surgical etc. treatment of human beings, animals or plants from the scope of patentability, was seen by many as a model for the other developing countries. However, together with other WTO Member countries, India was under a binding commitment to change its national patent system in accordance with the provisions of TRIPS Agreement. For countries like India, which did not grant product patent rights in certain articles like pharmaceuticals, TRIPS provided a three-stage implementation schedule when it came into force on 1 January, 1995: (i) Introduction of a 'mail-box' facility from 1 January, 1995 to receive and hold product patent applications in the fields of pharmaceuticals and agricultural chemicals. Such applications were not to be processed for the grant of a patent until the end of 2004 (Article 70.8). But, Exclusive Marketing Rights (EMR's) could be obtained for that application if a patent had been granted in some other WTO Member country and the application had not been rejected in the country as not being an innovation (Article 70.9); (ii) Compliance from 1 January, 2000 with other obligations of TRIPS, namely, those related to the rights of the patentee, term of patent protection, compulsory licensing, reversal of burden of proof and so on; and (iii) Introduction of full product patent protection in all fields including pharmaceuticals from 1 January, 2005 (Article 65). All the product patent applications held in the mail-box were also required to be taken up for examination from 1January 2005. Together with aforesaid changes in the 'The Patents Act, 1970', it had also become imperative that all the other related national laws such as 'The Protection of Plant Varieties and Farmers' Rights Act, 2001J,(PPVFR), 'The Biological Diversity Act, 2002', 'The Plants, Fruits and Seeds Order', 'The New Seeds Bill'

247

and the 'Environment Protection Act' were made complementary and compatible with one another. The present chapter is concerned with changes incorporated in 'The Patents Act, 1970' wherein the following three legislations were enacted to bring it in line with the TRIPS Agreement: (i) Patents (Amendment) Act, 1999, (ii) Patents (Amendment) Act, 2002 & (iii) Patents (Amendment) Act, 2005.

I. PATENTS (AMENDMENT) ACT, 1999 The Patents (Amendment) Act, 1999 mainly dealt with the facility for submitting product patent mail-box applications and applications for grant of Exclusive Marketing Rights (EMR's) retrospectively with effect from 01.01.95. Consequently, between 1999 and 2004, about 9000 mail-box applications were received. As regards the other facility, only 13 applications were received for grant of EMR's out of which only four were found to be eligible. The Patents (Amendment) Act, 2005 has since omitted all the provisions incorporated under Patents (Amendment) Act, 1999. This has been done as product patent applications would now be received from 01.01.2005 for all the areas of technology including the two areas of technology covered by the transitional arrangements.

11. PATENTS (AMENDMENT) ACT, 2002 The next legislation, Patents (Amendment)Act, 2002 dealt with the definition of patent terminologies such as 'invention', 'inventive step' and 'capable of industrial application' apart from few other minor definitions. This legislation simplified the procedure for submission of patent applications and their examination by the patent office. As regards the substantive issues, it, inter alia, dealt with an enhanced term of patents and the system of compulsory licences. Those salient features of the Amendment Act, 2002, which survived the third amendment of 2005, are as under: Term of every new patent as well as those whose term had not expired became 20 years from the date of filing (Sec. 53); A new definition of "invention" - a new product or process involving an inventive step and capable of industrial application - came into force [Sec. 2(j)]; Various processes defined under Sec. 3(i) were held as patentable, when they pertained to plants; A request for examination system was introduced wherein all the patent applications in which the First Examination Report had not been issued on or before 19th May 2003 could be examined under

248

14. POST-TRIPS AMENDMENT OF INDIAN PATENT LAWS

EVOLUTION OF PATENT LAWS

249

--

Sec.12 only after filing a request for examination in prescribed manner; Provision for filing request for examination by any other interested person (other than applicant) was also introduced; Provision for the withdrawal of application by applicant any time before grant was introduced; Grounds of opposition under S. 25 as well as revocation under S. 64 were enlarged by adding the following grounds: (i) Non-disclosure or wrongly mentioning the source of geographical origin of biological material used for invention. (ii) Anticipation having regard to the knowledge, oral or otherwise, available within any local or indigenous community in India or elsewhere. The important chapter on the 'working of patent, compulsory licences and revocation of patents' was also amended by incorporating extensive provisions relating to compulsory licensing possibilities alongwith the terms and conditions for such licences within the framework of TRIPS. The 'licences of right' system, which was available earlier, stood abolished. An Appellate Board was also established to deal with the appeals against the decisions of the Con troller of Pa tents; Provisions for allowing Paris Convention priority has been extended to group or union of countries or inter-governmental organizations, therefore, upto 12 months priority was henceforth available also to applications filed in EPO, ARIPO, OAPI & EAPO, etc..

I

1

I

1

1

1 I

111. PATENTS (AMENDMENT) ACT, 2005 The final legislation amending the 1970 Act was enacted in March 2005. The salient features of this legislation were the following: Introduction of product patent regime in the field of Chemicals and Pharmaceuticals by deleting Sec. 5; Revision of definition of 'inventive step' - while the earlier definition had only one ingredient viz. of 'non-obviousness', the revised definition is narrower as it requires simultaneous satisfaction of two ingredients i.e. technical advance and/or increment in economic significance alongwith non-obviousness; Incorporation of definitions of 'new invention' and 'pharmaceutical substance'. The definition of 'pharmaceutical substance' contains a controversial term, 'new entity' which together with 'microorganism' form the two issues referred for a detailed examination by an expert technical committee;

1 1

Mere new form of known substances excluded out of the category of invention - this would curtail 'evergreening' of existing patents; Streamlining and further improvement in the system of patent examination. Allowing to continue production of Mail Box products by the domestic enterprises that started production of these products prior to 01.01.2005 on payment of reasonable royalty; Opposition to the grant of patent has been divided into the pre-grant opposition and post-grant opposition on almost similar grounds. The procedure to deal with this opposition is, however, different; In case of compulsory licences, a clear provision has been made for the first time allowing the licensee to export the goods; An important new section, Sec. 92A, has been incorporated to deal with compulsory licence for export of patented pharmaceutical products in certain exceptional circumstances to such countries that have inadequate or no capacity to produce pharmaceutical substances. The three phases of amendments have been a subject of much animated discussion. Though the amendments have often been assailed for being against the national interests, yet they admittedly contain a few welcome provisions.

IV. SOME SALUTARY FEATURES IN THE AMENDMENTS Not surprisingly, after the very clear ruling in the EC-Canada Case, the amended Act provides for Bolar exception. Under Sec. 107A(a),use of a patent for development and submission of information for regulatory approval will not be considered as an infringement of the patent right. Thus, in the new patent regime, as innovator companies introduce new drugs in India and enjoy exclusive patent rights, such Bolar provisions can be used to introduce generics immediately after the expiry of patents. Next, the exclusive rights of patentee to prevent import of goods by any third party under Sec. 48 has been qualified by the 'exhaustion of patent rights' clause under Sec. 107A(b)which says that importation of patented products by any person from a person who is duly authorized under the law to produce and sell or distribute the product shall not be considered as an infringement of patents rights. This, therefore, permits parallel imports. Further, the three amendments carried out to comply with TRIPS d o not contain any provision relating to test data protection. Thus, India has been able to use an important TRIPS flexibility with positive implications for generic competition and prices.

250--

EVOLUTION OF PATENT LAWS

V. FLEXIBILITIES OF TRIPS AND DOHA DECLARATION IGNORED Despite some of its pro-developmental features, critics have commented that the amendments to 'The Patents Act, 1970' should have been carefully worked out so that all flexibilities available in the TRIPS Agreement, which were also clarified in the Doha Declaration on TRIPS Agreement and Public Health, were implemented with utmost precision. Certain important flexibilities of TRIPS ignored relate to the provisions stipulated in the following Articles: (a) Article 7 - Transfer of Technology & Balancing of Rights and Obligations. (b) Article 8 - Promotion of public interest in sectors of vital importance. (c) Article 27.3(b)- Patenting of micro-organism and non-biological and micro-biological processes. (d) Article 31(b) - Compulsory licence for commercial activity on reasonable terms and conditions. (e) Article 70.3 - Mail Box products in public domain as on 01.01.2005. As regards the Doha Declaration, it contained a nl ~mberof flexibilities such as member's right to protect public health, member's right to grant compulsory licences and freedom to determine the grounds therefor and reading each of the TRIPS provisions in the light of its objectives (Article 7) and principles (Article 8). If all the above flexibilities had also been applied in the amending process, the public interest about the availability and affordability would have been protected to a considerable extent.

VI. RECENT INTERNATIONAL STUDIES IGNORED There have been several important studies in the recent past on various implications of the TRIPS Agreement. These studies should have sewed as a guide to frame amendments to Indian patent laws. Some of these studies are: Research Report by USA National Institute for Health Care Management Research and Educational Foundation (NIHCM). US Federal Trade Commission Report, 2003. Report of the UK Commission on Intellectual Property Rights. U.K. Royal Society Report on "Keeping Science Open". The gist of these studies relate to a wide range of questionable inventions patented in USA, having only incremental modifications, which are discouraging generic companies and blocking the entry of competitive products into USA. Another situation which is emerging in USA is about the flood of patent applications, rising to over 300 thousands annually, resulting into grant of poor quality or questionable patents. UK Commission on IPR made specific recommendations to contain patentable subject-matter by defining patentable inventions and other terminologies appropriately.

-

14. POST-TRIPS AMENDMENT OF INDIAN PATENT LAWS

2_51

These studies, thus, are extremely useful while dealing, particularly, with the scope of patentability and freedom to determine proper definitions of 'invention' and other terminologies, which are extremely important in relation to amendments to Indian Patents Act in order to bring the same in line with the TRIPS Agreement.

VII. WARNING BY ECONOMISTS, SCIENTISTS & MASS ORGANIZATIONS It is pertinent to note that various economists of repute who otherwise are fully supportive of the free trade theory and the WTO (Jagdish Bhagwati, Dani ~ o d r i k Michael , Finger) have, of late, recognized the inequity of the TRIPS Agreement from the point of view of developing countries and some have even questioned the logic of incorporating TRIPS into the WTO system in the first place. Even a large number of mass organizations and international organizations have pointed out to the governmental authorities in India to use the flexibilities in their laws so that the countries dependent upon supplies of pharmaceuticals are not deprived of imports from India. Dr. Yusuf K. kamied, Chairman and Managing Director of Cipla Limited and a leading scientist, in his recent Paper "Trading in Death" has made strong observations on the new Indian Patent Law keeping the critical health scenario in India in view: "The truth is that health in India is in a permanent and perpetual crisis. The disease profile is as follows: 80 million cardiac patients, 80 million afflicted with mental illness, 60 million diabetics, 50 million asthmatics, 50 million hepatitis B cases, and one in three Indians is a latent carrier of TB. The World Bank has said that India will have 35 million HIV cases by 2015, or approximately half of all the AIDS cases in the world. Given these facts, the patent regime in this country should be devised so that the utmost priority is granted to securing the people's rights of access to affordable and quality healthcare, without monopoly". In view of these concerns as regards the provisions in the amended 'The Patents Act, 1970'. some of the leading provisions of the Act, which may require an amendment, shall be now discussed.

VIII. PROVISIONS WHERE AMENDMENT IS NECESZ3ARY (a) Scope of Patentability (i) Section 2(j)

Clause (j) defines invention as follows: "(j) "Invention" means a new product or process involving an inventive Step and capable of industrial application;"

14. POST-TP_IPSAMENDMENT OF INDfiNP_ATENT LAWS

EVOLUTION OF PATENT LAWS

252

.-(iv) Section

In order to limit puten table subject-matter, it issuggested that the definition of invention could be changed as follows: ""ln~len.!ion"means a basic new pyreduct or process invol\.ing a n inventive step and c;jpable of industrial application." The UK Commission on IPR has also recommended that developing countries should aim at limiting the subject-matter of patents in view of the problem of increasing volume of patent claims filed in USA, which, at present, is going upto 300 thousands per year. Similar problem is being faced by China where increasing number of patent claims are being filed for even minor incremental changes etc. The scope of patentable inventions car^ be substantially contained through t l ~sugg~steil t definition of "inve~\tlr:r:" (ii) Section 2(ta) Clause (ta) defines pharmaceutical substanre as follows:

I

\

I

"(ta) "Pharmaceutical substance" means any new entity involving one or mc!re inventive steps." The above definition is quite broad and not specific Even Mashelkar Committee on R&D for pharmaceuticals had made recommendations in this respect. The definition, therefore, ought to be as follows: ""Pharmaceutical substance" means new drug molecule involving one or more inventive steps." This definition will help rationallzc the drug patenting to a considerable extent so that only such drugs which involve a significant therapeutic advance, regarding which there exists sufficient evidence to convince the scientific and medical community, are granted patent rights. It will, thus, help Indian Patent system to discourage early patenting of new chemical entities. It will also deal s with the phenomena of trivial patents, patcntil.:g of me-too-type of d r ~ g and patents for dosage forms and drug formulati~.?ns. (iii) Section 2(ja) C:latl.se (jaj defines "inventive step" a s follows: .,lnvrntive step" means a feature of an invention that involves a technical advance as compared to the existing knowledge or having economic significance or both and that makes the invention not obvious to a person skilled in the art;" ,I

T ~ L Ithe S , amendment may ha1.e expanded the scope tn allow patent on the basis of a subjective criterion, namel?., 'cconornic significance' alone The definition, thus, needs to be revised so as to delete the phrase 'or having economic significance or both'

,

3(d) Section 3 enumerates a number of categories which are not to he treated as inventions. Clause (d) reads as follows: "(d) The mere discovery of a new form of a known substance which does not result in the enhancement of the knownefficacy of the s~ibstanceor the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant The explanation under clause (d) reads as follows: "Explanation - For the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixti~msof isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy;" . The above explanation can give different interpretations for different purposes. The rider "unless they differ significantly with regard to efficacy" is capablr of being misused by encouraging patent holders to ~ndulgein 'evergreening'. Moreover, when new molecules only are to be patentable, salts, esters, and other derivatives of the known substance should, anyway, not be treated as patentable inventions. The purpose of clause 'dl and explanation thereto should be to contain tlie scope of patentable suhjcct-matter. The explanation should, accordingly, be either deleted or modified as tollows: "

"Explanation: - For tlie purposes of this clause. salts, esters, ethers, polymorphs, metabolites,pure form,particle size, isomers, complexes, combination and other derivatives of known substances shall not be patentable."

:

i I

(v)New clause (da) in Section 3 In view of the various judicial pronouncements on the issue of patentable subject-ma tter in the courts of other WTO conntries, there is a need for expanding the scope of statutory exclusion. Accordingly, a new clause (da) in Sec 3 may be incorporated as follows: "(da) inventions which do not strictly meet the criteria o f indu5trial application eg. oncomouse,stem cell, partial gene fragme~ts, research tools, PCR tcclin~que,machlne based enibcdt-led b~o-i!iformatics software, genomic information and data base."

.!,Vi) Section 3(j) A very controversial provisionin the aniended Act pertains to patentability 9f micro-organisms, subsequently referred tn Mashclkilr Committee.

2 5 4 - ---- - -

EVOLUTION OF PATENT LAWS

-

Clause (j) of Section 3 states: "(j) plants and animals in whole or any part thereof other than micro-organisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals." This clause is based on Article 27(3)(b)of TRIPS Agreement, where n o definition of micro-organism has been provided. In fact, the issue of patentability of micro-organisms and non-biological and micro-biological processes are under the mandated review i n the WTO itself. This review was initiated in 1999 and till now no final decision has been taken. As far as India is concerned, the government needs to be guided more by the considerations of how to exploit fully the flexibility available for the development of absorptive and adaptive technological capacity in the field of biotechnological in.ventions and not by the need to make the patent protection broader for micro-organisms and pharmaceutical substances to attract foreign direct investment (FDI) in respect of R&D for clinical trials, drug discovery, agricultural biotechnology etc. The accommodation of biotechnology and pharmaceutical substances in patent law has occurred at the cost of the application of the traditional requirements of patentability - novelty, industrial applicability, inventive step, enablement and patentable inventions. In developed countries, since the courts have been liberal, the judicial precedents established are of limited help in settling the issue of patentability of micro-organisms and pharmaceutical substances. The statutory exceptions, therefore, offer a critical way out to deal with this problem in India. In most of the developed countries, biotechnology covers three types of subject-matters and these are: 1. The biological matter itself which includes the product of biotechnology; 2. The methods and processes of making the biological matter and/or the products; and 3. The uses of the biological matter or the products of bio-technology. [Dinesh Abrol (2005)l It would be beneficial to study, in brief, the technological processes invc)lved in various areas of biotechnological research in order to get an idea of what precisely sho~rldbe the scope of patentability in this crucial area of research. Historically, a great deal of difficulty in using the recombinant DIVA techniques consisted in locating, isolating and sequencing the genes associated with the particular proteins. However, advances in technology and in laboratory techniques have now eased and automated much of this process, substan-

-

,

I

i

i

1

I

14. POST-TRIPS AMENDMENT OF INDIAN PATENT LAWS

tially routinising a variety of tasks that had previously required considerable effortand ingenuity. Indeed, automations has made possible the DNA sequencing of whole species to be undertaken in a short period; researchers using automated sequences have already been able to sequence the genomes of a number of sinall species so that the sequencing of others is only a matter of time. With sequencing reduced to a routine activity and with the results of Human Genome Project (HGP) and other public sector genome projects being placed in information repositories which are freely accessible via the internet, it is expected that the near futureyears will witness a shift in the focus of genetics towards the more inherently intractable problems of understanding gene and protein function [JohnM. Golden (2001)l. Further, the completion of an increasing number of genome maps has led to the realization that genomes are much smaller, in terms of the number of genes within an organism, than had previously been thought and that there are significant genetic similarities or "homologies" across species, genera and classes of an organism. This is reconfiguring scientific understanding in the sense that there has been a rise of phylogenetic taxonomy and system biology is increasingly leading to an emphasis on the relatedness between organisms. The nature of genetic homologies between organisms signifies that first of all, intellectual property claims in relation to the biological or genetic components of one organism may permit intellectual property claims in relation to the biological or genetic components of other organisms (eg. primate embryonic stem cells and human stem cells). F~rrthermore,given that now single genes are involved in the expression of multiple proteins, permitting patent claims in relation to DNA and genes is likely to have unforeseen consequences for science and innovation as science moves into the realm of proteomes where key developments in relation to healthcare are predicated [Paul Oldham (2003)l. There is one more aspect that is very crucial especially in the field of biotechnology. This is the fact that many of the resul ts of research are not merely discoveries of facts but creation of research tools (such as gene manipulation, gene mapping and analysis of sequences). A large number of the research results in the biotechnology field are, in effect, research tools, that are by their nature, of potential use to other researchers. To patent a vital research tool forecloses the possibility of further research in a given area, thereby, posing a serious threat to scientific progress. In this context, even the counter-argument ofbolar exception or experimental use provisions is not enough as it has been generally limited to pure and non-profit research which is generally ins~rfficient to protect, in the developing countries, the interests of future R&D. Keeping these developments in view, it wo~rldnot be wrong to conclude b t the current trends in patenting of biotechnology, where the attempt is to accommodate somehow the biological matter by bending the criteria, norms a d standards of patentability, are quite problematic and are not in the interest

EVOLUTION OF PATENT LAWS

of e1tht.r scleilce on.inno~rationThey are, in fact, clearly inimical to the public Interest, be it oi the developing countries or of the developed world [Dinesh Abrol and Usha Menon (1993)l. Recently, Carvalho, Deputy Director and head of the Industrial Property t Property Law) Department, Law Section, Economic ~ e ; e l o ~ m e n(Intellectual WIPO, Geneva suggested that gene should not be patentable subject-matter. This is because genes, as an invention of nature, rather than of man, fails to meet the criterion of alternativeness, which is the first of four substantive conditions of patentability (the most critical condition and the first test on patentability carried out to the distinguish discoveries from inventions). He further argues that creations, like genes, that cannot be alter-invented, undermine the social value of the patent system. He suggests that the attention of law-makers and policy-makers must be drawn towards the risks of granting patents for human genes, both in their natural environment and after being identified, isolated, purified and synthesized. He argues that these advances are close to discoveries thdt cannot be alter-invented [Nuno Pires De Carvalho (2004)l. On a more practical and less rhetorical level, it has been suggested that since genetically modified micro-organisms perform certain activities, only such specific activity should be allowed to be patented, albeit, as a process patent. [B.K. Keayla (2005)l. The implementation of patentability of micro-organisms must be postponed till a final decision about its precise scope has been taken in the WTO mandated review as well as by Mashelkar Committee. The date of its implementation may, accordingly, be notified at the appropriate time. (vii) Section 5 The amended Act provides that Section 5, titled as 'Inventions where only methods of processes of manufacture patentable', shall be omitted. It would have been better, in view of the irenetic debate on the issue of pharmaceuticals and, more importantly, to provide a central subject-matter provision to the statute, if Sec. 5 was retained and rephrased as under: "Srct~on5 - Patents shall be available for basic new inventions including pharmaceutical substances as defined in Section 2(ta) whether products or processes in all fields of technologies provided that they are new, involve an inventive step and are capable of industrial application excluding inventions not patentable as stipulated under Section 3."

In addition, as there is no globally acceptable uniform practice regarding the determination of inventive step or non-obviousness and the scope of utility or industrial applicability, it is possible as well as essential to work out our own tests and guidelines in respect of these two criteria. All this would enable 'The Patents Act, 1970' to have a clear perspective on the question of patentable invention, so as to clearly rule out discoveries and to filter out frivolous claims.

---

1

' I

14. POST-T_RIPFiAMENDMEhJT-GF INDIAN PATENT LAWS

257

(viii) Section l l A ( 7 ) Section 11A deals with publication of applications for patent by the Controller. The third proviso to sub-section 7 of Section 11A reads as follows: "Provided also that after the patent is granted in respect of applications made under sub-section (2) of Section 5, (Mail Box applications filed during 1995-2004)the patent holder shall only be entitled to receive reasonable royalty from such enterprises which have made significant investment and m r e producing and marketing the concerned product prior to the 1st day of January 2005 and which continue to manufacture the products covered by the patent on the date of grant of the patent and no infringement proceedings shall be instituted against such enterprises." On the other hand, Article 70 Para 3 of TRIPS stipulates as under: "There shall be no obligation to restore protection to subject-matter (i.e. Mail Box applications) which on the date of application of this Agreement for the Member in question (i.e. 01.01.2005) has fallen into the public domain." The above stipulation in the TRIPS Agreement clearly provides that any mail-box product which has fallen In tilt public domain as on 1st day of January, 2005 would not be patentable. Thus, the provisions under the 3rd proviso to Section llA(7) are clearly in excess of TRIPS provisions. In other words, these are TRIPS-plus provisions. This matter needs to be seriously considered and no patent protection should be provided for such mail-box productsso that the existing manufacturers could continue with their production. Even otherwise, there are avoidnble qualifying phrases such as 'reasonable royalty' and 'significant investment' in the 3rd proviso that can create unnecessary claims and objections.

(b)Pre-grant Opposition weakened 1

It is essential to have a proper procedure to scrutinize the product patent applications, The unamended 'The Patents Act, 1970' provided 3 detailed procedure to avoid wrongful claims. First, the patent examiners scrutinized the claims; next, the complete specifications were made open for public inspection and any interested person could oppose the grant of patent on specified grounds; and finally, a patent was granted only after entertaining such oppcjsltion. The advantage of such a procedure was that any wrongful claim coi~ldbe detected before a patent was granted. For example, pre-grant scratiny could easily detect applications filed for secondary patents so that protection could be denied. However, under the amended Act, as per Section 117A(2)which provides for appeals to the Appellate Board against decisions, orders or directions of the Controller or Central Government under certain specified sections of the Act only, orders passed under sub-section (4)of Section 25 relating to post-grant opposition would be appealable. Thus, full scale proceedings for opposition can

259

EVOLUTION OF PATENT LAWS

14. POST-TRIPS AMENDMENT OF INDIAN PATENT LAWS

start only after the patent is granted i.e. no appeal has been provided against the order of Controller disposing off representations by way of opposition filed by any person. This, obviously, will speed up the process of grant of undeserving patent applications involving minor variations. Since MNC's are the main innovatas of new drugs, they can continue to enjoy perpetual monopolistic exclusive rights even when these are wrongfully claimed (such as, cases of 'ever-greening') and granted, till the post-grant scrutiny establishes it, which may take years. With much greater access to financial resources, the MNC's can delay or influence the post-grant proceedings. Since TRIPS does not impose any restrictions on what procedure WTO Member countries can adopt, there was no need and justification to change the procedure of pre-grant scrutiny, as provided in the unamended Act. In fact, it is quite important that any decision taken relating to pre-grant opposition should be appealable both by the patent applicant and the opponent. In view of this, it would be appropriate if decisions taken under the entire Section 25 are made appealable. (c)Reversal of Burden of Proof The evidentiary principles such as burden of proof during the adversarial proceedings, under the amended Act, is faulty. As opposed to the principles of natural justice, where an accused is deemed as innocent unless proven guilty so that the burden of proof is on the accuser (plaintiff),the current provisions of TRIPS have shifted the burden of proof on to the accused. This could mean that large companies with huge patent portfolios can intimidate smaller competitors with accusations of infringement, whereafter the accused has to prove his innocence. Interestingly, in all the other areas of dispute settlement in WTO, all the available jurisprudence clearly shows that the burden of proof is on the plaintiff and not the accused. Therefore, there is no objective reason for India to accept this reversal of burden of proof in the case of patents. (d) Provisions for Compulsory Licensing inadequate Under the unamended 1970 Act, Sec. 87 provided that any process patent related to pharmaceuticals was to be endorsed with the words 'licenses of right' within three years of the sealing of the patent. In such cases, anyone could ask for a licence from the patent owner to use the patented process on mutually agreed terms. In fact, a compulsory licence was practically redundant in the previous regime as, being free to produce the patented drugs, the indigenous firms could develop their own processes. In the product patent regime introduced in India post-2005 amendments, the indigenous firms will not be able to produce a patented drug even if they develop processes of manufacturing it, unless they obtain a compulsory licence. Hence, it is of fundamental importance to have a simple and easy to administer compulsory licensing system.

The TRIPS Agreement, under Article 31(b), clearly stipulates that a Member can allow the use of the subject-matter of a patent provided that: " (b)such use may only be permitted if, prior to such use, the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time." Based on the above stipulation in the TRIPS Agreement, a large number of countries (developed and developing) have made specific compulsory licence provisions in their patent laws. As examples, the provisions in the patent laws of Brazil and China are reproduced as under: Brazil The Patent Act of Brazil provides for compulsory licence for exploitation of the patent as follows: Article 73: An application for a compulsory licence shall be drawn up by setting out the conditions offered to the patent owner. On filing of the licence application, the patent owner shall be invited to submit his comments within a period of 60 days, on expiry of which, in the absence of a reply from the patent owner, the proposal shall be deemed as accepted under the conditions offered. China The Patents Act, 1992of China provides for compulsory licence for exploitation of the patent as follows: Article 51: Where any entity which is qualified to exploit the invention or utility model has made requests for authorization from the patentee of an invention or utility model to exploit its or his patent on reasonable terms and such efforts have not been successful within a reasonable period of time, the patent office may, upon theapplication of that entity, grant a compulsory licence to exploit the patent for invention or utility model. Thus, the stipulation in Article 31(b) of TRIPS is a very important provision towards enabling a substantive role by the domestic enterprises. In fact, this provision, which is similar to the 'licences of rights' provisions under the original Patents Act, 1970, is the heart and soul of TRIPS for developing countries. Apart from meeting the domestic requirements, such licences are necessary also fdr meeting the export demands in the longer run. It would be pertinent to mention here that it takes almost three to four years to develop a technology and stabilize the product. As such, an enterprise already in production of the relevant patented products has to be there in the country to respond to export demands. However, it appears that adequate attention has not been devoted to design the law to take advantage of the flexibilities which TRIPS provides. In the absence of a positive strategy, the entire amendment has been carried out very

258

260

EVOLUTION OF PATENT LAWS

mechanically. It starts with the relevant text of the original Patents Act, 1970 and then introduces some amendments to make it TRIPS compliant. This has been done by deleting some clauses of the original 1970 Act (for example, 'licences of right' provisions) and lifting some clauses from TRIPS and inserting these in the amended Act. In the process, many negative aspects have remained in the amended Act, which could have been tackled without violating TRIPS. Moreover, the clarification under Article 1 of TRIPS that member countries are 'not obliged to implement in their laws more extensive protection than is required by this Agreement' has not been followed, as the government has adopted a stricter compulsory licensing regime than what is required under TRIPS. The provisions on compulsory licensing, in the amendment act, is contained in Chapter XVI (Sections82 to 94). The general principles, which are more elaborate than in original 1970 Act, note that patents are granted to encourage inventions and to make the benefit of patented inventions available at 'reasonably affordable prices to the public'; to secure that these are worked in India, and not to enable patentees to enjoy monopoly power by importing; that the patent right is not abused by the patentee and the patentee does not 'resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology' (Section 83). The entire Article 7 of the TRIPS Agreement on 'Objectives' and Article 8 on 'Principles' are listed here. Paragraph 4 of the Doha Declaration relating to the right of governments to take measures to protect public health, is also incorporated here. The amended Act also specifies the 'general purposes' to be followed while granting compulsory licences, for example, that 'the patented inventions are worked on a commercial scale in the territory of India without undue delay and to the fullest extent that is reasonably practicable' (Section 89). In the amendment Act, an application for a compulsory licence (C.L.)can be made under three sets of circumstances: 1. Section 84 - On certain specified grounds within three years from the date of the grant of a patent. 2. Section 92 - In cases of national emergency, extreme urgency or public non-commercial use, if Central Government notifies in respect of a patent, then anytime after the sealing of the patent. 3. Section 93A - Whenever any other country, having insufficient manufacturing capacity in the pharmaceutical sector for the concerned patented product, either grants a compulsory licence or notifies or allows importation from India. However, here the licensee is allowed to produce a given quantity for export purposes alone. These three situations will be taken up separately for a detailed discussion. (i) C.L. under Section 84 An application for a C.L. can be made under Section 84 on the following grounds:

14. POST-TRIPS AMENDMENT OF INDKN PATENT LAWS

261

(a) that the 'reasonable requirements of the public' have not been satisfied, or (b) that the product is not available at a 'reasonably affordable price', or (c) that the patented invention is 'not worked in the territory of India'. The wording of these grounds have come up for criticism as these are not amenable to an umambiguous interpretation and, thus, are not operationally 4

1

I

1

!

8

useful. Further, though the 'failure to obtain licence on reasonable terms' is taken into account by the Controller while considering the application, this itself is not a ground for granting compulsory licences as done in several countries. This ground would have helped the generic industry and the public immensely. As regards the terms and conditions of C.L., though Sec. 90(l)(vii)and Sec. 90(l)(ix)now permit export of patented products, post 01.01.2005 amendment, these are needlessly hedged by a qualifying phrase 'if need be'. This is likely to create avoidable doubts and disputes. Yet another condition under Sec. 90(l)(vi)provides for a 'shorter term' for the C.L.. No one would be interested to take a C.L. for a shorter period. Moreover, it would also be problematic to determine the circumstances when a shorter term need to be provided. In view of this, 'shorter term' may be deleted from Section 90(l)(vi). As regards the procedure specified for the grant of C.L., it is cumbrous and open-ended without any time-limit having been imposed for the grant of C.L.. Under this procedure, the copy of the C.L. application is required to be advertised in the official gazette, though this is not required under TRIPS. The patentee or any other person may oppose the application and will have to be given adequate time for doing so. The Controller will decide only after giving both the parties an opportunity to be heard. A C.L. granted by the Controller can be opposed by filing an appeal. This would be considered by an Appellate Board before a C.L. is ultimately permitted. While the aspect of working a patent in India can be objectively assessed, the grounds of 'reasonable requirements of the public' or 'reasonably affordable price' are subjective criteria which can be easily challenged by the patentees. As a result of arguments and counterarguments before the Controller and in cases of appeals, also before Appellate Board, it may take years before a C.L. is granted, if at all. The entire process is, thus, excessively legalistic and provides the patentees with an opportunity to buy crucial time through litigation. The huge legal expenses involved in fighting the MNC's holding the patents may, in fact, dissuade the generic companies from applying for licences in the first place. The above forebodings are borne by the experiences under the Patents and Designs Act of 1911, which was in force till 'The Patents Act, 1970' replaced it. The 1911 Act also had elaborate provisions for compulsory licensing. But,

14. POST-TRIPS AMENDMENT OF INDIAN PATENT LAWS

262

263

EVOLUTION OF PATENT LAWS

during the British Rule, not a single C.L. was granted. The Patents Enquiry Committee (1950) found that the foreign patentees did abuse their rights, yet the provisions regarding compulsory licensing were 'wholly inadequate to prevent misuse or abuse of patents rights, particularly by foreigners'. Though some amendments were carried out in 1950and 1952,yet, the general procedure specified under Section 23D (for all the products except pharma, food etc.) of the 1911 Act was very elaborate and cumbersome. Thus, the patentees could oppose grant of compulsory licences and, if granted, appeal against such decisions could indefinitely delay or prevent the actual use of C.L. As a result, till 1972, when the 1970 Act came into force, only five applications for C.L. had been made. While it was refused in one case and withdrawn in two other cases, it was finally granted in only two cases. Since, it is the same procedure, which the 1970 Act inherited for products other than pharmaceuticals, which the amended Act has retained and expanded to make it applicable for all the products including pharmaceuticals, hence the experience under the 1911 Act would be a rough guide as to what is likely to happen in India. In this regard, it is important to point out that world over the important international organizations, mass organizations in South East Asia and American and European continents are perturbed over the C.L. amendments made in 'The Patents Act, 1970'. Even important newspapers in their editorials and articles by world known economists have commented upon the seriousness of the situation which might emerge from the amended Indian Patents Act, affecting the availability and affordability of medicines in the poor countries that are dependent upon exports from India. These concerns have been particularly shrill since certain TRIPS flexibilities concerning public interest and specifically the role of the domestic enterprises have been ignored. Such concerns have been raised by the WHO(Geneva), UNAIDS(Geneva), Special Envoys of the UN Secretary General for HIV/AIDS in Asia and the Pacific and in Africa and International Council of Medicins Sans Frontiers, Geneva. In view of the multiple lacunae in the amendment Act as well as serious concerns expressed globally, it is extremely important that a simple and easy to follow provision is made through a new Sec. 84A as follows: " S e c t b i 84A

1.When the proposed user has made efforts to obtain authorization from the patentee to use the patent on reasonable commercial terms and conditions and that such efforts have not been successful within a period not exceeding 100 days, the Controller shall at any time after the date of grant of patent, grant compulsory licence to the applicant on such terms and conditions as he may deem fit.

2. The commercial terms and conditions offered by the applicant shall be considered reasonable by the Controller if royalty and other

remuneration offered by him are within five per cent of the annual sale turnover at net ex-factorysale price (exclusiveof excise duty and sales tax)." [B.K. Keayla (2005)l

\

I

I

1

I

i I

'

Besides the above provision, another aspect needs a consideration to prevent the attempts to frustrate the actual use of C.L.. Two of the important TRIPS conditions which are often considered to stand in the way of fast use of C.L. are Article 31(i) & Article 31(j). These Articles provide that the decisions relating to authorization of patent-use or remuneration provided in respect of such use shall be subject to a review by a judicial or higher administrative authority. The requirement of such review, however, does not mean that the actual use should be held up till all the disputes were settled. This is also because TRIPS does not require governments to grant injunctive relief to patent holders [Article 44(2) - Love (2001)l. (ii) C.L. under Section 92 An application can also be made, anytime after the sealing of the patent, for a patent notified under Section 92 by the Central Government in the official gazette. Such a notification can be made when the Central Government is satisfied that in circumstances of national emergency, extreme urgency or for public non-commercial use, it is necessary to grant a compulsory licence for such a patent. The procedure mentioned earlier for the grant of C.L. under Section 84 is to be followed for these applications too, except that the applicant is not required to first approach the patentee to get a voluntary licence. Further, the procedure can be waived in certain circumstances of national emergency or extreme urgency or public non-commercial use 'including public health crises relating to Acquired Immunodeficiency Syndrome, Human Immunodeficiency Virus, Tuberculosis, Malaria or other epidemics' (Section 92(3)). Under this special provision, though the usual procedure is not applicable, but, here too, any decision by the Controller can be challenged and referred to the Appellate Board. As mentioned earlier, the patent holders will obviously oppose any such compulsory licences. As it may take a long time for such disputes to be settled and, further, if the patent holders can get an injunction against such use till the dispute is finally resolved, this special provision will effectively be of a limited use. To make this special provision more effective, certain useful suggestions have been made [Chaudhuri (2002)l: 1. Both Sec. 92(3) of the amended Act as well as para 5(c) of the Doha Declaration have limited the 'public health crises' to diseases such as AIDS, HIV, TB, Malaria or other epidemics whereas there is a need to interpret this phrase in much broader terms. Fortunately, Para 5(c) of the Doha Declaration has clarified that individual countries have

264

EVOLUTION OF PATENT LAWS

14. P O S T - T R G AMENDMENT OF INDIAEATENT LAWS

'the right to determine what constitutes a national emergency or other circumstances of extreme urgency'. It is well known that the majority of the Indians living in rural areas and in urban slums have no or little access to modern drugs. In view of this, the Central Government may notify a list of such essential patented drugs, eligible for compulsory licences, to take care of the health needs of the people. The list may be prepared, in consultation with health experts, bearing in mind the specific situation in the country, such as the disease patterns, the drugs required and its present availability. This list may also be revised from time to time. 2. The inclusion of any drug in the list cannot be a ground for opposition and appeal. There is nothing in TRIPS or even the amended Act to suggest that it should be so. 3. Guidelines may be issued for the royalty to be paid to the patent holders in case of compulsory licences. Both UNDP (2001) and the patent experts who appeared before the People's Commission on Patent Laws for India (2003) have recommended that royalty rates may vary depending upon the therapeutic value of the product and whether public funds have been used in R&D for developing the drugs. The patent experts suggested that five per cent royalty may be paid for drugs with significant therapeutic benefit or less if the benefits are not significant. Where the drug is particularly innovative with higher than average R&D investment, an additional royalty of up to 3 per cent maybe awarded [People's Commission for Patent Laws for India (2003)l. 4. For any d r u g in the public health list, the Controller may, immediately after receiving an application, grant the C.L. fixing a royalty rate using the royalty guidelines. Any opposition or appeal against the grant of a C.L., in this case, can only relate to the royalty rate fixed. However, this opposition should not hold up the use of C.L. Thus, pendir g adjudication, the licensee could begin to use the patent on the basis of an undertaking that the royalty rate finally decided will be honoured. (iii) C.L. under Section 92A It is well known that under TRIPS, a country with manufacturing capacities can resort to compulsory licensing to manufacture drugs to tackle problems such as public health needs. But, the compulsory licensing provisions of TRIPS cannot be used by a country with no manufacturing capacity to import drugs to take care of her health needs. Paragraph 6 of the Doha Declaration recognized this major lacuna of TRIPS and instructed the TRIPS Council to find an expeditious solution to this problem. It said,

"6.We recognize that WTO members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of the compulsory licensing under the TRIPS Agreement. We instruct the Council for TRIPS to find an expeditious solution to this problem and to report to the General Council before the end of 2002." After several rounds of formal and informal discussions, a compromise solution was reached on 30th August 2003. This was "Agreement on Implementation of Para 6 of the Doha Declaration on the TRIPS Agreement & Public Health". The solution takes the form of a temporary waiver (pending the amendment) of the obligation under Article 31(f) of TRIPS that C.L. can be granted predominantly for the supply of the domestic market. The decision permits countries producing patented drugs under compulsory licence to export these to countries with no or insufficient manufacturing capacities. But, several conditions have been attached to the Decision which raises serious doubts about the extent to which it can be used at all. Rather than facilitating exports of drugs to countries which urgently require them, several obstacles have been placed which will act as disincentives for such exports. Some of the onerous conditions and cumbrous procedures inherent in the 30th August, 2003 decision were adverted to in Chapter 6 earlier. As these procedures and conditions have to be followed each time a country exports or imports, it will act as a serious disincentive for the parties involved in the transaction, particularly the generic suppliers. The Patents Act, 1970, by an amendment dated 01.01.2005, has introduced a new provision, Section 92A, to permit grant of compulsory licence in order to enable an export of patented pharmaceutical product to any country having insufficient or no manufacturing capacity i~ the pharmaceutical sector for the concerned product to address public health problems. It is noted that Section 92A is definitely an advance over 30th August, 2003 decision in the following ways: It is more practicable and less cumbrous than 30th August 2003 decision. There is no requirement of an 'eligible importing member' in its strictest sense i.e. the importing member's request for an import is not limited to situations of national emergency or extreme urgency or public non-commercial use alone. Under Sec. 92A(3), a licensee's right to export under other provisions viz. Sec. 90(l)(vii)and Section 90(l)(ix)is protected. Despite the aforementioned salutary features, this provision suffers from certain defects. These are: No guidelines have been prescribed for terms and conditions and reasonable royalty to be fixed by the Controller. It would have been

265

266

EVOLUTION OF PATENT LAWS

better if various restrictive conditions prescribed under 30th August, 2003 decision were specifically waived and, further, a reasonable royalty not exceeding 2% of the net ex-factory price (exclusive of taxes) was prescribed. It also leaves the matter open for royalty claimed in both the countries. Under the Patent Rules, 2003, an elaborate procedure for grant of compulsory licences is prescribed. As per Rule 96, such procedure is applicable also to Section 92A licences, without realizing that being an exceptional case, it ought to have been exempted from the purview of a routine procedure. Thus, Rule 97 provides for a prima-facie rejection by the Controller. Further, an opposition by the patentee or any interested person is permitted under Section 87(2) read with Rule 98. This is followed by hearing on such notices of opposition wherein no time-frame is prescribed. All this is likely to delay the grant of C.L. by a significant and valuable period of time. Further, no appeal is provided for the applicant or the patentee under Sec. 117A. As such, the decision of the Controller would be final. None of these provisions are mandated by Sec. 92A of Patents Act, 1970or Article 31 of TRIPS. In fact, what is necessary for the success of this scheme is to permit an appeal, under Sec. 117A, against such orders passed under Sec. 92A which are against the applicant. Further, there should also be a waiver from the usual procedure of C.L. under Sec. 87 etc.

.

TRADITIONAL KNOWLEDGE CONSTRUCTION OF A RIGHTS MODEL I. MEANING OF TRADITIONAL KNOWLEDGE Speaking generally, traditional knowledge is the knowledge that does not fit in the western paradigm of science. It includes the knowledge of 'indigenous people' or 'tribal people' but it is not limited to them. In fact, it is an amorphous concept which covers all the knowledge systems which are not based on the western system of scientific and technological development. The expression "traditional knowledge" (TK) is a shorter form of "tradi, tional knowledge, innovations and practices". WIPO, in its April, 2001 report on fact finding missions on intellectual property and traditional knowledge, titled: "Intellectual Property Needs and Expectations of Traditional Knowledge Holders", defined TK as a broader concept of heritage which comprises: ''traditional-based literary, artistic or scientific works; performances; inventions; scientific discoveries; designs; marks, norms and symbols; undisclosed information; and, all other traditional based innovation and creation resulting from intellectual activity in the industrial, scientific, literary or artistic fields."

Characteristically, TK is thus knowledge that: has generally been transmitted from generation to generation; has generally been developed in a non-systematic way; is constantly evolving in response to a changing environment; is traditional in the sense that its creation and use is part of the cultural traditions of a community; does not necessarily mean that the knowledge is ancient or static; is generally regarded as pertaining to a particular people or its territory;

268

EVOLUTION OF PATENT LAWS

--

is representative of the cultural values of a people and, thus, is generally held collectively; is not limited to any specific field of technology or the arts. Professor Graham Dutfield has suggested defining TK by the way it is generated and held, and offers, inter alia,following supplementary definitional characteristics of TK: it derives its explanation of environmental phenomena from cumulative, collective and often spiritual experiences; it is learned through observation and hands-on experience; it is based on the understanding that the elements of matter have a life force. TK has various strands. On the one hand, it covers all the knowledge of farmers concerning wild and domesticated biodiversity, for instance, including plant varieties locally developed also known as landraces. It can either be associated toa specificbiologicalsource; can be integrated in the resource itself as in the case of landraces or can concern techniques or processes to use resources as well as technical or technological developments. However, TK is not limited to 'collective knowledge' as above but also includes 'individual knowledge' of individual farmers, individual healers, etc.. Besides, TK also covers 'common knowledge' such as intangible cultural heritage. This includes practices, representations, expressions, knowledge and skills that communities or individuals recognize as part of their cultural heritage. This extends to oral traditions and expressions, performing ark and social practices, etc.. Therefore, in order to conceive a model for protection of TK, it may be useful to analytically dissect it into its components and understand their dynamic interplay. In a paper titled "Contested Domains, Fragmented Spaces: rights, responsibilities and rewards for conserving biodiversity and associated knowledge system", Anil K. Gupta and Riya Sinha have analyzed the dynamics between private knowledge, community knowledge and public domain knowledge by way of a schematic representation. (Fig. 1)

-

---- 15. TRADITIONAL KNOWLEDGE CONSTRUCTION OF A RIGHTS MODEL

269

220

-

EVOLUTION OF PATENT LAWS

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTSLOPEL

271

The three subsets in Fig. 1refer to three overlapping domains of knowledge

- produced by individuals or by groups alone or in combination. Some of this knowledge may diffuse only locally to be characterized as community knowledge while others may diffuse widely among various communities in a region and some time across regions and countries to become public domain knowledge. Within the community knowledge, there may be elements which are restricted in scope or in terms of accessibility while others may be in public domain. Similarly, individuals may also produce knowledge, which they may share widely with the community and outsiders in a manner that the knowledge might become public domain. However, some of the knowledge produced by the individuals may be kept confidential and, accordingly, maybe accessed only with restrictions. The contestation emerges when the producers and users of knowledge have unequal access, ability and assurances about the resources and the benefits emerging out of commercial or non-commercial usage of the resources with or without value addition. Gupta(1999) has, in particular, highlighted the following contested domains of knowledge:

I

1

ior with modification . -

I

K1-m

I

1 one

I

4

rights to use the modified and unmodified according to same rules -

I

lor different rules

iC

/ I

I

11

i

1 t -

~

(d)

i ~ n o w l e d known ~e to the community

(e)

Knowledge practiced bv individuals if known to individuals 1

(f)

-

~ n o w l e d g e~ ra c t i c eby d individuals if known to community

i

K1-I

1

K2-I

'.

community if known tocommunity community even if details known

1

--

Known to community but not practiced by individuals or ( s m u n i t y . -

(j)

Y I ~ n o w l--e d known ~e to community and accessible to outsiders -

1-

Knowledge known to community and not accessible t o outsiders = -

K2-na

A

I

1 ,

[Adapted from Gtlpta, 19991 The private individuals may have knowledge which they may have inherited from their forefathers (Kl),and they may have acquired the skill to practice it faithfully without modification or with modification (Kl-wm or m). The individual contribution in modifying traditional knowledge may be treated according to the same rules as the non-modified knowledge is used, or its use and dissemination may be governed by different rules (Kl-sr, K1-dr). Knowledge may be known only to individuals (Kl)or to the community (K2)and may be practiced by individuals (Kl-I, K2-I) or by the community (Kl-c or K2-c), or by none (Kl-n or K2-n). In the last case, the knowledge, because of discontinued use, may still be effective or may not be effective. When individual knowledge is shared with community, its practice may still be restricted to individual experts. There are healers who know how to calibrate the dose and combination of herbal drugs according to the condition of the patient. The general relationship between the plants and their uses in some cases may be known to the community. Further, community knowledge may or may not be accessible to outsiders (K2-a and K2-na). Different communities may have varying capability to produce, reproduce and practice the knowledge for individuals or common good. Wider the sharing, greater is the probability of feedback coming from larger number of people and thus improving the knowledge. At the same time, the incentives for individuals to improve such knowledge may go down because such individuals in view of widespread awareness cannot extract the rent. Some communities govern the access to biodiversity resource by different rules than the access to knowledge about such resources. The knowledge within a community is, therefore, not distributed symmetrically. The third set of knowledge system includes public domain knowledge (K3), which may be practiced by individuals, or wider public or not practiced by anyone (K3-I, K3-P, K3-n). Ethno biologists, other researchers and firms may document individual and community knowledge and bring this into public domain. Such a wider variety of TK domain poses a challenge before policy makers in drawing an appropriate regime for its protection.

272

EVOLUTION OF PATENT LAWS

-------

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL ------

--

exclusive stress was laid on the developnlent and promotion of hazardous and Ilon-stlstainable chemical pesticides suck as DDT and Sevin. In fact, the two knowledge systems viz Western-Scientific and traditional are different, having distinct epistemoiogical foundations. This aspect was highlighted by a schemdtic representation by G.A. Kinhal of FRLHT, Bangalore at a TRIPS-CBD Seminar in 2005 as under. Distinct Epistemological Foundations Figure 4 : TWO DIFFERENT KNOWLEDGE-SYSTEMS both of which have universal applications

11. WHETHER TK IS INFERIOR TO WESTERN SCIENCE ? The assumed superiorityof Western scientificsystem over'TK has inhibited the formulation of a proper policy. This happened under the colonial influence wherein biological and cultural heritage of developing countries were devalued. Guided by a western bias, the hitherto plurality of knowledge systems was transformed into a hierarchy of knowledge systems. As an illustration, the transformation in case of systems of medicine in India happened as under: Froin Figure 2 A. Pluralism of knowledge systems - Diverse but equally valid methodologies

7 I I

I

L ~ ~ u r v e d a i ~ i d d h a u nFolk i / --

-

-----=T----7

- = -

1 Homeopathy 1 --

Allopathy

SHASTRA

1

4

(Atmaa)

Recognizes physical . and biological worlds

Recognizes

Differing world view

physical, b ~ o l o g i c a l and spint~:alaorlds

1

Scientific

Ayurveda Homeopathy

\

Foundations based on three existential entities viz. Matter.Tirne& Space

-

1 I

GI

'

Differing foundation

k

-

/

-b SCIENCE

correlation attempted

~oundationbased 011 fieexistential entitle5 1 ,,,matter . (Panch ~&a-Bhutas),Mind jmanas),Ti1 'e (kal), Spece(dik), the Soul

Figure 3 B. Hierarchy of Knowledge systems only reductionist methods of western science treated as valid.

Allopathy

-

- Nu rigorous f o u n d a t i v n a l

/

To

/

273

I

I

Logical positivism and later schools

Differing philosophical framework P

Nyaya Vaishika

-4

zzitific

Differing Logical System Differing Categories

Dravya Guna

*

Aristotelian logic & it$ evolution Phyto-Chemibtry 61 Phar~nacology

-. Loss of Homeostatis

With knowledge plurality (Fig.2)mutating into knowledge hierarchy (Fig.3), a horizontal ordering of diverse but equally valid and diverse systems was converted into a vertical ordering of unequal systems, with the epistemological foundations of the system being imposed on others to invalidate them. Western systems of knowledge in agriculture and medicine were defined as the only scientific system. Indigenous systems of knowledge were defined as inferior, and in fact as unscientific. Thus, instead of strengthening research on safe and sustainable plant-based pesticides such as Neem and Pongamia,

4

lnfect~onvia bacteria. panslrlo virus

I

Prof. Graham Dutfield has suggested certain additional points which distinguish TK from western science: It is based on diachronic data, whereas western science is based on synchronic data; It is rooted in a social context that sees the world in terms of social and spiritual relations between all life forms. In contrast, western science is hierarchically organized and vertically compartmentalized; It is holistic whereas western science is reductionist;

EL

EVOLUTION OF PATENT LAWS

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

It is intuitive in its mode of thinking whereas western science is analytical; It is mainly qualitative whereas western science is mainly quantitative; In view of the above analysis, it can be seen that it is wholly unfair to treat TK as an inferior category of knowledge system. A pluralistic view of knowledge system would generate respect for the different systems in their own logic and in their own epistemological foundation. It would also mean that western system does not have to serve as the measure of scientific adequacy for all systems and diverse systems d o not need to be reduced to the language and logic of western knowledge systems.

"with the emergence of modern biotechnologies, genetic resources have assumed increasing economic, scientific and commercial value to a wide range of stakeholders... traditionalknowledge, whether or not associated with those resources, has also attracted widespread attention from an enlarged audience; other traditionbased creations, such as expressions of folklore, have at the same time taken on new and cultural significance with a globalized information society." Thirdly, as a recognition of the ecological failure of the chemical route to pest control, the use of plant based pesticides is becoming popular in the industrialized world. MNC's that earlier promoted the useof chemicals are now looking for biological options. An instance is the aborted attempt to claim IPR on neem-based biopesticides. The experience with agrichemicals is replicated in the field of drugs and medicines. Despite the fact that indigenous systems of medicine and the biodiversity of medicinal plants were totally neglected in India's scientific research and health policy which focused exclusively on the western allopathic system, there has been, as a matter of fact, a flourishing indigenous medical system (see Table 1) based on over 7,000 species of medicinal plants and on 15,000 medicines of herbal formulations in different systems. The Ayurvedic texts refer to 1,400 plants, Unani texts to 342, Siddha system to 328. Homeopathy uses 570, of which approximately 100 are Indian plants. The economic significance of medicinal plants to 100 million rural households in India is immeasurable. Table 1 Carriers of Traditional Medical knowledge

I

111. THE RISING IMPORTANCE OF TK Up to 80% of the world's population depends on products and services derived from traditional knowledge, innovations and practices to meet their everyday food and health needs. TK is indispensable for survival of the poorest segments of societies, particularly women, indigenous people and rural inhabitants, especially in the developing and least developed countries. Such TKbased products as handicrafts, medicinal plants, traditional agricultural products and non-wood forest products are traded in both domestic and international markets and already provide substantial benefits for exporter countries. TK is extensively used as an inpot in such modern industries as pharmaceuticals, cosmetics, agriculture, food additives, industrial enzymes, biopesticides and personal care. India is one of the major centres for world biodiversity and has been recognized as one of the twelve megadiversity countries of the world with 47,000 known species of plants, 500 varieties of mammals, 2,000 species of birds, 3,000 types of insects and a wide variety of fish, amphibians & reptiles and innumerable microbial species. Many of the cultivated plants have originated from India. Together with such vast- resources, India also has an affluent traditional and indigenous knowledge, coded as well as uncoded. In recent years, particularly after Doha Ministerial Declaration, the protecconcerning tion of TK has progressively taken centre stage in global disc~~ssions intellectual property and trade. There are several reasons for this. First, a large number of countries feel that hitherto, they have not derived great benefits from "traditional" forms of intellectual property, yet find themselves rich with TK, especially genetic resources and folkore. They would now like to exploit these resources and several companies share this interest. The second reason is the growing political importance of aboriginal commrlnities in several countries. The statement issued by the WIPO Inter-Regional Meeting on Intellectual Property and Traditional Knowledge organized in Chiangray, Thailand in November, 2000 makes the point quite clearly:

'

1 1

t 1

1

275

-

/ ,

,

1P.E. Rajasekl~aran,Export of Medicinal Plant Products, IIHR, Bangalore.1 Meanwhile, there has been an increasing level a public awareness of side-effects of hazardous drugs and the rise of strains resistant to antibiotics. This has been accompanied by a declining rate at which patentable new drugs are being discovered and the huge time lags and financial uncertainties in the modern drugs discovery process. As a result, the western pharmaceuticals industry is increasingly turning to the plant-based system of Indian and Chinese medicines. Patenting of drugs derived from indigenous systems of medicine has started to take epidemic proportions.

276

----

.- --

-

EVOLUTION OF PATENT LAWS ---

-

----

--

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

The failure and non-sustainability of the chemical route to agriculture and e and health care provides an opportunity to reevaluate k ~ ~ o w l e d gsystems move from the false hierarchy of these systems to a plurality.

N.URGENCY IN PROTECTION OF TK In recent years, globally the demand in the natural plant based drugs has risen substantially. However, with rampant deforestation, over-harvesting etc., many of the plants in the current trade are threatened, endangered and some are already extinct. At present, it is feared that 15-20% of the total flora of India (over 3,000 species) may fall under one of the IUCN categories of threatened, rare or endangered (Holley and Cherla, 1998). At least 120 medicinal species have been officially classified as endangered (Jain, 1987).The biodiversity crisis is being accompanied by a cultural diversity crisis, which could lead to the disappearance of up to 90% of the world's languages and of the traditional knowledge and cultures expressed by them in the next 100 years. Thus, protection of TK is closely related to the protection of biodiversity. Moreover, there are concerns that the genetic resources and TK of developing countries are often used commercially and/or patented in developed countries with little or no benefit to the owners of the genetic resources or the traditional knowledge, and without their prior informed consent. With the TRIPS Agreement being implemented in ever more WTO members, there are concerns that this situation will only be exacerbated, to the detriment of developing countries and the holders of TK. The initiatives for specifically dealing with TK issues arose from different concerns and perspectives which can be classified as under: (a) Development Considerations The recognition of the importance of TK as source oi food and healthcare for a large part of the population in developing countries, particularly LDC's, would enable them to harness TK for their benefit and to promote development and trade. (b) Conservation Concerns The protection of TK is important for the conservation and sustainable development of the environment, as much of the world's crop diversity has been conserved and preserved by indigenous/local people, which has helped in the protection and conservation of biodiversity. Their knowledge is central to the conservation and preservation of GR's and other bio-resources. Most of these communities live in areas where the vast majority of the world's plant genetic resources (PGR's) are found. There is also the danger that the biological resources increasingly subjected to IPR's and patents are likely to be plucked to extinction, which raises concerns over their exhaustibility and loss of habitat besides the loss of lifestyles and livelihood to indigenous communities that have nurtured and used these resources for generations. This may also ultimately

'1

1 ,

{

t

I

277

affectfood security. International recognition and protection of TK would help in the protection/conservation of the environment and in the management of biodiversity. A related matter of concern is erosion of traditional knowledge which is taking place at a very rapid rate. Just as one cannot locate a book in a library if the catalogue is lost or misplaced, likewise if the knowledge about the plants, their place in nat~lreand uses is lost, one cannot accord them the value they may deserve. These are several other forces accentuating the knowledge erosion such as loosening links between grandparent and grandchildren generation and a consequent loss of respect for this rich source of knowledge. All this has lent an urgency to establish a regime dedicated to conservation and promotion of TK. (c) Preservation of traditional practices and culture Protection of TK would be used to raise the profile of the knowledge and the people entrusted with it both within and outside communities. (d) Prevention of Biopiracy The phenomena of 'biopiracy' and 'intellectual piracy' which western commercial interests claim on products and innovations, derived from and currently used by indigenous knowledge traditions, as their 'intellectual property' protected through 'intellectual property rights' like patents has emerged as a result of the devaluation and hence the invisibility of indigenous systems of knowledge and the lack of protection for these systems. This devaluation is linked to the imposition of the reductionist methods of western science to the non-reductionist approaches of indigenous knowledge systems. Further, since western style IPRsystems are biased towards western knowledge systems which reduce biodiversity to its chemical or genetic structures, the indigenous systems get no protection, but piracy of these systems is protected. In the absence of a protection system for biodiversity and indigenous knowledge systems, and with the universalization of western style IPR regimes, such intellectual and biological piracy will grow. Protecting our biological and intellectual heritage in the age of biopiracy requires the recognition and rejuvenation of our heritage, and the evolution of legal systems for the protection of this heritage in the context of emerging 1PR regimes. (e)Equity Considerations There is a clear asymmetry between the benefits obtained by companies that commercially exploit products derived from TK and a corresponding lack of benefits for TK holders. It is, therefore, necessary that the custodian of TK should receive fair compensation if the exploitation of TK leads to commercial gain.

278

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

EVOLUTION OF PATENT LAWS

V. INADEQUACY OF TRIPS REGIME FOR TK PROTECTION The first option explored to find a regime to protect TK and associated material resources is, often, the current western patent system, guided by TRIPS. In this regard, it would be pertinent to trace the genesis of the system, which, being primarily designed for a different knowledge system, 'had a distinct epistemological foundation. In an article, 'A Patent Attorney's View' (1965), John Hoxic stated: The patent system as we have it today w'as really very little changed by the Patent Act of 1952; it goes back to a period when invention was largely mechanical, followed by an electrical era. In both, invention was chiefly of physical objects. The language and much of the judicial treatment of the statutes is geared to that sort of invention..When chemical invention became more frequent...... a problem arose of fittingchemical invention into a mold of words and a habit of thinking that were not developed with i t in mind". The shift from the chemical era to the age of biology creates new problems of patentability. Firstly, patents on biodiversity or prodrlcts of biodiversity, or uses of biodiversity falsely claim properties of plant derived drugs as 'products of the mind' when they are actually products of plant biodiversity. Unlike mechanical and electrical artifacts, plant based medicines are not merely a result of inventive human genius. They are based on existing properties and characteristics of diverse plants. The boundary between the 'product of naturef and the 'product of the mind' is, therefore, fuzzy and blurred in the case of medicines from plants. Even otherwise, the knowledge of utilization of biodiversity for particular health problems which is available in traditional systems is not patentable by indigenous practitioners since the criteria of patentability are (a) novelty (b) non-obviousness & (c) industrial application. Within the indigenous tradition under taken by traditional practitioners, the knowledge is an ancient heritage, continues overtime and hence is not 'novel' even though it is based on innovation. Being traditional is by definition not new. It, therefore, cannot satisfy criterion (a). Further, since indigenous medical systems are non-industrial but part of folk traditions or small-scale production, processing and use, they also d o not meet criterion(c). However, when knowledge from these ancient systems is transferred to the west, translated into western systems for commercialization on a large scale, it gets treated as 'novel', 'non-obvious' and having 'industrial applicationf. There is thus a derecognition of the innovation embodied in indigenous systems and the possibility of claiming its appropriation as the innovative step. The knowledge that the Neem can be used for biopesticide or that Phyllanthus Niruri can be used for jaundice cure is clearly part of the indigenous knowledge and indigenous practice in India.

I

I I

i

i I

279

The principle that Plant P is useful for U is, therefore, existing knowledge, and cannot be treated as novel. Further, given this principle, small variations in processing P form an obvious step. How, then, does such knowledge get patented and qualify as 'novel' and 'non-obvious'? The false claim to novelty is based on the existence of diverse and pluralistic knowledge systems. It is based on the fact that while such knowledge might exist in knowledge system Ki, it does not exist in the western knowledge system Kw. The lateral transfer of knowledge with no epistemic value added, i.e. mere translation of the knowledge that plant P is useful for purpose of U, from system Ki to system Kw, is taken as an innovation. Translation of Ki-Kw in a hierarchical perspective suggests a 'higher' level of knowledge content. Translation is misconstrued as the 'creation' of knowledge. A sociological shift is thus fallaciously treated as an epistemological shift. This fallacy of sociological and cultural displacement as an epistemological shift generating new knowledge is made possible because knowledge pluralities have been transformed into knowledge hierarchies as a result of colonial biases which have treated western knowledge as exclusively scientific and non-western knowledge systems as unscientific. However, the difference in epistemological foundations does not make indigenous knowledge systems inferior, it just makes them different. This diversity of knowledge needs to be recognized and respected, and a pluralistic IPR regime needs to be evolved which makes it possible to recognize and respect indigenous knowledge, and protect the indigenous knowledge systems and practices and livelihoods based on it. Schematically, what is being proposed is that we need to recognize that there are diverse knowledge systems Ki, each with its own epjstemological foundations and its own scientific community of practitioners Ci. We, therefore, need diverse legal regimes Li to protect the diverse Ki and the diverse communities Ci. The legal regime being universalized trough TRIPS and WTO is restricted to Lw, IPR systems reflecting the interest of the dominant economic systems of the west, the MNC's. At a lower level (from the aforestated paradigm level), an examination of the various provisions of TRIPS and the national patent systems drawn on its basis reveal that the current IPR system is unsuitable to take care of TK for various reasons as under: (a) The preamble of the TRIPS Agreement states that intellectual property rights are recognized only as private rights. This excludes all kinds of knowledge, ideas and innovations that take place in the 'intellectual commons', in villages among farmers, in forests among tribals and even in universities among scientists. TRIPS is, therefore, a mechanism to privatize the intellectual c o m m o n s a n d

EVOLUTION OF PATENT LAWS

_ _ -

de-intellectualize civil society, so that, in effect, the mind becomes a corporate monopoly. (b) Intellectual property rights are recognized only when knowledge and innovation generate profits, not when they meet social needs. According to Article 27.1, to be recognized as an IPR, innovation must be capable of industrial application. Only profits and capital accumulation are recognized as viable uses of creativity. Under corporate control, the social creativity and social good are discounted. (c) A significant limitation of IPR is on account of the prefix 'trade-related'. Most innovation by women, peasants and tribals is for domestic, local and public use, not for international trade. On the other hand, MNC's innovate for the sole purpose of increasing their share in global markets and international trade. (d) Intellectual property protection does not, in principle, apply to knowledge which is in the public domain. This implies that expressions of folklore and several other forms of traditional knowledge, which is shared even among few people in one given location, is generally deemed to be in the public domain. (e) In most cases of traditional knowledge, the author or inventor of the material or knowledge is not identifiable and there is thus no 'rightsholder' in the usual sense of the term. In fact, the author or inventor is often a large and diffuse group of people and the same creation or invention may have several versions or incarnations. Moreover, from the point of view of traditional knowledge, the IPR system tends to reduce TK holders to producers of raw knowledge and materials. (f) There is clearly a lot of traditional material that is unfit by its very nature for protection by extant intellectual property norms. Examples include spiritual beliefs, methods of governance, languages etc. (g) While discoveries and other forms of traditional medicinal knowledge based on plants or animal parts generally cannot be patented either because they are obvious or because they are in the public domain, drugs derived from such plants and animals are generally patentable. The companies that develop and refine the molecule own the patent when the R&D efforts is often inspired by TK holders, who may directly instruct western scientists or teach them by letting them observe their traditional practices. This is unfair to the holders of TK. In sum, the exclusionary effect of the current intellectual property system (which generally does not protect TK as such for the reasons mentioned above) is compounded by a positive exclusionary effect because intellectual property rights are acquired

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

I

I

1

281

by non-traditional knowledge holders to exclude their pre-existing rights. (h) The IPR model, in the context of TK, provides a defensive protection as it is aimed at excluding the use of protected knowledge by unauthorized parties. Here too, it would not prevent genetic resources or traditional knowledge from being inappropriately acquired, used commercially, but just not patented. It is not concerned with its promotion or diffusion, goals which are fundamental for the sustainability of TK. Existing IPR frameworks are neither capable of rewarding innovation at the local level nor of provlding incentives for conserving existing knowledge. (i) IPR's function on exclusivity and are limited in time, held by an identifiable natural or legal person. At the end of the protection period, they become part of the public domain. On the other hand, TK is held (owned) collectively and is inherently dynamic, growing/altering in response to changing environmental and social circumstances, while belng in continuity with land and habitat, and mostly exists in an unfixed (oral) form. It originates and is preserved and transmitted in a traditional context and is not limited to any specific field of technology or arts. The enforcement of I13R's requires the identification and isolation of the protected information, while the challenging aspect of TK is its holistic character. These conceptual inconsistencies are supported by the result obtained on the ground level. An instance is the area of crop genetic engineering where the profitability motive has led to a situation where there areseries of 'orphan' crops and 'orphan' countries, namely commodities and nations that are under-researched as they are unprofitable for the private sector to pursue. Another important issue in this context is the abject failure of current IPR regimes in accommodating the TK-friendly features of Convention on Biological Diversity (CBD). For the last four years, after the mandate given in para 19 of the Doha Ministerial Declaration to bring about a mutually supportive resolution of the objectives of the TRIPS and the CBD, there have been discussion in the TRIPS Council but without any notable success. These discussions have focussed on the relationship between the TRIPS Agreement and the CBD, including the protection of TK. Developing countries have a particular interest in the CBD, as the vast majority of global biodiversity and TK lies within their territories. These countries wish to make full use of these resources for their long-term sustainable development. Article 8(j) of the CBD mentions conservation and sustainable use of biodiversity. It also states the need to respect and preserve knowledge, innovations and practices of indigenous and local communities and promote their

282

EVOLUTION OF PATENT LAWS

wider application. The provisions of this article encourage prior informed access to TK and equitable sharing of benefits arising from its utilization. Article 16(5)of the CBD recognizes that patent and other IPR's may have an influence on the CBD implementation and requests parties to cooperate in this regard to ensure that such rights are supportive of and d o not run counter to the objectives of the Convention. The TRIPS Agreement, though it was signed after CBD, makes no mention of the CBD or its important principles such as prior informed access and equitable benefit sharing. There is one more significant conceptual barrier. The idea of property right, if not totally alien, is very different in tribal societies, an important TK stakeholder. Land here generally belongs to communities, and the individuals have only user rights over it. Further, the concept of property includes all tangible and intangible items including cultural, intellectual, spiritual, social and economic property. For all the above reasons, TRIPS as well as various national IPR regimes are wholly unsuitable to protect and sustain traditional knowledge.

VI. IRRELEVANCE OF TRIBAL CUSTOMARY LAWS The tribal customary laws were meant for regulating the tribal population of the village and for the inter-village regulations. A preliminary look at the Arunachal Pradesh (India) customary laws, few of which are documented, reveals, that though there are few provisions that can be used to regulate the issue of biopiracy, IPR, access and benefit sharing, in totality it shows inadequacy to address these issues, which have generated enormous debate internationally. These laws were definitely not formulated to capture the plethora of interrelated issues that the modern globalization and IPR regime brings forth. They appear to be too simplistic for the complex issue of access and benefit sharing. Moreover, some of the provisions of these laws are surrounded by magico-spiritual elements, which do not have any relevance outside the said tribal community. Many of the provisions of dispute settlements, (for e.g. leaving the thief in the forest for visitation of spirits or tigers; Tangsa Tribe) are also quite primitive and lack logical conclusions. These kinds of magical and spiritual provisions, which are mainly based on beliefs, will most probably be unacceptable in international legal battlegrounds of IPR and trade related issues. Thus, the provisions of customary laws cannot alone provide protection to traditional knowledge and regulate the issue of commercialization, access and benefit sharing. Supporting laws would be needed to complement these provisions.

VII. INTERNATIONAL INITIATIVES FOR PROTECTION OF TK The first effort to protect TK, specifically folklore, under the IP regime was a joint initiative taken by the WIPO and the United Nations Educational, Scientific and Cultural Organization (UNESCO) in 1978 which led to the adop-

- - - - -15.-

TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

283

tion of the WIPO-UNESCO Model Provisions for National Laws on the Protection of Expressions of Folklore against Illicit Exploitation and other Prejudicial Action in 1982. These provisions were in the nature of guidelines to WIPO ~ ~ m b etor protect s folklore in their jurisdictions. Since then, a number of efforts b v e been initiated to protect TK by inter-governmental bodies dealing with intellectual property, environment and human rights which are aimed at enmsting legal control to indigenous/local communities over the exploitation of their TK when such knowledge has special cultural significance. (a) The International Labour Organization Convention No. 169 The ILO Convention No. 169 of 1989, which replaced the earlier ILO Convention No. 107 concerning Indigenous and Tribal Peoples in Independent Countries, 1957, does not directly address the issue of protection of TK, is more human rights centric and asserts the right of indigenous and tribal people over their land. It affirms the right of indigenous peoples to self-identification. It obliges States to "respect the special importance for the cultures and spiritual values of the peoples concerned of their relationship with the land or territories or both" (Article 13). In this regard, States are to promote "the full realization of the social, economic and cultural rights of these peoples with respect for their social and cultural identity; their customs and traditions and their institutions" (Article 2(2)). Governments have the responsibilities to develop, "with the participation of the peoples concerned, co-ordinated and systematic action to protect the rights of these peoples and to guarantee respect for their integrity" (Article 2(1)).Their social, cultural, religious and spiritual values and practices are to be recognized and protected (Article 5). Within the context of the Convention, the concept of cultural identity thus provides an important link between cultural rights and cultural heritage, implying the collective right of indigenous peoples to the protection of their own cultural heritage. The Convention, although not defining TK or explicitly mentioning indigenous resources or folklore, nevertheless, recognizes the rights of indigenous peoples over natural resources pertaining to their land and to their traditional activities inorder to maintain their culture and economic self reliance and development, which are to be safeguarded (Article 15 and 23). More importantly, they can "decide their own priorities for the process of development as it affects their lives, beliefs, institutions and spiritual well being and the lands they occupy or otherwise use, and to exercise control to the extent possible, over their own economic, social and cultural development (Article 7). The Convention clearly accepts the inter-relationship between cultural heritage, law, land rights and cultural rights of indigenous peoples in their own traditions, which includes TK as well. The Convention is important in providing a model definition of indigenous and tribal peoples (Article 1.1).

EVOLUTION OF PATENT LAWS

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

285

/

(b)Draft UN Declaration on the Rights of Indigenous Peoples, 1994 The draft UN Declaration on the Rights of Indigenous Peoples, 1994 by the UN Sub-Commission on the Promotion and Protection of Human Rights includes human rights principles which have implications for TK and biodiversity. It accepts the right of self determination of indigenous peoples. It recognizes their "collective right to live in freedom, peace and security as distinct peoples" (Article 6(1)); their right to the full recognition of their laws, traditions and customs (Article 26); and full maintenance, protection and promotion of past, present and future manifestations of their cultures (Article 12).The Declaration demands that States abstain from removing indigenous peoples from their lands or territories (Article lo), respect their traditions and indigenous knowledge (Part 111) and restore and protect the environment (Article 28). Cultural and Intellectual Property rights are recognized in Article 29 which reads: "Indigenous peoples are entitled to the recognition of the full ownership, control and protection of their cultural and intellectual property. They have the right to special measures to control, develop and protect their sciences, technologies and cultural manifestations, including human and other genetic resources, seeds, medicines, knowledge of the properties of fauna and flora, oral traditions, literatures, designs and visual and performing arts." The provision is thus wide in its implication, establishing a link between cultural property, cultural identity and the collective right to own and control one's own cultural property. In this sense, it is close to the ILO Convention. Indigenous communities have the right to determine and develop priorities and strategies to use their own lands, territories and other resources. This includes the right that States obtain their "free and informed consent" before any projects affecting their lands, territories or resources may be approved, "particularly in connection with the development, utilization or exploitation of mineral, water or other resources" (Article 30). There is no explicit mention of TK and traditional resources (as is the case with the ILO Convention), but the term "other resources" in Article 30 could be broadly interpreted to cover them. Article 29 does cover them, but the degree of protection to be accorded to them by States has not been specified. The draft Declaration, if adopted, would be a significant step in protecting the rights of indigenous peoples, including TK, and would be holistic in approach, including cultural and land rights, but it makes formidable demands upon governments for the attainment of a number of objectives with heavy implications for State resources.

(c) The Convention on Biological Diversity (CBD) The CBD is the principal international instrument which explicitly acknowledges the role of traditional knowledge, innovations and practices of indigenous and local communities embodying traditional lifestyle in biodiversity conservation and its sustainable development. The scope of the TK covered

,

I ,

,

I, ,

by the Convention, however, is confined to genetic materials (GR's). It is a convention, setting out general principles that the parties agree to be guided by and work towards in a long-term process. According to Article 8(j) of the Convention, each contracting party, subject to its national legislation, is required to: 1. respect, preserve and maintain knowledge, innovations and practices of indigenous and local communities embodying traditional lifestyle relevant for the conservation and sustainable use of biological resources; 2. promote the wider application of such knowledge, innovation and practices with the approval and involvement of their holders; and 3. encourage the equitable sharing of benefits arising from the ~~tilization of such knowledge, innovations and practices. Apart from Article 8(j), however, no other provision of the CBD requires the consent or involvement of indigenous/local communities in granting access to genetic resources. It, in fact, does not specify who are the stakeholders in issues related to genetic resources but only places binding legal obligations on national governments, parties to the Convention. In giving effect to other provisions of the Convention, however, governments have the authority to determine the mechanism for the involvement of these communities and other stakeholders and to specify their roles and responsibilities. Article 18(4)states that Contracting Parties shall "encourage and develop methods of cooperation for the development and use of technologies, including indigenous and traditional technologies". Article 15 recognizes the sovereign rights of States over their natural resources and their authority to determine access to genetic resources and provides that access, where granted, shall be on mutually agreed terms and subject to prior informed consent of the provider party (a contracting party). The most controversial provision is Article 16(5), which require Parties to co-operate to ensure that patents and other IPRs "are supportive of and d o not run counter to its [the CBD's] objectives." In furtherance of this framework, TK has been on the agenda of the CBD since 1996, and an extensive and complex work programme has grown around the issue of IPR's and their role in the implementation of the CBD. The Fourth Conference of the Parties to the Convention for Biological Diversity (COP-IV), held in Bratislava, Slovakia in 1998, recognizing "the importance of making intellectual property related provisions of Article 8(j) and related provisions of the Convention on Biological Diversity and provisions of international agreements relating to intellectual property mutually supportive, and the desirability of undertaking further cooperation and consultation with the World Intellectual Property Organization", decided to establish an "ad hoc open-ended inter-sessional working group". The mandate of the working group was to "provide advice on the application and development of legal and other appropriate forms

286

E V O L U E N OF PATENT LAWS 15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

of protection for the knowledge, innovations and practices of indigenous and local communities" and also "to develop a programme of work, based on the structure of the elements in the Madrid Report". The mandate of the group was further extended to case studies on the protection of indigenous knowledge. The working group is working towards strategies to protect TK based on a combination of approaches and with full respect for customary law and practices, including the use of existing IP mechanisms, the use of contractual arrangements, a register of TK and guidelines and a code of practices. It is also considering the stli generis mode of protection of TK, which may take into account the elements related to the Bonn Guidelines on Access to Genetic Resources and Fair and Equitable Sharing of Benefits Arising out of their Utilization (Bonn Guidelines), particularly in terms of how the elements might complete the guidelines by focussing on the specific needs and interests of indigenous and local communities in the protection, utilization and equitable sharing of benefits when access to their genetic resources are sought. In another significant development, the COP-IV took up the matter of access to genetic resources and benefit-sharing and the COP-V decided to establish an Ad hoc Open-ended Working Group to develop guidelines and other approaches on the access to GR's and benefit-sharing from their use. Its work led to the adoption of the Bonn Guidelines by the COP-VI in 2002, which called upon the parties to use the Guidelines when drafting their laws and policies "on access and benefit-sharing, and contracts and other arrangements under mutually agreed terms for access and benefit-sharing". The Guidelines are voluntary in nature, which the parties may take into account while giving effect to their obligations under the CBD. They provide some background to the discussion on the practical interaction between the IPR system and the CBD. The Guidelines suggest that Material Transfer Agreements (MTA's) on GR's may include conditions under which the user of accessed GR's may seek IPR's and monetary and non-monetary benefits may include "joint ownership of relevant intellectual property rights". Parties have been invited: ".. to encourage the disclosure of the country of origin of genetic resources in applications for intellectual property rights, where the subject matter of the application concerns or makes use of genetic resources in its development, as a possible contribution to tracking compliance with prior informed consent and the mutually agreed terms on which access to those resources was granted." They have further been invited "to encourage the disclosure of the origin of the relevant traditional knowledge, innovations and practices of indigenous and local communities". The same approach has been proposed under the WTO, UNCTAD and the WIPO. As means to implement the CBD requirements for mutually agreed terms, the guiding parameters suggested for contractual agreements provide that the "provision for the use of intellectual property rights include joint research,

/

287

to implement rights on inventions obtained and to provide licences

by common consent" and "the possibility of joint ownership of intellectual property rights according to the degree of contribution". In order to seek with the prior informed consent of the contracting party providing such resources and mutually agreed terms, the countries may take measures to encourage the disclosure of the country of origin of the genetic resources and the origin of TK in applications for IPR's. On some of the more important topics - such as the impact of IPR's on a c c e s s / ~ ~ofe GR's and scientific research, the role of customary law, the relationship between disclosure requirements and international legal obligations, the efficacyof disclosure requirements, the feasibility of an internationally recognized certificate of origin system, monitoring, compliance and enforcement, and the role of oral evidence of prior art in granting IPR's - further information and work has been requested. The COP-VII further elaborated on these issues and has invited parties to recognize TK, whether written or oral, as prior art. Parties are to ensure under their domestic law compliance with the requirement of prior informed consent of indigenous communities and put in place mechanisms to ensure fair and equitable benefit-sharing at the national level with relevant stakeholders and indigenous/local communities. It invites the WIPO to take into account the CBD's work on these topics and calls for the WIPO's work to be supportive of the CBD, to address issues on model provisions on disclosure requirements and to devise options for incentive measures for applicants. These initiatives to a great extent address the concerns of developing countries but d o not create any binding legal obligation. The importance of the Guidelines for developing countries, nevertheless, is that they are significant step towards the harmonization of the regime of access and benefit-sharing. It is also important to note that in the context of the CBD, emphasizing national sovereignty and the authority of governments to regulate access to GR's cannot rule out bilateral negotiations between the biodiversity-rich but technologically poor countries and those seeking access to these resources. In other words, the CBD promotes bilateral agreements between the providers and users of resources, whereas a multilateral approach would be mutually beneficial by laying down the framework of fair terms because in bilateral negotiations the biodiversity-rich countries quite often are not in a strong position to negotiate a fair deal.

(d) Declaration of Indigenous Groups And Peoples As an aftermath of the adoption of the CBD and the growing importance of TK in biotechnological inventions, a number of international/regional conferences were held with the participation of indigenous peoples and groups, highlighting the recognition of their rights in the traditional knowledge and the need for its protection. They, nevertheless, were more centred in their approach towards intellectual property rights and the current IPR regime. Significant

288

-

EVOLUTION OF PATENT LAWS /

statements on the rights of indigenous peoples came from some of these conferences. The Mataatua Declaration on the Cultural and Intellectual Property Rights of Indigenous Peoples, 1993 had a human-rights approach towards TK and asked for a moratorium on any further commercialization of indigenous medicinal plants and human genetic materials until these communities have developed appropriate protection mechanisms. It also demanded the recognition of their right over their knowledge. The Charter of the Indigenous-Tribal Peoples of the Tropical Forests, 1992 declared the willingness of indigenous peoples to share their knowledge with humanity, as determined by them. It demanded a guarantee of rights to intellectual property and control over the development and manipulation of indigenous knowledge. The Jalayinbul Statement on Indigenous Property Rights, 1993emphasized the right of indigenous peoples "to define for themselves their own intellectual property" in accordance with "Aboriginal Common Law". The statement most critical of the current IPR system for its colonialist approach, however, was made by the International Consultation on Intellectual Property Rights and Biodiversity, organized by the Coordinating Body of the Indigenous Peoples of the Amazon Basin, held at Santa Cruz de la Sierra, Bolivia in September, 1994. It also declared patents and other IPR's to life-forms "unacceptable to indigenous peoples". The mail1 premise of these Statements/Declarations, however, is the right of self-determination and independence of these people in relation to their resources and the recognition of these rights.

I ' I 1

(e)The World Intellectual Property Organization (WIPO) The WIPO's direct and positive involvement in the issue of TK started in 1998. During 1998-1999, the WIPO embarked on nine fact-finding missions in various parts of the world, exploring the intellectual property aspects of TK protection while bearing in mind the needs and expectations of TK holders. In its 26th session, the WII'O General Assembly established the IGC. The IGC's actions so far have focussed on trying to understand the needs and expectations of traditional /local communities, ascertaining the adequacy of current methods for protecting TK and surveying proposals to enhance such protection. It has produced an impressive number of documents, including the model clause for genetic resources contracts, a toolkit for documentation of TK protection and work on elements of a possible stli generis system of protection for TK. Beyond the Committee's work, the WIPO is also taking steps to enhance the coverage of documented TK in the minimum documentation of the Patent Cooperation Treaty (PCT) and to expand the International Patent Classification (IPC) to contain categories for TK subject-matter to provide for more accurate and focussed searching for relevant TK during the patent examination process. The WIPO's approach in the matter of TK protection is mainly IP-related. The documents produced acknowledge the general difficulties with protecting

I

15. TRADITIONAL -CONSTRUCTION - -KNOWLEDGE - ---..-.. - OF A RIGHTS MODEL

289

under IP law. The IGC has centred its activities mainly on solutions that tend to minimize the rigours of IP cr~teria.The IP solution is sought for TK in the public domain, which is a small part of the vast arena of TK that has strong moorings in cultures and traditions/rituals, etc. The IGC's deliberations so far, however, have revealed a clear division of among the countries regarding the need, scope and nature of legal protection of TK and its format. Despite their strong, polarized positions on these issues, the countries have agreed that the WIPO should produce the elements for a model stir generis system of protection for TK, though the developed cotlntries are of the view that any legally binding international sui generls system at this stage is premature and unnecessary and that attempts should first be made at the national level to determine its feasibility. Developing countries, on the other hand, desire expeditious work to be undertaken on this. Views are also divided on whether there should be two separate documents to protect TK and folklore, but the developing countries desire to protect the holistic character of TK. Broadly speaking, the IGC's work so far has not produced any tangible results other than being a forum for discussion of legal, economic and policy issues related to the protection of TK, including the szii generis form of protection of TK It has, of course, heightened the awareness among the developing countries to safeguard their valuable knowledge assets. To date, the WIPO has proposed a bottom-up approach under which developing countries first assess how existing national mechanisms of IPR's could be more effectively used to protect TK before introducing protection at the international level. (0The World Trade Organization (WTO) Traditional Knowledge has come up on the agenda of the WTO under the TRIPS Agreement. The Agreement, as such, deals with the traditional concepts of intellectual property and does not have any specific provision on the protection of TK. Rather, TK is excluded by virtue of Article 70(3), which considers it as a part of the public domain. The relevant provisions in this context could be Article 39 (protection of undisclosed information), if the TK is kept as secret knowledge, and Article 22 (protection of geographical indications). Obviously, these articles are of limited application and are unable to meet the concerns of developing countries. The issue of protection of TK was brought before the General Council of theWT0 in thecontext of Article 27(3)(b)of the TRIPS Agreement in 1999,which was to be reviewed under its terms. Article 27(3)(b)requires Members to protect plant varieties "either by patents or by an effective sui generis system or by any combination thereof." While constructing a sui generis regime, a country may take into account the protection of TK because plant genetic resources have a double nature: they are physical material and the carriers of hereditary information which is capable of self-replication and, as such, aIso a part of TK. This

290

EVOLUTION OF PATENT LAWS

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

-

double nature gives rise to a conceptual tension between physical property in germplasm on the one hand and the IPR's in intangible elements of GR's (genotype) which constitute inventions, trade secrets or new plant varieties on the other. TK also became an issue in the context of patenting biological inventions, which saw a tremendous surge after the adoption of the TRIPS Agreement, which made micro-organisms, micro biological and non biological processes pa tentable. The submission made by Venezuela at the Third Ministerial Conference of r should the WTO in Seattle asked that the next review of TRIPS, i t ~ t e alio, "......establish on a mandatory basis within the TRIPS Agreement a system for the protection of intellectual property, with an ethical and economic content, applicable to the traditional knowledge of local and indigenous communities, together with the recognition of the need to define the rights of collective holders." A submission by the African Group, two months later, also called for a new mandate dealing with TK in a future round, leading ultimately to establishing a multilateral legal framework. Other developing countries also put forward proposals for the substantive review of TRIPS Article 27(3)(b)and called for the harmonization of the TRIPS Agreement and the CBD, the two internationally binding instruments relating to the protection of TK and use of GR's. The proposals from developing countries together argued that the exclusions in TRIPS Article 27(3)(b)should be clarified, that life forms should be excluded from patentability, that information relating to the origins of a biological invention should become part of the patent application process and that the principle of prior informed consent under the CBD should be incorporated into the TRIPS Agreement. There was heightened-concern about the grant of patents and/or other IPR's covering TK to persons other than the indigenous peoples/communities who own and control them when their TK is being used without their authorization and without sharing with them the benefits that accrue from such use. The United States, on the other hand, argued that the CBD's objectives on access to GR's and TK could best be achieved through national legislation and contractual arrangements based on the national legislation, which could include commitments on disclosures. This submission of the United States, however, does not address the issue of the consequences of non-compliance with the national Legislation and the IPR's granted on GR's and TK. The strong position taken by the developing countries on the protection of TK, nevertheless, led to its inclusion in the Doha Ministerial Declaration in November, 2001. The Declaration, in Paragraph 19, has mandated the Council for TRIPS: ".....in pursuing its work programme including under the review of Article 27(3)(b), the review of the implementation of the TRIPS Agreement under

I

\

I

11

1

I

I

!

,,

1 L \

i

4

291

Article 71.1... to examine, inter olio, the relationship between the TRlPS Agreement and the Convention on Biological Diversity, the protection of traditional knowledge and folklore, and other relevant new developments raised by members pursuant to Article 71.1. In undertaking this work, the TRIPS Council shall be guided by the objectives and principles set out in Articles 7 and 8 of the TRIPS Agreement and shall take fully into account the development dimension." It has further instructed the Committee on Trade and Environment to give particular attention to three issues in pursuing its work on items on its agenda, including the relevant provisions of the TRIPS Agreement (Para 32). It is, however, to be noted that the TRIPS Agreement does not make any reference to the CBD in its provisions. Though adopted after the CBD, it failed to take note of Article 16(5) of the CBD, which clearly observes that the patents and other IPR's may have an influence on the implementation of the CBD and that parties shall ensure that such rights do no run counter to its objectives. Since the Doha Ministerial Meeting, the discussions before the Council for TRIPS have centered on the relationship between the provisions of the TRIPS Agreement and the CBD and the protection of TK under the mandated review of the TRIPS Article 27(3)(b).In order to assist the Council to discharge its mandate, different nations/national groups have made submissions. These submissions, once again, have highlighted the contrasting approaches on the issue of protection of TK under the TRIPS Agreement between the industrialized and developing countries. Industrialized countries consider the WIPO as the most appropriate forum to tackle the issue of legal protection of TK, and feel that once that body has sufficiently clarified conceptual issues and possible options and completed the model national legislation, the WTO should come back to this matter. According to these nations, the WTO is, in fact, not the right place to negotiate a full-fledged system of protection for a complex, and as yet undefined, subject-matter such as TK or folklore. The developing countries, on the other hand, d o not find the present IP regime adequate to address their concerns in relation to TK. They find the patent system faulty, as it does not take into account TK as prior art nor does it take care of the requirements of benefit-sharing and prior informed consent. They are insisting that the TRIPS Agreement should be suitably amended or provide a mechanism requiring that an applicant for a patent on biological material or TK should, as a condition to acquire patent rights, disclose the source and country of origin of the biological resources and of the traditional knowledge used in the invention and provide evidence of prior informed consent and fair and equitable benefit-sharing under the relevant national regime. These requirements in patent applications on biological inventions, according to these countries, will ensure that national legal regimes for preventing bio-piracy and requiring benefit-sharing are effectively implemented when use Or Commercialization of TK takes place outside the country. This will also reduce

292

EVOLUTION OF PATENT LAWS

the instances of bad patents and enhance the ability of countries to track down and challenge bad patents. The disclosure requirement may also be justified on grounds that it would ensure effective enforcement at the international level and thus complement provisions in national patent laws that permit revocation of patents for failure to disclose material information or for submission of false information with an intent to mislead. Other points made by developing countries can be viewed as necessary to improve national compliance with treaty obligations regarding prior informed consent and benefit-sharing found under the CBD (Article 15). They further argue that such compliance would be consistent with the objectives of the CBD as well as with Article 7 of the TRIPS Agreement, which provides that: "The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation ... to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations." They are of the view that a szii generis protection system would provide proprietary rights to ensure that market forces will operate to generate fairness and equity. These deliberations at the WTO/Council for TRIPS clearly reveal that no perceptible achievement has been registered on the issue of protection of TK and that countries are sticking to their stated positions as revealed in the IGC meetings. It is, nevertheless, to be noted that out of 147 parties to the TRIPS Agreement, three-fourths are developing countries, which are the chief holders of TK, and they want to correct the balance of TRIPS, which, according to them, is heavily titled towards the interests of industrialized countries. Consequently, they have demanded the inclusion of TK in the TRIPS Agreement to get a fair return on their resources. (g) The Food and Agriculture Organization (FAO) The FAO, in November 2001, adopted the International Treaty on Plant Genetic Resources for Food and Agriculture (PGRFA Treaty), which is based on the FAO's International Undertaking, first adopted in 1983. The Treaty is limited to PGR's for food and agriculture. It is much influenced by the CBD but does not encourage IPR's over PGR's and the TK related thereto. The use of PGR's for medical and healthcare purposes is outside its scope (and can be subjected to IPR's). It recognizes the rights of farmers (without defining who is a farmer) and local/indigenous communities, who have been in the centres of origin and diversity, in conserving, improving and making available these resources (Article 9). The implementation of farmers' rights requires the "protection of traditional knowledge relevant to plant genetic resources for food and agriculture" (Article 9.2). It is the responsibility of national governments to involve farmers equitably in benefit-sharing from the utilization of PGR's

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

293

(Article 9.2(b)). Article 13 details the provisions on benefit-sharing. Access to PGR's shall be provided solely for purposes of utilization and conservation for research, breeding and training for food and agriculture. The transfer of or access to PGR's shall be subject to the multilateral system, according to the terms of standard MTA's (Articles 12).The treaty, however, does not specifically refer to indigenous people, except in relation to States' responsibility to promote in situ conservation by supporting, inter alin, the efforts of indigenous and local communities (Article 5.l(d)). The Treaty is limited in its scope, principally aimed at preventing the loss of agro-biodiversity rather than biodiversity in general, and establishes the principle of farmers' rights and not the rights of local / indigenous communities in general. (h) The United Nations Conference on Trade and Development

(UNCTAD) UNCTAD has addressed the issue of protection of TK from the trade and development perspective. It began its work on TK in October-November 2000 by convening an Expert Meeting on Systems and National Experiences for Protecting Traditional Knowledge, Innovations and Practices. Accepting the importance of TK in the sustainable development of national and international economics, the Meeting recommended to UNCTAD further work on its protection. Possible means for the protection of TK were identified, which would include traditional/customary law, modern IPR instruments and sni generis systems. However, as it felt that national suigeneris systems by themselves "will not be sufficientto protect traditional knowledge adequately", it recommended that UNCTAD explore an international mechanism that might include minimum standards of an international szli generis system for TK protection. Based on the report of the expert Meeting, UNCTAD's Commission on Trade in Goods and Services and Commodities made a set of recommendations which emphasized capacity-building in implementing a TK protection regime, fair and equitable sharing of benefits and encouraging the WTO to continue discussions on the protection of TK and exchange of information on national systems of TK protection. At the International Seminar on Systems for the Protection and Commercialization of Traditional Knowledge, jointly organized by the UNCTAD and the Government of India, held in New Delhi in April, 2002, participants considered how evolving national systems for the protection of TK could be supported or augmented by international measures. They were of the view that countries supportive of TK protection could enact provisions designed to prevent misappropriation of TK but that such action would not be effective beyond those countries' borders unless an international system is put into place. Among others, the following measures were listed for the protection of TK: 1. local protection of the rights of TK holders under national stii generis regimes including customary laws;

294

15. 'TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

EVOLUTION OF PATENT LAWS

2. protection through registers of TK databases to avoid misappropriation of TK; 3. a procedure whereby the use of TK from one country is allowed, i.e. to devise a system of "certificate of origin" issued by the competent authority, giving details of the source of origin and prior informed consent, including benefit-sharing conditions; and 4. a n internationally agreed instrument that recognizes such national-level protection. This would not only prevent misappropriation but would also ensure that national level benefit-shnring mechanisms and laws are respected worldwide.

II

(i) The World Health Organization (WHO) The WHO's involvement in TK relates to its work on traditional medicines. In that regard, on request from its Members, it held anInter-Regional Workshop on Intellectual Property Rights in the Context of Traditional Medicine in Bangkok, Thailand in December, 2000. Like all other fora, it also recommended, inter din, a suigeneris model for the protection of traditional medicines and equitable benefit-sharing, documentation of TK which is in the public domain in the form of TK digital libraries and dissemination of such information, and strengthening of customary laws for the protection of traditional medicine knowledge from bio-piracy. It also recommended the promotion of easy access to traditional medicine for the healthcare needs of developing countries by using the flexibility provided under the TRIPS Agreement. Based on the Report issued by this Workshop, further work of the WHO is envisaged in co-operation with the WIPO, UNCTAD and the WHO's regional offices.

1

I

i

VIII. CRITICAL APPRAISAL OF THE OUTCOMES OF INTERNATIONAL INITIATIVES So far, no international regime for the protection of TK has emerged, although an incremental progress has been registered through piecemeal efforts, namely the FAO's PGRFA Treaty and the CBD's Bonn Guidelines on access to genetic resources and benefit-sharing. Their scope, however, is limited to access to GR's and benefit-sharing and they, thus, relate to the physical aspects of these resources rather than their intellectual or intangible aspects, which are mainly related to TK and are the subject-matter of intellectual property protection. Apart from this, the Strasbourg Convention on the IPC has recently been revised to take better account of TK subject-matter and further work is underway. Similarly, the minimum documentation specified under the PCT is being expanded to give explicit recognition to TK as prior art. These measures, however, are not comprehensive enough to address the concerns and needs of developing countries, which desire an international mechanism acknowledging the holistic nature of TK and collective rights of indigenous/local communities over it.

295

During the discussions at the Council for TRIPS, on misappropriation of TK, the developing countries have demanded that: (i) patent applicants must disclose the country and source of origin of biological material and traditional knowledge; and (ii) patent applicants must provide evidence that the prevalent laws and practices of the country of origin on prior informed consent and benefit-sharing have been fully respected. The developed countries, particularly the United States, on the other hand, have proposed: (i) bilateral contracts between the users and providers of genetic resources; and (ii) databases and register of TK to be used by the patent offices in cases of biotechnological inventions. These demands and counter-proposals require some serious consideration. (a) Disclosure requirement The issue of disclosure has been already become the subject of contested views among nations in the Council for TRIPS. It has generally been contended by the industrialized countries, particularly the United States, that providing additional norms of disclosure would be violative of Article 27(1)of the TRIPS Agreement and discriminatory between the fields of technology and would lead to legal and administrative difficulties for patent offices. This argument, according to developing countries, is not in consonance with the current patent regime where already inventions based on micro-organism are treated differently, for which, in accordance with the Budapest Treaty, specimens have to be deposited prior to the grant of patent. A multilaterally agreed uniform approach would be in the interest of all countries.

(b) Evidence of prior informed consent and benefit-sharing

/ I

Making prior informed consent and benefit-sharing conditions of patentability calls for an important threshold question that needs to be addressed: "when would an applicant need to give this evidence?" Could this be at the point of merely according access to GR's, or when the genetic resources would lead to an inventive contribution to, or form part of the "technical character" of the patentable invention? Further, whose prior informed consent would be relevant for this purpose - that of the appropriate government authority so designated or of the community - needs to be precisely laid down. Besides these issues, another important aspect is the extra-territorial application of this requirement as demanded in the proposal of the developing countries. The requirements of prior informed consent and benefit-sharing for TK related inventions, as construed under a national law, would be taken into account when grating a patent on a biological invention in a foreign jurisdiction. This could be considered not only violative of the princinle of territoriality of

296

--

-

EVOLUTION OF PATENT LAWS

297

contracts, that should not negate their value per se, and national laws might provide criminal and civil liabilities for breach of contracts. The developing countries, however, do not endorse this approach, as these contracts are not easily enforceable. They also result from negotiations between unequal parties, as the foreign companies own a wide experience in contracting while the indigenous communities, on the other hand, have little knowledge and experience in commercial practices and negotiating strategies, a fact which is also true in the case of least-developed countries. In most developing countries, the communities will depend on governments, and the extent to which the interest of these communities will be defended depends on their institutional capacity and attitude towards the system.

IPR's but also to create a conflict-of-laws situation. However, this is not an insurmountable problem, and already IP law provides precedence of extra-territorial recognition of the rights and the requirements of granting the right. For example, Article 6quinquies(A)(l)of the Paris Convention for the Protection of Industrial Property provides that: "....every trademark duly registered in the country of origin shall be accepted for filing and protected as in the other countries of the Union, subject to the reservations indicated in this Article." Likewise, in the case of well-known trademarks, Article 6bis of the Paris Convention states that: "The countries of the Union undertake, ex officio if their legislation so permits, or at the request of an interested party, to refuse or to cancel the registration, and to prohibit the use, of a trademark which constitutes a reproduction, an imitation, or a translation, liable to create confusion, of a mark considered by the competent authority of the country of registration or use to be well known in that country as being already the mark of a person entitled to the benefits of this Convention and used for identical or similar goods." However, unlike these provisions where the competent legal authorities both make the determinations about the well known marks and also accept applications for filing, in the case of TK, the country of origin of the TK needs to make determinations about the TK, whether it is a part of prior art if it is oral and, depending on the nature of TK, whether it needs automatic international protection and is binding on the patent granting country. It may, nevertheless, be noted that if the problem of misappropriation of GR's and TK are to be addressed squarely, these conditions need to be made part of patentability, with precise contents and legal consequences. Voluntary requirements will not produce the desired results. /

(d) Databases of Traditional Knowledge

(c) Bilateral Contracts

In the view of the developed countries, the best way to address the concerns of developing countries on protection of TK and to ward off its misappropriation is through bilateral contracts between the holders of traditional knowledge and the persons or companies wishing to access and use that knowledge. Such a system could be backed up by suitable national or local legislation. Such contracts should spell out in detail the terms and conditions under which access is granted, including the requirements for research and'development or transfer of technology that might result from the use of GR's to which access was granted. Such a contract system might also include a requirement that a party to which access has been given identify, in the specification of a patent application it files claiming an invention developed through use of the GR's accessed, the source of those GR's. Any benefits arising out of the commercialization could be shared in accordance with the terms of the contract. While it is possible that a few individuals might ignore the legal requirements laid down in such

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

I

It has been suggested that creating TK databases would be helpful in addressing the issue of "prior art" and would avoid the problem of bad pa tents, such as those granted in the recent past. Often, TK is only transmitted orally and is, therefore, not documented. As such, it would not be accessible to patent offices. Where it is documented, it may be in languages with which patent authorities are not familiar. Creating organized databases of TK, searchable over the Internet, would be beneficial for determining prior art by patent offices to determine novelty and inventive step of an invention, as well as being a help to potential licensees. Such databases would also be helpful in the preservation of TK and, through that, of cultural diversity. Even though many initiatives are underway in this regard, databases have inherent limitations in the context of TK. Firstly, while they may forestall the grant of inappropriate patents, they are unable to address the problem of the non-accrual to the holders of TK of the economic benefits resulting from the use of that knowledge. Secondly, they will mainly contain the TK which is already in the public domain, and, in that case, prior informed consent is presumed. Thirdly, while documentation may fulfil an important function in defensive protection of TK, its role in positive protection is very much limited. Moreover, databases codify TK as it is identified and described at a particular time, which does not take into account its dynamic nature and its continuous evolution through incremental innovation. As such, they are static and rigid and would be useful only if they are systematically updated to keep up with the evolution of knowledge. Views have also been expressed that they may fuel further piracy of TK. Developing countries, thus, find bilateral agreements between the provider and the user of TK and TK databases to be inadeauate and ineffective.

298--.--

EVOLUTION OF PATENT LAWS

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OYA RIGHTS MODEL

IX. REGIONAL & NATIONAL INITIATIVES FOR PROTECTION OF TK Since the debate on s~iigenerisprotection of TK has heated up and because of the WIPO's bottom-up approach to the international protection of TK, based on the national experiences, a number of regional and national initiatives have been taken to protect TK under a sliigeneris model. As of February 2002, at least twenty two countries and certain regional integration organizations had made or were in the process of making available a sui generis form of legal protection for TK-related subject-matter. The regional initiatives have come from the Andean Community, the Organization of African Unity (OAU; now the African Union), the Central American Commission on Environment and Development, the Association of South-East Asian Nations (ASEAN), and the Pacific Islands Forum. These regional regimes, broadly speaking, are the framework for the mechanisms for access to GR's and benefit-sharing from the utilization of those resources. There are, however, certain differences over the extent of these rights enjoyed by the local communities. As a result of the efforts of OAU, the African Model Legislation for the Protection of Rights of Local Communities, Farmers and Breeders and for the Regulations of Access to Biological Resources (Model Legislation) was adopted in 2000. The Model Legislation pursues a number of inter-related goals. It generally seeks to ensure the sustainable management of biological resources. Within this broad objective, the Model Legislation focusses on a number of different issues. These include the question of access to biological resources, community rights, farmer's rights and plant breeders' rights. The Model Legislation first seeks to reassert countries' sovereign rights over their biological resources and proposes a system whereby access can only be granted with prior and informed consent of the state of origin of the biological resource as well as concerned communities. The Model Legislation also prohibits patent over life forms. As a result, individuals or legal entities that collect biological resources are barred from seeking patent over biological resources accessed in accordance with the Model Legislation. The Model Legislation recognizes three types of related property rights. Firstly, it recognizes the collective rights of the communities to their biological resources and the right to collectively benefit from their use, rights to their innovations, practices, knowledge and technology as well as the right to collectively benefit from their utilization. In practice, these rights allow communities the right to prohibit access to their resources and knowledge but only in cases where access would be detrimental to the integrity of their natural or cultural heritage. The right to control access is strengthened with a right to receive at least fifty per cent of the benefits derived from the commercial use of their resource or knowledge. The duty to channel the benefits back to the communi-

1

I

1

I

1

/ !

2%

ties is put on the state. The Model Legislation also provides for the recognition of community intellectual property rights. These rights include the rights of communities to community innovation, practice, knowledge or technology. Apart from the specific indication that registration is not a condition for the protection of community intellectual property rights, the Model Legislation does not provide a complete framework for community intellectual property rights, a task which must be undertaken by individual countries adopting the Model Legislation. The Model Legislation goes on to define farmers' rights which are to a certain extent more precisely defined. Farmers' rights include the protection of knowledge relevant to plant and animal genetic resources, the right to an equitable sharing of benefits arising from the use of plant and animal genetic resources, the right to participate in decision-making on matters related to the conservation and sustainable use of plant and animal genetic resources, the right to save, use, exchange and sell farm-saved seed or propagating material, and the right to use a commercial breeder's variety to develop other varieties. Besides the recognition of community rights and farmers' rights, the Model Legislation also defines plant breeders' rights along the lines of the model provided by the UPOV Convention. However, the breeders' right is balanced by granting certain exemptions including the right to use a protected variety for purposes other than commerce, the right to sell plant or propagating material as food, the right to sell within the place where the variety is grown and the use of the variety as an initial source of variation for developing another variety. O n the whole, the Model Legislation seeks to provide a framework which takes into account the requirements of Article 27(3)(b)of the TRIPS Agreement. At the same time, it also indirectly recognizes that it is relatively difficult to distinguish the plant variety protection regime from broader considerations concerning access to resources and knowledge, benefit-sharing and the protection of traditional knowledge generally, which includes not only farmers' knowledge but all other knowledge related to plant genetic resources, for instance, concerning pharmaceutical properties. In fact, the Model Legislation constitutes one of the few attempts to integrate plant variety protection with other concerns in a single legal instrument. The Andean common regime accepts the sovereign rights of the Andean States over such resources and, in case of intangible components of these resources, a fair and equitable distribution of the profits to the respective indigenous, Afro-American or local community from their use needs to be guaranteed. Article 3 of Decision No. 486 of Andean Community recognizes the right and competence of indigenous/local communities to decide on matters pertaining to their collective knowledge. Patent applicants must disclose the relevant information and modalities of the access to GR's and TK. The Model Law of the Pacific Islands Forum extends protection to TK in the "public

300

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

EVOLUTION OF PATENT LAWS

domain" and has retroactive effects regarding moral rights but not economic rights. The draft ASEAN Framework Agreement in its present format merely reiterates the language of the CBD but talks about involving local/indigenous communities in decision-making on access to GR's and benefit-sharing. Among the notable countries, which have enacted specific TK-related laws are Brazil, Costa Rica, Guatemala, Panama, The Philippines, Peru and Portugal. India has also enacted new laws protecting TK in specific areas. Bangladesh drafted the Biodiversity and Community Knowledge Act in 1998 which, however, is yet to be enacted. The Brazilian slli generis measure was enacted in 2001 to protect the TK associated with biodiversity. It establishes a regime for access to genetic resources, including specific provisions on the protection of associated traditional knowledge. Under this legislation, the State recognizes the right of indigenous/local communities to decide on the use of their TK associated with the genetic heritage, which includes the cultural heritage of Brazil. The protection of TK is mainly ensured through a bilateral approach, that is, through contracts of access, the purpose of which is to ensure the sharing of benefits arising from the use of genetic resources and associated TK. Art. 9 of the Law is important, as it guarantees the rights of indigenous/local communities that create, develop, hold or preserve TK associated with the genetic heritage to have the origin of the TK mentioned in all publications, uses, exploitations and disclosures; prevent unauthorized third parties from using, exploiting, experimenting, disclosing, transmitting and re-transmitting data and information that integrate or constitute associated TK; and derive profit from economic exploitation by third parties of associated TK in which the rights are owned by the community. The law provides for sanctions including fines, the seizure of illegal material and products embodying unlawful material, prohibition of distribution, invalidation of patents or registration, loss of governmental incentives, etc. Costa Rica's law on Biodiversity is basically aimed at giving effect to the CBD at the national level and, thus, is not a specific law on TK. It, nevertheless, recognizes community rights in TK, which does not require any prior declaration, express recognition or official registration and, as such, may include practices which acquire that status. The Law contains specific provisions on the protection of intellectual and industrial property rights, which also include s ~ l i gerierzs community intellectual rights (Art. 77). The Law provides for an inventory to be drawn up of specific stli generis rights that the communities wish to protect. The registration of these rights shall be voluntary and free of charge (Art. 84). The Law also establishes the prior informed consent of local communities as a condition to grant access to genetic resources. The Guatemalan Law provides for protection of TK from the national cultural-heritage-oriented approach. The protection is accorded to expressions of national culture comprising intangible cultural-htri tage expressions, includ-

*

!

301

. ing traditional medicinal knowledge, music, performances and the like, by

means of registration in a Cultural Goods Registry. They cannot be disposed of by means of contractual arrangements; that is, they cannot be sold and there is no right of remuneration. It has the public-good approach towards TK in the sense that TK is to be identified, recorded and preserved by the State for the benefit of the entire society. The stligeneris regime of Panama to protect TK is very comprehensive. Its objective is to protect the collective intellectual property rights and TK of indigenous communities through the registration, promotion, commercialization and marketing of their rights in such a way as to give prominence to indigenous socio-cultural values and cultural identities and promote social justice. Another key objective is the protection of the authenticity of crafts and other traditional expressions. The scope of the protection is very wide and encompasses customs, traditions, beliefs, spirituality, and folkloric and traditional expressions of indigenous/local communities. TK is protected to the extent i t provides for the cultural identification of indigenous peoples and is suspectible to commercial use. Collective intellectual property rights and TK embodied in the creations of indigenous peoples such as inventions, designs and innovations, cultural and historical elements, music, art and traditional artistic expressions are protected. Collective exclusive rights are accorded to registered elements of TK. In order to be protectable, however, the subject-matter must be susceptible to commercial use. If there is no known author and no date of origin of the protectable subject-matter, it will constitute the heritage of an entire indigenous people. These "collective indigenous rights" may also be the basis of opposing unauthorized third-party claims in IPRs. The authority to attribute rights is vested in the Congress or the Traditional Indigenous Authority. Protection is dependent on the registration of the relevant TK. The law also provides for exceptions to rights conferred as well as measares of enforcements. The Executive Decree of 2001 has made clear that the regime covers biodiversity-related TK, thus giving a practical expression to Art. 8(j) of the CBD in Panama. Peru adopted the Law on the Protection Regime for the Collective Knowledge of Indigei~ousPeoples in 2002, which recognizes that the TK of the indigellous people helps to conserve and make use of the components of biodiversity. The Law establishes a arigeneris regime that recognizes the indigenous peoples' ownership and associated rights over their TK as well as their right to decide on how it should be used. Prior informed consent of the relevant community is required for access to kn6wledge not in the public domain, independently of the purposes for which access is sought. The Law also stipulates that indigenous peoples may enter into "knowledge licensing contracts" Which specifies the terms for the use of their knowledge. Voluntary registration protected indigenous knowledge is set up under the Law within the National

302

EVOLUTION OF PATENT LAWS

-

/

Institute for the Defense of Competition and the Protection of Intellectual Property. The registration is not a condition for protection, however. The law makes an interesting distinction between knowledge which is in the p~lblic domain when it is accessed and knowledge which is not. In the case of knowledge which is not in the public domain, the law mandatorily ~ r o v i d e sthat no less than 10 percent of the value of gross sales of goods developed on the basis of collective traditional knowledge should be forwarded to a fund for the development of indigenous peoples. In the case of knowledge which is already in the public domain but has been so for less than 20 years, a percentage of sales yet to be defined will also accrue to the fund. If the knowledge has been in the public domain for more than 20 years, no compensation is due. The Philippines was one of the first countries to enact law protecting the rights of indigenous peoples. The Indigenous Peoples' Rights Act of 1997 and its regulation, Executive Order No. 247 of 18 May 1995, protect the rights of indigenous communities in TK in general, including the right to limit the access of researchers in their ancestral domain/lands or territories and to receive royalties from the income derived from any of the researches conducted and from resulting publications. Access to bio-resources and G.R1swould be subject to prior informed consent obtained in accordance with customary laws of indigenous peoples and to the conclusion of agreements between the bioprospectors and The Philippines government. Protection of TK in Portugal has been provided within the framework of Decreto-Lei No. 119/2000. Protection is conferred to the intangible elements associated with the industrial or commercial use of local plant varieties and other local native material of current or potential interest. Protection is conditional upon the identification, description and registration of the TK in the Register of Plant Genetic Resources. Also, i t is limited to the knowledge which was not publicly known outside the population or local community where it was obtained on thedate of filing. However, the regime also provides protection of confidential TK. Rights in TK are granted to individuals in the nature of the other IPRs. India has not brought out any TK specific regime, but laws adopted to give effect to its obligations under the TRIPS Agreement, the CBD and the PGRFA Treaty has reiterated India's stand ~ndifferent inter-governmental bodies working on the protection of TK. The Patents (Amendment) Act, 2002 provides that applicants seeking protection for biological inventions must disclose in their patent applications the sources of origin of the biological material used in the inventior.. It also allows opposition to the patent application to be filed for failure to disclose or wrongly mentioning the source of origin of the biological material for the invention in the specification. A patent application can be rejected or a patent can be revoked for non-disclosure or wrongful disclosure

rejected or a patent can be revoked for non-disclosure or wrongful disclosure

303

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

'

,

II

1 I

I

I

of the source of origin of biological resources or TK in the patent application

and prior disclosure of knowledge, oral or otherwise. The Protection of Plant Varieties and Farmers' Rights Act, 2001 has provisions protecting farmers' right. Farmers have the right to save the harvested of protected varieties and to use and sell them so long as they are not branded. The Act also has a provision on benefit-sharing which depends on the registration of genetic material by villagers and local communities and on the of their right. Once a variety has been registered on that material, benefits will accrue to the community which will first be deposited with National Gene Fund (Section 41). There will, however, be no proprietary rights of the community over the variety. The Biodiversity Act, 2002 regulates access to genetic resources and associated knowledge. The Act's main premise is to check bio-piracy. It also has elaborate provisions on benefit-sharing but is weak in prior informed consent. There is no provision for the involvement of communities in decision-making, which is supposed to be taken care of in framing the operational rules for the Act. The Act is very much influenced by the Bonn Guidelines. The National Biodiversity Authority (NBA)is the principal body for granting access to genetic resources and stipulates the conditions therefor. It has laid down elaborate provisions on benefit-sharing (Section 21). Monetary benefits will first be deposited with the National Biodiversity Fund, which will channel its use. Access to genetic resources for research purposes also requires the prior approval of the NBA. India has also created digital databases of prior art related to medicinal plants used in the Indian systems of medicines - Ayurveda, Unani and Siddha. Besides these TK-specific laws of different countries and model regimes proposed at the regional level, many countries are using existing IP laws to protect TK, namely Australia, Canada, Colombia, Kazakhstan, New Zealand, the Russian Federation, Venezuela and Vietnam.

X. CRITICAL APPRAISAL OF THE OUTCOMES OF VARIOUS REGIONAL AND NATIONAL INITIATIVES A review of the various srli ,generis regimes reveals a great diversity in approaches in the scope and modes of protection of TK. While some of them are comprehensive and include tangible and intangible elements of TK - such as Panama's, which includes traditional cultural expressions - most of them are limited to biodiversity and genetic resources, access to those resources and benefit-sharing from their utilization. There are also elements of extra-territorial application in some of these regimes; Bangladesh's proposed law, for example, has provisions to reclaim and regain resources deposited in international or national gene banks or in any other private or public ex-situ or in-situ collections. Most of these regimes are concerned with the defensive protection of TK against misappropriation and emphasize control, with no provision for diffusion and Promotion of TK. In some cases, rights will accrue on registration (Peru, Portu-

A

-

1

V

misappropriation and emphasize control, with no provision for diffusion and - Promotion of TK. In some cases, rights will accrue on registration (Peru, Portu-

304

--

15. TRADITIONAL K N M G L C O N S T R U C T I O N OF A RIGHTS MODEL

EVOLUTION OF PATENT LAWS

305

(a) TK model based on utilizing TRIPS flexibilities and modifying procedural conditions on patentability;

gal, Guatemala) while in others, they belong to the people in perpetuity (Bangladesh)and registration is voluntary (theOAU Model Law, Peru). In some cases, TK in the public domain is treated differently and/or considered outside protection (Peru); in others, it is under the control of local communities (the OAU Model Law) or its exploitation is subject to payment of a specified fee (Bangladesh, Peru). These laws d o not provide any distinct approach towards enforcement of rights or mechanisms and remedies available for the infringement of these rights. Enforcement of rights within a national legal system is an important aspect of any effective regime, a fact which has been overlooked in these na tional efforts. Enforcement, in turn, is very much dependent upon who are the beneficiaries and in whom the right vests. This again requires a definition (which has not been attempted in these initiatives), preferably inclusive of the indigenous/local communities and the rights conferred. If these communities reside in a particular area, it is easier to identify them as beneficiaries than when they are scattered in different areas/countries. Approaches are different under these laws as to whether the rights will be held collectively (such as Brazil, Bangladesh, Panama and Peru) or individually (as in Portugal). Legal regimes need to define how the communities will be represented to assert their rights and what are the measures for enforcement of the rights. Enforcement may be based on the formal legal system or on informal customary laws of indigenous / local communities. These national/regional regimes also d o not provide any distinct approach to facilitate access to genetic resource for commercial and scientific purposes for further research and development of TK. In their concern to prevent unauthorised access to GR's for commercial purposes, access has been hindered even for researchers for scientific purposes. In fact, the requirements of access permission should serve the purpose of preventing undue exploitation rather than preventing research. There is also the multiplicity of stakeholders whose consent needs to be acquired. To reap the benefits from the system and not to unduly hinder access by genuine parties, the procedure needs to be transparent and less cumbersome.

(b) Petty patent model; (c) Geographical indications (GI) as a tool for TK protection; and

I 1

I I

XI. SUGGESTED MODELS OF TK Although there have been a number of international, regional and national initiatives towards the creation of either a stiigeneris TK regime or incorporation of TK-friendly features within the extant IPR regimes, these, nonetheless, have fallen short of expectations. This may have happened on account of an asymmetry between the interests of various stakeholders, leading to divergent pulls and pressures during the process of policy formulation. Thus, the debate is still raging on the formation of an ideal TK regime. In this regard, certain leading suggestions are proposed to be taken up for detailed scrutiny. These are: i*t

(d) An effective sui gerzeris TI( model. (a) TK Model based on utilizing TRIPS Flexibilities The TRIPS Agreement provides a legal framework for IPR's which mandates rather strict obligations. In this regard, it differs from a number of other international treaties, in particular, in the fields of environment, agriculture or human rights in so far as the latter treaties tend to provide broad obligations. As a result, member states have less freedom to fit their constitutional obligations and policy needs while implementing it at the local level than in case of many other international treaties. The general qualifying clauses of the TRIPS Agreement are, therefore, of great significance since they provide an important avenue for countries to bring in flexibility at the level of the implementation of the TRIPS Agreement. The first important provision is the Objectives clause - Art. 7 - which emphasizes the basic principle of a balance between the rights provided to IPR holders and broader social welfare. This means that there must be a balance between the gains brought about by technological innovation to some segments of a population and the need for technological innovation to trickle down and have positive impacts for the majority of the population. Thus, the balancing act concerning the introduction of IPR's in a TK-relevant field such as agriculture must include not only aggregate food security at the national level but also individual food security. Similarly, Art. 8 provides a more specific acknowledgement that in implementing the TRIPS Agreement, Member states can take measures to protect nutrition and to promote the public interest in sectors of vital importance to their socio-economic and technological development. This provision, therefore, recognizes the special case of basic needs. Together, Articles 7 and 8 authorize Member states to take a broad view of substantive provisions. In fact, under Art. 7, it might be possible to argue that there is a scope for derogation from some of the specific minimum standards of protection provided for under the TRIPS Agreement. This may, for instance, include derogation from the scope of patentability in the context of technologies which are the subject-matter of TK or which are directly linked to the fulfillment of basic needs, with a view to achieve the broader balance called for in Art. 7 between the interests of various actors involved. This flexibility has been availed by India. Accordingly, Sec. 3(p)of the amended Patents Act, 1970 provide that neither traditional knowledge nor any aggregation or duplication of known properties of traditionally known compois patentable in India.

EVOLUTION OF PATENT LAWS

Similarly, Art. 7 and Art. 27(3)(b)concerning plant variety protection also provide a framework allowing developing countries to take into account their other international obligations in implementing IPR commitments. The scope provided by the TRIPS Agreement can be further exploited in different ways. Firstly, flexibilitiesprovidean opportunity to go slightly beyond the TRIPS Agreement by bringing in other important issues, such as the protection of the farmer's rights and the protection of traditional knowledge, elements which are not part of the TRIPS Agreement but called for by other treaties in the field. Another avenue is to follow what WTO Member states did in the coiztext of medical patents. In that case, the Doha Ministerial Conference reasserted theexistence of flexibility options within theTRIPS Agreement and went on to create new avenues for flexibility, in particular, in the context of Art.3l(f) on compulsory licences. In general, however, flexibilities within the TRIPS Agreement has its limitations. Therefore, adding goals related to sustainable development instruments such as, food security, agro-biodiversity conservation, preservation of folklore & traditional med~cinesetc., may prove difficult within the boundaries of the existing agreement unless the exceptions and flexibilities are pushed to the limit of their possible interpretation. There are also some practical reasons which makes the existing IPR system not well adapted for TK such as the relatively high costs involved in applying for patents and maintaining the rights. However, it has to be recognized that the existing patent system partly performs the function of the defensive protection in respect of TK. Thus, many TK or its embodiments in the public domain are indirectly protected from being patented by outsiders. In view of this, it may be useful to consider modification of certain procedural requirements and safeguards to ensure that the patent system does not lead to any f ~ ~ r t h e r unwarranted appropriation of TK in the future. These include the introduction of novel ways to address the issue of prior art, the introduction of a disclosure requirement, suitably adapting the novelty requirement and adding a new understanding of the notion of joint inventorship. In fact, the latter two modifications are designed to perform a positive function. These procedural issues are being discussed hereunder; (i) Prior Art Search Many serious patent controversies associated with TK have been linked to insufficientprior art searches. Prior art is information in written, oral or any other form that is accessible to the public before the filing date of the patent application or before the priority date of the application, depending on the national rules. The main issues regarding prior art searches are two-fold. First is the procedure that patent offices put in place to verify the accnracy of the claims embodied in patent applications. It is seen that public domain knowledge is not easily accessible

I

1

,

,

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

307

through the normal search procedures that patent offices use. Second concerns the national law on the issue. Thus, oral publication in a foreign country does not count as a proof of prior art within the USA. One way to help patent offices in prior art searches is through the development of specific traditional knowledge databases. Further, the national law should provided for opposition to grant of TK patent wherever evidence is produced that it is, in fact, in the public domain in another country. This can, however, be a cumbersome and expensive strategy because it forces the opposing party to challenge the patent in the jurisdiction where it was granted and show that each and every claim made in the patent application is invalid because it is anticipated in prior art. (ii) Disclosure of Origin requirement The question of the introduction of a direct or indirect requirement for patent applicants to disclose the source of the knowledge or biological resources they have used in the claimed invention has been at the centre of significant debates in interpational forums. At present, international patent treaties do not include specific requirements to disclose the origin of the resources or knowledge from which the protected invention is derived. The question of a disclosure requirement is important from the point of view of the relationship between the patent system and traditional knowledge. While prior art searches by pateqt officers may be enhanced by better access to available knowledge, a disclosure requirement would reduce the workload of the patent offices by helping them :.s focus their searches more effectively. Further, disclosing the origin of knoatdedge or biological resources used in an invention provides an easier yardst-ik to judge whether an invention has benefitted from the existence of traditional knowledge. The introduction of a disclos~lrerequirement in patent applications would have several advantages. Firstly, it would ensure that patent applicants double check prior art in their field before applying for a patent. Secondly, i t would provide an avenue for claimsof benefit-sharing or for claims of joint ownership. Thirdly, it would provide a needed confirmation that prior informed consent has been obtained wherever available or more generally would provide a way to confirm that the condition for accessing the knowledge and resources from the source country have been fulfilled. From the point of view of the traditional knowledge protection, it is likely that a disclosure requirement introduced as a condition of patentability would be an effectiveinstrument to ensure that the traditional knowledge is fully taken into account and acknowledged by the patent applicants. It would have the advantage of forcing patent offices to examine the question of disclosure at the outset. The legality of such a requirement under TRIPS has been questioned because Art. 27 provides a finite list of substantive conditions that can be imposed on patent applicants. However, there is no need to conceive the

308

.

I

EVOLUTION OF PATENT LAWS

requirement as a substantive condition of patentabilty. Art. 62 of the TRIPS Agreement expressly provides that Member states can introduce 'reasonable procedures and formalities' as long as they are consistent with the provisions of the Agreement. The requirement of the disclosure of origin has already been incorporated in the legislation of some developing countries. The Costa Rican Biodiversity Act provides, for instance, that intellectual property rights on invention using biological resources can only be granted if a certificate of origin is provided to the organs instituted under the Biodiversity Act. The Indian Patents Act, 1970, as amended in 2002, now includes a requirement concerning the disclosure of the geographical origin of biological materials used in the invention. This requirement is limited to physical resources. In view of its significance, it is necessary that a quick agreement on this issue is reached at WIPO. (iii) Adapting the Novelty requirement One of the significant difficulties with regard to protecting TK through the existing patent sys tem has been a selective application of the criterion of novelty. Thus, while advances made in western science and technology are easily classified as novel, important advances in a different system of knowledge are disqualified. In other words, TK has been considered as a misfit in the patents system as it is often deemed to bring insufficient novelty to qualify for protection. However, there has been a progressive lowering of the standards of inventiveness witnessed in recent years. Thus, patent rights have been obtained on purified natural substances, mere different forms or uses of a substance etc. In view of this, there is a need for reassessment of patent protection of incremental nature but causing significant value-addition. (iv) Joint Inventorship In certain cases, it may be possible to explore possibilities for a more direct recognition of TK holder contributions where this is significant enough. This can be done by invoking the concept of joint contributions to an invention. Ttus concept, technically called as 'Joint Inventorship', is not unknown to the patent system. In principle, the main requirements imposed for joint inventorship are that each of the joint inventors must contribute to the inventive element of the protected invention and that they may collaborate with each other. More specifically, the joint inventors must produce an invention by their aggregate efforts and must work on the same subject-matter. Although the notions of joint inventorship has been developed in conditions that are very different from the conditions that a patent office would face in the case of an invention to which both a TK holder and a genetic engineering firm contribute, yet the principles developed could be applied in the case of TK.

1

1

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

309

Thus, in the case of traditional knowledge obtained with prior informed consent from original holder, normal patent rule can be relatively easily used to provide joint inventorship to traditional knowledge holders if their contribution is clearly linked and relevant to the final product. Overall, the determining test may be that the contribution of the joint inventor must be essential in distinguishing the invention from prior art. While the merits of each case would have to be examined individually, there are situations where the contribution of the traditional knowledge holders to a given invention may constihlte an integral part of the protected invention. However, while it may be relatively easy to determine the joint nature of an invention based on the traditional knowledge of a healer who does not share knowledge with other members of her/his community, this would be much more difficult in a case like the turmeric patent where the contribution to the overall invention would have been the inventive effort of a broad community and not that of easily identifiable individual(s). The above discussions have revealed multiple difficulties in integrating the subject-matterof TK even witha modified version of patent regime. Thus, although there are many proponents who argue for more safeguards within the paradigm of IPR's, the solution camot lie within the problem. In view of this, it may be necessary to look beyond the narrow confines of TRIPS and extant patent regimes. However, before we take up the eagerly awaited effective szii generis TK model, it would be unfair to omit discussion on some serious attempts made over a long time-period to address, from within the IPR system, some of its perceivec! deficiencies in the context of TK.

(b)Petty Patent as a model for TK Protection There have been proposals for the introduction of so-called second-tier patents or petty patents which provide protection for innovations which cannot fulfil the criteria of the patent system. Such modified systems are noteworthy in the context of TK. The development of second-tier patents, which began with UK Utility Design Act of 1843, was linked to the need to find the legal instruments that could provide protection to innovations that were not deemed significant enough to warrant the grant of a patent but were genuine innovations. As a result, the idea behind petty patent was such a protection which was short-term and which was granted on the basis of diminished standards of inventiveness compared to patent law. Another important factor accounting for its development was the need to find a form of intellectual property protection that could be obtained faster and cheaper than patents. In general, second-tier patent Systems provided a way to reward functional improvements in three-dimensional shapes of tools or similar developments which neither patent nor trade secret law effectively protected. In other words, second-tier patent rewarded enhanced technical proficiency of tools but neither protected the underlying idea nor the manufacturing process.

310

EVOLUTION OF PATENT LAWS

There could be different methods of implementing a petty patent regime in the context of TK. Thus, on the one hand, the lowering of the barrier concerning the inventive step could lead to the recoqnition that a locally developed plant variety was worthy of protection. This would enable farmers a measure of control over follow-up innovations derivt 1 from their protected variety. This method is, however, prone to a familiar criticism that such a broadening of the scope of patentability has a potential to harm further scientific and technological developments. On the other hand, states could decide to deny protection of the 'inventive step' for a local variety but simply provide that copying the product should be illegal. In this way, where innovation is deemed insufficient to qualify for a patent, protection through a right akin to copyright would provide the most limited form of protection possible. While second-tier patenting indicates certain possibilities in which the patent system could open itself to TK, the response it provides remain limited by the framework within which they are conceived. (c) Geographical Indications (GI) as a tool for TK Protection Art. 22(2) of TRIPS provides that WTO Members must make protection of geographical indications available to "interested parties", a term broad enough to apply to aboriginal communities and rural populations that hold TK. In practice, for the developing countries, GI's have the potential to be an important instrument for the protection of products derived from plant genetic resources and TK, as this protection requires the quality, reputation or other characteristics of a product to be essentially attributable to its geographical origin. This allows the protection not merely of the uniqueness of the product but also the uniqueness of its origin and traditional knowledge at that place. From the perspective of TK, geographical indications are attractive for several reasons. Firstly, they differ from other types of IPR's in so far as they provide a collective right to use the indication which implies that an indeterminate number of people within a designated area may benefit from an exclusive protection against outsiders. As it does not restrict the number of rights holders within the area, it may be more amenable to adaptation to TK protection. On account of this quality, GI scores over trademark protection. Whereas trademarks seek to provide signs that distinguish products from a given entity from its competitors, GI's are freely enjoyed by all product manufacturers and traders in the specific area and protect all of them from inappropriate use of the indication. Further, unlike trademarks, GI's cannot be transferred, a significant advantage in all situations where transferability involves a risk for the weaker party as is likely to be the case with TK holders.

I

I

I

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

31 1

Secondly, GI's do not impose any tests of novelty like the patent system. In fact, they can specifically be used to protect traditional products as long as the particular characteristics of these products can be attributed to a specific geographical origin. Thirdly, protection through GI's allow not only different production methods to be covered under a given indication but also for production methods to ~ h a n g eover time within the scope of protection offered. Thus, GI's recognize the intrinsically evolutionary nature of TK. Fourthly, GI's d o not imply monopoly control over the knowledge that is embedded in the protected indication. In fact, this knowledge remains in the public domain. Despite some clear advantages, GI's suffer from certain limitations. Firstly, they can only be used to protect an indication and can not constitute a tool to protect the underlying knowledge. Secondly, GI's that are deemed to have become generic lose all their usefulness from the point of view of TK protection. Thirdly, without setting up certain strict safeguards, its effectiveness may be suspect. Thus, there is a need to provide an embargo against outsiders acquiring a company making the specified goods within the protected area. Overall, although GI's provide some interesting possibilities to protect TK but the protection remains limited in so far as indications are conceived as marketing tools and d o not protect the knowledge related to the product. (dl Effective sui generis TK model Earlier, we had discussed the various characteristics of TK. We had also dissected it into three major knowledge domains and studied their mutual contestations. Yet, the TK debate remained isolated from other resource domains. It is now widely felt that fragmentation of landscapes, eco-systems and bio-spheres along artificial boundaries does impair our ability to let the socioecological interactions be monitored or managed in a most sustainable manner. It is, therefore, necessary to understand about the various valuable resources natural, social, ethical and intellectual - available in a tradition-based society in order to appreciate the nature of TK based intellectual property in a holistic perspective. Such an analysis will be immensely useful for drawing a right and proper effective szii generis traditional knowledge model. (i) Understanding the various facets and linkages of Intellectual Property based on Traditional Knowledge The natural resources available in a society constitute its natural capital. This natural capital has provided the spur for economic progress all through the history, though its precise role has varied. The natural capital can be governed by social capital, some of which is also ethical capital.

312

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

EVOLUTION OF PATENT LAWS

I

Social-Capital

Natural Capital

Zone of Contestation [FIG 4. : Source : Gupta 20011

The social capital represents the positive trust and mutual respect that exists in the communities i.e. community-based institutional arrangements that contribute to conditions for conservation, reproduction and sustainable utilization of natural capital. Ethical capital are essentially such investments and institutional arrangements that may be governed by ethical norms of accountability, transparency, reciprocity and fairness to both human and non-human sentient beings. When common property institutions follow ethical values, then the intersection of social and ethical capital takes place. Intellectual capital is a broad-based knowledge system including the rultural, technological and ecological knowledge of local communities and individuals which is embodied in literature, data bases, folklore and other kinds of formal and informal sources of wisdom. The intellectual property is a subset of intellectual capital, which may draw upon social, natural and ethical capital. The mutual contestations and dynamic interplays among the natural, social, ethical and intellectual capitals in a given community can be better appreciated by a schematic representation. (Fig. 4) The purpose of the above analysis is to emphasize that intellectual property is only one of the various means of conserving and augmenting natural re-

i

.

313

sources and associated knowledge systems. This environmental perspective shall inform the contours of an effective sui pneris TK regime. Although the above analysis does assist us to understand a certain localized intellectual property in a macro-perspective, yet, in order to establish a sui generis regime, a further analysis of intellectual property residing in a traditional knowledge system may be useful. Indigenous or traditional knowledge producers innovate collectively. Their knowledge systems are mainly aimed at self-provisioning and local self reliance in nutrition and health care. Instead of individual rights, the dominant themes are community rights and collective innovation. If communities d o not conserve the resources, the individuals will not be able to access, experiment, innovate, develop solutions and specialize. Therefore, there has to be a proper recognition of the rights of communities as well as individuals. Further, this innovation also takes place over time i.e. it is accretional, informal and prolonged. The knowledge evolves as it modifies, adapts and builds upon the existing knowledge. In other words, innovation is not an isolated activity. The current definition is based on a false and artificial construction of individual innovation as a one-shot step in time. A redefinition of 'innovation' is, therefore, needed that reflects this process of innovation cumulatively over time, and collectively across a community. The quest for a knowledge intensive society will be fulfilled when public domain will expand and proprietary knowledge will be balanced with open source pool of innovations and traditional knowledge. (ii) Meaning of an effective sui generis TK regime A s t ~generis i TK regime is a broad property rights regime which focusses not only on commercialization but also on other wider issues. Thus, while addressing questions of ownership of existing traditional knowledge, it also includes questions of traditional knowledge innovations, questions concerning the safeguarding of existing traditional knowledge and question concerning the conservation and enhancement of underlying biological resources. Thereby, it ensures the integration of issues related to protection of the intellectual assets of TK holders with issues related to the sustainable management of the underlying resources. While doing so, the social capital and ethical capital present in a society, as already elaborated earlier, must be given due importance. The development of a sru generis TK regime could, in this sense, constitute a model for the development of 'sustainable intellectual property rights' providing for the integration of, inter alia, environmental and agricultural concerns with the intellectual property rights frameworks. As an illustration, a sui generis TK regime for a farmer community must include positive features geared to accord farmers the right to commercialize their own knowledge rather than simply stop others from commercializing it. Accordingly, such a regime would include the Protection through property rights of commercially relevant traditional knowl-

31 4

EVOLUTION OF PATENT LAWS

edge, the conservation and management of biological resources and plant genetic resources and the recognition that plant variety management and protection is intrinsically linked to the fundamental human right to food. Effectiveness of such a regime is dependent upon the ability to accord conprehensive protection to all economic actors in relation to the commercial rights over their knowledge and also on wider human rights considerations linked to food security. (iii) Wisdom of having the required kind of sui generis regime Whereas existing intellectual property rights were conceived before the development of the notion of sustainable development, today all states need to take into account their constitutional and international obligations not only in the field of intellectual property but also in related relevant fields. The idea of a sili gelzeris protection, preservation and promotion regime provides the developing countries with the conceptual justification for looking beyond the established categories of intellectual property rights to protect certain inventions in accordance with the specificities of the field concerned and the specific needs of the individual countries. It also steers away from an all encompassing suigeneris regime of protection of TK, which may not be flexible enough to accommodate the local needs of individual countries. This aspect is significant as a "one-size-fits-all" model, without taking into account the diversity and unique needs of individual communities, would not be able to address all the issues to protect and promote TK. An ideal slri generis regime, therefore, provides a conceptual foundation for integrating intellectual property rights with capacity building of indigenous /local communities and sustainable development. (iv) Parameters of a sui generis TK model While constructing a siligeneris TK model, it has to be remembered that its subject-matter is peculiarly diffuse, its rightholders are often a whole community or a disparate group of people. The institutional challenge is, therefore, vast and incapable of yielding a solution by any application of pre-designed and specified uniform formula. In addition, certain concepts such as 'innovation' requires a modification in the context of a TK regime. National measures hold the key for TK protection and promotion, as the international measures will only be able to protect the economic aspects of TK if it is put into commercial use. Moreover, an international regime would be mainly limited to its protection and not concerned with its further development, diffusion and conservation, tasks which can be met only under national systems. For example, TK is very much specific to the land and habitat in which indigenous/local communities live. If it is to be maintained, the social and economic context in which it has developed must be maintained. Separating it from its surroundings is killing TK rather than helping in its enhancement or conservation.

-

-

15. TRADITIONAL KNOWLEDGE CONSTRUCTION OF A RIGHTS MODEL

315

It has been observed that the local communities, the repositories of TK, in developing countries are often characterized by decentralized, dispersed, polyspurs of social, ecological and economic entrepreneurship. Gerlach and . palmer labelled these forces as SPIN (segmented, polycentric, integrated networks) while Anil K. Gupta views these as SPLICE (segmented, polycentric, loosely integrated and co-ordinated entities). They are segmented because historically, the formal and informal institutions which are meant to connect creative voices have remained weak. The polycentric nature of these forces is apparent from the fact that there is no single leadership which either spurs or sustains these loosely integrated or connected networks. As a result of loose coordination, many times these forces remain on the margin and, thus, their Dotentialdoes not get realized for a long time. It has now been realized that a subtle networking among the grassroot deviants, innovators and other marginal forces in a community can give enough momentum to the civil society initiatives to transform its entrepreneurial profile. Of late, a perceptible coordination among these entities and networks is slowly emerging through civil society initiatives such as SRISTI and its Honey Bee Network (see Box I ) but these are still incipient. Box 1:SRISTI and the National Innovation Foundation Besides theoretical perspectives on ways to adapt the patent system, there has been at least one prakicil effort in India using the existing patent system to reward innovations which are either traditional knowledge innovations or innovations which would not be considered as going beyond the existing state of the art. These efforts have been spearheaded through three inter-related initiatives. The first step in this effort was the setting up of the Honey Bee Network which has sought since 1990 to document traditional knowledge in a framework allowing knowledge providers to share some of the benefits from the transfer of knowledge to outsiders and generally to foster innovation at the local level. The network was institutionalized and this is now known as the Society for Research and Initiative for Sustainable Technologies and Institutions (SRISTI). IN 2000, a new initiative was taken up at the national level with the establishment of the National Innovation Foundation (NIF) which is an autonomous body set up by the Department of Science and Technology to support innovators in the informal sector. Both SRISTI and the NIF have a number of inter-related objectives. Firstly, With regard to scouting, several campaigns of the NIF have yielded thousands of innovations and traditional knowledge examples. Secondly, the NIF seeks to contribute to research and development to optimize informal innovations with the help of western science and technology inputs. Thirdly, the NIF endeavours -. to support the transition of informal innovation to self-supporting activities. With the aim of adding value to innovations, the Grassroots Innovation Aug-

316

EVOLUTION OF PATENT LAWS --

-..-

mentation Network (GIAN)was established in 1997 to link innovations, investment and enterprise. Among the different aspects of the work of SRISTI and the NIF, the protection of intellectual property rights is one of the important components. From the perspective of intellectual property rights, one of the central aims is to try and ensure that informal innovators can be users of the patent system. Specific aims include, for instance, mobilizing resources and efforts to allow the filing of intellectual property rights claims which informal innovators would not be able to afford otherwise. It also includes the provision of assistance to innovators to allow them to enter into licensing agreements with entrepreneurs for transferring the technology. By August, 2003, 46 patent applications had been filed in India and abroad alongwith 2 trademark applications and 1 design application in the context of NIF activities. The kinds of innovations for which applications have been filed include agriculture related devices such as an improved thresher and a weed remover, devices with broader uses such as portable power generating device and an improved bicycle and devices in the high technology segment such as a fibre optic cable. Among the innovations for which intellectual property rights applications have been filed, there are a number which fall within the domain of traditional knowledge and some which 1 may go beyond while still being produced in the informal sector. In general, from an iritellectual property rights perspective, SRISTI and the NIF have 1 contributed to promote local informal innovations in various sectors. These are, however, not focussed on biodiversity related traditional knowledge. The SRISTI and the NIF experience would thus tend to indicate for the time being that there is more scope within the existing intellectual property rights system to reward small-scale innovators of novel devices and processes than to reward innovations in the field of plant genetic resource management.

---

--

1

["Intellectual Property Protection and Sustainahle Dezdopment" - Philippe Ctillet (2005)J But, it is expected that these initiatives will enable these communities to transcend the technological and institutional inadequacies faced by the innovators, and TK holders. However, to ensure that these initiatives enable SPLICE work in a sustainable manner, an injection of innovations is badly needed. The national and international institutions, particularly core science and technology ones, cannot find solutions for highly location specific problems faced by the people in a given region. Such solutions can be provided by innovations based on traditional knowledge and resources. Incentives for these innovations, accountability towards these innovators and opportunities for these individual or collective innovators to generate more efficient and competitive livelihood support measures are necessary. Several small, simultaneous and sequential changes in different sub-systems of society will be needed to institutionalize the

1

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

317

Honey Bee Philosophy. A lot of useful work has been performed in this area by GIAN, established by NIF (see Box 1). (iv) Towards a Special Innovation Patent System Earlier, we had occasion toconsider "Petty Patent System" as an alternative TK model. However, this system, being derived out of IPR model, is essentially a passive model i.e. it does not envisage positive measures which constitutes the core concern of an effective sul generis TK model. In this section, an attempt would be made to lay down possible parameters of a positive model of special innovation patent system so as to conserve the existing individual and community knowledge domains and promote further innovations. In the next section, this effort shall be complemented by erecting a protective regime against misappropriation of public domain knowledge in view of predatory tendencies of existing IPR regimes. (v) A new concept of TK Innovation Before we set out to lay down an institutional model to conserve and promote TK, it may be essential to define 'innovation' in the peculiar matrix of TK. Earlier, it was seen that such innovations are accretional, informal and prolonged. A redefinition of 'innovation' is, therefore, needed that reflects this process of innovation cumulatively over time and collectively across a community. A team of scientists and lawyers of the Third World Network have proposed to define 'innovation' as follows to reflect the innovation in indigenous systems in order to protect the 'collective right' of indigenous innovators: "Innovation includes any collective and cumulative knowledge or technology of the uses, properties, values and processes of any biological material or parts thereof, rendered of any, or enhanced, use or value as a result of the said cumulative knowledge or technology whether documented, recorded, oral, written or howsoever otherwise existing including any alteration, modification, improvement thereof; and shall also include derivatives which utilize the knowledge of indigenous peoples and local communities in the commercialization of any product as well as to a more sophisticated process for extracting, isolating, or synthesizing the active chemical in the biological extracts or compositions used by the indigenous peoples." The foundation is now ready to erect a positive TK model. (vi) Linking Innovation, Investment and Enterprise It is seldom that the three skills - innovation, investment and enterprise are at one place. Innovators often may not like to become entrepreneurs themselves. And, even if they want to become entrepreneurs, they may not have access to risk capital, technical know-how or design input for making their innovations into a product, which can be commercialized or diffused through "on-commercial channels. Many times, on the other hand, the innovators d o

318

EVOLUTION OF PATENT LAWS

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL .

319

--

not prove to be good entrepreneurs. They seldom realize that by not making any two products or machines alike, they generate a doubt in the minds of the customers. The lack of incubators, labs and other science and technology institutions dedicated to adding value to local innovations make the tasks of these innovators even more difficult. The lack of venture promotion capital and R&D funds constrain the pace and scale of technology upgradation of the innovations. Moreover, the lack of certification facilities at concessional rates for the products based on local innovations delays and sometimes inhibits the diffusion of innovation. Earlier, the admirable work on tapping and promoting innovations by Honey Bee Network was referred (see Box 1). As a follow up of first International Conference on Creativity and Innovations at Grassroots held in January, 1997 at Indian Institute of Management, Ahmedabad (India), a regional fund was created in collaboration with Gujarat State Government to convert innovations from Honey Bee database into enterprises. GIAN (Grassroots Innovation Augmentation Network) was set up in 1997 to link innovations, investments and enterprises. A major promotion of R&D among informal innovators was attempted by Government of India by setting up NIF (National Innovation Foundation) under the Department of Science and Technology in March, 2000. As a result, mobilization of innovations and trsditional knowledge registered a seven-fold increase within two years from 1,600 in 2001 to 13,500 in 2002. Subsequently, NIF has set up two more GIAN's - one at IIT, Guwahati (Assam) and another at Jaipur. Within eight months, GIAN-Guwahati had incubated more than half a dozen technologies and scouted several hundred more. It is further necessary to make small enterprises more innovative by providing them access to design workshop, building their links with formal R&D sector and providing incentives through micro-venture capital and incubation fund for scaling up these innovations and by facilitating technology networks among these tiny and small enterprises on regional as well as sectoral level. In the Indian Budget of Financial Year 2002-03, a micro-venture promotion fund was set up by Government Bank, SIDBI, in collaboration with NIF. However, its corpus is quite inadequate for the purpose. Unless thousands of technologies are incubated every year, no significant number of viable products would mature which could in turn help in spawning large number of enterprises. It is, therefore, proposed to establish National Innovation Incubation and Micro Venture Promotion Fund with an adequate corpus. There is also a need for differentially charging the small innovators for testing and certification of their technologies Honey Bee Network's experience shows that formal agricultural research system charges the same fee for testing a new herbal product to NGO or small farmer as it would charge a large multinational corporation. There is no special track for small or individual innovators. This has to change.

*

1 1

I

I

I

The next important stage in establishing a Special Innovation Patent System pertains to registering the claims of individuals or community innovators. such registration is particularly useful in cases of individual and community knowledge domains. "However, while registering claims fosters better clarity, the recognition of farmers' rights should not be conditioned on registration. In other words, registration may act as a tool to ascertain existing claims but it should not constitute a condition for the recognition of the rights." [P.Cullet (2005)1. At this stage, the issues of rightholders and registering authority crops up. There have been various proposals to grant property rights to local communities or other groups, in addition to individual innovators. This may, for instance, lead to vesting property rights in legal entities such as Panchayats or other democratically elected bodies. As to the registering authority, the three-tier structure comprising of the National Biodiversity Authority (NBA), State Biodiversity Board (SBB) and Biodiversity Management Committees (BMCfs), envisaged under The Biological Diversity Act, 2002 of India, forms a useful starting point. In particular, Biodiversity Management Committees, whose functions include the promotion of conservation, sustainable use and documentation of TK, including agro-biodiveristy related knowledge, can be equipped to act as a registration office for small innovators. While registering the claims, the emphasis should be on disclosure rather than examination of novelty or non-obviousness. If an innovation is not worthwhile, nobody would license it. The registry should provide a grace period for disclosure so that protection can be accorded to knowledge shared in good faith by the TK holders after 1995. This is not likely to be without problems considering the public domain character of such disclosed knowledge. However, this will remedy the injustice caused to the TK holders on account of their generosity and good faith. The examination of the claims should be taken up so that the community or individual knowledge which is not reasonably accessible i.e. which has not been coded and/or catalogued in publicly accessible databases should not be considered as prior art. Such knowledge should be considered as a patentable subject-matter so long as it meets a threshold novelty criteria, even in terms of use. The stage is now prepared for granting patent rights. A national innovation patent system should be developed on the pattern of Australian proposal. In this, small innovators are given eight to ten years protection with ntaximum fiveclaims, a small fee of less than ten dollars and protection is granted quickly. within three months. Alternatively, a national fund should bear the cost of Processing of patent claims. Such a patent regime would go a long way in stimulating linkages between innovation, investment and enterprise. The greatest advantage of this system would be that the people will have incentives to disclose their traditional and contemporary knowledge and make it available

& ? o - .

EVOLUTION OFPATENT LAWS

to others for learning process. Once this knowledge becomes a basis for livelihood, conservation, lateral learning and social networking, a knowledge society starts emerging. Once this happens, the public domain provides incentives and not disincentives for individuals and communities to share their knowledge. The registry can share thesynoptic information after protection is provided with the potential investors and entrepreneurs around the world in consonance with prior informed consent provided by TK holders. This way, the transaction costs of entrepreneurs will go down and also the wealth which is generated can be shared equitably with the stakeholders. The registry will also make it possible for people to people learning to be facilitated through local language interfaces, thereby hastening the knowledge churning process in the society. NIF has done pioneering work in the area of registration by developing a National Register of Grassroots Inventions and Traditional Knowledge. This register needs to be accorded a statutory protection so that the disclosures to NIF can entitle knowledge holders a minimum protection. SRISTI has pleaded for international registry tentatively called INSTAR (International Network for Sustainable Technological Application and Registration) to achieve a similar purpose at international level. It may be recalled that the provisions in TRIPS for international negotiations for international registry for wines and spirits was inserted because France would not have signed the treaty otherwise. This provision should not be limited only for wines and spirits. India should argue for international registry on the pattern of National Registry developed by NIF. Having mobilized more than 50,000 innovations on TK from over 350 districts during last five years with the help of Honey Bee Network, NIF has demonstrated the potential that Indian Society has for solving problems through its own genius. This experiment offers valuable lessons for other economically poor but TK-rich developing countries.

XII. ESTABLISHING A COMPLEMENTARY PROTECTIVE REGIME AGAINST MISAPPROPRIATION O F PUBLIC DOMAIN KNOWLEDGE BY IPR SYSTEM TRIPS and various national IPR systems based on it are afait acconzpli. A major concern, which prompted the TK debate, has been rampant biopiracy of valuable TK database and resources by patent holders who are often powerful MNC's. Being segmented and weak, TK holders in developing countries have not been able to protect their knowledge from getting pillaged. Ironically, they are forced to buy their own inventions at inflated prices, which MNC's sell as patented & packaged commodities. Therefore, together with harnessing the potential of TK holders by establishing a positive Special Innovation Patent System, efforts to erect a suitable

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

321

legal and institutional barrier against the predatory tendencies of IPR regime must be made without any delay. Even while erecting a protection regime, avenues to establish useful linkages with IPR system must be made. This means that while, on one hand, powerful MNC's should not be allowed to run away with precious resources and knowledge, the objective should also be to attract them by establishing a mutually beneficial access and benefit-sharing regime. The role of the nation state is paramount in this scheme. The relationship between communities that possess genetic resources & TK and the government authority that negotiates access contracts maybe conceptualized as a principal (community) - agent (government) relationship. Since communities maybe unfamiliar with the legal regimes, the intervention of the State as a bargaining agent may improve the capaci ty of communities to protect their interest and extract value from their knowledge. Such intervention may be necessary to protect communities against undue exploitation by way of unbalanced access contracts entered into with foreign partners. While foreign companies, such as pharmaceutical laboratories, have a wide experience in contracting, indigenous communities have little knowledge and experience on commercial practices and negotiating strategies (Zerda-Sarmiento aiid ForeroPineda, 2002). The proposed 3-tier structure comprising of the National Biodiversity Authority (NBA), State Biodiversity Boards (SBB's) and Biodiversity Management Committees (BMC's) under The Biological Diversity Act, 2002 of India offer a sound institutional base. Thus, NBA may be assigned with the duty of assisting communities in harnessing higher level of benefit-sharing, given the inequity between the TK holders and powerful MNC's. However, it is desirable to give adequate importance to the decisions oi local coinmiinity leaders during the process of negotiations. Thus, there should be at least one position reserved in the negotiation Committee at all times for a representative from the concerned community. Also, at the various stages of negotia tion and decision-making, SBB's and BMC's should be involved to ensure better disbursement of benefits. (a)Traditional Knowledge Database One of the most visible problems with regard to TK protection has been its appropriation either because of insufficient written documentation of existing bowledge or because relevant documentation has not been used by patent officers. Every patent description needs to be studied in detailed to understand if the traditional knowledge associated with, say, a locally available plant have been copied or used in the process of develupmeilt of a product or a process. While there is enough existing literature on the classical rise of the medicinal

322

EVOLUTION OF PATENT LAWS

plants as in Ayurveda, etc. there is a dearth of documentation on the folk use of medicinal plants. Most often, the use of a specific plant and its parts are similar in documented classical text and in oral folk tradition. However, this need not always be so. Sometimes, the use of a specific plant in the folk tradition might be quite different as compared to the classical use. For example, the folk healers use plants mentioned in traditional texts to treat diseases not prescribed in these texts. This is part of their traditional folk culture where they have found a unique use of a known plant. Many a times the use of medicinal plants for treatment of a disease is common between tribal communities separated by geographical and language barriers. For examples, the use of Niruri as a hepatoprotective agent is known to the Southern Indian and the Brazilian Amazonian tribes and local communities. Thus, it might not be possible to consider a single plant and its traditional knowledge as Indian property without studying the tribal use of the same in other traditional communities in the world. On the other hand, the usage of a particular plant species in different traditional and tribal communities might sometimes be different. Thus, without the presence of a complete documentation of all the traditional uses of these plants including those that are in the private domain, a patent search remains incomplete. The second problem is that the patent claims need not always mention the Sanskrit or Latin names of the plant species. The description or claim might simply mention the names of the chemical extract of these plants. One plant species can have several chemical compounds, each of which in combination with other chemicals can be used for several different therapeutic purposes. In a traditional society, on the other hand, the whole plant, parts of it, or its extract is used usually without any mention of chemical terminologies used in modern scientific discourse. Finally, the classical texts on medicine or oral folk tradition d o not mention the western scientific names of disease and its treatment. Thus, these traditional uses of the medicinal plants need to be interpreted and correlated with that of the modern terminologies in the IPR claims. There is a need to understand traditional medicines, its diagnosis, prognosis and treatment methods in the light of modern scientific terminologies and an efficient correlation between the two is essential before one can come to the conclusion whether traditional knowledge is really being packaged in a new form for IPR claim or there is substantial value addition or an invention of a new use of a known plant. For all this to happen, there has to be a better documentation of existing knowledge and its communication both to patent offices as well as TK holders. Efforts at documenting traditional knowledge has been undertaken in different forums and contexts. These range from informal biodiversity registers at the panchayat level to national level efforts spearheaded by the central

15. TRADITIONAL -- KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

323

Government, in India, to set up computerized TK databases. Under the Biological Diversity Act, 2002, biological registers are to be prepared and maintained by Biodiversity Management Committees (BMC's), which are to be set up in all panchayats and municipalities. In practice, these registers are likely to build on and use the ones that have already been prepared through individual or more formal endeavours. These biodiversity registers will be registers of biological resources and associated traditional knowledge. Another big effort at documentation concerns the creation of a Traditional Knowledge Digital Library (TKDL) (see Box 2). Box-2: TRADITIONAL KNOWLEDGE DIGITAL LIBRARY (TKDL) A N INDIAN VIEW

-In 1999, following; - the

ultimaielv successful, but expensive, Indian granted by USPTO, it was agreed challenge of the turmeric and basmati that the Indian National Institute of Science Communication (NISCOM)and the Department of Indian System of Medicine and Homeopathy (ISM&H) would collaborate to establish a Traditional Knowledge Digital Library (TKDL). The TKDL project is initially targeting Ayurveda (a traditional Indian system of medicines), and proposes to document the knowledge available in public domain (the existing Ayurveda literature) in digitized format. Information from about 35,000 Slokas (Verses and Prose) and formulations will be inputted on a database, and it is expected that the web site will have approximately 1,40,000 Ayurveda pages. The data will be made available in several international languages (English, Spanish, German, French, Japanese and Hindi). The Traditional Knowledge Resource Classification (TKRC) is an innovative, structured classification system that has been designed to facilitate the systematic arrangement, dissemination and retrieval of the information in the traditional knowledge DL. The TKRC is based on the International Patent Classification System (IPC),with the information classified under section, class, subclass, group and subgroups for the convenience of its use by the international patent examiners. It provides greater definition of traditional knowledge informationby expanding one IPC group (i.e.AK61K35/78 related to medicinal plants) into about 5,000 subgroups. The TKDL will give legitimacy to existing traditional knowledge, and by ensuring ease of retrieval of traditional knowledge-related information by Patent examiners, will hopefully prevent the granting of patents, such as the turmeric case, which claim subject-matter already in the public domain. Work on such libraries is also being pursued in WIPO where a specialized Task Force including representatives from China, India, the USPTO and the EPO are examining how such libraries can be integrated into the existing search tools used by patent offices.

324

EVOLUTION OF PATENT LAWS

Earlier, various government departments had taken initiatives to create digital libraries by scanning and storing contents in their domains. However, at present, Department of Information Technology (DIT) has been designated as the nodal agency. DIT has circulated a draft paper to nearly 80 organizations in the country for their comments. After the paper is ready, discussions will be held with various contenders for hosting the library. The prospective contenders include the Software Technology Parks of India, National Informatics Centre, ERNET, Indian Institute of Science, among others. The detailed assessment of their hardware, software requirements and the associated costs will be done at that stage. Soon after, an inter-ministerial Committee will be formed under the IT Secretary. In a couple of months from then, a concept paper will be prepared on the TKDL, based on the brainstorming sessions and interaction with concerned agencies. The concrete achievements under the TKDL project have been impressive. Under this, so far, 21 scanning centres and four regional mega centres have been set up. The mega centres - IIIT Hyderabad, IIIT Allahabad, CDAC Kolkata, CDAC Noida - are developing niche technologies, such as, cross-lingual information access, multi-lingual crawler, automatic search and index tools and multimedia interface. TKDL focuses in large part on making this compiled and ordered information about traditional knowledge available to patent offices. Although information contained in TKDL has been in the public domain for long, but its availability in original texts or in English on the internet is qualitatively different. Thus, the value of creating a TKDL on scientific criteria in order to make it user-friendly is immense. At present, Govt. of India has decided to provide the databases under non-disclosure agreements to patent offices around the world. This indicates that TKDL is being conceived as an important protective or defensive mechanism. In fact,effortsat doc~unentingTK now span from the local level to WIPO, which is attempting to foster better availability of knowledge throughout the world.

---

I 1

i

-

Traditional knowledge registers hold possibilities to perform various functions for TK holders. Some of them are as under: They can be used to document existing public domain knowledge in written forms and in various national/international languages so as to prevent misappropriation of traditional knowledge through IPRs. They can be used to record individual and community-based knowledge domains also. This segment of register is useful for granting patent rights to small innovators in situations where the legal framework offers such protection to TK holders. They can be used to promote the use of existing traditional knowledge among neighboring communities or across countries

1 >

15. TRADITIONAL KNOWLEDGE - CONSTRUCTION OF A RIGHTS MODEL

325

wherever actors want to share knowledge. TK database needs to be developed in local languages also so that the local communities, in addition to thwarting usurpation of their knowledge, can promote horizontal learning among people. Honey Bee multimedia language database provides one kind of template for such a mechanism. They may provide the basis for benefit-sharing claims also, apart from being effective in preventing misappropriation of public domain knowledge. However, for this to happen, care needs to be exercised during documentation process so that finer details of the TK are not mentioned. This will force the interested parties to get in touch with the National Biodiversity Authority for negotiating a benefit-sharing agreement. TK registers also constitute an attractive tool for patent examiners, researchers or private biotechnology companies. For patent examiners, TK registers constitute much easier tools to handle since the knowledge will have been compiled and systematically arranged. For researchers, registers increase the amount of knowledge available on specific biological or genetic resources. For private companies, registers may provide an incentive for commercial research into new products while ensuring that there will be no subsequent dispute on the transparency of access to the knowledge. It can be seen, therefore, that TK register can provide effective protection against misappropriation of public domain knowledge through IPR's in all jurisdictions. The above national effort at creating TK database would be of little use unless supplemented by international legal agreements on patent search procedures, definition of prior art, compulsory disclosure of origin provisions combined with principles of prior informed consent and equitable benefit-sharing agreements. Acccrdingly, digital libraries of traditional knowledge should be incorporated into the minimum search documentation list of the patent offices in all WTO countries in order to ensure that the data contained within them is mandatorily considered during the processing of patent applications. Similarly, the definition of 'prior-art' should be amended so as to include not only domestic use but use in other countries as well. In addition, account should also be taken of the unwritten nature of traditional knowledge. Further, all countries should provide in their legislation for a compulsory disclosure of information in the patent application of the geographical source of genetic resources from which the invention is derived. This condition would ensure that patents issue from "backgrounds free from fraud or other inequitable conduct". The US Supreme Court has noted thus,

326

EVOLUTION OF PATENT LAWS

-

"A court of equity acts only when and as conscience commands; and if the conduct of the plaintiff be offensive to the dictates of natural justice, then, whatever may be the rights he possesses, and whatever use he may make of them in a court of law, he will be held remediless in a court of equity."

[Keystone Driller Co. v. General Excavator Co., 290 US 240, 245 (1933) quoting Deweese v. Reinhard, 165 US, 386,390 (1887)l.

The principle of equity, therefore, dictates that a person should not be able to benefit from an IP right based on genetic resources or associated knowledge acquired in contravention of any legislation governing access to that material. Wherever the patent applicant discloses the origin of his claims as based upon traditional knowledge, he should be asked to prove whether he had obtained prior informed consent (PIC) from TK holders and signed a benefitsharing agreement. NIF has now modified the PIC framework and developed a two-stage process. In stage one, the consent is sought for sharing, adding value or blending the knowledge with other innovations/TK practices etc. In stage two, if something useful is considered ~ o s s i b l ewith or without value addition, then a benefit-sharing agreement is signed with shares allocated to communities or their representative bodies. It has been pointed out by various commentators that the domestic Indian laws d o not require PIC in case of national use. Indian case for insistence on PIC at international level will not carry much weight unless access to TK and associated resources is required to be obtained only through PIC even within the country. Thus, while framing TK regime, developing countries need also to guard against domestic misappropriation.

'

.

i

ANNEXURES

ANNEXURE I EXTRACTS FROM AGREEMENT ON TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS (TRIPS) AGREEMENT ON TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS, INCLUDING TRADE IN COUNTERFEIT GOODS

Members, Desiring to reduce distortions and impediments to international trade and taking into account the need to promote effective and adequate protection of intellectual property rights, and to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade: Recognizing, to this end, the need for new rules and disciplines concerning: a. the applicability of the basic principles of the GATT 1994 and of relevant international intellectual property agreements or conventions; b. the provisions of adequate standards and principles concerning the availability, scope and use of trade-related intellectual property rights; c. the provision of effective and appropriate means for the enforcement of trade-related intellectual property rights, taking into account differences in national legal system; d. the provisions of adequate standards and principles concerning the availability, scope and use of trade-related intellectual property rights; e. the provision of effective and expeditious procedures for the multilateral prevention and settlement of disputes between government; and f. transitional arrangements aiming at the fullest participation in the results of the negotiations; Recognizing the need for a multilateral framework of principles, rules and disciplines dealing with international trade in counterfeit goods; Recognizing that intellectual property rights are private rights; Recognizing the underlying public policy objectives of national systems for the protection of intellectual property, including developmental and technological objectives;

-

EVOLUTION OF PATENT LAWS

Recognizing also the special needs of the least-developed country Members in respect of maximum flexibility in the domestic implementation of laws and regulations in order to enable them to create a sound and viable technological base; Emphasizing the importance of reducing tensions by reaching strengthened commitments to resolve dispute on trade-related intellectual property issues through multilateral procedures; Desiring to establish a mutually supportive relationship between the WTO and the World Intellectual Property Organization (referred to in this Agreement as "WIPO") as well as other relevant international organizations; Hereby agree as follows:

PART I GENERAL PROVISIONS AND BASIC PRINCIPLES

Article 1 Nature and Scope of Obligations 1. Members shall give effect to the provisions of this Agreement. Members may, but shall not be obliged to implement in their law more extensive protection than is required by this Agreement, provided that such protection does not contravene the provisions of this Agreement. Members shall be free to determine the appropriate method of implementing the provisions of this Agreement within their own legal system and practice. 2. For the purposes of this Agreement, the term "intellectual property" refers to all categories of intellectual property that are the subject of Sections 1 through 7 of Part 11. 3. Members shall accord the treatment provided for in this Agreement to the nationals of other Members. In respect of the relevant intellectual property right, the nationals of other Members shall be understood as those natural or legal persons that would meet the criteria for eligibility for protection provided for in the Paris Convention (1967), the Berne Convention (1971), the Rome Convention and the Treaty on Intellectual Property in Respect of Integrated Circuits, were all Members of the WTO members of those conventions. Any Member availing itself of the possibilities provided in paragraph 3 of Article 5 or paragraph 2 of Article 6 of the Rome Convention shall make a notification as foreseen in those provisions to the Council for Trade-Related Aspects of Intellectual Property Rights ("Council for TRIPS"). Article 2 Intellectual Property Conventions 1.In respect of Parts, 11, IIIand IV of this Agreement, Members shall comply with Articles 1 through 12, and Article 19 of the Paris Convention (1967). 2. Nothing in Parts I to IV of this Agreement shall derogate from existing obligations that Members may have to each other under the Paris Convention,

I

I

I

ANNEXURE l

331

the Berne Convention, the Rome Convention and the Treaty on InteIIectuaI Property in respect of Integrated Circuits. Article 3 National Treatment 1. Each Member shall accord to the nationals of other Members treatment no less favourable than that it accords to its own nationals with regard to the protection of intellectual property, subject to the exceptions already provided in, respectively, the Paris Convention (1967), the Berne Convention (1971), the Rome Convention or the Treaty on Intellectual Property in Respect of Integrated Circuits. In respect of performers, producers of phonograms and broadcasting organizations, this obligation only applies in respect of the rights provided under this Agreement. Any Member availing itself of the possibilities provlded in Article 6 of the Berne Convention (1971)or paragraph 1(b)of Article 16 of the Rome Convention shall make a notification as foreseen in those provisions to the Council for TRIPS. 2. Members may avail themselves of the exceptions permitted under paragraph 1 in relation to judicial and administrative procedures, including the designation of an address for service of the appointment of an agent within the jurisdiction of a Member, only where such exceptions are necessary to secure compliance with laws and regulations which are not inconsistent with the provisions of this Agreement and where such practices are not applied in a manner which would constitute a disguised restriction on trade Article 4 Most-Favoured Nation Treatment With regard to the protection of intellectual property, any advantage, favour, privilege or immunity granted by a Member to the nationals of any other country shall be accorded immediately and unconditionally to the nationals of all other Members. Exempted from this obligation are any advantage, favour. privilege or immunity accorded by a member: (a) deriving from international agreements on judicial assistance and la-Y enforcement of a general nature and not particularly confined to the protection of intellectual property; (b) granted in accordance with the provisions of the Berne Convention (1971) or the Rome Convention authorizing that the treatment accorded be a function not of national treatment but of the treatment accorded in another country; (c) in respect of the rights of performers, producers of phonograms and a broadcasting organizations not provided under this Agreement; (d) deriving from international agreements related to the protection of intellectual property which entered into force prior to the entry into force of the WTO Agreement, provided that such agreements are notified to the Council for TRIPS and d o not constitute an arbitrary or unjustifiable discrimination against nationals of other Membrrs.

EVOLUTION OF PATENT LAWS

Article 5 Multilateral Agreements on Acquisition or Mainteiiance of Protection The obligations under Articles 3 and 4 do not apply to procedures provided in multilateral agreements concluded under the auspices of WIPO relating to the acquisition or maintenance of intellectual property rights. Article 6 Exhalrstion For the purposes of dispute settlement under this Agreement, subject to the provisions of Articles 3 and 4 above nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual property rights. Article 7 Objectives The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations. Article 8 Principles 1. Members may, in formulating or amending their national laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement. 2. Appropriate measures, provided that they are consistent with the provisions of this Agreement, may be needed to prevent the abuse of intellectual property rights by right holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology.

V*****l PARTII STANDARDS CONCERNING THE AVAILABILITY, SCOPE AND USE OF INTELLECTUAL PROPERTY RIGHTS Section 5 :Patents

Article 27 Patentable Subject-Matter 1. Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of this Article, patent shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced. 2. Members may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that

such exclusion is not made merely because the exploitation is prohibited by their law. 3. Members may also exclude from patentability: (a) diagnostic, therapeutic and surgical methods for the treatment of humans or animals; (b) plants and animals other than micro-organisms, and essentially biological processes for the production of plants or animals other than non-biological and microbiologicaI processes. However, Members shall provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof. The provisions of this sub-paragraph shall be reviewed four years after the entry into force of the WTO Agreement. Article 28 Rights conferred 1. A patent shall confer on its owner the following exclusive rights: (a) where the subject-matter of a patent is a product, to prevent third parties not having the owner's consent from the acts of making, using, offering for sale, selling or importing for these purposes that product; (b) where the subject-matter of a patent is a process, to prevent third parties not having the owner's consent from the act of using the process, and from the acts of using, offering for sale, selling, or importing for these purposes at least the product obtained directly by that process. 2. Patent owners shall also have the right to assign, or transfer by succession, the patent and to c o n c l ~ ~licensing de contracts. Article 29 Conditions on Patent Applicants 1. Members shall require that an applicant for a patent shall disclose the invention in a manner sufficiently clear and complete for the invention to be carried out by a person skilled in the art and may require the applicant to indicate the best made for carrying out the invention known to the inventor at the filing date or, where priority is claimed, at the priority date of the application. 2. Members may require an applicant for a patent to provide information concerning the applicant's corresponding foreign applications and grants. Article 30 Exceptions t o Rights Conferred Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties.

334

EVOLUTION OF PATENT LAWS

Article 31 Other Use Without Authorisation of the Right Holder Where the law of a Member allows for other use of the subject-matter of a patent without the authorization of the right holder, including use by the government or third parties authorized by the Government, the following provisions shall be respected: a. authorization of such use shall be considered on its individual merits; b. such use may only be permitted if, prior to such use, the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time. This requirement may be waived by a Member in the case of a national emergency or other circumstances of extreme urgency or in case of public non-commercial use. In situations of national emergency or other circumstances of extreme urgency, the right holder shall, nevertheless, be notified as soon as reasonably practicable. In the case of public non-commercial use, where the government or contractor, without making a patent search, knows or has demonstrable grounds to know that a valid patent is or will be used by or for the government, the right holder shall be informed promptly; c. the scope and duration of such use shall be limited to the purpose for which it was authorized, and in the case of semi-conductor technology shall only be for public non-commercial use or to remedy a practice determined after judicial or administrative process to be anti-competitive; d. such use shall be non-exclusive; e. such use shall be non-assignable, except with that part of the enterprise or goodwill which enjoys such use; f. any such use shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use; g. authorization for such use shall be liable, subject to adequate protection of the legitimate interests of the persons so authorized, to be terminated if and when the circumstances which led to it cease to exist and are unlikely to recur. The competent authority shall have the authority to review, upon motivated request, the continued existence of these circumstances; h. the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization;

I

ANNEXURE l

335

i. the legal validity of any decision relating to the authorization of such use shall be subject to judicial review or other irldependel~trevlew by a distinct higher authority in that Member;

j. any decision relating to the remuneratiorl provided in respect of such use shall be subject to judicial review or other independent review by a distinct higher authority in that Member; k. Members are not obliged to apply the conditions set forth irk sub-paragraphs (b) and (f) above where such use is permitted to remedy a practice determined afterjudicial or administrative process to be anti-competitive. The need to correct anti-competitive practices may be taken into account in determining the amount of remuneration in such cases. Competent authorities shall have the authority to refuse termination of authorization if and when the conditions which led to such authorization are likely to recur; 1. where such use is authorized to permit the exploitation of a patent ("the second patent") which cannot be exploited without infringing another patent ("the first patent"), the following additional conditions shall apply:(i) the invention claimed in the second patent shall involve an important technical advance of considerable economic significance in relation to the invention claimed in the first patent; (ii) the owner of the first patent shall be entitled to a cross-licence 011 reasonable terms to use the invention claimed in the second patent; and (iii) the use authorized in respect of the first patent shall be non-assignable except with the assignment of the second patent. Article 32 Revocationl Forfeiture An opportunity for judicial review of any decision to revoke or forfeit a patent shall be available. Article 33 Term of Protection The term of protection available shall not end before the expiration of a period of twenty years counted from the filing date. Article 34 Process Patents: Burden of Proof 1. For the purposes of civil proceedings in respect of the infringement of the rights of the owner referred to in paragraph l(b) of Article 28, if the subject-matter of a patent is a process for obtaining a product, the judicial authorities shall have the authority to order the defendant to prove that the process to obtain an identical product is different from the patented process. Therefore, Members shall provide, in at least one of the following circumstances, that any identical product when produced without the consent of the

336

-

ANNEXURE l

EVOLUTION OF PATENT LAWS

patent owner shall, in the absence of proof to the contrary, be deemed to have been obtained by the patented process: a. if the product obtained by the patented process is new; b. if there is a substantial likelihood that the identical product was made by the process and the owner of the patent has been unable through reasonable efforts to determine the process actually used. 2. Any Member shall be free to provide that the burden of proof indicated in paragraph 1 shall be on the alleged infringer only if the condition referred to in sub-paragraph (a) is fulfilled or only if the condition referred to in subparagraph (b) is fulfilled. 3. In the adduction of proof to the contrary, the legitimate interests of the defendants in protecting his manufacturing and business secrets shall be taken into account. [.. ......] Section 7 :Protection of Undisclosed Information. Article 39 1. In the course of ensuring effective protection against unfair competition as provided in Article lobis of the Paris Convention (1967), Members shall protect undisclosed information in accordance with ~ a r a g r a p h2 and data submitted to governments or governmental agencies in accordance with paragraph 3. 2. Natural and legal persons shall have the possibility of preventing information lawfully within their control from being disclosed to, acquired by, or used by others without their consent in a manner contrary to honest commercial practices so long as such information:

I

(a) is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; (b) has commercial value because it is secret; and (c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret. 3. Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. In addition, Members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use.

t

Section 8: Control of Anti-Competitive Practices in Contractual Licences. Article 40 1. Members agree that some licensing practices or conditions pertaining to intellectual property rights which restrain competition may have adverseeffects on trade and may- impede the transfer and dissemination of technology. 2. Nothing in this Agreement shall prevent Members from specifying in their national legislation licensing practices or conditions that may in particular cases constitute an abuse of intellectual property rights having an adverse effect on competition in the relevant market. As provided above, a Member may adopt, consistently with the other provisions of this Agreement, appropriate measures to prevent or control such practices, which may include for example exclusive grantback conditions, conditions preventing challenges to validity and coercive package licensing, in the light of the relevant laws and regulations of that Member. 3. Each Member shall enter, upon request, into consultations with any other Member which has cause to believe that an intellectual property right owner that is a national or domiciliary of the Member to which the request for consultations has been addressed is undertaking practices in violation of the requesting Member's law and regulations on the subject matter of this Section, and which wishes to secure compliance with such legislation, without prejudice to any action under the law and to the full freedom of an ultimate decision of either Member. The Member addressed shall accord full and sympathetic consideration to, and shall afford adequate opportunity for, consultation with the requesting Member, and shall cooperate through supply of publicly available non-confidential information of relevance to the matter in question and of other information available to the Member, subject to domestic law and to the conclusion of mutually satisfactoryagreements concerning the safeguarding of its confidentiality by the requesting Member. 4. A Member whose nationals or domiciliaries are subject to proceedings in another Member concerning alleged violation of that other Member's laws and regulations on the subject-matter of this Section shall, upon request, be granted an opportunity for consultations by the other Member under the same conditions as those foreseen in paragraph 3. Part III ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS

Section 1: General Obligations Article 41 1. Members shall ensure that enforcement procedures as specified in this Part are available under their national laws so as to permit effective action against any act of infringement of intellectual property rights covered by this Agreement, including expeditious remedies to prevent infringements and rem-

338

EVOLUTION OF PATENT LAWS

i

ANNEXURE 1

edies which constitute a deterrent to further infringements. These procedures shall be applied in such a manner as to avoid the creation ofbarriers to legitimate

trade and to provide for safeguards against their abuse. 2. Procedures concerning the enforcement of intellectual property rights shall be fair and equitable. They shall not be unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays. 3. Decisions on the merits of a case shall preferably be in writing and reasoned. They shall be made available at least to the parties to the proceeding without undue delay. Decisions on the merits of a case shall be based only on evidence in respect of which parties were offered the opportunity to be heard. 4.Parties to proceeding shall have an opportunity for review by a judicial authority of final administrative decisions and, subject to jurisdictional provisions in national laws concerning the importance of a case, of at least the legal aspects of initial judicial decision on the merits of a case. However, there shall be no obligation to provide an opportunity for review of acquittals in criminal cases 5 It is understood that this Part does not create any obligation to put in place a judicial system for the enforcement of intellectual property rights distinct from that for the enforcement of law in general, nor does it affect the capacity of Members to enforce their law in general. Nothing in this Part creates any obligation with respect to the distribution of resources as between enforcernent of intellectual property rights and the enforcement of law in general. Section 2: Civil and Administrative Procedures and Remedies. Article 42 Fair and Equitable Procedures Members shall make available to right holders civil judicial procedures concerning the enforcement of any intellectual property right covered by this Agreement. Defendants shall have the right to written notice which is timely and contains sufficient detail, including the basis of the claims. Parties shall be allowed to be represented by independent legal counsel, and procedures shall not impose overly burdensome requirements concerning mandatory personal appearances. All parties to such procedures shall be duly entitled to substantiate their claims and to present all relevant evidence. The procedure shall provide a means to identify and protect confidential information, unless this would be contrary to existing constitutional requirements. Article 43 Evidence 1. The judicial authorities shall have the authority, where a party has presented reasonably available evidence sufficient to support its claims and has specified evidence relevant to substantiation of its claims which lies in the control of the opposing party, to order that this evidence be produced by the opposing party, subject in appropriate cases to conditions which ensure the protection of confidential information.

I

i I

1

I

lp.

339

2. In case in which a party to a proceeding voluntarily and without good reason refuses access to, or otherwise does not provide necessary information within a reasonable period, or significantly impedes a procedure relating to an enforcement action, a Member may accord judicial authorities the authority to make preliminary and finaldeterminations, affirmativeor negative, on the basis of the information presented to them, including the complaint or the allegation presented by the party adversely affected by the denial of access to information, subject to providing the parties an opportunity to be heard on the allegations or evidence. Article 44 Injunctions 1.The judicial authorities shall have the authority to order a party to desist from an infringement, inter alia, to prevent the entry into the channels of commerce in their jurisdiction of imported goods that involve the infringement of an intellectual property right, immediately after customs clearance of such goods. Members are not obliged to accord such authority in respect of protected subject-matter acquired or ordered by a person prior to knowing or having reasonable grounds to know that dealing in such subject-matter would entail the infringement of an intellectual property right. 2. Notwithstanding the other provisions of this Part and provided that the provisions of Part I1 specifically addressing use by governments, or by third parties authorized by a government, without the authorization of the right holder are complied with, Members may limit the remedies available against such use to payment of remuneration in accordance with sub-paragraph (h) of Article 31. In other cases, the remedies under this Part shall apply or, where these remedies are inconsistent with national law, declaratory judgements and adequate compensation shall be available. Article 45 Damages 1.The judicial authorities shall have the authority to order the infringer to pay the right holder damages adequate to compensate for the injury the right holder has suffered because of an infringement of the person's intellectual property right by an infringer who knew or had a reasonable ground to know that he was engaged in infringing activity. 2. The judicial authorities shall also have the authority to order the infringer to pay the right holder expenses, which may include appropriate attorney's fee. In appropriate cases, Members may authorize the judicial authorities to order recovery of profits and/or payment of pre-established damages even where the infringer did not knowingly, or with reasonable grounds to know, engaged in infringing activity. Article 46 Other Remedies In order to create an effectivedeterrent to infringement, the judicial authorities shall have the authority to order goods that they have found to be infringing

340

EVOLUTION OF PATENT LAWS

be, without compensation of any sort, disposed of outside the channels of commerce in such a manner as to avoid any harm caused to the right holder, or unless this would be contrary to existing constitutional requirements, destroyed. The judicial authorities shall also have the authority to order that materials and implements the predominant use of which has been in the creation of the infringing goods be without compensation of any sort, disposed of outside the channels of commerce in such a manner as to minimize the risks of further infringements. In considering such requests, the need for proportionality between the seriousness of the infringement and the remedies ordered as well as the interests of the third parties shall be taken into account. In regard to counterfeit trade mark goods, the simple removal of the trade mark unlawfully affixed shall not be sufficient, other than in exceptional cases, to permit release of the goods into the channels of commerce. Article 47 Right oflnformation Members may provide that the judicial authorities shall have the authority, unless this would be out of proportion to the seriousness of the infringement, to order the infringer to inform the right holder of the identity of third persons involved in the production and distribution of the infringing goods or services and of their channels of distribution. Article 48 Indemnification ofthe Defendant I . The judicial authoritieslshall have the authority to order a party at whose request measures were taken and who has abused enforcement procedures to provide to a party wrongfully enjoined or restrained adequate compensation for the injury suffered because of such abuse. The judicial authorities shall also have the authority to order the applicant to pay the defendant expenses, which may include appropriate attorney's fees. 2. In respect of the administration of any law pertaining to the protection or enforcement of intellectual property rights, Members shall only exempt both public authorities and officials from liability to appropriate remedial measures where actions are taken or intended in good faith in the course of the administration of that law. Article 49 Administrative Procedures To the extent that any civil remedy can be ordered as a result of administrative procedures on the merit of a case, such procedures shall conform to principles equivalent in substance to those set forth in this Section. Section 3: Provisional Measures Article 50 I . The judicial authorities shall have the authority to order prompt and effective provisional measures: (a) to prevent an infringement of any intellectual property right from occurring, and in particular to prevent the entry into the channels of

ANNEXURE l

I

i

I

i

I

1

I,

341

commerce in their jurisdiction of goods, including imported goods immediately after customs clearance; (b) to preserve relevant evidence in regard to the alleged infringement. 2. The judicial authorities shall have the authority to adopt provisional measures inaudita altera parte where appropriate, in particular where any delay is likely to cause irreparable harm to the right holder, or where there is demonstrable risk of evidence being destroyed. 3. The judicial authorities shall have the authority to require the applicant to provide any reasonably available evidence in order to satisfy themselves with a sufficient degree of certainty that the applicant is the right holder arid that the applicant's right is being infringed or that such infringement is imminent, and to order the applicant to provide a security or equivalent assurance sufficient to protect the defendant and to prevent abuse. 4. Where provisional measures have been adopted inaudita altera parte, the parties affected shall be given notice, without delay after the execution of the measures at the latest. A review, including a right to be heard shall take place upon request of the defendant with a view to deciding, within a reasonable period after the notification of the measures, whether these measures shall be modified, revoked or confirmed. 5. The applicant may be required to supply other information necessary for the identification of the goods concerned by the authority that will execute the provisional measures. 6 . Without prejudice to paragraph 4, provisional measures taken on the basis of paragraphs 1 and 2 shall, upon request by the defendant, be revoked or otherwise cease to have effect, if proceedings leading to a decision on the merits of the case are not initiated within a reasonable period, to be determined by the judicial authority ordering the measures where a Member's law so permits or, in the absence of such a determination, not to exceed 20 working days or 31 calendar days, whichever is the longer. 7. Where the provisional measures are revoked or where they lapse due to any act or omission by the applicant, or where it is subsequently found that there has been no infringement or threat of infringement of an intellectual property right, the judicial authorities shall have the authority to order the applicant, upon request of the defendant, to provide the defendant appropriate compensation for any injury caused by these measures. 8. To the extent that any provisional measure can be ordered as a result of administrative procedures, such procedures shall conform to principles equivalent in substance to those set forth in this Section.

ANNEXURE l

342

343

EVOLUTION OF PATENT LAWS

Section 4 :Special Requirements Related to Border Measures. Article 51 Suspension of Release b y Customs Authorities Members shall, in conformity with the provisions set out below, adopt procedures to enable a right holder, who has valid grounds for suspecting that the importation of counterfeit trademark or pirated copyright goods may take place, to lodge an application in writing with competent authorities, administrative or judicial, for the suspension by the customs authorities of the release into free circulation of such goods. Members may enable such an application to be made in respect of goods which involve other infringements of intellectual property rights, provided that the requirements of this Section are met. Members may also provide for corresponding procedures concerning the suspension by the customs authorities of the release of infringing goods destined for exportation from their territories. Article 52 Application Any right holder initiating the procedures under Article 51 shall be required to provide adequate evidence to satisfy the competent authorities that under the laws of the country of importation, there is prima facie an infringement of the right holder's intellectual property right and to supply a sufficiently detailed description of the goods to make them readily recognizable by the customs authorities. The competent authorities shall inform the applicant within a reasonable period whether they have accepted the application and, where determined by the competent authorities, the period for which the customs authorities will take action. Article 53 Security or Equivalent Assurance 1. The competent authorities shall have the authority to require an applicant to provide a security or equivalent assurance sufficient to protect the defendant and the competent authorities and to prevent abuse. Such security or equivalent assurance shall not unreasonably deter recourse to these procedures. 2. Where pursuant to an application under this Section the release of goods involving industrial designs, patents, layout-designs or undisclosed information into free circulation has been suspended by customs authorities on the basis of a decision other than by a judicial or other independent authority, and the period provided for in Article 55 has expired without the granting of provisional relief by the duly empowered authority, and provided that all other conditions for importation have been complied with, the owner, importer, or consignee of such goods shall be entitled to their release on the posting of a security in an amount sufficient to protect the right holder for any infringement. Payment of such security shall not prejudice any other remedy available to the right holder, it being understood that the security shall be released if the right holder fails to pursue his right of action within reasonable period of time.

Article 54 Notice of Suspension The importer and the applicant shall be promptly notified of the suspension of the release of goods according to Article 51. Article 55 Duration of Suspension If within a period not exceeding ten working days after the applicant has been served notice of the suspension, the customs authorities have not been informed that proceedings leading to a decision on the merits of the case have been initiated by a party other than the defendant, or that the duly empowered authority has taken provisional measures prolonging the suspension of the release of the goods, the goods shall be released, provided that all other conditions for importation or exportation have been complied within appropriate cases, this time-limit may be extended by another 10 working days. If proceedings leading to a decision on the merits of the case have been initiated, a review including a right to be heard, shall take place upon request of the defendant with a view to deciding, within a reasonable period, whether these measures shall be modified, revoked or confirmed. Notwithstanding the above, where the suspension of the release of goods is carried out or continued in accordance with a provisional judicial measure, the provisions of paragraph 6 of Article 50 shall apply. Article 56 Indemnification of the Importer and of the Owner of the Goods Relevant authorities shall have the authority to order the applicant to pay the importer, the consignee and the owner of the goods appropriate compensation for any injury caused to them through the wrongful detention of goods or through the detention of goods released pursuant to Article 55. Article 57 Right of Inspection and Information Without prejudice to the protection of confidential information, Members shall provide the competent authorities the authority to give the right holder sufficient opportunity to have any product detained by the customs authorities inspected in order to substantiate his claims. The competent authorities shall also have the authority to give the importer an equivalent opportunity to have any such product inspected. Where a positive determination has been made on the merits of a case, Members may provide the competent authorities the authority to inform the right holder of the names and addresses of the consignor, the importer and the consignee and of the quantity of the goods in question. Article 58 Ex Oflicio Action Where Members require competent authorities to act upon their own initiative and suspend the release of goods in respect of which they have acquired prima facie evidence that an intellectual property right is being infringed:

a. the competent authorities may at any time seek from the right holder any information that may assist them to exercise these powers;

344 -

EVOLUTION OF PEATT LAWS

b. the importer and the right holder shall be promptly notified of the suspension. Where the importer has lodged an appeal against the suspension with the competent authorities, the suspension shall be subject to the conditions, mutatis mutandis, set out at Article 55;

c. Members shall only exempt both public authorities and officialsfrom liability to appropriate remedial measures where actions are taken or intended in good faith. Article 59 Remedies Without prejudice to other rights of action open to the right holder and subject to the right of the defendant to seek review by a judicial authority, competent authorities shall have the authority to order the destruction or disposal of infringing goods in accordance with the principles set out in Article 46. In regard to counterfeit trademark goods, the authorities shall not allow the re-exportation of the infringing goods in an unaltered state or subject them to a different customs procedure, other than in exceptional circumstances. Article 60 De Minimis Imports Members may exclude from the application of the above provisions small quantities of goods of a non-commercial nature contained in travellers' personal luggage or sent in small consignments. Section 5 :Criminal Procedures Article 61 Members shall provide for criminal procedures and penalties to be applied at least in case of wilful trademark counterfeiting or copyright piracy on a commercial scale. Remedies available shall include imprisonment and /or monetary fines sufficient to provide a deterrent, consistently with the level of penalties applied for crimes of a corresponding gravity. In appropriate cases, remedies available shall also include the seizure, forfeiture and destruction of the infringing goods and of any materials and implements the predominant use of which has been in the commission of the offence. Members may provide for criminal procedures and penalties to be applied in other cases of infringement of intellectual property rights, in particular where they are committed wilfully and on a commercial scale. PART IV ACQUISITION AND MAINTEhTANCEOF INTELLECTUAL PROPERTY RIGHTS AND RELATED INTER-PARTES PROCEDURES Article 62 1.Members may require, as a condition of the acquisition or maintenance of the intellectual property rights provided for under Sections 2 through 6 of Part 11, compliance with reasonable procedures and formalities. Such procedures and formalities shall be consistent with the provisions of this Agreement.

ANNEXURE I

_

..

345

2. Where the acquisition of an intellectual property right is subject to the right being granted or registered, Members shall ensure that the procedure for grant or registration, subject to compliance with the subs fantive conditions for acquisition of the right, permit the granting or registration of the right within a reasonable period of time so as to avoid unwarranted curtailment of the period of protection. 3. Article 4 of the Paris Convention (1967) shall apply mutatis mutandis to service marks. 4. Procedures concerning the acquisition or maintenance of intellectual property rights and, where a Member's law provides for such procedures, administrative revocation and inter partes procedures such as opposition, revocation and cancellation, shall be governed by the general principles set out in paragraphs 2 and 3 of Article 41. 5.Final administrative decisions in any of the procedures referred to under paragraph 4 shall be subject to review by a judicial or quasi-judicial authority. However, there shall be no obligation to provide an opportunity for such review of decisi.ons in case of unsuccessful opposition or administrative revocation provided that the grounds for such procedures can be the subject of invalidation procedures. PART V ,

DISPUTE PREVENTIONAND SElTLEMENT

Article 63 Transparency 1. Laws and regulations, and final judicial decisions and administrative rulings of general application, made effective by any Member pertaining to the subject matter of the Agreement (the availability, scope, acquisition, enforcement and prevention of the abuse of intellectual property rights) shall be published or where such publication is not practicable made publicly available in a national language in such a manner as to enable governments and right holders to become acquainted with them. Agreements concerning the subject matter of this Agreement which are in force between the government or a governmental agency of a Member and the government or a governmental agency of another Member shall also be published. 2. Members shall notify the laws and regulations referred to in paragraph 1 to the Council for TRIPS in order to assist that Council in its review of the operation of this Agreement. The Council shall attempt to minimize the burden on Members in carrying out this obligation and may decide to waive the obligation to notify such laws and regulations directly to the Council if consultations with WIPO on the establishment of a common register containing these laws and regulations are successful. The Council shall also consider in this conltection any action required regarding notifications pursuant to the obligations under this Agreement stemming from the provisions of Article 6ter of the Paris Convention (1967).

346

EVOLUTION OF PATENT LAWS

3. Each Member shall be prepared to supply, in response to a written request from another Member, information of the sort referred to in paragraph 1. A Member, having reason to believe that a specific judicial decision or administrative ruling or bilateral agreement in the area of intellectual property rights affects its rights under this Agreement, may also request in writing to be given access to or be informed in sufficient detail of such specific judicial decisions or administrative rulings or bilateral agreements. 4. Nothing in paragraphs 1, 2 and 3 shall require Members to disclose confidential information which would impede law enforcement or otherwise be contrary to the public interest or would prejudice the legitimate commercial interests of particular enterprises, public or private. Article 64 Dispute Settlement 1. The provisions of Articles XXII and XXIII of GATT 1994 as elaborated and applied by the Dispute Settlement Understanding shall apply to consultations and the settlement of disputes under this Agreement except as otherwise specifically provided herein. 2. Subparagraphs l(b)and l(c)of ArticleXXIII of GATT 1994shall not apply to the settlement of disputes under this Agreement for a period of five years from the date of entry into force of the WTO Agreement. 3. During the time period referred to in paragraph 2, the TRIPS Council shall examine the scope and modalities for complaints of the type provided for under subparagraphs l(b) and l(c) of Article XXIII of GATT 1994 made pursuant to this Agreement, and submit its recommendations to the Ministerial Conference for approval. Any decision of the Ministerial Conference to approve such recommendations or to extend the period in paragraph 2 shall be made only by consensus, and approved recommendations shall be effective for all Members without further formal acceptance process. PART VI TRANSITIONAL ARRANGEMENTS

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 from 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 I1 to such areas of technology for an additional period of five years. 5. Any 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. Article 66 Least-Developed C o u n t y Members 1.In view of the special needs and requirements of least-developed country Members, their economic, financial and administrative constraints, and their need for flexibility to create a viable technologicalbase, such Members shall not be required to apply the provisions of this Agreement, other than Articles 3,4 and 5, for a period of 10 years from the date of application as defined under paragraph 1 of Article 65. The Council shall upon duly motivated request by a least-developed country Member, accord extensions of this period. 2. Developed country Members shall provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to least-developed country Members in order to enable them to create a sound and viable techndlogical base. Article 67 Technical Cooperation In order to facilitate the implementation of this Agreement, developed country Members shall provide, on request and on mutually agreed terms and conditions, technical and financial cooperation in favour of developing and least-developed country Members. Such cooperation shall include assistance in the preparation of domestic legislation on the protection and enforcement of intellectual property rights as well as on the prevention of their abuse, and shall include support regarding the establishment or reinforcement of domestic offices and agencies relevant to these matters, including the training of personnel. PART VII INSTITUTIONALARRANGEMENTS; FINAL PROVISIONS

Article 68 Council for Trade-Related Aspects of Intellectual Property Rights The Council for TRIPS shall monitor the operation of this Agreement and, in particular, Members' compliance with the obligations hereunder, and shall afford Members the opportunity of consulting on matters relating to the traderelated aspects of intellectual property rights. It shall carry out such other

348

1

EVOLUTION OF PATENT LAWS

responsibilities as assigned to it by the Members, and it shall, in particular, provide any assistance requested by them in the context of dispute settlement procedures. In carrying out its functions, the Council shall seek to establish, within one year of its first meeting, appropriate arrangements for cooperation with bodies of that Organization. Article 69 International Co-operation Members agree to cooperate with each other with a view to eliminating international trade in goods infringing intellectual property rights. For this purpose, they shall establish and notify contact points in their national administration and be ready to exchange information on trade in infringing goods. They shall, in particular, promote the exchange of information and cooperation between customs authorities with regard to trade in counterfeit trademark goods and pirated copyright goods. 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. 2. Except as otherwise provided for in this Agreement, this Agreement gives rise to obligations in respect of all subject-matter existing at the date of application of this Agreement for the Member in question, and which is protected in that Member on the said date, or which meets or comes subsequently to meet the criteria for protection under the terms of this Agreement. In respect of this paragraph and paragraphs 3 and 4, copyright obligations with respect to existing works shall be solely determined under Article 18 of the Berne Convention (1971), and obligations with respect to the rights of producers of phonograms and performers in existing phonograms shall be determined solely under Article 18 of the Berne Convention (1971) as made applicable under paragrdph 6 of Article 14 of this Agreement. 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.

1

I

I

.~

ANNEXURE l

---

349

5. A Member is not obliged to apply the provisions of Article 11 and of paragraph 4 of Article 14 with respect to originals or copies purchased prior to the date of application of this Agreement for the Member. 6. 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. 7. 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. 8. 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 sub paragraph (b). 9. Where a product is the subject of a patent application in a Member in accordance with paragraph 8(a), exclusive marketing rights shall be granted, notwithstanding the provisions of Part VI, above for a period of five years after obtaining market 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. Article 71 Review and Amendment 1.The council for TRIPS shall review the implementation of this Agreement after the expiration of the transitional period referred to in paragraph 2 of Article

%?!-

EVOLUTION OF PATENT LAWS

65. The Council shall, having regard to the experience gained in its implementation, review it two years after that date, and at identical intervals thereafter. The Council may also undertake reviews in the light of any relevant new developments wliich might warrant modification or amendment of this Agreement. 2. Amendments merely serving the purpose of adjusting to higher levels of protection of intellectual property rights achieved, and in force, in other multilateral agreements and accepted under those agreements by all Members of the WTO may be referred to the Ministerial Conference for action in accordance with paragraph 6 Article X of the WTO Agreement on the basis of a consensus proposal from the Council for TRIPS. Article 72 Reservations Reservations may not be entered in respect of any of the provisions of this Agreement without the consent of the other Members. Article 73 Security Exceptions Nothing in this Agreement shall be construed: (a) to require a Member to furnish any information the disclosure of which it considers contrary to its essential security interests; or (b) to prevent a Member form taking any action which it considers necessary for the protection of its essential security interest; (i) relating to fissionable materials or the materials from which they are derived; (ii) relating to the traffic in arms, ammunition and implements of war and to such traffic in other goods and materials as is carried on directly or indirectly for the purpose of supplying a military establishment; (iii) taken in time of war or other emergency in international relations; or (c) to prevent a Member from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.

ANNEXURE I1 DECISIONS AND DECLARATION ADOPTED AT THE DOHA MINISTERIAL CONFERENCE (NOVEMBER 2001)

,

-

-

-

-

--

--

-

The three essential documents concerning intellectual property adopted'at the Doha Ministerial Conference are as under: 1. The Ministerial Declaration (relevant excerpts) 2. The Decision on Implementatioi~- related Issues and Concerns (relevant excerpts). 3. The Declaration on TRIPS and Public Health.

iI 1

I

1. MINISTERIAL DECLARATION (ADOPTED ON 14.11.2001) I. The multilateral tradingsystem embodied in the World Trade Organisation has contributed significantly to economic growth, development and employment throughout the past fifty years. We are determined, particularly in the light of the global economic slowdown, to maintain the process of reform and liberalization of trade policies, thus ensuring that the system plays its full part in promoting recovery, growth and development. We therefore strongly reaffirm the principles and objectives set out in the Marrakesh Agreement Establishing the World Trade Organization, and pledge to reject the use of protectionism. 2. International trade can play a major role in the promotion of economic development and the alleviation of poverty. We recognize the need for all our peoples to benefit from the increased opportunities and welfare gains that the multilateral trading system generates. The majority of WTO Members are developing countries. We seek to place their needs and interests at the heart of the Work Programme adopted in this Declaration. Recalling the Preamble to the Marrakesh Agreement, we shall continue to make positive effortsdesigned to ensure that developing countries, and especially the least developed among them, secure a share in the growth of world trade commensurate with the needs of their economic development. In this context, enhanced market access, balanced rules and well targeted, sustainably financed technical assistance and capacity-building programmes have important roles to play. 3. We recognize the particular vulnerability of the least developed countries and the special structural difficulties they face in the global economy. We are committed to addressing the marginalization of least developed countries in international trade and to improving their effective participation in the multilateral trading system. We recall the commitments made by Ministers at

352

--

EVOLUTION OF PATENT LAWS

.

ANNEXURE ll

--~

our meetings in Marrakesh, Singapore and Geneva and by the international community at the Third UN Conference on Least-Developed Countries in Brussels to help least-developed countries secure beneficial and meaningful integration into the multilateral trading system and the global economy. We are determined that the WTO will play its part in building effectively on these commitments under the Work Programme we are establishing. 4. We stress our commitment to the WTO as the unique forum for global trade rule making and liberalization, while also recognizing that regional trade agreements can play an important role in promoting the liberalization and expansion of trade and in fostering development. 5. We are aware that the challenges Members face in a rapidly changing international environment cannot be addressed through measures taken in the trade field alone. We shall continue to work with the Bretton Woods institutions for greater coherence in global economic policy-making. 6. We strongly reaffirm our commitment to the objective of sustainable development, as stated in the preamble to the Marrakesh Agreement. We are convinced that the aims of upholding and safeguarding an open and non-discriminatory multilateral trading system, and acting for the protection of the environment and the promotion of sustainable development can and must be mutually supportive. We take note of the efforts by Members to conduct national environmental assessments of trade policies on a voluntary basis. We recognize that under WTO rules no country should be prevented from taking measures for the protection of human, animal or plant life or health, or of the environment at the levels it considers appropriate, subject to the requirement that they are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, and are otherwise in accordance with the provisions of the WTO Agreements. We welcome the WTO's continued cooperation with UNEP and other inter-governmental environmental organizations. We encourage efforts to promote cooperation between the WTO and relevant international environmental and developmental organizations, especially in the lead-up to the World Summit on Sustainable Development to be held in Johannesburg, South Africa, in September 2002. 7. We reaffirm the right of Members under the General Agreement on Trade in Services to regulate, and to introduce new regulations on the supply of services. 8. We reaffirm our declaration made at the Singapore Ministerial Conference regarding internationally recognized core labour standards. We take note of work under way in the International Labour Organization (ILO)on the social dimension of globalization.

353

9. We note with particular satisfaction that this Conference has completed the WTO accession procedures for China and Chinese Taipei. We also welcome the accession as new Members, since our last Session, of Albania, Croatia, Georgia, Jordan, Lithuania, Moldova and Oman, and note the extensive market access commitments already made by these countries on accession. These accessions will greatly strengthen the multinational trading system, as will those of the 28 countries now negotiating their accession. We therefore attach great importance to concluding accession proceedings as quickly as possible. In particular, we are committed to accelerating the accession of least-developed countries. 10. Recognizing the challenges posed by an expanding WTO membership, we confirm our collective responsibility to ensure internal transparency and the effective participation of all Members. While emphasizing the intergovernmental character of the organization, we are committed to making the WTO's operations more transparent, including through more effective and prompt disseminationof information, and to improvedialogue with the public. We shall therefore at the national and multilateral levels continue to promote a better public understanding of the WTO and to communicate the benefits of a liberal, rules-based multilateral trading system.

11. In view of these considerations, we hereby agree to undertake the broad and balanced Work Programme set out below. This incorporates both an expanded negotiating agenda and other important decisions and activities necessary to address the challenges facing the multilateral trading system.

Work Programme Implementation - Related Issues and Concerns 12. We attach the utmost importance to the implementation-related issues and concerns raised by Members and are determined to find appropriate solutions to them. In this connection, and having regard to the General Council Decisions of 3 May and 15 December 2000, we further adopt the Decision on Implementation Related Issues and Concerns in document WT/MIN(01)/17 to address a number of implementation problems faced by Members. We agree that negotiations on outstanding implementation issues shall be an integral part of the Work Programme we are establishing, and that agreements reached at an early stage in these negotiations shall be treated in accordance with the provisions of paragraph 47 below. In this regard, we shall proceed as follows: (a)where we provide a specific negotiating mandate in this Declaration, the relevant implementation issues shall be addressed under that mandate; (b) the other outstanding implementation issues shall be addressed as a matter of priority by the relevant WTO bodies which shall report to the Trade Negotiations Committee, established under paragraph 46 below, by the end of 2002 for appropriate action.

354

EVOLUTION OF PATENT LAWS

Agriculture

ANNEXURE ll ---

I

[.. .I Trade-Related Aspects of Intellectual Property Rights 17. We stress the importance we attach to implementation and interpretation of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPSAgreement) in a manner supportive of public health by promoting both access to existing medicines and research and development into new medicines and in this connection, are adopting a separate Declaration. 18. With a view to completing the work started in the Council for TradeRelated Aspects of Intellectual Property Rights (Council for TRIPS) on the implementation of Article 23.4, we agree to negotiate the establishment of a multilateral system of notification and registration of geographical indications for wines and spirits by the Fifth Session of the Ministerial Conference. We note that issues related to the extension of the protection of geographical indications provided for in Article 23 to products other than wines and spirits will be addressed in the Council for TRIPSpursuant to paragraph 12of this Declaration. 19. We instruct the Council for TRIPS, in pursuing its work programme including under the review of Article 27.3(b),the review of the implementation of the TRIPS Agreement under Article 71.1 and the work foreseen pursuant to paragraph 12 of this Declaration to examine, inter alia, the relationship between the TRIPS Agreement and the Convention on Biological Diversity, the protection of traditional knowledge and folklore, and other relevant new developments raised by Members pursuant to Article 71.1 In undertaking this work, the TRIPSCouncil shall be guided by the objectives and principles set out in Articles 7 and 8 of the TRIPS Agreement and shall take fully into account the development dimension.

[.....I Trade Facilitation 27. Recognizing the case for further expediting the movement, release and clearance of goods, including goods in transit, and the need for enhanced technical assistance and capacity-building in this area, we agree that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken, by explicit consensus, at that Session on modalities of negotiations. In the period until the Fifth Session, the Council for Trade in Goods shall review and as appropriate, clarify and improve relevant aspects of Articles V, VIII and X of the GATT 1994 and identify the trade facilitation needs and priorities of Members, in particular developing and least-developed countries. We commit ourselves to ensuring adequate technical assistance and support for capacity building in this area.

I

1

1 1

i

355

WTO Rules 28. In the light of experience and of the increasing application of these instruments by Members, we agree to negotiations aimed at clarifying and improving disciplines under the Agreements on Implementation of Article VI of the GATT 1994 and on Subsidies and countervailing measures while preserving the basic concepts, principles and effectiveness of these Agreements and their instruments and objectives and taking into account the needs of developing and least developed participants. In the initial phase of the negotiations, participants will indicate the provisions including disciplines on trade distorting practices, that they seek to clarify and improve in the subsequent phase . In the context of these negotiations, participants shall also aim to clarify and improve WTO disciplines on fisheries subsidies, taking into account the importance of this sector to developing countries. We note that fisheries subsidies are also referred to in paragraph 31. 29. We also agree to negotiations aimed at clarifying and improving disciplines and procedures under the existing WTO provisions applying to regional trade agreements. The negotiations shall take into account the developmental aspect of regional trade agreements. Dispute Settlement Understanding 30. We agree to negotiations on improvements and clarifications of the Dispute Settlement Understanding. The negotiations should be based on the work done thus far as well as any additional proposals by Members and aim to agree on improvements and clarifications not later than May 2003 at which time we will take steps to ensure that the results enter into force as soon as possible thereafter . Trade and Environment 31. With a view to enhancing the mutual supportiveness of trade and environment we agree to negotiations, without prejudging their outcome on: (i) the relationship between existing WTO rules and specific trade obligations set out in multilateral environmental agreements (MEAs). The negotiations shall be limited in scope to the applicability of such existing WHO rules as among parties to the MEA in question. The negotiations shall not prejudice the WTO rights of any Member that is not a party to the MEA in question; (ii) procedures for regular information exchange between MEA Secretariats and the relevant WTO committees, and the criteria for the granting of observer status; (iii) the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services. We note that fisheries subsidies form part of the negotiations provided for in paragraph 28.

356

-

EVOLUTION OF PATENT LAWS --

32. We instruct the committee on Trade and Environment in pursuing work on all items on its agenda within its current terms of reference to give particular attention to :

[.....I

(ii) the relevant provisions of the Agreement on Trade-Related Aspects of Intellectual Property rights; and

Electronic Commerce 34. We take note of the work which has been done in the General Council and other relevant bodies since the Ministerial Declaration of 20 May 1998 and agree to continue the Work Programme on Electronic Commerce. The work to date demonstrates that electronic commerce creates new challenges and opportunities for trade for Members a t all stages of development and we recognize the importance of creating and maintaining an environment which is favourable to the future development of electronic commerce. We instruct the General Council to consider the most appropriate institutional arrangements for handling the Work Programme and to report on further progress to the Fifth Session of the Ministerial Conference. We declare that Members will maintain their current practice of not imposing customs duties on electronic transmissions until the Fifth Session.

357

Small Economies 35. We agree to a work programme, under the auspices of the General Council to examine issues relating to the trade of small economies. The objective of this work is to frame responses to the trade-related issues identified for the fuller integration of small, vulnerable economies into the multilateral trading system and not to create a sub-category of WTO Members. The General Council shall review the work programme and make recommendations for action to the Fifth Session of the Ministerial Conference.

(i) the effect of environmental measures on market access, especially in relation to developing countries, in particular the least-developed a.mong them, and those situations in which the elimination or reduction of trade restrictions and distortions would benefit trade, the environment and development;

(iii) labelling requirements for environmental purposes. Work on these issues should include the identification of any need to clarify relevant WTO rules. The Committee shall report to the Fifth Session of the Ministerial Conference and make recommendations, where appropriate, with respect to future action, including the desirability of negotiations. The outcome of this work as well as the negotiations carried out under paragraph 31(i) and (ii) shall be compatible with the open and non-discriminatory nature of the multilateral trading system shall not add to or diminish the rights and obligations of Members under existing WTO agreements, in particular the Agreement on the Application of Sanitary and Phytosanitary Measures, nor alter the balance of these rights and obligations, and will take into account the needs of developing and least-developed countries. 33. We recognize the importance of technical assistance and capacity building in the field of trade and environment to developing countries, in particular the least-developed among them. We also encourage that expertise and experience be shared with Members wishing to perform environmental reviews at the national level. A report shall be prepared on these activities for the Fifth Session.

ANNEXURE ll

;

1

r

Trade and Transfer of Technology 35. We agree to an examination, in a Working Group under the auspices of the General Council, of the relationship between trade and transfer of technology and of any possible recommendations on steps that might be taken within the mandate of the WTO to increase flows of technology to developing countries. The General Council shall report to the Fifth Session of Ministerial Conference on progress in the examination. Technical Cooperation and Capacity Building 38. We confirm that technical cooperation and capacity building are core elements of the development dimension of the multilateral trading system and we welcome and endorse the New Strategy for WTO Technical Cooperation for Capacity Building, Growth and Integration. We instruct the Secretariat in coordination with other relevant agencies to support domestic efforts for mainstreaming trade into national plans for economic development and strategies for poverty reduction. The delivery of WTO technical assistance shall be designed to assist developing and least-developed countries and low income countries in transition to adjust to WHO rules and disciplines, implement obligations and exercise the rights of membership including drawing on the benefits of an open, rules-based multilateral trading system. Priority shall also be accorded to small, vulnerable and transition economies as well as to Members and Observers without representation in Geneva. We reaffirm our support for the valuable work of the International Trade Centre which should be enhanced. 39. We underscore the urgent necessity for the effective coordinated delivery of technical assistance with bilateral donors in the OECD Development Assistance Committee and relevant international and regional intergovernmental institutions within a coherent policy framework and timetable. In the coordinated delivery of technical assistance, we instruct the Director-General to consult with the relevant agencies, bilateral donors and beneficiaries to identify ways of enhancing and rationalizing the Integrated Framework for Trade-Related Technical Assistance to Least-Developed Countries and the Joint Integrated Technical Assistance Programme (JITAP).

358

EVOLUTION OF PATENT LAWS

40. We agree that there is a need for technical assistance to benefit from secure and predictable funding. We therefore instruct the Committee on Budget, Finance and Administration to develop a plan for adoption by the General Council in December 2001 that will ensure long-term funding for WTO technical assistance at an overall level no lower than that of the current year and commensurate with the activities outlined above. 41. We have established firm commitments on technical cooperation and capacity building in various paragraphs in this Ministerial Declaration. We reaffirm these specific commitments contained in paragraphs 16,21,24,26,27, 33,38-40,42 and 43 and also reaffirm the understanding in paragraph 2 on the important role of sustainably financed technical assistance and capacity-building programmes. We instruct the Director-General to report to the Fifth Session of the Ministerial Conference, with an interim report to the General Council in December 2002 on the implementation and adequacy of these commitments in the identified paragraphs. Least Developed Countries 42. We acknowledge the seriousness of the concerns expressed by the least-developed countries (LDCs) in the Zanzibar Declaration adopted by their Ministers in July 2001. We recognize that the integration of the LDCs into the multilateral trading system requires meaningful market access, support for the diversification of their production and export base and trade related technical assistance and capacity building. We agree that the meaningful integration of LDCs into the trading system and the global economy will involve efforts by all WTO Members. We commit ourselves to the objectives of duty-free, quota-free market access for products originating from LDCs. In this regard, we welcome the significant market access improvements by WTO Members in advance of the Third UN Conference on LDCs (LDC-111) in Brussels, May 2001. We further commit ourselves to consider additional measures for progressive improvements in market access for LDCs. Accession of LDCs remains a priority for the Membership. We agree to work to facilitate and accelerate negotiations with acceding LDCs. We instruct the Secretariat to reflect the priority we attach to LDCs accessions in the annual plans for technical assistance. We reaffirm the commitments we undertook at LDC-I11 and agree that the WTO should take into account, in designing its work programme for LDCs, the trade-related elements of the Brussels Declaration and Programme of Action, consistent with the WTOs mandate, adopted at LDC-III.We instruct the Sub-committee for Least Developed Countries to design such a work programme and to report on the agreed work programme to the General Council at its first meeting in 2002. 43. We endorse the Integrated Framework for Trade-Related Technical Assistance to Least-Developed Countries (IF) as a viable model for LDCs trade development. We urge development partners to significantly increase contributions to the IF Trust Fund and WTO extra-budgetary trust funds in favour of

I ANNEXURE ll

1

359

LDCs. We urge the core agencies in coordination with development partners to explore the enhancement of the IF with a view to addressing the supply side constraints of LDCs and the extension of the model to all LDCs following the review of the IF and the appraisal of the ongoing Pilot Scheme in selected LDCs We request the Director-General, following coordination with heads of the other agencies, to provide an interim report to the General Council in December 2002 and a full report to the Fifth Session of the Ministerial Conference on all issues affecting LDCs. Special and Differential Treatment 44. We reaffirm that provisions for special and differential treatment are an integral part of the WTO Agreements. We note the concerns expressed regarding their operation in addressing specificconstraints faced by developing countries, particularly least developed countries. In that connection, we also note that some Members have proposed a Framework Agreement on Special and Differential Treatment (WT/GC/W/442). We therefore agree that all special and differential treatment provisions shall be reviewed with a view to strengthening them and making them more precise, effective and operational. In this connection, we endorse the work programme on special and differential treatment set out in the Decision on Implementation Related Issues and Concerns. Organization and Management of the Work Programme 45. The negotiations to be pursued under the terms of this Declaration shall be concluded not later than 1January 2005. The Fifth session of the Ministerial Conference will take stock of progress in the negotiations, provide any necessary political guidance and take decisions as necessary. When the results of the negotiations in all areas have been established, a special Session of the Ministerial Conference will be held to take decisions regarding the adoption and implementation of those results. 46. The overall conduct of the negotiations shall be supervised by a Trade Negotiations Committee under the authority of the General Council. The Trade Negotiations Committee shall hold its first meeting not later than 31 January 2002. It shall establish appropriate negotiating mechanisms as required and supervise the progress of the negotiations. 47. With the exception of the improvements and clarifications of the Dispute Settlement Understanding, the conduct, conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking. However, agreements reached at an early stage may be implemented on a provisional or a definitive basis. Early agreements shall be taken into account in assessing the overall balance of the negotiations. 48. Negotiations shall be open to: i. all Members of the WTO; and

360

EVOLUTION OF PATENT LAWS

ANNEXURE II

ii. States and separate customs territories currently in the process of accession and those that inform Members, at a regular meeting of the General Council of their intention to negotiate the terms of their membership and for whom an accession working party is established. Decisions on the outcomes of the negotiations shall be taken only by WTO Members. 49. The Negotiations shall be conducted in a transparent manner among participants in order to facilitate the effective participation of all. They shall be conducted with a view to ensuring benefits to all participants and to achieving an overall balance in the outcome of the negotiations. 50. The negotiations and the other aspects of the Work Programme shall take fully into account the principle of special and differential treatment for developing and least-developed countries embodied in: Part IV of the GATT 1994; the Decision of 28 November 1979 on Differential and More Favourable Treatment. Reciprocity and Fuller Participation of Developing Countries; the Uruguay Round Decision on Measures in Favour of Least-Developed Countries and all other relevant WTO provisions. 51. The Committee on Trade and Development and the Committee on Trade and Environment shall, within their respective mandates, each act as a forum to identify and debate developmental and environmental aspects of the negotiations in order to help achieve the objective of having sustainable development appropriately reflected. 52. Those elements of the Work Programme which do not involve negotiations are also accorded a high priority. They shall be pursued under the overall supervision of the General Council, which shall report on progress to the Fifth Session of the Ministerial Conference.

Recalling the 3 May 2000 Decision of the General Council to meet in special sessions to address outstanding implementation issues, and to assess the existing difficulties, identify ways needed to resolve them, and take decisions for appropriate action not later than the fourth Session of the Ministerial Conference. Noting the actions taken by the General Council in pursuance of this mandate at its Special Sessions in October and December 2000 (WT/L/384) as well as the review and further discussion undertaken at the Special Sessions held in April, July and October 2001, including the referral of additional issues to relevant WTO bodies or their chairperson for further work; Noting also the reports on the issues referred to the General Council from subsidiary bodies and their chairpersons and from the Director General and the discussions as well as the clarifications provided and understandings reached on implementation issues in the intensive informal and formal meetings held under this process since May 2000; Decides as follows: 11. Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) 11.1 TheTRIPS Council is directed to continue its examination of the scope and modalities for complaints of the types provided for under subparagraphs l(b) and l(c) of Article XXIII of G A R 1994 and make recommendations to the Fifth Session of the Ministerial Conference. It is agreed that, in the meantime, Members will not initiate such complaints under the TRIPS Agreement. 11.2 Reaffirming that the provisions of Article 66.2 of the TRIPS Agreement are mandatory. It is agreed that the TRIPS Council shall put in place a mechanism for ensuring the monitoring and full implementation of the obligations in Question. To this end, developed country Members shall submit prior to the end of 2002 detailed reports on the functioning in practice of the incentives provided to their enterprises for the transfer of technology in pursuance of their commitments under Article 66.2 These submissions shall be subject to a review in the TRIPS Council and information shall be updated by Members annually. 12. Cross - cutting Issues 12.1 The committee on Trade and Development is instructed: (i) to identify those special and differential treatment provisions that are already mandatory in nature and those that are non-binding in character, to consider the legal and practical implications for developed and developing Members of converting special and differential treatment measures into mandatory provisions, to

2. IMPLEMENTATION - RELATED ISSUES AND CONCERNS (DECISION OF 14 NOVEMBER 2001) The Ministerial Conference, Having regard to Articles IV.1, IV.5 and IX of the Marrakesh Agreement Establishing the World Trade Organization (WTO). Mindful of the importance that Members attach to the increased participation of developing countries in the multilateral trading system and of the need to ensure that the system responds fully to the needs and interests of all participants. Determined to take concrete action to address issues and concerns that have been raised by many developing country Members regarding the implementation of some WTO Agreements and decisions, including the difficulties and resource constraints that have been encountered in the implementation of obligations in various areas:

361

%s22p-.-

363

EVOLUTION OF PATENT LAWS

ANNEXURE ll

identify those that Members consider should be made mandatory, and to report to the General Council with clear recommendations for a decision by July 2002; (ii) to examine additional ways in which special and differential treatment provisions can be made more effective, to consider ways including improved information flows, in which developing countries, in particular the least-developed countries may be assisted to make best use of special and differential treatment provisions a n d to report to the General Council with clear recommendations for a decision by July 2002; and (iii) to consider, in the context of the work programme adopted at the Fourth Session of the Ministerial Conference, how special and differential treatment may be incorporated into the architecture of WTO rules. The work of the Committee on Trade and Development in this regard shall take fully into consideration previous work undertakenas noted in WT/COMTD/W/77/Rev.l. It will also be without prejudice to work in respect of implementation of WTO Agreements in the General Council and in other Councils and Committees. 12.2 Reaffirms that preferences granted to developing countries pursuant to the Decision of the Contracting parties of 28 November 1979 ("Enabling Clause") should be generalised, non-reciprocal and non-discriminatory. 13. Outstanding Implementation Issues Agrees that outstanding implementation issues be addressed in accordance with paragraph 12 of the Ministerial Declaration (WT/MIN(Ol)DEC/l). 14. Final Provisions Requests the Director-General, consistent with paragraphs 38 to 43 of the Ministerial Declaration (WT/MIN(Ol)DEC/l) to ensure that WTO technical assistance focuses, on a priority basis, on assisting developing countries to implement existing WTO obligations as well as on increasing their capacity to participate more effectively in future multilateral trade negotiations. In carrying out this mandate, the WTO Secretariat should cooperate more closely with international and regional intergovernmental organizations so as to increase efficiency and synergies and avoid duplication of programmes.

2. We stress the need for the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) to be part of the wider national and international action to address these problems. 3. We recognize that intellectual property protection is important for the development of new medicines. We also recognize the concerns about its effects on prices. 4. We agree that the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO Member's right to protect public health and, in particular, to promote access to medicines for all. In this connection, we reaffirm the right of WTO Members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose. 5. Accordingly and in the light of paragraph 4 above, while maintaining our commitments in the TRIPS Agreement, we recognize that these flexibilities include: (a) In applying the customary rules of interpretation of public international law, each provision of the TRIPS Agreement shall be read in the light of the object and purpose of the Agreement as expressed, in particular, in its objectives and principles. (b) Each Member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted. (c) Each Member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/ AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency.

3. DECLARATION ON THE TRIPS AGREEMENT AND PUBLIC

HEALTH (ADOPTED ON 14 NOVEMBER 2001) 1. [Ministers]recognize the gravity of the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics.

_

(d) The effect of the provisions in the TRIPS Agreement that are relevant to the exhaustion of intellectual property rights is to leave each Member free to establish its own regime for such exhaustion without challenge, subject to the MFN and national treatment provisions of Articles 3 and 4. 6 . We recognize that WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement. We instruct the Council for TRIPS to find an expeditious solution to this problem and to report to the General Council before the end of 2002.

364

EVOLUTION OF PATENT LAWS

7. We reaffirm the commitment of developed-country Members to provide incentives to their enterprises and institutions to promote and encourage technology transfer to least-developed country Members pursuant to Article 66.2. We also agree that the least-developed country Members will not be obliged, with respect to pharmaceutical products, to implement or apply Sections 5 and 7 of Part I1 of the TRIPS Agreement or to enforce rights provided for under these Sections until 1 January 2016, without prejudice to the right of least-developed country Members to seek other extensions of the transition periods as provided for in Article 66.1 of the TRIPS Agreement. We instruct the Council for TRIPS to take the necessary action to give effect to this pursuant to Article 66.1 of the TRIPS Agreement.

ANNEXURE I11 EXTENSION OF THE TRANSITION PERIOD UNDER ARTICLE 66.1 OF THE TRIPS AGREEMENT FOR LEAST DEVELOPED COUNTRY MEMBERS FOR CERTAIN OBLIGATIONS WITH RESPECT TO PHARMACEUTICAL PRODUCTS WORLD TRADE ORGANIZATION

IP/C/25 1July 2002 (02-3664)

Council for Trade-Related Aspects of Intellectual Property Rights

. .

ecislon of the Counc~lfor TRIPS of 77 Tune 2007 The Council for Trade-Related Aspects of Intellectual property Rights (the "Council for TRIPS"), Haz~iizgregard to paragraph 1 of Article 66 of the TRIPS Agreement; Having regard to the instruction of the Ministerial Conference to the Council for TRIPS contained in paragraph 7 of the Declaration on the TRIPS Agreement and Public Health (WT/MIN(Ol)/DEC/2) (the "Declaration"); Considering that paragraph 7 of the Declaration constitutes a duly motivated request by the least developed country Members for an extension of the period under paragraph 1 of Article 66 of the TRIPS Agreement; Decides as follows: 1. Least developed country Members will not be obliged with respect to pharmaceuticals products, to implement or apply Sections 5 and 7 of part I1 of the TRIPS Agreement or to enforce rights provided for under these Sections until 1 January 2016. 2. This decision is m a d e w i t h o u t prejudice to the rights o f least-developed country Members to seek other extensions of the period provided for in paragraph 1 of Article 66 of the TRIPS Agreement.

ANNEXURE V

ANNEXURE IV

IMPLEMENTATION OF PARAGRAH 6 OF THE DOHA DECLARATION ON THE TRIPS AGREEMENT AND PUBLIC HEALTH

LEAST-DEVELOPED COUNTRY MEMBERS OBLIGATIONS UNDER ARTICLE 70.9 OF THE TRIPS AGREEMENT WITH RESPECT TO PHARMACEUTICAL PRODUCTS

-

-

WT/L/540

WORLD TRADE

i

Decision of 30 August 2003

Decision of 8 Julv 2002 The General Council, Having regard to paragraphs 1, 3 and 4 of Article IX of the Marrakesh Agreement Establishing the World Trade Organization (the "WTO Agreement"); Condircting the functions of the Ministerial Conference in the interval between meetings pursuant to paragraph 2 of Article IV of the WTO Agreement; Noting the decision of the Council for TRIPS on the Extension of the Transition Period under Article 66.1 of the TRIPS Agreement for Least-Developed Country Members for Certain Obligations with respect to Pharmaceutical Products (IP/C/25) (the "Decision"), adopted by the Council for TRIPS at its meeting of 25-27 June 2002 pursuant to the instructions of the Ministerial Conference contained in paragraph 7 of the Declaration on the TIXIIPS Agreement and Public Health (WT/MIN(Ol)/UEC 2) (the "Declaration"); Considering that obligations under paragraph 9 of Article 70 of the TRIPS Agreement, where applicable, should not prevent attainment of the objectives of paragraph 7 of the Declaration; Noting that, in light of the foregoing,exceptionalcircumstancesexist justifying a waiver from paragraph 9 of Article 70 of the TRIPS Agreement with respect to pharmaceutical products in respect of least-developed country Members: Decides as follows: 1. The obligations of least-developed country Members under paragraph 9 of Article 70 of the TRIPS Agreement shall be waived with respect to pharmaceutical products until 1 January 2016. 2. This waiver shall be reviewed by the Ministerial Conference not later than one year after it is granted, and thereater annually until the waiver terminates, in accordance with the provisions of paragraph 4 of Article IX of the WTO Agreement.

2 September 2003 (03-4582)

ORGANIZATION

WT/L/478 12 July 2002 (02-3891)

WORLD TRADE ORGANIZATION

1

I

The General Council, Having regard to paragraphs 1,3 and 4 of Article IX of the Marrakesh Agreement Establishing the World Trade Organization ("the WTO Agreement"); Conducting the functions of the Ministerial Conference in the interval between meetings pursuant to paragraph 2 of Article IV of the WTO Agreement; Noting the Declaration on the TRIPS Agreement and Public Health (WT/MIN(Ol)/DEC/2) (the "Declaration") and, in particular, the instruction of the Ministerial Conference to the Council for TRIPS contained in paragraph 6 of the Declaration to find an expeditious solution to the problem of the difficulties that WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector could face in making effective use of compulsory licensing under the TRIPS Agreement and to report to the General Council before the end of 2002; Recognizing, where eligible importing Members seek to obtain supplies under the system set out in this Decision, the importance of a rapid response to those needs consistent with the provisions of this Decision; Noting that, in the light of the foregoing, exceptional circumstances exist justifying waivers from the obligations set out in paragraphs (f) and (h) of Article 31 of the TRIPS Agreement with respect to pharmaceutical products; Decides as follows: 1. For the purposes of this decision: (a) "pharmaceutical product" means any patented product, or product manufactured through a patented process, of the pharmaceutical sector needed to address the public health problems as recognized in paragraph 1 of the Declaration. It is understood that active ingredients necessary for its manufacture and diagnostic kits needed for its use would be included;

368

EVOLUTION OF PATENT LAWS

(b) "eligible importing Member" means any least-developed country Member, and any other Member that has made a notification to the Council for TRIPS of its intention to use the system as an importer, it being understood that a Member may notify at any time that it will use the system in whole or in a limited way, for example only in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use. It is noted that some Members will not use the system set out in this Decision as importing Members and that some other Members have stated that, if they use the system, it would be in no more than situations of national emergency or other circumstances of extreme urgency; (c) "exporting Member" means a Member using the system set out in this Decision to produce pharmaceutical products for, and export them to, an eligible importing Member. 2. The obligations of an exporting Member under Article 31(f)of the TRIPS Agreeriteitl shall be waived with respect to the grant by it of a compulsory licence to the extent necessary for the purposes of production of a pharmaceutical product(s)and its export to an eligible importing Member(s) in accordance with the terms set out below in this paragraph: (a) the eligible importing Member(s) has made a notification to the Council for TRIPS that: (i) specifies the names and expected quantities of the product(s) needed. (ii\ confirms that the eligible importing Member in question, other than a least developed country Member, has established that it has insufficient or no manufacturing capacities in the pharmaceutical sector for the product(s) in question in one of the ways set out in the Annex to this decision; and (iii) confirms that, where a pharmaceutical product is patented in its territory, it has granted or intends to grant a compulsory licence in accordance with Article 31 of the TRIPS Agreement and the provisions of this Decision. (b) the compulsory licence issued by the exporting Member under this Decision shall contain the following conditions: (i) only the amount necessary to meet the needs of the eligible importing Member(s) may be manufactured under the licence and the entirety of the production shall be exported to the Member(s) which has notified its needs to the Council for TRIPS; (ii) products produced under the licence shall be clearly identified as being produced under the system set out in this Decision through specific labelling or marking. Suppliers should distinguish such

ANNEXURE V

369

products through special packaging and/or special colouring/shaping of the products themselves, provided that such distinction is feasible and does not have a significant impact on price; and (iii) before shipment begins, the licensee shall post on a website the following information: - the quantities being supplied to each destination as referred to in indent (i) above and - the distinguishing features of the product(s)referred to in indent (ii) above; (c) the exporting Member shall notify the Council for TRIPS of the grant of the licence, including the conditions attached to it. The information provided shall include the name and address of the licensee, the product(s) for which the licence has been granted the quantity(ies) for which it has been granted, the country(ies) to which the product(s) is(are) to be supplied and the duration of the licence. The notification shall also indicate the address of the website referred to in subparagraph (b)(iii)above. 3. Where a compulsory licence is granted by an exporting Member under the system set out in this Decision, adequate remuneration pursuant to Article 31(h)of the TRIPS Agreement shall be paid in that Member taking into account the economicvalue to the importing Member of the use that has been authorized in the exporting Member. Where a compulsory licence is granted for the same products in the eligible importing Member, the obligation of that Member under Article 31(h)shall be waived in respect of those products for which remuneration in accordance with the first sentence of this paragraph is paid in the exporting Member. 4. In order to ensure that the products imported under the system set out in this Decision are used for the public health purposes underlying their importation, eligible importing Members shall take reasonable measures within their means, proportionate to their administrative capacities and to the risk of trade diversion to prevent re-exportation of the products that have actually been imported into their territories under the system. In the event that an eligible importing Member that is a developing country Member or a least-developed country Member experiences difficulty in implementing this provision, developed country Members shall provide, on request and on mutually agreed terms and conditions, technical and financial cooperation in order to facilitate its implementation. 5. Members shall ensure the availability of effective legal means to prevent the importation into, and sale in, their territories of products produced under the system set out in this Decision and diverted to their markets inconsistently and its provisions, using the means already required to be available under the

370

EVOLUTION OF PeTENT LAWS

-

TRIPS Agreement. If any member considers that such measures are proving insufficient for this purpose, the matter may be reviewed in the Council for TRIPS at the request of that Member. 1. With a view to harnessing economies of scale for the purposes of enhancing purchasingpower for, and facilitating the local productisn of, pharmaceutical products: (i) where a developing or least-developed country WTO Member is a party to a regional trade agreement within the meaning of Article X X N of the GATT 1994and the Decision of 28 November 1979 on Differential and More Favourable Treatment Reciprocity and Fuller Participationof Developing Countries (L/4903), at least half of the current membership of which is made up of countries presently on the United Nations list of leastdeveloped countries, the obligations of that Member under Article 31(f) of the TRIPS Agreement shall be waived to the extent necessary to enable a pharmaceutical product produced or imported under a compulsory licence in that Member to be exported to the markets of those other developing or least developed country parties to the regional trade agreement that share the health problem in question. It is understood that this will not prejudice the territorial nature of the patent rights in question; (ii) It is recognized that the development of systems providing for the grant of regional patents to be applicable in the above Members should be promoted. To this end, developed country Members undertake to provide technical cooperation in accordance with Artlcle 67 of the TRIPS Agreement, including in conjunction with other relevant intergovernmental organizations. 2. Members recognize the desirability of promoting the transfer of technology and capacity building in the pharmaceutical sector in order to overcome the problem identified in paragraph 6 of the Declaration. To this end, eligible importing Members and exporting Members are encouraged to use the system set out in this Decision in a way which would promote this objective. Members undertake to cooperate in paying special attention to the transfer of technology and capacity building in the pharmaceutical sector in the work to be undertaken pursuant to Article 66.2 of the TRIPS Agreement, paragraph 7 of the Declaration and any other relevant work of the Council for TRIPS. 3. The Council for TRIPS shall review annually the functioning of the system set out in this Decision with a view to ensuring its effective operation and shall amually report on its operation to the General

ANNEXURE V

.

371

Council. This review shall be deemed to fulfil the review requirements of Article lX:4 of the WTO Agreement. 4. This Decision is without prejudice to the rights, obligations and flexibilities that Members have under the provisions of the TRIPS Agreement other than paragraphs (f) and (h) of Article 31, including those reaffirmed by the Declaration, and to their interpretation. It is also without prejudice to the extent to which pharmaceutical products produced under a compulsory licence can be exported under the present provisions of Article 31(f) of the TRIPS Agreement. 5. Members shall not challenge any measures taken in conformity with the provisions of the waivers contained in this Decision under subparagraphs l(b) and l(c) of Article XXIII of GATT 1994. 6. This Decision, including the waivers granted in it, shall terminate for each Member on the date on which an amendment to the TRIPS Agreement replacing its provisions takes effect for that Member. The TRIPS Council shall initiate by the end of 2003 work on the preparation of such an amendment with a view to its adoption within six months, on the understanding that the amendment will be based, where appropriate, on this Decision and on the further understanding that it will not be part of the negotiations referred to in paragraph 45 of the Doha Ministerial Declaration (WT/MIN(Ol)/DEC/l). ANNEX ASSESSMENT OF MANUFACTURING CAPACITIES IN THE PHARMACEUTICAL SECTOR

Least-developed country Members are deemed to have insufficient or no manufacturing capacities in the pharmaceutical sector. For other eligible importing Members, insufficient or no manufacturing capacities for the product(s) in question may be established in either of the following ways: (i) the Member in question has established that it has no manufacturing

capacity in the pharmaceutical sector; OR (ii) Where the member has some manufacturing capacity in this sector, it has examined this capacity and found that, excluding any capacity owned or controlled by the patent owner, it is currently insufficient for the purposes of meeting its needs. When it is established that such capacity has become sufficient to meet the Member's needs, the system shall no longer apply.

ANNEXURE VI PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY [March 20,1883, as revised at Brussels on December 14,1900, at Washington on June 2,1911, at The Hague on November 6,1925, at London on June 2,1934, at Lisbon on October 31,1958, and at Stockholm on July 14,1967, and as amended on September 28,19791 Article 1 (1)The countries to which this Convention applies constitute a Union for the protection of industrial property. (2) The protection of industrial property has as its object patents, utility models, industrial designs, trademarks, servicemarks, trade names, indications of source or applications of origin, and the repression of unfair competition. (3)Industrial property shall be understood in the broadest sense and shall apply not only to industry and commerce proper, but likewise to agricultural and extractive industries and to all manufactured or natural products, for example, wines, grain, tobacco leaf, fruit, cattle, minerals, mineral waters, beer, flowers and flour. (4)Patents shall include the various kinds of industrial patents recognized by the laws of the countries of the Union, such as patents of importation, patents of improvement, patents and certificates of addition etc. Article 2 (1)Nationals of any country of the Union shall, as regards the protection of industrial property, enjoy in all the other countries of the Union the advantages that their respective laws now grant, or may hereafter grant to nationals all without prejudice to the rights specially provided for by this Convention. Consequently, they shall have the same protection as the latter, and the same legal remedy against any infringement of their rights, provided that the conditions and formalities imposed upon nationals are complied with. (2)However, no requirement as to domicile or establishment in the country where protection is claimed may be imposed upon nationals of countries of the Union for the enjoyment of any industrial property rights. (3)The provisions of the laws of each of the countries of the Union relating to judicial and administrative procedure and to jurisdiction, and to the designation of an address for service or the appointment of an agent, which may be required by the laws on industrial property are expressly reserved.

ANNEXURE VI

373

Article 3 National of countries outside the Union who are domiciled or who have real and effective industrial or commercial establishments in the territory of one of the countries of the Union shall be treated in the same manner as nationals of the countries of the Union. Article 4 A. (1)Any person who has duly filed an application for a patent, or for the registration of a utility model, or of an industrial design, or of a trademark, in one of the countries of the Union, or his successor in title, shall enjoy, for the purpose of filing in the other countries, a right of priority during the periods hereinafter fixed. (2) Any filing that is equivalent to a regular national filing under the domestic legislation of any country of the Union or under bilateral or multilateral treaties concluded between countries of the Union shall be recognized as giving rise to the right of priority. (3) By a regular national filing is meant any filing that is adequate to establish the date on which the application was filed in the country concerned, whatever may be the subsequent fate of the application. B. Consequently, any subsequent filing in any of the other countries of the Union before the expiration of the periods referred to above shall not be invalidated by reason of any acts accomplished in the interval, in particular, another filing, the publication or exploitation of the invention, the putting on sale of copies of the design, or the use of the mark, and such acts cannot give rise to any third-party right or any right of personal possession. Rights acquired by third parties before the date of the first application that serves as the basis for the right of priority are reserved in _accordancewith the domestic legislation of each country of the Union. C. (1)The periods of priority referred to shall be twelve months for patents and utility models, and six months for industrial designs and trademarks. (2) These periods shall start from the date of filing of the first application, the day of filing shall not be included in the period. (3)If the last day of the period is an official holiday, or a day when the office is not open for the filing of applications in the country where protection is claimed, the period shall be extended until the first following working day. (4)A subsequent application concerning the same subject as a previous first application within the meaning of paragraph (2), above, filed in the same country of the Union shall be considered as the first application, of which the filing date shall be the starting point of the period of priority, if, at the time of filing the subsequent application, the said previous application has been withdrawn, abandoned, or refused, without having been laid open to public inspec-

374

EVOLUTION OF PATENT LAWS ANNEXURE Vl

tion and without leaving any rights outstanding, and if it has not yet served as a basis for claiming a right of priority. D. (1) Any person desiring to take advantage of the priority of a previous filing shall be required to make a declaration indicating the date of such filing and the country in which it was made. Each country shall determine the date on which such declaration must be made. (2) These particulars shall be mentioned in the publications issued by the competent authority, and in particular in the patents and the specifications relating thereto. (3) The countries of the Union may require any person making a declaration of priority to produce a copy of the application (description, drawings, etc.) previously filed. The copy, certified as correct by the authority which received such application, shall not require any authentication, and may in any case be filed, without fee, at any time within three months of the filing of the subsequent application. They may require it to be accompanied by a certificate from the same authority showing the date of filing, and by a translation. (4) No other formalities may be required for the declaration of priority at the time of filing the application. Each country of the Union shall determine the consequences of failure to comply wi th the formalities prescribed by this Article, but such consequences shall in no case go beyond the loss of the right of priority. (5) Subsequently, further proof may be required. Any person who avails himself of the priority of a previous application shall be required to specify the number of that application, this number shell be published as provided for by paragraph (2), above. E. (1)Where an industrial design is filed in a country by virtue of a right of priority based on the filing of a utility model, the period of priority shall be the same as that fixed for industrial designs. (2)Furthermore, it is permissible to file a utility model in a country by virtue of a right of priority based on the filing of a patent application, and vice versa. F. No country of the Union may refuse a priority or a patent application on the ground that the applicant claims multiple priorities, even if they originate in different countries, or on the ground that an application claiming one or more priorities contains one or more elements that were not included in the application or applications whose priority is claimed, the filing of the subsequent application shall give rise to a right of priority under ordinary conditions. G. (1) If the examination reveals that an application for a patent contains more than one invention, the applicant may divide the application into a certain number of divisional applications and preserve as the date of each the date of the initial application and the benefit of the right of priority, if any. (2)The applicant may also, on his own initiative, divide a patent application and preserve as the date of each divisional application the date of the initial

I

375

application and the benefit of the right of priority, if any. Each country of the Union shall have the right to determine the conditions under which such division shall be authorized. H. Priority may not be refused on the ground that certain elements of the inventions for which priority is claimed do not appear among the claim formulated in the application in the country of origin, provided that the application documents as a whole specifically disclose such elements. I. (1) Applications for inventor's certificates filed in a country in which applicants have the right to apply at their own option either for a patent or for an inventor's certificate shall give rise to the right of priority provided for by this Article, under the same conditions and with the same effects as applications for patents. (2) In a country in which applicants have the right to apply at their own option either for a patent or for an inventor's certificate, an applicant for an inventor's certificate shall in accordance with the provisions of this Article relating to patent applications, enjoy a right of priority based on an application for a patent, a utility mode$, or an inventor's certificate. Article 4bis (1) Patents applied for in the various countries of the Union by nationals of countries of the Union shall be independent of patents obtained for the same invention in other countries whether members of the Union or not. (2) The foregoing provision is to be understood in an unrestricted sense, in particular, in the sense that patents applied for during the period of priority are independent, both as regards the grounds for nullity and forfeiture and as regards their normal duration. (3) The provision shall apply to all patents existing at the time when it comes into effect. (4) Similarly, it shall apply, in the case of the accession of new countries to patents in existence on either side at the time of accession. (5) Patents obtained with the benefit of priority shall, in the various countries of the Union, have a duration equal to that which they would have, had they been applied for or granted without the benefit of priority. Article 4ter The inventor shall have the right to be mentioned as such in the patent. Article 4quater The grant of a patent shall not be refused and a patent shall not be invalidated on the ground that the sale of the patented product or a product obtained by means of a patented process is subject to restrictions or limitations resulting from the domestic law.

376

ANNEXURE VI

EVOLUTION OF PATENT LAWS

Article 5 A. (1) Importation by the patentee into the country where the patent has been granted of articles manufactured in any of the countries of the Union shall not entail forfeiture of the patent. (2) Each country of the Union shall have the right to take legislative measures providing for the grant of compulsory licenses to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent, for example, failure to work. (3) Forfeiture of the patent shall not be provided for except in cases where the grant of compulsory licenses would not have been sufficient to prevent the said abuses. No proceedings for the forfeiture or revocation of a patent may be instituted before the expiration of two years from the grant of the first compulsory license. (4) A compulsory license may not be applied for on the groundof failure to work or insufficient working before the expiration of a period of four years from the date of filing of the patent application or three years from the date of the grant of the patent, whichever period expires last; it shall be refused if the patentee justifies his inaction by legitimate reasons. Such a compulsory license shall be non-exclusive and shall not be tranferable, even in the form of the grant of a sub-license, except with that part of the enterprise or goodwill which exploits such license. (5)The forgoing provisions shall be applicable, mutatis mutandis, to utility models. B. The protection of industrial designs shall not, under any circumstance, be subject to any forfeiture, either by reason of failure to work or by reason of the importation of articles corresponding to those which are protected. C. (1)If, in any country, use of the registered mark is compulsory, the registration may be cancelled only after a reasonable period, and then only if the person concerned does not justify his inaction. (2) Use of a trademark by the proprietor in a form differing in elements which do not alter the distinctive character of the mark in the form in which it was registered in one of the countries of the Union shall not entail invalidation of the registration and shall not diminish the protection granted to the mark. (3) Concurrent use of the same mark on identical or similar goods by industrial or commercial establishments considered as co-proprietors of the mark according to the provisions of the domestic law of the country where protection is claimed shall not prevent registration or diminish in any way the protection granted to the said mark in any country of the Union, provided that such use does not result in misleading the public and is not contrary to the public interest .

I I

I

377

D. No indication or mention of the patent, of the utility model, of the registration of the trademark, or of the deposit of the industrial design, shall be required upon the goods as a condition of recognition of the right to protection. Article 5bis (1) A period of grace of not less than six months shall be allowed for the payment of the fees prescribed for the maintenanceof industrial property rights, subject, if the domestic legislation so provides, to the payment of a surcharge. (2) The countries of the Union shall have the right to provide for the restoration of patents which have lapsed by reason of non-payment of fees. Article 5ter In any country of the Union the following shall not be considered as infringements of the rights of a patentee: (1) the use on board vessels of other countries of the Union of devices forming the subject of his patent in the body of the vessel, in the machinery, tackle gear and other accessories, when such vessels temporarily or accidentally enter the waters of the said country, provided that such devices are used there exclusively for the needs of the vessel; (2) the use of devices forming the subject of the patent in the construction or operation of aircraft or land vehicles of other countries of the Union or of accessories of such aircraft or land vehicles, when those aircraft or land vehicles temporarily or accidentally enter the said country. Article Squater When a product is imported into a country of the Union where there exists a patent protecting a process of manufacture of the said product, the patentee shall have all the rights, with regard to the imported product, that are accorded to him by the legislation of the country of importation, on the basis of the process patent, with respect to products manufactured in that country. Article 5quinquies Industrial designs shall be protected in all the countries of the Union. Article 6 (1) The conditions for the filing and registration of trademarks shall be determined in each country of the Union by its domestic legislation. (2) However, an application for the registration of a mark filed by a national of a country of the Union in any country of the Union may not be refused, nor may a registration be invalidated on the ground that filing, registration, or renewal, has not been effected in the country of origin. (3) A mark duly registered in a country of the Union shall be regarded as independent of marks registered in the other countries of the Union, including the country of origin.

378

379

EVOLUTION OF PATENT LAWS

ANNEXURE VI

Article 6bis (1)The countries of the Union undertake, ex officio if their legislation so permits, or at the request of an interested party, to refuse or to cancel the registration, and to prohibit the use of a trademark which constitutes a reproduction, an imitation, or a translation, liable to create confusion, of a mark considered by the competent authority of the country of registration or use to be well known in that country as being already the mark of a person entitled to the benefits of this Convention and used for identical or similar goods. These provisions shall also apply when the essential part of the mark constitutes a reproduction of any such well-known mark or an imitation liable to create confusion therewith. (2) A period of at least five years from the date of registration shall be allowed for requesting the cancellation of such a mark. The countries of the Union may provide for a period within which the prohibition of use must be requested. (3) No time limit shall be fixed for requesting the cancellation or the prohibition of the use of marks registered or used in bad faith. Article 6ter (1) (a) The countries of the Union agree to refuse or to invalidate the registration, and to prohibit by appropriate measures the use. Without authorization by the competent authorities, either as trademarks or as elements of trademarks, of armorial bearings flags and other State emblems of the countries of the Union, official signs and hallmarks indicating control and warranty adopted by them and any imitation from a heraldic point of view. (b) The provision of subparagraph (a), above, shall apply equally to armorial bearings, flags, other emblems, abbreviations, and names, of international intergovernmental organizations of which one or more countries of the Union are members, with the exception of armorial bearings, flags, other emblems, abbreviations, and names, that are already the subject of international agreements in force, intended to ensure their protection. (c) No country of the Union shall be required to apply the provisions or subparagraph (b) above, to the prejudice of the owners of rights acquired in good faith before the entry into force, in that country, of this Convention. The countries of the Union shall not be required to apply the said provisions when the use or registration referred to in subparagraph (a), above, is not of such a nature as to suggest to the public that a connection exists between the organization concerned and the armorial bearings, flags, emblems, abbreviations, and names, or if such use or registration is probably not of such a nature as to mislead the public as to the existence of a connection between the user and the organization.

(2) Prohibition of the use of official signs and hallmarks indicating control and warranty shall apply solely in cases where the marks in which they are incorporated are intended to be used on goods of the same or a similar kind. (3) (a) For the application of these provisions, the countries of the Union agree to communicate reciprocally, through the intermediary of the International Bureau, the list of State emblems, and official signs and hallmarks indicating control and warranty, which they desire, or may hereafter desire, to place wholly or within certain limits under the protection of this Article, and all subsequent modifications of such list. Each country of the Union shall in due course made available to the public the lists so communicated. Nevertheless such communication is not obligatory in respect of flags of States. (b) The provisions of subparagraph (b) of paragraph (1) of this Article shall apply only to such armorial bearings, flags, other emblems, abbreviations, and names, of international intergovernmental organizations as the latter have communicated to the countries of the Union through the intermediary of the International Bureau. (4) Any country of the Union may, within a period of twelve months from the receipt of the notification, transmit its objections, if any, through the intermediary of the International Bureau, to the country or international intergovernmental organization concerned. (5) In the case of State flags, the measures prescribed by paragraph (I), above, shall apply solely to marks registered after November 6, 1925. (6) In the case of State emblems other than flags, and of official signs and hallmarks of the countries of the Union, and in the case of armorial bearings, flags, other emblems, abbreviations, and names, of international intergovernmental organizations, these provisions shall apply only to marks registered more than two months after receipt of the communication provided for in paragraph (3). above. (7) In cases of bad faith, the countries shall have the right to cancel even those marks incorporating State emblems, signs and hallmarks, which were registered before November 6,1925. (8) Nationals of any country who are authorized to make use of the State emblems signs and hallmarks, of their country may use them even if they are similar to those of another country. (9) The countries of the Union undertake to prohibit the unauthorized use in trade of the State armorial bearings of the other countries of the Union, when the use is of such a nature as to be misleading as to origin of the goods. (10) The above provisions shall not prevent the countries from exercising the right given in paragraph (3) of Article6quinquies, Section B, to refuse or to invalidate the registration of marks incorporating, without authorization, ar-

I

i

1 ~ 1

1

'

1

380

EVOLUTION OF PATENT LAWS

morial bearings, flags, other State emblems, or official signs and hallmarks adopted by a country of the Union, as well as the distinctive signs of international intergovernmental organizations referred to in paragraph (I), above. Article 6quater (1) When, in accordance with the law of a country of the Union, the assignment of a mark is valid only if it takes place at the same time as the transfer of the business or goodwill to which the mark belongs, it shall suffice for the recognition of such validity that the portion of the business or goodwill located in that country be transferred to the assignee, together with the exclusive right to manufacture in thesaid country, or to sell therein, the goods bearing the mark assigned. (2) The foregoing provision does not impose upon the countries of the Union any obligation to regard as valid the assignment of any mark the use of which by the assignee would, in fact, be of such a nature as to mislead the public, particularly as regards the origin, nature or essential qualities, of the goods to which the mark is applied. Article 6quinquies A. (1) Every trademark duly registered in the country of origin shall be accepted for filing and protected as is in the other countries of the Union, subject to the reservations indicated in this Article. Such countries may, before proceeding to final registration, require the production of a certificate of registration in the country of origin, issued by the competent authority. No authentication shall be required for this certificate. (2)Shall be considered the country of origin the country of the union where the applicant has a real and effective industrial or commercial establishment, or, if he has no such estabhshment within the Union, the country of the Union where he has his domicile, or, if has no domicile within the Union but is a national of a country of the Union, the country of which he is a national. B. Trademark covered by this article may be neither denied registration nor invalidated expect in the following cases: (1) when they are of such a nature as to infringe rights acquired by third parties in the country where protection is claimed; (2) when they are devoid of any distinctive character, or consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, place of origin, of the goods, or the time of production, or have become customary in the current language or in the bona fide and established practices of the trade of the country where protection is claimed; (3) when they are contrary to morality or public order and, in particular, of such a nature as to deceive the public. It is understood that a mark may not be considered contrary to public order for the sole reason

--

ANNEXURE VI

381

that it does not conform to a provision of the legislation on marks, except if such provision itself relates to public order. This provision is subject, however, to the application of Article 10bis. C. (1)In determining whether a mark is eligible for protection, all the factual circumstances must be taken into consideration, particularly the length of time the mark has been in use. (2) No trademark shall be refused in the other countries of the Union for the sole reason that it differs from the mark protected in the country of origin only in respect of elements that do not alter its distinctive character and do not affect its identity in the form in which it has been registered in the said country of origin. D. No person may benefit from the provisions of this Article if the mark for which he claims protection is not registered in the country of origin. E. However, in no case shall the renewal of the registration of the mark in the country of origin involve an obligation to renew the registration in the other countries of the Union in which the mark has been registered. F. The benefit of priority shall remain unaffected for application for the registration of marks filed within the period fixed by Article 4, even if registration in the country of origin is effected after the expiration of such pericd. Article 6sexies The countries of the Union undertake to protect service marks. They shall not be required to provide for the registration of such marks. Article 6septies (1) If the agent or representative of the person who is the proprietor of a mark in one of the countries of the Union applies, without such proprietor's authorization, for the registration of the mark in his own name, in one or more countries of the Union, the proprietor shall be entitled to oppose the registration applied for or demand its cancellation or, if the law of the country so allows, the assignment in his favor of the said registration, unless such agent or representative justifies his action. (2) The proprietor of the mark shall, subject to the provision of paragraph (1)above, be entitled to oppose the use of his mark by his agent or representative if he has not authorized such use. (3) Domestic legislation may provide an equitable time limit within which the proprietor of a mark must exercise the rights provided for in this Article. Article 7 The nature of the goods to which a trademark is to be applied shall in no case form an obstacle to the registration of the mark.

382

-

EVOLUTION OF PATENT LAWS

Article 7bis (1)The countries of the Union undertake to accept for filing and to protect collective marks belonging to assoc-iationsthe existence of which is not contrary to the law of the country of origin, even if such associations do not possess an industrial or commercial establishment. (2)Each country shall be the judge of the particular conditions under which a collective mark shall be protected and may refuse protection if the mark is contrary to the public interest. (3) Nevertheless, the protection of these marks shall not be refused to any association the existence of which is not contrary to the law of the country of origin, on the ground that such associatiol~is not established in the country where protectionis sought or is not constituted according to the law of the latter country. Article 8 A trade name shall be protected in all the countries of the Union without the obligation of filing or registration, whether or not it forms part of a trademark. Article 9 (1) All goods unlawfully bearing a trademark or trade name shall be seized on importation into those countries of the Union where such mark or trade name is entitled to legal protection. (2) Seizure shall likewise be effected in the country where the unlawful affixation occurred or in the country into which the goods were imported. (3) Seizure shall take place at the request of the public prosecutor, or any other competent authority, or any interested party, whether a natural person or a legal entity, in conformity with the domestic legislation of each country. (4) The authorities shall not be bound to bound to effect seizure of goods in transit. (5) If the legislation of a country does not permit seizure on importation, seizure shall be replaced by prohibition of importation or by seizure inside the country. (6) If the legislation of a country permits neither seizure on importation nor prohibition of importation nor seizure inside the country, then, until such time as the legislation is modified accordingly, these measures shall be replaced by the actions and remedies available in such cases to nationals under the law of such country. Article 10 (1) The provisions of the preceding Article shall apply in cases of direct or indirect use of a false indication of the source of the goods or the identity of the producer, manufacturer, or merchant.

ANNEXURE VI

383

(2)Any producer, manufacturer, or merchant, whether a natural persdn or a legal entity, engaged in the production or manufacture of or trade in such goods and established either in the locality falsely indicated as the source, or in the region where such locality is situated, of in the country falsely indicated, or in the country where the false indication of source is used, shall in any case be deemed an interested party. Article lobis (1) The countries of the Union are bound to assure to nationals of such countries effectiveprotection against unfair competition. (2) Any act of competition contrary to honest practices in industrial or commercial matters constitutes an act of unfair competition. (3) The following in particular shall be prohibited:

1. all acts of such a nature as to create confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities, of a competitor; 2. false allegations in the course of trade of such a nature as to discredit the establishment, the goods, or the industrial or commercial activities, of a competitor; 3. indications or allegations the use of which in the course of trade is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity, of the goods. Article loter

I

(1) The countries of the Union undertake to assure to nationals of the other countries of the Union appropriate legal remedies effectively to repress all the acts referred to in Articles 9, 10 and lobis. (2)They undertake, further, to provide measures to permit federations and associations representing interested industrialists, producers, or merchants, provided that the existence of such federations and associations is not contrary to the laws of their countries, to take action in the courts or before the administrative authorities, with a view to the repression of the acts referred to in Articles 9,10and lobis, in so far as the law of the country in which protection is claimed allows such action by federations and associations of that country. Article 11 (1) The countries of the Union shall, in conformity with their domestic legislation, grant temporary protection to patentable inventions, utility models, and industrial designs, and trademarks, in respect of goods exhibited at official or officially recognized international exhibitions held in the territory of any of

them.

384

EVOLUTION OF PATENT LAWS

(2) Such temporary protection shall not extend the periods provided by Article 4. If, later, the right of priority is invoked, the authorities of any country may provide that the period shall start from thedate of introduction of the goods into the exhibition. (3)Each country may require, as proof of the identity of the article exhibited and of the date of its introduction, such documentary evidences as it considers necessary. Article 12 (1)Each country of the Union undertakes to establish a special industrial property service and a central office for the communication to the public of patents, utility models, industrial designs, and trademarks. (2) This service shall publish an official periodical journal. It shall publish regularly: (a) the names of the proprietors of patents granted, with a brief designation of the inventions pa tented; (b) the reproductions of registered trademarks. Article 19 It is understand that the countries of the Union reserve the right to make separately between themselves special agreements for the protection of indus-, trial property, in so far as these agreements do not contravene the provisions of this Convention.

ANNEXURE VII CONVENTION O N BIOLOGICAL DIVERSITY RIO D E JANEIRO, 5 JUNE 1992 Preamble

The Contracting Parties, Conscious of the intrinsic value of biological diversity and of the ecological, genetic, social, economic, scientific, educational, cultural, recreational and aesthetic values of biological diversity and its components, Conscious also of the importance of biological diversity for evolution and for maintaining life sustaining systems of the biosphere, Affirnzing that the conservation of biological diversity is a common concern of humankind, Reaffirming that States have sovereign rights over their own biological resources, Reaffirr~ling also that States are responsible for conserving their biological diversity and for using their biological resources in a sustainable manner, Concerned that biological diversity is being significantly reduced by certain human activities, Aware of the general lack of information and knowledge regarding biological diversity and of the urgent need to develop scientific, technical and institutional capacities to provide the basic understanding upon which to plan and implement appropriate measures, Noting that it is vital to anticipate, prevent and attack the causes of significant reduction or loss of biological diversity at source, Noting also that where there is a threat of significant reduction or loss of biological diversity, lack of full scientificcertainty should not be used as a reason for postponing measures to avoid or minimize such a threat, Noting further that the fundamental requirement for the conservation of biological diversity is the ill-situ conservation of ecosystems and natural habitats and the maintenance and recovery of viable populations of species in their natural surroundings, Noting further that ex-situ measures, preferably in the country of origin, also have an important role to play, Recognizing the close and traditional dependence of many indigenous and local communities embodying traditioi~allifestyles on biological resources, and the desirability of sharing equitably benefits arising from the use of traditional knowledge, innovations and practices relevant to the conservation of biological diversity and the sustainable use of its components,

386

EVOLUTION OF PATENT LAWS

Recognizing also the vital role that women play in the conservation and sustainable use of biological diversity and affirming the need for the full participation of women at all levels of policy makinq and implementation for biological diversity conservation, Stressing the importance of, and the need to promote, international, regional and global cooperation among States and intergovernmental organizations and the non-governmental sector for the conservation of biological diversity and the sustainable use of its components, Acknowledging that the provision of new and additional financial resources and appropriate access to relevant technologies can be expected to make a substantial difference in the world's ability to address the loss of biological diversity, Acknowledging further that special provision is required to meet the needs of developing countries, including the provision of new and additional financial resources and appropriate access to relevant technologies, Noting in this regard the special conditions of the least developed countries and small island States, Acknowledging that substantial investments are required to conserve biological diversity and that there is the expectation of a broad range of environmental, economic and social benefits from those investments, Recognizing that economic and social development and poverty eradication are the first and overriding priorities of developing countries, Aware that conservation and sustainable use of biological diversity is of critical importance for meeting the food, health and other needs of the growing world population, for which purpose access to and sharing of both genetic resources and technologies are essential, Noting that, ultimately, the conservation and sustainable use of biological diversity will strengthen friendly relations among States and contribute to peace for humankind, Desiring to enhance and complement existing international arrangements for the conservation of biological diversity and sustainable use of its components, and Determined to conserve and sustainably use, biological diversity for the benefit of present and future generations, Have agreed as follows: Article 1.Objectives The objectives of this Convention, to be pursued in accordance with its relevant provisions, are the conservation of biological diversity, the sustainable use of its components and the fair and equitable sharing of the benefits arising out of the utilization of genetic resources, including by appropriate access to genetic resources and by appropriate transfer of relevant technologies, taking

VII ANNEXURE -

into account all rights over those resources and to technologies, and by appropriate funding. Article 2. Use of Terms For the purposes of this Convention: "Biological diversity" means the variability among living organisms from all sources including, inter alia, terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part; this includes diversity within species, between species and of ecosystems. "Biological resources" includes genetic resources, organisms or parts thereof, populations, or any other biotic component of ecosystems with actual or potential use or value for humanity.

1

"Biotechno1ogytrmeans any technological application that uses biological systems, living organisms, or derivatives thereof, to make or modify products of processes for specific use. "Country of origin of genetic resources" means the country which possesses those genetic resources in in-situ conditions. "Country providing genetic resources" means the country supplying genetic resources collected from in-situ sources, including populations of both wild and domesticated species, or taken from ex-situ sources, which may or may not have originated in that country. "Donzesticated or cultivated species" means species in which the evolutionary process has been influenced by humans to meet their needs. "Ecosystem" means a dynamic complex of plant, animal and micro-organism communities and their non-living environment interacting as a functional unit. Ex-situ conservation " means the conservation of components of biological diversi ty outside their natural habitats. "Genetic material" means any material of plant, animal, microbial or other origin containing functional units of heredity. Genetic resources" means genetic material of actual or potential value. Habitat" means the place or type of site where an organism or population naturally occurs. "In-situ conditions" means conditions where genetic resources exist within ecosystems and natural habitats, and, in the case of domesticated or cultivated species, in the surroundings where they have developed their distinctive properties. In-situ conservatiot~" means the conservation of ecosystems and natural habitats and the maintenance and recovery of viable populations of species in their natural surroundings and, in the case of domesticated or cultivated species, in the surroundings where they have developed their distinctive properties.

38c

EVOLUTION OF PATENT LAWS

Protected area" means a geographically defined area which is designated or regulated and managed to achieve specific conservation objectives. "Regional economic integration organization" means an organization constituted by sovereign States of a given region, to which its member States have transferred competence in respect of matters governed by this Convention and which has been duly authorized, in accordance with its internal procedures, to sign, ratify, accept, approve or accede to it. "St~stainableuse" means the use of components of biological diversity in a way and at a rate that does not lead to the long-term decline of biological diversity, thereby maintaining its potential to meet the needs and aspirations of present and future generations. "Technology" includes biotechnology. Article 3. Principle State have, in accordance with the Charter of the United Nations and the principles of international law, the sovereign right toexploit their own resources pursuant to their own environmental policies, and the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other States or of areas beyond the limits of national jurisdiction. Article 4. Jurisdictional Scope Subject to the rights of other States, and except as otherwise expressly provided in this Convention, the provisions of this Convention apply, in relation to each Contracting Party: a. In the case of components of biological diversity, in areas within the limits of its national jurisdiction; and b. In the case of processes and activities regardless of where their effects occur, carried out under its jurisdiction or control, within the area of its national jurisdiction or beyond the limits of national jurisdiction. Article 5. Co-operation Each Contracting Party shall, as far as possible and as appropriate, cooperate with other Contracting Parties, directly or, where appropriate, through competent international organizations, in respect of areas beyond national jurisdiction and on other matters of mutual interest, for the conservation and sustainable use of biological diversity. Article 6. General Measures for Conservation and Sustainable Use Each Contracting Party shall, in accordance with its particular conditions and capabilities: a. Develop national strategies, plans or programmes for the conservation and sustainable use of biological diversity or adapt for this purpose existing strategies, plans or programmes which shall

-

ANNEXURE VII

383

reflect, inter alia, the measures set out in this Convention relevant to the Contracting Party concerned; and b. Integrate, as far as possible and as appropriate, the conservation and sustainable use of biological diversity into relevant sectoral or cross-sectoral plans, programmes and policies. Article 7. Identification and Monitoring Each Contracting Party shall, as far as possible and as appropriate, in particular for the purposes of Articles 8 to 10: a. Identify components of biological diversity important for its conservation and sustainable use having regard to the indicative list of categories set down in 4nnex 1; b. Monitor, through sampling and other techniques, the components of biological diversity identified pursuant to subparagraph (a) above, paying particular attention to those requiring urgent conservation measures and those which offer the greatest potential for sustainable use; c. Identify processes and categories of activities which have or are likely to have significant adverse impacts on the conservation and sustainable use of biological diversity, and monitor their effects through sampling and other techniques; and d. Maintain and organize, by any mechanism data, derived from identification and monitoring activities pursuant to subparagraphs (a), (b) and (c) above. Article 8. In-situ Conservation Each Contracting Party shall, as far as possible and as appropriate: a. Establish a system of protected areas or areas where special measures need to be taken to conserve biological diversity; b. Develop, where necessary, guidelines for the selection, establishment and management of protected areas or areas where special measures need to be taken to conserve biological diversity; c. Regulate or manage biological resources important for the conservation of biological diversity whether within or outside protected areas, with a view to ensuring their conservation and sustainable use; d. Promote the protection of ecosystems, natural habitats and the maintenance of viable populations of species in natural surroundings;

?!K__-

EVOLUTION OF PATENT LAWS

-

e. Promote environmentally sound and sustainable development in areas adjacent to protected areas with a view to furthering protection of these areas; f. Rehabilitate and restore degraded ecosystems and promote the recovery of threatened species, inter alia, through the development and implementation of plans or other management strategies; g. Establish or maintain means to regulate, manage or control the risks associated with the use and release of living modified organism resulting from biotechnology which are likely to have adverse environmental impacts that could affect the conservation and sustainable use of biological diversity, taking also into account the risks to human health; h. Prevent the introduction of, control or eradicate those alien species which threaten ecosystems, habitats or species; i. Endeavour to provide the conditions needed for compatibility between present uses and the conservation of biological diversity and the sustainable use of its components;

j. Subject to its national legislation, respect, preserve and maintain knowledge, innovations and practices of indigenous and local communities embodying traditional lifestyles relevant for the conservation and sustainable use of biological diversity and promote their wider application with the approval and involvement of the holders of such knowledge, innovations and practices and encourage the equitable sharing of the benefits arising from the utilization of such knowledge, innovations and practices. k. Develop or maintain necessary legislation and/or other regulatory provisions for the protection of threatened species and populations;

1. Where a significant adverse effect on biological diversity has been determined pursuant to Article 7, regulate of manage the relevant processes and categories of activities; and m. Cooperate in providing financial and other support for in-situ conservation outlined in sub-paragraphs (a) to (1) above, particularly to developing counties. Article 9. Ex-situ Conservation Each Contracting Party shall, as far as possible and as appropriate, and predominantly for the purpose of complementing in-situ measures: a. Adopt measures for the ex-situ conservation of components of biological diversity, preferably in the country of origin of such components;

-

ANNEXURE VII

391

b. Establish and maintain facilities for ex-situ conservation of and research on plants, animals and micro-organisms, preferably in the country of origin of genetic resources; c. Adopt measures for the recovery and rehabilitation of threatened species and for their reintroduction into their natural habitats under appropriate conditions; d. Regulate and manage collection of biological resources from natural habitats for ex-situ conservation purposes so as not to threaten ecosystems and in-situ populations of species, except where special temporary ex-situ measures are required under subparagraph (c) above; and e. Cooperate in providing financial and other support for ex-situ conservation outlined in subparagraphs (a) to (d) above and in the establishment and maintenance of ex-situ conservation facilities in developing countries. Article 10. Sustainable Use of Components of Biological Diversity Each Contracting Party shall, as far as possible and as appropriate: a. Integrate consideration of the conservation and sustainable use of biological resources into national decision making; b. Adopt measures relating to the use of biological resources to avoid or minimize adverse impacts on biological diversity; c. Protect and encourage customary use of biological resources in accordance with traditional cultural practices that are compatible with conservation or sustainable use requirements; d. Support local populations to develop and implement remedial action in degraded areas where biological diversity has been reduced; and e. Encourage cooperation between its governmental authorities and its private sector in developing methods for sustainable use of biological resources. Article 11. Incentive Measures Each Contracting Party shall, as far as possible and as appropriate, adopt economically and socially sound measures that act as incentives for the conservation and sustainable use of components of biological diversity. Article 12. Research and Training The Contracting Parties, taking into account the special needs of developing countries, shall: a. Establish and maintain programmes for scientific and technical education and training in measures for the identification, conservatiot~and sustainable use of biological diversity and its

%L

EVOLUTION OF PATENT LAWS

components and provide support for such education and training for the specific needs of develoning countries; b. Promote and encourage research which contributes to the conservation and sustainable use of '~iologicaldiversity, particularly in developing countries, inter alia, in accordance with decisions of the Conference of the Parties taken in consequence of recommendations of the Subsidiary Body on Scientific, Technical and Technological Advice; and c. In keeping with the provisions of Article 16,18 and 20, promote and cooperate in the use of scientific advances in biological diversity research in developing methods for conservation and sustainable use of biological resources. Article 13. Public Education and Awareness The Contracting Parties shall: a. Promote and encourage understanding of the importance of, and the measures required for, the conservation of biological diversity, as well as its propagation through media, and the inclusion of these topics in educational programme; and b. Cooperate, as appropriate, with other States and international organizations in developing educational and public awareness programmes, with respect to conservation and sustainable use of biological diversity. Article 14. Impact Assessment and Minimizing Adverse impacts 1. Each Contracting Party, as far as possible and as appropriate, shall: a. Introduce appropriate procedures requiring environmental impact assessment of its proposed projects that are likely to have significant adverse effects on biological diversity with a view to avoiding or minimizing such effects and, where appropriate, allow for public participation in such procedures; b. Introduce appropriate arrangements to ensure that the environmental consequences of its programmes and policies that are likely to have significant adverse impacts on biological diversity are duly taken into account; c. Promote, on the basis of reciprocity, notification, exchange of information and consultation on activities under their jurisdiction or control which are likely to significantly affect adversely the biological diversity of other States or areas beyond the limits of national jurisdiction, by encouraging the conclusion of bilateral, regional or multilateral arrangements, i s appropriate;

ANNEXURE VII

393

d. In the case of imminent or grave danger or damage, originating under its jurisdiction or control, to biological diversity within the area under jurisdiction of other States or in areas beyond the limits of national jurisdiction, notify immediately the potentially affected States of such danger or damage, as well as initiate action to prevent or minimize such danger or damage; and e. Promote national arrangements for emergency responses to activities or events, whether caused naturally or otherwise, which present a grave and imminent danger to biological diversity and encourage international cooperation to supplement such national efforts and, where appropriate and agreed by the States or regional economic integration organization concerned, to establish joint contingency plans. 2. The Conference of the Parties shall examine, on the basis of studies to be carried out, the issue of liability and redress, including restoration and compensation, for damage to biological diversity, except where such liability is a purely internal matter. Article 15. Access to Genetic Resources 1. Recognizing the sovereign rights of States over their natural resources, the authority to determine access to genetic resources rests with the national governments and is subject to national legislation. 2. Each Contracting Party shall endeavour to create conditions to facilitate access to genetic resources for environmentally sound uses by other Contracting Parties and not to impose restrictions that run counter to the objectives of this Convention. 3. For the purpose of this Convention, the genetic resources being provided by a Contracting Party as referred to in this Article and Articles 16 and 19, are only those that are provided by Contracting Parties that are countries of origin of such resources or by the Parties that have acquired the genetic resources in accordance with this Convention. 4. Access, where granted, shall be on mutually agreed terms and subject to the provisions of this Article. 5. Access to genetic resources shall be subject to prior informed consent of the Contracting party providing such resources, unless otherwise determined by that Party. 6. Each Contracting Party shall endeavour to develop and carry out scientific research based on genetic resources provided by other Contracting Parties with the full participation of, and where possible in, such Contracting Parties. 7. Each Contracting Party shall take legislative, administrative or policy measures, as appropriate, and in accordance with Articles 16 and 19 and, where necessary, through the financial mechanism established by Articles 20 and 21

394

EVOLUTION OF PATENT LAWS

ANNEXURE VII

with the aim of sharing in a fair and equitable way the results of research and development and the benefits arising from the commercial and other utilization of genetic resources with the Contracting Party providing such resources. Sharing shall be upon mutually agreed terms.

Article 17. Exchange of information 1.The Contracting Parties shall facilitate the exchange of information, from all publicly available sources, relevant to the conservation and sustainable use of biological diversity, taking into account the special needs of developing countries. 2. Such exchange of information shall include exchange of results of technical, scientific and socio-economic research, as well as information on training and surveying programmes, specialized knowledge, indigenous and traditional knowledge as such and in combination with the technologies referred to in Article 16, paragraph 1. It shall also, where feasible, include repatriation of informa tion. Article 18. Technical and Scientific Co-operation 1. The Contracting Parties shall promote international technical and scientific co-operation in the field of conservation and sustainable use of biological diversity, where necessary, through the appropriate international and national institutions. 2. Each Contracting Party shall promote technical and scientific cooperation with other Contracting Parties, in particular developing countries, in implementing this Convention, inter alia, though the development and implementation of national policies. In promoting such cooperation, special attention should be given to the development and strengthening of national capabilities, by means of human resources development and institution building. 3. The Conference of the Parties, at its first meeting, shall determine how to establish a clearing-house mechanism to promote and facilitate technical and scientific cooperation. 4. The Contracting partiesshall, in accordance with national legislation and policies, encourage and develop methods of cooperation for the develop~nent and use of technologies, including indigenous and traditional technologies, in pursuance of the objectives of this Convention. For this purpose, the Contracting Parties shall also promote cooperation in the training of personnel and exchange of experts. 5. The Contracting Parties shall, subject to mutual agreement, promote the establishment of joint research programmes and joint ventures for the development of technologies relevant to the objectives of this Convention. Article 19. Handling of Biotechnology and Distribution of its Benefits 1. Each Contracting Party shall take legislative, administrative or policy measures, as appropriate, to provide for the effective participation in biotechnological research activities by those Contracting Parties, especially developing countries, which provide the genetic resources for such research, and where feasible in such Contracting Parties.

-

Article 16. Access to and Transfer of Technology 1. Each Contracting Party, recognizing that technology includes biotechnology, and that both access to and transfer of technology among Contracting Parties are essential elements for the attainment of the objectives of this Convention, undertakes subject to the provisions of this Article to provide and/or facilitate access for and transfer to other Contracting Parties of technologies that are relevant to the conservation and sustainable use of biological diversity or make use of genetic resources and do not cause significant damage to the environment. 2. Access to and transfer of technology referred to in paragraph 1 above to developing countries shall be provided and/or facilitated under fair and most favourable terms, including on concessional and preferential terms where mutually agreed, and where necessary, in accordance with the financial mechanism established by Article 20 and 21. In the case of technology subject to patents and other intellectual property rights, such access and transfer shall be provided on terms which recognize and are consistent with the adequate and effectiveprotection of intellectual property rights. The application of this paragraph shall be consistent with paragraphs 3,4 and 5 below. 3. Each Contracting Party shall take legislative, administrative or policy measures, as appropriate, with the aim that Contracting Parties, in particular those that are developing countries, which provide genetic resources are provided access to and transfer of technology which makes use of those resources, on mutually agreed terms, including technology protected by patents and other intellectual property rights, where necessary, through the provisions of Articles 20 and 21 and in accordance with international law and consistent with paragraphs 4 and 5 below. 4. Each Contracting Party shall take legislative, administrative or policy measures, as appropriate, with the aim that, the private sector facilitates access to, joint development and transfer of technology referred to in paragraph 1 above for the benefit of both governmental institutions and the private sector of developing countries and in this regard shall abide by the obligations included in paragraphs 1,2 and 3 above.

5. The Contracting Parties, recognizing that patents and other intellectual property rights may have an influence on the implementation of this Convention, shall cooperate in this regard subject to national legislation and international law in order to ensure that such rights are supportive of and d o not run counter to its objectives.

395

396

EVOLUTION OF PATENT LAWS

2. Each Contracting Party shall take all practicable measures to promote and advance priority access on a fair and equitable basis by Contracting Parties, especially developing countries, to the results and benefits arising from biotechnologies based upon genetic resources provided by those Contracting Parties. Such access shall be on mutually agreed terms. 3. The Parties shall consider theneed for and modalities of a protocol setting out appropriate procedures, including, in particular, advance informed agreement, in the field of the safe transfer, handling and use of any living modified organism resulting from biotechnology that may hatre adverse effect Qn the conservation and sustainable use of biological diversity. 4. Each Contracting Party shall, directly or by requiring any natural or lega! person under its jurisdiction providing the organisms referred to in paragraph 3 above, provide any available information about the use and safety regulations required by that Contracting Party in handling such organism, as well as any available information on the potential adverse impact of the specific organisms c~ncernedto the Contracting Party into which those organism are to be introduced. Article 20. Financial Resources 1 . Each Contracting Party undertakes to provrde, in accordance with its capabilities, financial support and incentives in respect of those national activities which are intended to achieve the objectives of this Convention, in accordance with its national plans, priorities and programmes. 2. The developed country IJarties st1a:l provide new and additional financial resources to enable devclopil~,gcc?~.~ntry Parties to meet the agrecd f1111 incremental costs to them of implementing measures which fulfil the obligations of this Convention and to brnefit from its provisions and n-hich costs are agreed between a developing country Party and the institutional s trr-ict~~re referred to in Article 21, in accordance with policy, strategy, programme priorities and eligibility criteria and an indicative list of incremental costs established by the Conference of the Parties. Qther Parti(?s,including countries undergoing the process of transition to a market economy, may voluntarily assume the obligations of the developed country Parties. For the purpose of this Article, the Conference of the Parties, shall at its first meeting establish a list of developed country Parties and other Partics which voluntarily assume the obligations of the developed country Parties. The Conference of the Parties shall periodically review and if necessary amend the list. Contributions from other countries and sources on a voluntary basis would also be encouraged. The implementation of these commitments shall take into accaunt the need for adequacy, predictability and timely flow of funds a n d the importance of burden-sharing among the contributing Parties incltided ir3 thc !ist

3. The developed country parties may also provide, and developing country parties avail themselves of financialresources related to the implementation of this Convention through bilateral, regional and other multilateral channels. 4. The extent to which developing co~lntryParties will effectively implcment their commitments under this Convention will depend on the effective implementation by developed country Parties of their commitments under this Convention related to financial resources and transfer of trcl~no~ogy and wil! take fully into account the fact that economic and social development and eradication of poverty are the first and overriding priorities of the developing country Parties. 5. The Parties shall take full account of the specific needs and special situation of least developed countries in their actiovs with rcgard to funding and transfer of tect~nology. 6. The Contracting Parties shall also take into consideration the special conditions resulting frorn the dependence on, distribution and location of, biological diversity within developing country Parties, in particular, sma,ll island States. 7. Consideration shall also be given t o the special situaiir.)n of developing countries, including those that are most environmentally vulnerable, such those with arid and semi-arid zones, coastal and mountainous areas.

Article 21. Financial Mechanism 1 . There shall be a mechanism for the provision of financial resources tc developing country Parties for purposes ~ 7 fthi5 Convention on a grant el: concessional basis the essential elements of which are described in this Articlc. The mechanism shall function under the authority and guidance of, and bc accountable to, the Conference of the Parties for purposes of this Conzrentic~n The operations of the mechanism shall be carried out by such institutional structure as may be decided upon by the Conference of the Parties at its first meeting. For purposes of this Convention, the Conferc?nceof the Parties shall determine the policy, strategy, programme priorities and eligibility crittri~. relating to the access to and utilization of such resources. '!,i~econtributior~sshall be such as to take into account the need for predictability, adequacy and timely flow of funds referred to in Article 20 in accordance with the arnnu:lt c:f resources needed to be decided periodically by the Co~zfsrenceot the Partics and the importance of burden-sharing apicng the contrikr~tingParties incl~ldtd in the list referred to in Article 20, paragraph 2 Volut:tary contributions ma). also he made by the developed country Parties and by ether countries and sources. The mechanism shall operate within a dernncratjc and transparent System of governance. 2 Pursuant to the objectives of this Convention, the Conference of thr Parties shall, at its first meeting, determine t h policv, ~ s t r a t r . and ~ ~ progranlrnr

398

EVOLUTION OF PATENT LAWS

priorities, as well as detailed criteria and guidelines for eligibility for access to and utilization of the financial resources including monitoring and evaluation on a regular basis of such utilization. The Conference of the Parties shall decide on the arrangements to give effect to paragraph 1 above after consultation with the institutional structure entrusted with the operation of the financial mechanism. 3. The Conference of the Parties shall review the effectiveness of the mechanism established under this Article, including the criteria and guidelines referred to in paragraph 2 above, not less than two years after the entry into force of this Convention and thereafter on a regular basis. Based on such review, it shall take appropriate action to improve the effectiveness of the mechanism if necessary. 4. The Contracting Parties shall consider strengthening existing financial institlitions to provide financial resources for the conservation and sustainable use of biological diversity.

Article 22. Relationship with Other International Conventions

ANNEXURE VII

399

4. The Conference of the Parties shall keep under review the implementation of this Convention, and, for this purpose, shall:

a. Establish the form and the intervals for transmitting the igformation to be submitted in accordance with Article 26 and consider such information as well as reports submitted by any subsidiary body; b. Review scientific, technical and technological advice on biological diversity provided in accordance with Article 25; c. Consider and adopt, as required, protocols in accordance with Article 28; d. Consider and adopt, as required, in accordance with Article 29 and 30, amendments to this Convention and its annexes; e. Consider amendments to any protocol, as well as to any annexes thereto, and, if so decided, recommend their adoption to the parties to the protocol concerned; f. Consider and adopt as required, in accordance with Article 30, additional annexes to this Convention;

1 The provisions of this Convention shall not affect the rights and obligations of any Contracting Party deriving from any existing international agreement, except where the exercise of those rights and obligations would cause a serious damage or threat to biological diversity.

g. Establish such subsidiary bodies, particularly to provide scientific

2. Contracting Parties shall implement this Convention with respect to the marine environment consistently with the rights and obligations of States under the law of the sea.

h. Contact, through the Secretariat, the executive bodies of conventions dealing with matters covered by this Convention with a view to establishing appropriate forms of cooperation with them; and

Article 23. Conference of the Parties 1.A conference of the Parties is hereby established. The first meeting of the Conference of the Parties shall be convened by the Executive Director of the United Nations Environment Programme not later than one year after the entry into force of this Convention. Thereafter, ordinary meetings of the Conference of the Parties shall be held at regular intervals to be determined by the Conference at its first meeting.

2. Extraordinary meetings of the Conference of the Parties shall be held at such other times as may be deemed necessary by the Conference, or at the written request of any Party, provided that, within six months of the request being communicated to them by the Secretariat, it is supported by at least one third of the Parties.

3. The Conference of the Parties shall by consensus agree upon and adopt rules of procedure for itself and for any subsidiary body it may establish, as well as financial rules governing the funding of the Secretariat. At each ordinary meeting, it shall adopt a budget for the financial period until the next ordinary metinv

and technical advice, as are deemed necessary for the implementation of this Convention;

i. Consider and undertake any additional action that may be required for the achievement of the purposes of this Convention in the light of experience gained in its operation. 5. The United Nations, its specialized agencies and the International Atomic Energy Agency, as well as any State not Party to this Convention, may be represented as observers at meetings of the Conference of the Parties. Any other body or agency, whether governmental or non-government, qualified in fields relating to conservation and sustainable use of biological diversity, which has informed the Secretariat of its wish to be represented as an observer at a meeting of the Conference of the Parties, may be admitted unless at least one third of the Parties present object. The admission and participation of observers shall be subject to the rules of procedure adopted by the Conference of the Parties. Article 24. Secretariat 1. A secretariat is hereby established. Its functions shall be: a. To arrange for and service meetings of the Conference of the Parties provided for in Article 23;

400

EVOLUTION OF PATENT LAWS

b. To ~ e r f a r the n ~ frlnctions assigned to it by any protocol; c. To prepare reports on the execution of its functions under this Convention and present them to the Conference of the Parties; d. To ceordinate with other relevant international bodies and, in particular to enter into such administrative and contractual arrangements as may be required for the effective discharge of its functions; dnd e. To perform such other functions as may be determined by the Conference of the Parties. 2 . A t its first ordirlary-meeting, the Conference of the Parties shall d e s i g ~ ti: a the secretariat form amongst those existing competent international organizations which have signified their willingness to carry out the secretariat functions under this Convention. Article 25. Subsidiary Body on Scientific, Technical and Technological Advice 1.A subsidiary body for the provision of scientific, technical and technological advice is hereby established to provide the Conference of the Parties and, a s appropriate, its other subsidiary bodies with timely advice relating to the implementation of this Convention. This body shall be open to participation by all Parties and shall be multidisciplinary. It shall comprise government representatives competent in the relevant field of expertise. It shall report regularly to the Conference of the Parties on all aspects of its work. 2. Under the authority of and in accordance with guidelines laid down by the Conference of the Parties, and upon its request, this body shall: a . Provide scientificand technical assessments of the status of biological diversity; b. Prepare scientific and technical assessments of the effects of types of measures taken in accordance with the provisions of this Convention; c. Identify innovative, efficient and state-of-the-art technologies and know-how relating to the conservation and sustainable use of biological diversity and advise on the ways and means of promoting development and/or transferring such technologies; d. Provide advice on scientific programmes and international cooperation in research and development related to conservation and sustainable use of biological diversity; and e. Respond to scientific, technical, technological and methodological questions that the Conference of the Parties and its subsidiary bodies may put to the body. 3. The functions, terms of reference, organization and operation of this body may be further elaborated by the Conference of the Parties.

I

Article 26. Reports Each Contracting Party shall, at intervals to be determined by the Conference of the Parties, present to the Conference of the Parties, reports on measures which it has taken for the implementation of the provisions of this Convention and their effectiveness in meeting the objectives of this Convention. Article 27. Settlement of Disputes 1. In the event of a dispute between Contracting Parties concerning the interpretation or application of this Convention, the parties concerned shall seek solution by negotiation. 2. If the parties concerned cannot reach agreement by negotiation, they may jointly seek the good offices of, or request mediatian by, a third party. 3. When ratifying, accepting, approving or acceding to this Convention, or at any time thereafter, a State or regional economic integration organization may declare in writing to the Depositary that for a dispute not resolved in accordance with paragraph 1 or paragraph 2 above, it accepts one or both of the following rneans of dispute settlement as compulsory: a. Arbitration in accordance with the procedure laid down in Part 1 of Annex 11; t Submission of the dispute to the International Court of Justice. 4. If the parties to the dispute have not, in accordance with paragraph 3 abolle, accepted the same or any procedure, the dispute shall be submitted to conciliation in accordance with Part 2 of Annex 11 unless the parties otherwise agree. 5. The provisions of this Article shall apply with respect to any protocol except as otherwise provided in the protocol concerned. Article 28. Adoption of Protocols 1.'The Contracting Parties shall cooperate in the formulation and adoption of protocols to this Convention. 2. Protocols shall be adopted at a meeting of the Conference of the Parties. 3. The text of any proposed protocol shall be communicated to the Contracting Parties by the Secretariat at least six months before such a meeting. Article 29. Amendment of the Convention or Protocols 1. Amendments to this Convention may be proposed by any Contracting Party. Arnendments to any protocol may be proposed by any Party to that protocol. 2. Amendments to this Convention shall be adopted at a meeting of the Conference of the Parties. Amendments to any protocol shall be adopted at meeting of the Parties to the protocol in question. The text of any proposed amendment to this Convention or to any protocol, except as may otherwise be provided in such protocol, shall be communicated to the Parties to the instru-

=____-

403

EVOLUTlON OF PATENT LAWS

ANNEXURE VII

ment in question by the secretariat at least six months before the meeting at which it is proposed for adoption. The secretariat shall also communicate proposed amendments to the signatories to this Convention for information. 3. The parties shall make every effort to reach agreement on any proposed amendment to this Convention or to any protocol by consensus. If all efforts at consensus have been exhausted, and no agreement reached, the amendment shall as a last resort be adopted by a two-third majority vote of the Parties to the instrument in question present and voting at the meeting, and shall be submitted by the Depositary to all Parties for ratification, acceptance or approval. 4. Ratification, acceptance or approval of amendments shall be notified to the Depositary in writing. Amendments adopted in accordance with paragraph above shall enter into force among Parties having accepted them on the ninetieth day after the deposit of instruments of ratification, acceptance or approval by at least two thirds of the Contracting Parties to this Convention or of the Parties to the protocol concerned, except as may otherwise be provided in such protocol. Thereafter the amendments shall enter into force for any other Party on the ninetieth day after that Party deposits its instrument of ratification, acceptance or approl~alof the amendments. 5. For the purposes of this Article, "Parties present and voting" means Parties present and casting an affirmative or negative vote. Article 30.Adoption and Amendment of Annexes 1.The annexes to this Convention or to any protocol shall form an integral part of the Convention or of such protocol, as the case may be, and, unless expressly provided otherwise, a reference to this Convention or its protocol constitutes at the same time a reference to any annexes thereto. Such annexes shall be restricted toprocedural, scientific, technical and administrative matters. 2. Except as may be otherwise provided in any protocol with respect to its annexes, the following procedure shall apply to the proposal, adoption and entry into force of additional annexes to this Convention or of annexes to any protocol:

c. On the expiry of one year from the date of the communication of the. adoption by the Depositary, the annex shall enter into force for all Parties to this Convention or to any protocol concerned which have not submitted a notification in accordance with the provisions of subparagraph (b) above. 3. The proposal, adoption and entry into force of amendments to annexes to this Convention or to any protocol shall be subject to the same procedure as for the proposal, adoption and entry into force of annexes to the Convention or annexes to any protocol. 4. If an additional annex or an amendment to an annex is related to an amendment to this Convention or to any protocol, the additional annex or amendment shall not enter into force until such time as the amendment to the Convention or to the protocol concerned enters into force.

a. Annexes to this Convention or to any protocol shall be proposed and adopted according to the procedure laid down in Article 29; b. Any Party that is unable to approve an additional annex to this Convention or an annex to any protocol to which it is Party shall so notify the Depositary, in writing, within one year from the date of the communication of the adoption by the Depositary. The Depositary shall without delay notify all parties of any such notificationreceived. A Party may at any time withdraw a previous declaration of objection and the annexes shall thereupon enter into force for that Party subject to subparagraph (c) below;

\

Article 31. Right to Vote 1. Except as provide for in paragraph 2 below, each Contracting Party to this Convention or to any protocol shall have one vote. 2. Regional economic integration organizations, in matters within their competence, shall exercise their right to vote with a number of votes equal to the number of their member States which are Contracting Parties to this Convention or the relevant protocol. Such organizations shall not exercise their right to vote if their member States exercise theirs, and vice versa. Article 32. Relationship between this Convention and its Protocols 1.A State or a regional economic integration organization may not become a Party to a protocol unless it is, or becomes at the same time, Contracting Party to this Convention. 2. Decisions under any protocol shall be taken only by the Parties to the protocol concerned. Any Contracting Party that has not ratified, accepted or approved a protocol may participate as an observer in any meeting of the parties to that protocol.

Article 33. Signature This Convention shall be open for signature at Rio de Janeiro by all States and any regional economic integration organization from 5 June 1992 until 14 June 1992, and at the United Nations Headquarters in New York from 15 June 1992 to 4 June 1993. Article 34. Ratification, Acceptance or Approval 1. This Convention and any protocol shall be subject to ratification, acceptance or approval by States and by regional economicintegration organizations. Instruments of ratification, acceptance or approval shall be deposited with the Depositary.

404

EVOLUTION OF PATENT LAWS

ANNEXURE VII

2. Any Organization referred to in paragraph 1 above which becomes a Contractii~gParty to this Convention or any protocol without any of its member States being a Contracting Party shall be bound by all the obligations under the Conventian or the protocol, as the case may be. In the case of such organizations, one or more of whose member States is a Coi~tractingParty to this Convention or relevant protocol, the organization and its member States shall decide on their respective responsibilities for the performance of their obligations under the Convention or protocol, as the case may be. In such cases, the organization and the member States shall not be entitled to exercise rights under the Convention or relevant protocol concurrently. 3. In their instruments of ratification, acceptance or approval, the organizations referred to in paragraph 1 above shall declare the extent of their competence with respect to-the matters governed by tlre Convention or the relevant protocol. These organizations shall also inform the Depositary of any relevant modification in the extent of their competence.

4. Any protocol, except as otherwise provided in such protocol, shall enter into force for a Contracting Party that ratifies, accepts or approves that protocol or accedes thereto after its entry into force pursuant to paragraph 2 above, on the ninetieth day after the date on which that Contracting Party deposits its instrument of ratification, acceptance, approval or accession, or on the date on which this Convention enters into force for that Contracting Party, whichever shall be the later. 5. For the purpose of paragraphs 1 and 2 above, any instrument deposited by a regional economic integration organization shall not be counted as additional to thcse deposited by member States of such organization.

Article 35. Accession

1. This Convention and any protocol shall be open for accession by States and by regional economic integration organizations from the date on which the Convention or the protocol concerned is closed for signature. The instruments of accession shall be deposited with the Depositary. 2.111 their instruments of accession, the organizatibns referred to in paragraph 1 above shall declare the extent of their competence with respect to the matters governed by the Convention or the relevant protocol. These organizations shall also inform the Depositary of any relevant modification in the extent of their competence. 3. The provisions of Article 34, Paragraph 2, shall apply to regional economic integration organizations which accede to this Convention or any protocol. Article 36. Entry Into Force 1.This Convention shall enter into force on the ninetieth day after the date of deposit of the thirtieth instrument of ratification, acceptance, approval or accession. 2. Any protocol shall enter into force on the ninetieth day after the date of deposit of the number of instruments of ratification, acceptance, approval or accession, specified in that protocol, has been deposited. 3. For each Contracting Party which ratifies, accepts or approves this Convention or accedes thereto after the deposit of the thirtieth instrument of ratification, acceptance, approval or accession, it shall enter into force on the ninetieth day after the date of deposit by such Contracting Party of its instrument of ratification, acceptance, approval or accession.

405

Article 37. Reservations No reservations may be made to this Convention. Article 38. Withdrawals 1.At any time after two years from the date on whi;h this Convention has entered into force for a Contracting Party, that Contracting Party may withdraw from the Convention by giving written notification to the Depositary. 2. Any such withdrawals shall take place upon the expiry of one year after the date of its receipt by the Depositary, or on such later date as may be specified in the notification of the withdrawal. 3. Any Contracting Party which withdraws from this Convention shall be considered as also having withdrawn from any protocol to which it is party. Article 39. Financial Interim Arrangements Provided that it has been fully restructured in accordance with the requirements of Article 21, the Global Environment Facility of the United Nations Development Programme, the United Nations Environment Programme and the International Bank for Reconstruction and Development shall be the institutional structure referred to in Article 21 on an interim basis, for the period between the entry into force of this Convention and the first meeting of the Conference of the Parties decides which institutional structure will be designated in accordance with Article 21. Article 40. Secretariat Interim Arrangements The secretariat to be provided by the Executive Director of the United Nations Environment Programme shall be the secretariat referred to in Article 24, paragraph 2, on interim basis for the period between the entry into force of this Convention and the first meeting of the Conference of the parties. Article 41. Depositary The Secretary-General of the United Nations shall assume the functions of Depositary of this Convention and any protocols.

407

EVOLUTION OF PATENT LAWS

ANNEXURE VII

Article 42. Authentic Texts The original of this Convention, of which the Arabic, Chinese, English, French, Russian and Spanish texts and equally authentic, shall be deposited with the Secretary-General of the United Nations. IN WITNESS WHEREOF the undersigned, being duly authorized to that effect, have signed this Convention. Done at Rio de Janeiro on this fifth day of June, one thousand nine hundred and ninety-two.

residence in the territory of one of these parties, nor be employed by any of them, nor have dealt with the case in any other capacity. 2. In disputes between more than two parties, parties in the same interest shall appoint one arbitrator jointly by agreement. 3. Any vacancy shall be filled in the manner prescribed for the initial appointment. Article 3 1. If the President of the arbitral tribunal has not been designated within two months of the appointment of the second arbitrator, the Secretary-General of the United Nations shall, at the request of a party, designate the President within a further two-month period. 2. If one of the parties to the dispute does not appoint an arbitrator within two months of receipt of the request, the other party may inform the SecretaryGeneral who shall make the designation within a further two-month period. Article 4 The arbitral tribunal shall render its decisions ih accordance with the provisions of this Convention, any protocols concerned, and international law. Article 5 Unless the parties to the dispute otherwise agree, the arbitral tribunal shall determine its own rules of procedure. Article 6 The arbitral tribunal may, at the request of one of the parties recommend essential interim measures of protection. Article 7 The parties to the dispute shall facilitate the work of the arbitral tribunal and in particular, using all means at their disposal, shall: a. Provide it with all relevant documents, information and facilities; and b. Enable it, when necessary, to call witnesses or experts and receive their evidence. Article 8 The parties and the arbitrators are under an obligation to protect the confidentiality of any information they receive in confidence during the proceedings of the arbitral tribunal. Article 9 Unless the arbitral tribunal determines otherwise because of the particular circumstances of the case, the costs of the tribunal shall be borne by the parties to the dispute in equal shares. The tribunal shall keep a record of all its costs, and shall furnish a final statement thereof to the parties.

406

Annex I Identification and Monitoring 1. Ecosys tems and habitats: containing high diversity, large numbers of

endemic or threatened species, or wilderness; required by migratory species; of social economic, cultural or scientific importance; or which are representative, unique or associated with key evolutionary or other biological processes; 2. Species and communities which are: threatened; wild relatives of domesticated or cultivated species; of medicinal, agricultural or other economic value; or social, scientific or cultural importance; or importance for research into the conservation and sustainable use of biological diversity, such as indicator species; and 3. Described genomes and genes of social, scientific or economic importance. Annex I1 PART I ARBITRATION

Article 1 The claimant party shall notify the secretariat that the parties are referring a dispute to arbitration pursuant to Article 27. The notification shall state the subject-matter of arbitration and include, in particular, the articles of the Convention or the protocol, the interpretation or application of which are at issue. If the parties d o not agree on the subject matter of the dispute before the President of the tribunal is designated, the arbitral tribunal shall determine the subject matter. The secretariat shall forward the information thus received to all Contracting Parties to this Convention or to the protocol concerned. Article 2 1.In disputes between two parties, the arbitral tribunal shall consist of three members. Each of the parties to the dispute shall appoint an arbitrator and the two arbitrators so appointed shall designate by common agreement the third arbitrator who shall be the President of the tribunal. The latter shall not be a national of one of the parties to the dispute, nor have his or her usual place of

408

EVOLUTION OF PATENT LAWS

Article 10 Any Contracting Party that has an interest of a legal nature in the subjectmatter of the dispute which may be affected by the decision in the case, may intervene in the proceedings with the consent of the tribunal. Article 11 The tribunal may hear and determine counterclaims arising directly out of the subject-matter of the dispute. Article 12 Decisions both on procedure and substance of the arbitral tribunal shall be taken by a majority vote of its members. Article 13 If one of the parties to the dispute does not appear befcre the arbitral tribunal or fails to defend its case, the other party may request the tribunal to continue the proceedings and to make its award. Absence of a party or a failure of a party to defend its case shall not constitute a bar to the proceedings. Before rendering its final decision, the arbitral tribunal must satisfy itself that the claim is well founded in fact and law. Article 14 The tribunal shall render its final decision within five months of the date onwhich it is fully constituted unless it finds it necessary toextend the time-limit for a period which should not exceed five more months Article 15 The final decision of the arbitral tribunal shall be confined to the subjectmatter of the dispute and shall state the reason on which it is based. It shall contain the names of the members who have participated and the date of the final decision. Any member of the tribunal may attach a separate or dissenting opinion to the final decision. Article 16 The award shall be binding on the parties to the dispute. It shall be without appeal unless the parties to the dispute have agreed in advance to an appellate procedtare. Article 17 Any controversy which may arise between the parties to the dispute as regards the interpretation or manner of implementation of the final decision may be submitted by either party for decision to the arbitral tribunal which rendered it.

-- - ANNEXURE VII

409

PART 2 CONCILIATION

Article 1 A conciliation commission shall be created upon the request of one of the parties to the dispute. The commission shall, unless the parties otherwise agree, be composed of five members, two appointed by each party concerned and a President chosen jointly by those members. Article 2 In disputes between more than two parties, parties in the same interest shall a p p i n t their m e m b ~ r sof the commission jointly by agreement. Where two or more parties have separate interests or there is a disagreement as to whether they are of the same interest, they shall appoint their members separately. Article 3 If any appointments by the parties are not made within two months of the date of the request to create a conciliation commission, the Secretary-General of the United Nations shall, if asked to d o so by the party that made the request, make those appointments within a further two-month period. Article 4 If a President of the conciliation commission has not been chosen within two months of the last of the members of the commission being appointed, the Secretary-General of the United Nations shall, if asked to d o so by a party, designate a President within a further two-month period. Article 5 The conciliation commission shall take ~ t decisions s by majority vote of its members. It shall, unless the parties to the dispute otherwise agree, determine its own procedure. It shall render a proposal for resolution of the dispute, which the parties shall consider in good faith. Article 6 A disagreement as to whether the conciliation commission has competence shall be decided by the conamission.

ANNEXURE VIII INTERNATIONAL CONVENTION FOR PROTECTION OF NEW VARIETIES OF PLANTS (UPOV) [December 2,1961, as Revised at Geneva on November 10,1972, on October 23,1978, and on March 19,1991] List of Articles Chapter I: Definitions Article 1: Definitions Chapter 11: General Obligations of the Contracting Parties Article 2: Basic Obligation of the Contracting Parties Article 3: Genera and Species to be Protected Article 4: National Treatment Chapter 111: Conditions for the Grant of the Breeder's Right Article 5: Conditions of Protection Article 6: Novelty Article 7: Distinctness Article 8: Uniformity Article 9: Stability Chapter IV: Application for the Grant of the Breeder's Right Article 10: Filing of Applications Article 11: Right of Priority Article 12: Examination of the Application Article 13: Provisional Protection Chapter V: The Rights of the Breeder Article 14: Scope of the Breeder's Right Article 15: Exception to the Breeder k g h t Article 16: Exhaustion of the Breeder's Right Article 17: Restrictions on the Exercise of the Breeder's Right Article 18: Measures Regulating Commerce Article 19: Duration of the Breeder's Right Chapter VI: Variety Denomination Article 20: Variety Denomination Chapter VII: Nullity and Cancellation of the Breeder's Right Article 21 : Nullity of the Breeder's Right Article 22: Cancellation of the Breeder's Right

71 /

I

1

ANNEXURE Vlll

Chapter VII: The Union Article 23: Members Article 24: Legal Status and Seat Article 25: Organs Article 26: The Council Article 27: The Office of the Union Article 28: Languages Article 29: Finances Chapter IX: Implementation of the Convention; Other Agreements Article 30: Implementation of the Convention Article 31: Relations Between Contracting Parties and States Bound by Earlier Acts Article 32: Special Agreements Chapter X: Final Provisions Article 33: Signature Article 34: Ratification, Acceptance or Approval; Accession Article 35: Reservations Article 36: Communications Concerning Legislation and the Genera arid Species Protected; Information to be Published Article 37: Entry into Force; Closing of Earlier Acts Article 38: Revision of the Convention Article 39: Denunciation Article 40: Preservation of Existing Rights Article 41: Original and Official Texts of the Convention Article 42: Depositary Functions CHAPTER I DEFINITIONS

Article 1 Definitions For the purposes of this Act:

I

(i) "this Convention" means the present (1991) Act of the International Convention for the Protection of New Varieties of Plants; (ii) "Act of 1961/1972" means the International Convention for the Protection of New Varieties of Plants of December 2, 1961, as amended by the Additional Act of November 10,1972; (iii) "Act of 1978" means that the Act of October 23, 1978, of the International Convention for the Protection of new Varieties of Plants;

412

EVOLUTION OF PATENT LAWS

-

I

ANNEXURE Vlll --.--

- the person who bred, or discovered and developed,. a variety, - the person who is the employer of the aforementioned person or who has commissioned the latter's work, where the laws of the relevant Contracting Party so provide, or laws of the relevant Contracting Party so provide, or

-the successor in title of the first or second aforementioned person. as the case may be; (v) "breeder's right" means the right of the breeder provided for in t h i ~ Convention. (vi) "variety" means a plant grouping within a single botanical taxon of the lowest known rank, which grouping, irrt.sptctlve of whether the conditions for the grant of a breeder's right are flllly met,,can be

-defined by the expression of the characteristics resulting from a given genotype or combination of genotypes,

-distinguished from any other plant grouping by the expr~ssinn

I

of at least one of the s a d charactcriqficsand - considered as a unit with regard to its suitability f o ~being propagated unchanged; (vii) "Contracting Party" means a State or an intergoverrlmentai organization party to this Convention; (viii) "territory", in relation lo a Cc~tractingParty, means, where the Contracting Party is a Stace, the territory of that state and, where the Contracting Party is an intergovernmental organization, the territory in which the constituting treaty c.f that i n t ~ r g o v e r n m e n t a l organization applle., (ix) "authority" means the authority referred to in the Article 30(1)lii):

(x) "Union" means the Union f o r t h rrqt~ction ~ of Pjew 1 ' ~ ctrec r of Plants founded by the Act of 1961 and further mentlun-d In the Act 1972, the Act of 1978 and in this Convention; (xi) "member of the Uniork" means a State parry to the Ac! oi I. 951 11472 or the Act of 1978, nr a Contracting Party. CHAPTER 11 GENERAL OBLIGATIONS OF THE CONTRACTING PARTIES

Article 2 Basic Obligalinrr o f the Contracting rartiec EachContracting Part) shall grant and pr~)frctbrwdtr s rights.

I

I

.-

-.

41 3 -

Article 3 Genera and Species to be Protected (I) (Stat~snlrendy nlenlhers uf tl1.e i l ~ l . ' o ? lEach j Contracting Party w h ~ c h:; bound by the Act of 1961/ 1972 or the Act of 1975 shall apply the provisions cf this Convention, (i) at the date on whichi t becomes bour~dby this Convention. to all p l a ~ ~ genera and species to which it applies, on the said date, the provision. of the Act of 1961/I972 or the Act of 1978 and, (ii) at the latest b;" the expiration cf 3 period of fi.:? :?arc a f t ~ tho r saiil date, to all plant genera and species. (2) [Nezo nzenzbers of the Unioizl Each Contracting party which is'rlot bounc! by this Act of 1961/1972 Qr the Act of 197R shall -lprlj. tho Fro\ i.:i!;,ns of :h::i Convention, (i) at the date on which it becomes bound by this Convention, to at least 15 plant genera or species and, (ii) at the latest by the expiration of a period of 10 y a r s front the said date, to all plant genera and species. Article 4 National Treatment (1)fTreatment1 Withoc~tprejudice to the rights specified this Conventior~, nationals of a Contractirlg Party as well as natural persorts resident and legal entitles having their registered offices within the territory of a Contracting Party shall, insofar as the grant and protection of breeder's rights arc c:oncernrd exijo)within the territory of each other Contracting Party the same treatmelit as is accorded or rnay hereafter be accorded by the laws of each such otl!c-r CcrnLract. ing Party to its own nationals, provided that the said n a t i o ~ a l qr:;:[-it-a!.; , j..crsons or legal entitles comply with the conditions and fnrrrtali!ies inipos6.d (-!I. the nationals of the said other Ccntracting Party, (2) f'!Nntior:nls"/For t h e ~ u r p o s e (s ~ the f ~rt:~.:::iingpclragrnpil, ",iati:~r!als' means, where the Contracting Party is a State, tile naticnals of kllat StaLt? and, where thecontracting Party is an intergovernmental org;l.ni7nti?r!,,the r ia t:onals of the States which are n:~rnbersof that organization. CHAPTER III CONDlTlQNS FOR THE GRANT OF +HE BREEDER'S RlGHT Article 5 . Conditions of Protection (1) [Crrf~rinto b~ ~ntisfipdlThe b~t-t*dcr'sright shall br. pr,~r.tc-ircherc the Variety i s i. new, i i . distinct,

414

EVOLUTION OF PATENT LAWS

-

iii. uniform and iv. stable. ( 2 )[Othcr Condifions]The grant of the breeder's right shall not be subject to any further or different conditions, provided that the variety is designated by a denomination in accordance with the provisions of Article 20, that the applicant complies with the formalities provided for by the law of the Contracting Party with whose authority the application has been filed and that he pays the required fees. Article 6 Novelty (1) [Cr'teria] The variety shall be deemed to be new if, at the date of filing cf the application for a breeder's right, propagating or harvested material of the variety has not been sold or otherwise disposed of to others, by or with the conscrlt of'thebreeder, for purposes of exploitation of the variety. (i) in the territory of the Contracting Party in which the application has been filed earlier than one year before that date and ( i i j in a territory other than that of the Contracting Party in which the

application has been filed earlier than four years or, in the case of trees or of vines, earlier than six years before the said date. ( 2 ) f v a ~ i e t i c sof rerent crenfio~zlWhere a Contracting Party applies this Conventjon to a plant genw or species to which it did not previously apply this Convention or an earlier Act, it may consider a variety of recent creation existing at thc date of such extension of protection to satisfy the condition of novelty defined in paragraph (1) even where the sale or disposal to others described in that paragraph took place earlier than the time limits defined in that paragraph. (3) [ " T ~ ~ . r i t ~ IrI Zy certain " cnsrs] For the purposes of paragraph (I), all the C'ontract~ngParties which are member States of one and the same intergovernmental ctrganization may act jointly, where the regulations of that organization ho r~quirc,to assimilate acts done on the territories of the States members of that organization to acts done on their own territories and, should they do sol shal! notify the Secretary-General accordingly. Article 7 Distinctness The variety shall be deemed to be distinct if it is clearly distinguishable from any other variety whose existence is a matter of common knowledge at the timc of the filing of the application. In particular, the filing of an application for the granting of a breeder's right or for the entering of another variety in an official register of varieties, in any country, shall be deemed to render that other vdriety a matter of common knowledge from the date of the application! provided that the application leads to the granting of a breeder's right or to the

entering of the said other variety in the official register of varieties, as the case may be. Article 8 Uniformity The variety shall be deemed to be uniform if, subject to the variation that be expected from the particular features of its propagation, it is sufficiently uniform in its relevant characteristics. Article 9 Stability The variety shall be deemed tobe stable if its relevant charac teristics remain unchanged after repeated propagation or, in the case of a pdrtlcular cjrcie oi propagation, at the end of each such cycle. CHAPTER I V APPLICATION FOR THE GRANT OF THE BREEDER'S RIGHT

Article 10 Filing of Applications (1) [Place offirst applicafion]The breeder may choose the Contracting party with whose authority he wishes to file his first application for a breeder's right. (2)[Tinze of subseq~lentapplication1 The breeder may apply to the authorities of other Contracting Parties for the grant of breeder's rights without waiting for the grant to him of a breeder's right by the authority of the Contracting Party with which the first application was filed. (3) [lndependence of protection] No contracting Party shall refuse to grant a breeder's right or limit its duration on the ground that protection for the same variety has not been applied for, has been refused or has expired in any other State or intergovernmental organization. Article 11 Right of Priority (1) [The right; its period] Any breeder who has duly filed an application for the protection of a variety in one of the Contracting Parties (the "first application") shall, for the purpose of filing an application for the grant of a breeder's right for the same variety with the authority of any other Contracting Party (the "subsequent application") enjoy a right of priority for a period of 12 months. This period shall be computed from the date of filing of the first application. The day of filing shall not be included in the latter period. (2) [Clninling the right] In order to benefit from the right of priority, the breeder shall, in the subsequent application, claim the priority of the first application. The authority with which the subsequent application has been filed may require the breeder to furnish, within a period of not less than three months from the filing date of the subsequent application, a copy of the documents Which constitute the first application, certified to be a true copy by the authority

EL'OLUTION OF PATENT LAWS

-

with \%.hichthat npplication was filed, and samples or other evidence that the ~ a r i e t y~ ~ I I 15C the ~ Lsitbject matter of both applications is the same. ( 3 )[Docuiizerlts and material] The breeder shall be allowed a period of two years after the expiration of the period of priority or, where the first application is r.t.jected or withdrawn, an appropriate time after such rejection or withdrawal, l i t rk h i d ) to furnish, to tile duthority of the Contracting Party with which he has 111t.dti-);. .ub;,quent application, any necessary information, document or mbt e r ~ a ieqililed i for tlre purpose of ths examinatioii ~ ~ n dArticle er 12, as required by the laws of that Contracting Party. (4) [,Ei!e/lts occtirring dtlrirlg th,? pt.riod] Events occurrirlg within the period t~..;B:,idtdt'or in pardgraph (l),suck, as the fi1:ng of arotker application or the pitbliiaticin or use of the variety that is the subject of the first application, shall rut co~~stitute a ground for rejecting th2 s~tbsequerttapplication. Such events shall dlso not give rise to any third-party rigict. Article 12 Examination of the Application Any decision to grant a breeder's right shall require an examination for c*o~npliance wlth the conditions under Articles 5 to 9. In the course of the t?xamination, the authority may grow the variety or carry out other ne-~essary tests, cause the grciwing of the variety or the carrylng out of other necessary tests or take into account the results of growing tests or other trials which have already been carried out. For the purposes of examination, the authority may require: the breeder t ~Lrrtish ) sll the necessary information, documents or material. Article 13 Provisional Protection Each Contracting Party shall provide measures designed to safeguard the interests of the breeder during the period between the filing or the publication of tfic irppllcatioli far the grant oi a breeder's right and the grant of that right. Such measures shall have the effect that the holder of a breeder's right shall at least be entitled to equitable remuneration from any person who, during the sa:d period, has carried out acts which, once the right is granted, require the breeder's authorization as provided in Article 14. A Contracting Party may prcwide that the said measures shall only take effect in relation to persons whom tlw breeder I-ras notified of the filing of the application. CHAPTER V THE RIGHTS OF THE BREEDER

Article 14 Scope of the Breeder's Right ( I j [.4cts 111 respect o f t l ~ epropagating l~iaterzal](aj Subject to '\rticlcs 15 and 16, the following acts in respect of the propagating material of the ~rotected variety shall require the authorization of the breeder:

ANNEXUHE Vlll

-.-

.- ..-

417

i. production or reproduction (multiplication), ii. conditioning for the purpose of propagation, iii. offering for sale, iv. selling or other marketing, v. exporting, vi. importing, vii. stocking for any of the purposes mentioned in (i) to (vi), above. (bj The breeder may make his authorization subject to conditions and lirr,itations. (2) [Acts in respect of the harvested material] Subject to Articles 15 and 16, the acts referred to in items (i) to (vii) of paragraph (l)(a)in respect of harvested material, including entire plants and parts of plants, obtained through the unauthorized use of propagating material of the protected variety shall require the authorization of the breeder, unless the breeder has had reasonable opportunity to exercise his right in relation to the said propagating material. (3) [Acts in respect ofcertain products] Each Contracting party may provide that subject to Articles 15 and 16, the acts referred to in items (i) to (vii) of paragraph (l)(a)in respect of products made directly from harvested material of the protected variety falling within the provisions of paragraph (2) through the unauthorized use of the said harvested material shall require the authorization of the breeder, unless the breeder has had reasonable opportunity to exercise his right in relation to the said harvested material. (4) [Passible additional acts] Each Contracting Party may provide that, subject to Articles 15 dnd 16, acts other than those referred to in items (i) to (vii) ot paragraph (l)(a)shall also require the authorization of the breeder. (5) [Essentially derived and certain other vizrietiesl (a) The provisions of paragraphs (1) to (4) shall also apply in relation to i. varieties which are essentially derived from the protected variety, where the protected variety is not itself an essentially derived variety,

ii. varieties which are not clearly distinguishable in accordance with Article 7 from the protected variety and iii. varieties whose production requires the repeated use of the protected variety. (b) For the purposes of subparagraph (a)(i),a variety shall be deemed to be essentially derived from another variety ("the initial variety") when i. it is predominantly derived from the initial variety, or from a variety that is itself predominantly derived from the initial variety, while retaining the expression of the essential characteristics that result from the genotype or combination of genotypes of the initial variety.

41 8

419

EVOLUTION OF PATENT LAWS

ANNEXURE Vlll

ii. it is clearly distinguishable from the initial variety and iii. except for the differences which result from the act of derivation, it conforms to the initial variety in the expression of the essential characteristics that result from the genotype or combination of genotypes of the initial variety. (c) Essentially derived varieties may be obtained for example by the selection of a natural or induced mutant, or a somaclonal variant, the selection of a variant individual from plants of the initial variety, backcrossing, or transformation by genetic engineering. Article 15 Exceptions to the Breeder's Right (1) 1Compulsory exceptions] The breeder's right shall not extend to i. acts done privately and for non-commercial purposes, ii. acts done for experimental purposes and iii. acts done for the purpose of breeding other varieties, and, except where the provisions of Article 14(5)apply, acts referred to in Article 14(1)to (4) in respect of such other varieties. (2) [Optional exception] Notwithstanding Article 14, each Contracting Party may, within reasonable limits and subject to the safeguarding of the legitimate interests of the breeder, restrict the breeder's right in relation to any variety in order to permit farmers to use for propagating purposes, on their own holdings, the product of the harvest which they have obtained by planting, on their own holdings, the protected variety or a variety covered by Article 14(5)(a)(i)or (ii). Article 16 Exhaustion of the Breeder's Right (1) [Exhatistion of right] The breeder's right shall not extend to acts concerning any material of the protected variety, or of a variety covered by the provisions of Article 14(5) which has been sold or otherwise marketed by the breeder or with his consent in the territory of the Contracting Party concerned, or any material derived from the said material, unless such acts i. involve further propagation of the variety in question or ii. involve an export of material of the variety, which enables the propagation of the variety, into a country which does not protect varieties of the plant genus or species to which the variety belongs except where the exported material is for final consumption purposes. (2) [Meaning of "material"] For the purposes of paragraph (I), "material" means, in relation to a variety, i. propagating material of any kind, ii. harvested material, including entire plants and parts of plants, and

iii. any product made directly from the harvested material. (3) ["Territory" in certain cases] For the purposes of paragraph (I), all the Contracting Parties which are member States of one and the same intergovernmental organization may act jointly where the regulations of that organization so require, to assimilate acts done on the territories of the States members of that organization to acts done on their own territories and, should they do so, shall notify the Secretary-General accordingly. Article 17 Restrictions of the Exercise of the Breeder's right (1) [Public interest1 Except where expressly provided in this Convention, no Contracting Party may restrict the free exercise of a breeder's right for reason other than of public interest. (2) [Equitable rerntinerationl When any such restriction has the effect of authorizing a third party to perform any act for which the breeder's authorization is required, the Contracting Party concerned shall take all measures necessary to ensure that the breeder receives equitable remuneration. Article 18 Measures Regulating Commerce The breeder's right shall be independent of any measure taken by a Contracting Party to regulate within its territory the production, certification and marketing of material of varieties or the importing or exporting of such material. In any case, such measures shall not affect the application of the provisions of this Convention. Article 19 Duration of the Breeder's Right (1) [Period of protection1 The breeder's right shall be granted for a fixed period. ( 2 )[Minimumperiod] The said period shall not be shorter than 20 years from the date of the grant of the breeder's right. For trees and vines, the said period shall not be shorter than 25 years from the said date. CHAPTER VI VARIETY DENOMINATION

Article 20 Variety Denomination (1) [Designation of varieties by denominations; tise of denonlinationl (a) the variety shall be designed by a denomination which will be its genetic designation. (b) Each Contracting Party shall ensure that, subject to paragraph (4), no rights in the designation registered as the denomination of the variety shall

!!a!--____ -

-

E\'SLL"I'IOFJ OFPATENT I AWS

hamper the iree use of the denomination in connection with the variety, even after the expiration c;f t i ~ ebr2eder's rigl~t. (2) [Characteristics ~f tnr drnotizination] The denomination must enable the variety to be identified. St rrldv ]lot consist solely df figb~resexcept where this is an established practice for ,ies~gnatingvarieties. It must not tz liable to mislead or to cause confusion concerning the characteristics, value or identity of the variety or the identity of the breeder. In particular, it m i i ~ be t different from every denomination which designates, in the territory of any Contracting Party, an existing variety of the same plant species or of a closely related species. (3) [Registratio11of the der~onz:natio~~I The denomination of the variety shall be submitted by the breeder to the authority. If i t is found that the denomination does not satisfy the requirements of paragraph (2), the authority shall refuse to register it and shall require the breeder to propose another denomination within a prescribed period. The denomination shall be registered by the authority at the same time as the breeder's right is granted. (4) [Prior rights Lif tliird pelsons] Prior rights of third y.'rsons shall not be affected Ii, by reason of a prior right, the use of the denontination of a variety is forbidden to a person who, in accordance with the provisions of paragraph (7),is obliged to use it, the authxity shall require the breeder to submit another denom;nation for the variety. (5) lSante denonzination in dII Contr~zctingParties] H variety must be submitted to all Contracting Parties urLderthe same denomination. The authority of each Contracting Party shall register the denomination so submitted, unless it considers the denomination unsuitable within its territory. In the latter case, it shall require the breeder to srlbmit another denomination. oj Contractitzg P[i
ANNEXURE Vlll

42 1

CHAPTER V11 NULLITY AND CANCELLATION OF THE BREEDER'S RIGHT

Article 21 Nullity of the Breeder's Right (1) [Reasons of ~zullity]Each Contracting Party shall declare a breeder's right granted by it null and void when it is established. (i) that the conditions laid down in Articles 6 or 7 were not complied with at the time of the grant of the breeder's right, (ii) that, where the grant of the breeder's right has been essential!^ based upon information and documents furnishid by the breeder, the conditions laid down in Articles 8 or 9 were not complied .ik,ith at the time of the grant of the breeder's right, or (iii) that the breeder's right has bcerl granted to a pe;son who is not entitled to it, unless it is transferred to the person w l ~ aia so entitled. (2) [Exclusion of other reasons] No breeder's right shali be declared null and void for reasons other than those referred to ii-,paragraph (1). Article 22 Cancellation of the Breeder's Right ( 1 ) lReasons for ca~~cellation] (a) Each Contracting Party may cancel a breeder's right granted by it if it is established that the conditions laid down in Articles 8 or 9 are no loi~geriulfilled. (b) Furthermore, each Contractiilg Party may cancel a breeder's right granted by it if, after being requested to do so and within a prescribed period, 1. the breeder doe, not probzide tit,. authority with the information, documents or material deemed necessary for verifying the maintenance of the variety, ii. the breeder fails to pay such fees as may be payable to keep his right in force, or iii. the breeder does not propose, where the denomination of the variety is cancelled after the g r a n t of the right, a n o t h e r suitable denomination. (2) [Exclusion of other reasons] No breeder's right shall be cancelled for reasons other than those referred to the paragraph (1). CHAPTER VIIl THE UNION

Article 23 Members The Contracting Parties shall be members of the Union.

422

EVOLUTION OF PATENT LAWS

Article 24 Legal Status and Seat (1) [Legal personality] The Union has legal personality. (2) [Legal capacity] The Union enjoys on the territory of each Contracting Party, in conformity with the laws applicable in said territory, such legal capacity as may be necessary for the fulfillment of the objectives of the Union and the exercise of its functions. (3) [Seat]The seat of the Union and its permanent organs are at Geneva. (4) [Headqt~artersagreement]The Union has a headquarters agreement with the Swiss Confederation. Article 25 Organs The permanent organs of the Union are the Council and the Office of the Union. Article 26 The Council (1) [Composition] The Council shall consist of the representatives of the members of the Union. Each Member of the Union shall appoint one representative to the Council and one alternate. Representatives or alternates may be accompanied by assistants or advisers. ( 2 ) [Officers] The Council shall elect a President and a first Vice-President from among its members. It may elect other Vice-Presidents. The first Vice-President shall take the place of the President if the latter is unable to officiate. The President shall hold office for three years. (3)[Sessions]The Council shall meet upon convocation by its President. An ordinary session of the Council shall be held annually. In addition, the President may convene the Council at his discretion; he shall convene it, within a period of three months, if one-third of the members of the Union so request. (4)[Observers] States not members of the Union may be invited as observers to meeting of the Council. Other observers, as well as experts, may also be invited to such meetings. (5)[Tasks]The tasks of the Council shall be to: i. study appropriate measures to safeguard the interests and to encourage the development of the Union; ii. establish its rules of procedure; iii. appoint the Secretary-General and, if it finds it necessary a Vice Secretary-General and determine the terms of appointment of each; iv. examine an annual report on the activities of the Union and lay down the program for its future work;

ANNEXURE Vlll

423

v. give to the Secretary-General all necessary directions for the accomplishment of the tasks of the Union; vi. establish the administrative and financial regulations of the Union; vii. examine and approve the budget of the Union and fix the contribution of each member of the Union; viii. examine a n d a p p r o v e the accounts presented by the Secretary-General; ix. fix the date and place of the conferences referred to in Article 38 and take the measures necessary for their preparation; and x. in general, take all necessary decisions to ensure the efficient functioning of the Union. (6) [Votes] (a) Each member of the Union that is a State shall have one vote in the Council. (b) Any Contracting Party that is an intergovernmental organization may, in matters within its competence, exercise the rights to vote of its member States that are members of the Union. Such an intergovernmental organization shall not exercise the rights to vote of its member States if its member States exercise their right to vote, and vice versa. (7) [Majorities]Any decision of the Council shall require a simple majority of the votes cast, provided that any decision of the Council under paragraphs (5)(ii), (vi) and (vii) and under Articles 28(3), 29(5)(b) and 38(1) shall require three fourths of the votes cast. Abstentions shall not be considered as votes. Article 27 The Office of the Union ( 1 ) [Tasks and direction of the Office] The Office of the Union shall carry out all the duties and tasks entrusted to it by the Council. It shall be under the direction of the Secretary-General.

(2) [Dtlties of the Secretary-General] The Secretary-General shall be responsible to the Council; he shall be responsible for carrying out the decisions of the Council. He shall submit the budget of the Union for the approval of the Council and shall be responsible for its implementation. He shall make reports to the Council on his administration and the activities and financial position of the Union. (3) [Staff] Subject to the provisions of Article 26(5)(iii), the conditions of appointment and employment of the staff necessary for the efficient performance of the tasks of the Office of the Union shall be fixed in the administrative and financial regulations.

.c?!L--

E~VOLUTIONOF PATENT LAWS

Article 28 Languages (1) [Languages of the Office] The English, Fre:~cl\,German and Spanish languages shall be used by the Office of the Union in carrying out its duties. ( 2 ) [Langt~agesin certain meetings] Meetings of the Council and of revision conferences shall be held in the four languages. (3) [Further languages] The council may decide that further languages shall be used. Article 29 Finance ( 1 ) llncorrzel The expenses of the Union shall be m.et from i. the annual contributions of the States member of the Union, ii. payments received for services rendered, iii. miscellaneous receipts. (2) [Contributions:units] (a) The share of each State member of the Union in the total amount of the annual contributions shall be determined by reference to the total expen-diture to be met from the contributions of the States members of the Union and to the number of contribution units applicable to it under paragraph (3).The said share shall be computed according to paragraph (4) (b) The number of contribution units shall be expressed in whole numbers or fractions thereof, provided that no fraction shall be smaller than one-fifth. (3) lCo~1iribz~1loizs: share ofeach nleml;er](aj Thenumber of contribution units applicable to any member of the Union which is part): to the Act of 1961/1972 or the Act of 1978 on the date on which it becomes bound by this Convention shall be the same as the number applicable to it immediately before the said date. (5) Arly other State member of the lJnion shall, on joining the Union, indicate, in a declaration addressed to the Secretary-Ger~eral,the number of contribution units applicable to it. (c) .Any State member of the Union may, at any time, indicate, ic a declaration addressed to the Secretary-General, a number of contribution units different from the number applicable to it under subparagraph (a) or (b). Such declaration, if made during the first six months of a calendar year, shall take effect from the beginning of the subsequent calendar year; otherwise, it shall take effect from the beginning of the second calendar year which follow~sthe yeer in which the declaration was made. (4) 1ConfriFtilicw;s:con1prdf,7tlrl~ of shares] (a) For each budgetary period, the amount corresponding to one contribution unit shall be obtained by dividing the total amount of the expenditure to be met in that period from the contribu-

.

A

amount corresponding to one contribution unit shall be obtained by dividing the total amount of the expenditure to be met in that period from the contribu-

tions of the States members of tho Union by the total member of units applicable to those States members of the Union. (b) The amw!~:+cf thc cont rihu tior. of each State member of the Union shall be obtained by 1~1ult;plying the art7o:lr;t: correspoi~dingto one contribution unit by the number ilf contribution units applicable to that State member of the Union. (5) [Arrears In rontribr~iio~zsl (a) A State member of the Union which is in arrears in the p a y r n r ~of ~ ti ts coiitribu tions may not, subject to subparagraph (b), exercise its riglit to 7,cte in the Ccuncil if the amount of its arrears equals or exceeds the amouut sf the contribution due from it for the preceding full year. The suspension of the right to vote shall not relieve such State member of the union of its obligations under this Convention and shall not deprive it of any other rights therc-,lrx)3r.r. (b) The Col.~ncii!,lay allcw the said State member of the Union to continue , as long as, the Council is satisfied that the to exercise its right tc vote ~ f and delay in payment i s due to exceptional and unavoidable circumstances. (6) [ A l ~ L l t z (!n ~t f l c accorrnts] The auditing of d ~ accounts c of the Union shall be effected bj- astat-. member of the Union as ~ r c v i d e din the administrative and financial regulations. Such State member of fiie 1-Inionshall be designated, with its agreement, t ~ y the Council. (7) [Cotztribntions ofinfergovernnzentalorgarrizaiiotzs]Any Contracting Party which is an intergovernmental organization shall not be obliged to pay contributions. If, nevertheless, it chooses to pay contributions, the provisions of paragraphs (1) to (4) shall be applied accordingly. CHAPTER IX IMPLEMENTATIONOF THE CONVENTION; OTHER AGREEMENTS

Article 30 Implementation of the Convention ( 1 [?densures (5' ;rr?r~:prll~lztatic;~] Each Cotltiacting Farty shall adopt all measlires necessarj iclr the iinp1ern:ntatjr:n c?f this rZcri~e?lfi~*l; in ~?articl;!ar,it shal! . : p p l r'~i~-~.pdips {r?r thp e f f c ~ t i lf:nfo! :~ c~ment i ripj-i,je f:,r appr'>pi,i of brecdrt s rights; ii. rr~aintai!?a!~!al.l!horitv elitrusted with the tack of granting breeder's rights or- e ~ ; l.rst t ~ tkre said task to an authority nlaintained by another Contractir?gParty, iii. ensure that. the public is infurrl~edt11;ougt. !he regular publication of inf0rn;at.i~r l r ( r r ! c : t !:i::~x ----applk.i!I0risf . ~ ra i ~ dgrants of brcedcr's r~ght,arid --prof-os~il and approved denominations.

- - appnlc..t:l,ric- t(Jr a i d grants c;i brcedcr's ~ ~ g l and lt,

--pro~ow,l , ~ n dapproved denominations.

426

EVOLUTION OF PATENT LAWS

(2) [Conforniity of laws1 It shall be understood that, on depositing its instrument of ratification, acceptance, approval or accession, as the case may be, each State or intergovernmental organization must be in a position, under its laws, to give effect to the provisions of this Convention. Article 31 Relations between Contracting Parties and States Bound by Earlier Acts (1)[Relations between States bound by this Convention] Between States members of the Union which are bound both by this Convention and any earlier Act of the Convention, only this Convention shall apply. (2) [Possible relations with States not bound by this Convention] Any State member of the Union not bound by this Convention may declare, in a notification addressed to the Secretary-General that in its relations with each member of the Union bound only by this Convention, it will apply the latest Act by which it is bound. As from the expiration of one month after the date of such notification and until the State member of the Union making the declaration becomes bound by this Convention, the said member of the Union shall apply the latest Act by which it is bound in its relations with each of the members of the Union bound only by this Convention, whereas the latter shall apply this Convention in respect of the former. Article 32 Special Agreements Members of the Union reserve the right to conclude among themselves special agreements for the protection of varieties, insofar as such agreements d o not contravene the provisions of this Convention. CHAPTER X FINAL PROVISIONS Article 33 Signature This Convention shall be open for signature by any State which is a member of the Union at the date of its adoption. It shall remain open for signature until March 31,1992. Article 34 Ratification, Acceptance or Approval; Accession (1)[States and certain intergovernmental organizations] (a) Any State may, as provided in this Article, become party to this Convention. (b) Any intergovernmental organization may, as provided in this Article, become party to this Convention if it i. has competence in respect of matters governed by this Convention, ii. has its own legislation providing for the grant and protection of breeder's rights binding on all its member States and

iii. has been duly authorized, in accortiance with its inttsrtal pr ( ~ c c ~ u I - ~ s ,

1

1

1

to accede to this Convention. (2) [Instrument of adherence] Any State which has signed this C'onx~~1.ltio11 shall become party to this Convention by depositing an instrument of ratification, acceptance or approval of this Convention. Any State which has not signed this Convention and an intergovernmental organization shall become party to this Convention by depositing an instrument of accessiol~to this Convcntiul~. Instruments of ratification, acceptance, approval or accession shall be deposited with the Secretary-General. (3) [Advice of the Council] Any State which is not a member of the Union and any intergovernmental organization shall, before depositing its instrument of accession, ask the Council to advise it in respect of the conformity of its laws with the provisions of this Convention. If the decision embodying the advice i positive, the instrument of accession may be deposited. Article 35 Reservations (1)[Principle] Subject to paragraph (2), no reservations to this Convention are permitted. (2) [Possible exception] (a) Notwithstanding the provisions of Article 3(1), any State which, at the time of becoming party to this Convention, i s a party to the Act of 1978 and which, as far as varieties reproduced asexually are concerned, provides for protection by an industrial property title other than a breeder's tight shall have the right to continue to do so witho~ltapplying this Convention to those varieties. (b) Any State making use of the said right shall, at the time of depositing its instrument of ratification, acceptance, approval or accession, a5 the case wav be, notify the Secretary-General accordingly. The same State may, at a n y titrip, withdraw the said notification. Article 36 Communications Concerning Legislation and the Genera and Species Protected; Information to be published (1) [Initial ~~otification] When depositing its i n s t r ~ r ~ ~ i ~f e n tratificatio~?, acceptance 01- approval of or accessiorl to this Conv~ntirn,a the c a s t may bt, any State or intergoxrerrrmentd organization ~ l ~ . a~iotif? ll llir Cecr~:taryGl-neral of i. its legislation governing breeders' rights and

ii. the list of plant genera and specics to which, or1 the date on which it will become boiind by this Convc~~tion, it wil! npyly t ! - : ~proviricr:?<; of this Co~~tvention. (2) [Notification of changes] Each Contracting party ~ 1 - ~ , 1 1pr-cvml.tlv 1 notify the Secretary-Gcncral of

4_28--

EVOLUTION OF PATENT LAWS

i. any changes in its legislation governing breeders' rights and ii. any extension of the application of this Convention to additional plant genera and species. (3) [Publication of the information] The Secretary-General shall, on the basis of communications received from each Contracting Party concerned, publish information on i. the legislation governing breeders' rights and any changes in that legislation, and ii. the list of plant genera and species referred to in paragraph (l)(ii)and any extension referred to in paragraph (2)(ii). Article 37 Entry into force; Closing of Earlier Acts (1)[Initial entry intoforce] This Convention shall enter into force one month after five States have deposited their instruments of ratification, acceptance, approval or accession, as the case may be, provided that at least three of the said instruments have been deposited by States party to the Act of 1961/I972 or the Act of 1978. (2) [Sttbseqtient entry intoforce] Any State not covered by paragraph (I) or any intergovernmental organization shall become bound by this Convention one month after the date on which it has deposited its instrument of ratification, acceptance, approval or accession, as the case may be. (3) [Closing ofthe 1978 Act] No instrument of accession to the Act of 1978 may be deposited after the entry into force of this Convention according to paragraph (I), except that any State that, in conformity with the established practice of the General Assembly of the United Nations, is regarded as a developing country may deposit such an instrument until December 31,1995, and that any other State may deposit such an instrument until December 31, 1993, even if this Convention enters into force before that date. Article 38 Revision of the Convention ( 1 ) [Conferencel This Convention may be revised by a conference of the members of the Union. The convocation of such conference shall be decided by the Council. (2) [Q~~ortirn and nlajority] The proceedings of a conference shall be effective only if at least half of the States members of the Union are represented at it. A majority of three quarters of the States members of the Union present and voting at the conference shall be required for the adoption of any revision.

--

ANNEXURE Vlll

..

429

Article 39 Denunciation (1) [Not$cations]Any Contracting Party may denounce this Convention by notification addressed to the Secretary-General. The Secretary-General shall promptly notify all members of the Union of the receipt of that notification. (2) [Earlier Acts] Notification of the denunciation of this Convention shall be deemed also to constitute notification of the denunciation of any earlier Act by which the Contracting Party denouncing this Convention is bound. (3) [Efective date1 The denunciation shall take effect at the end of the calendar year following the year in which the notification was received by the Secretary-General. ( 4 ) [Acquired rights] The denunciation shall not affect any rights acquired in a variety by reason of this Convention or any earlier Act prior to the date on which the denunciation becomes effective. Article 40 Preservation of Existing Rights This Convention shall not limit existing breeders' rights under the laws of Contracting Parties or by reason of any earlier Act or any agreement other than this Convention concluded between members of the Union. Article 41 Original and Official Texts of the Convention (1)[Original] This Convention shall be signed in a single original in the English, French and German languages, the French text prevailing in case of any discrepancy among the various texts. The original shall be deposited with the Secretary-General. (2) [Official texts] The Secretary-General shall, after consultation with the interested Governments, establishofficial texts of this Convention in the Arabic, Italian, Japanese and Spanish languages and such other languages as the Council may designate. Article 42 Depositary Functions (1) [Transmittal of copies] The Secretary-General shall transmit certified copies of this Convention to all States and intergovernmental organizations which were represented in the Diplomatic Conference that adopted this Convention and, on request, to any other State or intergovernmental organization. (2) [Registration]The Secretary-General shall register this Convention with the Secretariat of the United Nations.

p ANNEXURE IX -

-

--

-

-- -

(19th September, 19701 An Act to amend and consolidate the law relating to patents. Be it enacted by Parliament in the Twenty-first Year of the Republic of India as follows~

CHAPTER l PRELIMINARY 1. Short title, extent and commencement ( 1 ) This Act may be called the Patents Act, 1970. (2) It extends to the whole of Indla. (3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint: Provided that different dates may be appointed for different provisions.of this Act, and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision. 2. Definitions and interpretation (1)In this Act, unless the context otherwise requires,(a) "Appellate Board" means the Appellate Board referred to in Section 116; (ab) "assignee" includes an assignee of the assignee and the legal representative of a deceased assignee and references to the assignee of any person include references to the assignee of the legal representative or assignee of that person; '[(aba) "Budapest Treaty" means the Budapest Treaty on the International Recognition of the Deposit of Micro-organisms for the purposes of Patent Procedure done at Budapest on 28th day of April, 1977, as amended and modified from time to time;] (ac) "capable of industrial application", in relation to an invention, means that the invention is capable of being made or used in an industry; (b) "Controller" means the Controller General of Patents, Designs and Trade Marks referred to in Section 73; (c) "convention application" means an application for a patent made by virtue of Section 135; 1

431

(d) "convention country" means a country or a country which is member of a group of coui~triesor a union of countries or an Inter-governmental organization '[referred to as a convention country in Section 1331; (e) "district court" has the meaning assigned to that expression by the Code of Civil Procedure, 1908 (5 of 1908); (f) "exclusive licence" means a licence from a patentee which confers on the licensee, or on the licensee and persons authorized by him, to the exclusion of all other persons (including the patentee), any right in respect of the patented invention, and exclusive licensee shall be construed accordingly; 2[~~x] (h) "Government undertaking" means any industrial undertaking carried on(i) by a department of the Government, or (ii) by a corporation established by a Central, Provincial or State Act, which is owned or controlled by the Government, or (iii) by a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956),3[or (iv) by an institution wholly or substantially financed by the Government;]

EXTRACTS FROM THE PATENTS ACT, 1970 (Act No. 39 of 1970) --

ANNEXURE IX

4

[xxxl

5[(i) "High Court", in relation to a State or Union territory, means the

High Court having territorial jurisdiction in that State or Union territory, as the case may be;] (ia) "international application" nleans an application for patent made i n accordance with the Patent Cooperation Treaty;

(j) "invention" means a new product or process involving an inventive step and capable of industrial application; '[(ja) "inventive step" means a feature of an invention that involves technical advance as compared to the existing knowledge or having economic significance or both and that makes the invention not obvious to a person skilled in the art;)

--

1 2 3 4

Ins by Ac! 15 of 2005, Scc. 2 (a) ( w r t..f 1-1-2005)

5 6

Subs. by Act '15of2005,sec.2(b),for"11otifiedassuch undersub-sectioi~(l)ofsectio~~ 133"(w.r.e.f 1.1-2005). Clause (g) omitted by Act 15 of 2005, sec. 2 (c) (w.r.e.f.1-1-2005). Ins. by Act 15 of 2005, (w.r.e.f.1-1-2005). The words "and includes thecouncil of Scientific and Industrial Researcll and any rrther institution which is financed wholly or for the major part of thesaid council", omitted by Act 15 of 2005, scc. 2 (d)(iii)(w.r.c.i. 1-1-2005). Subs. by Act 15 of 2005, sec. 2 (e), for clause (i), (w.r.e.f.1-1-2005). Subs. by Act 15of 2005, sec. 2(f), for clause (ja) (w.r.e.f.1-1-2005).

432

-

EVOLUTION OF PATENT LAWS

(k) "legal representative" means a person who in law represents the estate of a deceased person; ( 1 "new invention" means any invention or technology which has not been anticipated by publication in any document or used in the country or elsewhere in the world before the date of filing of patent application with complete specification i.e. the subject-matter has not fallen in public domain or that it does not form part of the state of the art;] (la) "Opposition Board" means an Opposition Board constituted under sub-section (4) of section 25; (m) "patent" means a patent for any invention granted under this act; (n) "patent agent" means a person for the time being registered under this Act as a patent agent; (0) "patented article" and "patented process" means respectively an article or process in respect of which a patent is in force; (oa) "Pa tent Coopera tion Treaty" means the Pa tent Coopera tion Treaty done at Washington on the 19th day of June, 1970 as amended and modified from time to time; (p) "patentee" means the person for the time being entered on the register as the grantee or proprietor of the patent; (q) "patent of addition" means a patent granted in accordance with Section 54; (r) "patent office" means the patent office referred to in Section 74; (s) "person" includes the Government; (t) "person interested" includes a person engaged in, or in promoting research in the same field as that to which the invention relates; 2[(ta) "pharmaceutical substance" means any new entity involving one or more inventive steps;] (u) "prescribed" means,-(A) in relation to proceedings before a High Court, prescribed by rules made by the High Court; (B) in relation to proceedings before the Appellate Board, prescribed by rules made by the Appellate Board; and (C) in other cases, prescribed by rules made under this Act; (v) "prescribed manner" includes the payment of the prescribed fee; (w) "priority date" has the meaning assigned to it by Section 11; (x) "register" means the register of patents referred to in Section 67; 1 2

Subs. by Act 15 of 2005, sec. 2(g), for clauses (I) and (m) (w.r.e.f. 1-1-2005). Ins. by Act 15 of 2005, sec. 2(h) (w.r.e.f.1-1-2005).

433

ANNEXURE IX

I

3.

I I.

(y) "true and first inventor" does not include either the first importer of an invention into India, or a person to whom an invention is first communicated from outside India. (2) In this Act, unless the context otherwise requires, any reference(a) to the Controller shall be construed as including a reference to any officer discharging the functions of the Controller in pursuance of Section 73; (b) to the patent office shall be construed as including a reference to any branch office of the patent office. CHAPTER ll INVENTIONS NOT PATENTABLE What arc! not inventions The following are not inventions within the meaning of this Act,(a) an invention which is frivolous or which claims anything obviously contrary to well established natural laws; (b) an invention the primary or intended use or commercial exploitation of which could be contrary public order or morality or which causes serious prejudice to human, animal or plant life or health or to the environment; (c) the mere discovery of a scientific principle or the formulation of an abstract theory (or discovery of any living thing or non-living substances occurring in nature); '[(d) the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacyof that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant. Explanation:- For the purposes of this clause, salts, esters, ethers, polymarphs, metabolites, pure form, particle size, isomers, mixtares of isomers, complexes, combinations and other deriva tives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy;] (e) a substance obtained by a mere admixture resulting only in the aggregation of the properties of the components thereof or a process for producing such substance; (f) the mere arrangement or re-arrangement or duplication of known devices each functioning independently of one another in a known way; --

.

A

1

Subs. by Act 15 of 2005, sec. 3, for clause (d)(w.r e.f. 1-1-2005).

I 434-.__-

EVOLUTION -O F PATENT LAWS

____--_-._

( g ) [omitted];

(11) a metllod of agrisultnre ul- horticulture; (i) any process for the medicinal, surgical, curative, prophylactic diagnostic therapeutic or other treatment of human beings or any process for a similar treatment d animals [xxx] to render them free of disease or to incredse their economic value or that of their products. ij) plants and animals in whole or any part thereof other than micro-organisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals; (k) a mathematical or business method or a computer programe per se or algorithms; (1) a literary, dramatic, musical or artistic work or any other aesthetic creation wl~atsoeverincluding cinema tographic works and television productions; (m) a mere scheme or rule or method of performing mental act or method of playing game; (n! a presentation of information; (0) topography of integrated circuits; (p) an invention which in effect, is traditional knowledge or which is an aggregation or duplication of known properties of traditionally known component or components. 4 Inventions relating to atomic energy not patentable Nu patent shall be granted in respect of an invention relating to atomic energy falling within sub-section (1) of Section 20 of the Atomic Energy Act,1962 (33 of 1962)

CHAPTER Ill APPLICATIONS FOR PATENTS 6. Persons entitled to apply for patents (1) Subject to the provisions contained in Section 134, an application for a patent for an invention may be made by any of the following persons, that is to 5dY,-(a) by any person claiming to be the true and first inventor of the invention, (b) by any person being the assignee of the person clairning to be the true and first inventory in respect of the right to make such an application; (c) by the legal representative of any deceased persoil who immediately before his death was entitled to make such an application. (2) An application under sub-section (1)may be made by any of the persons referred to therein either alone or jointly with any other person.

1 1

I

.

.

ANNEXURE lX

.

- -

_

Form of application (1) Every application for a patent shall be for one invention only and shall be made in the prescribed form and filed in the patent office. (1A) Every international application under the Patent Cooperation Treaty for a patent, as may be filed designating India shall be deemed to be an application under this Act, if a corresponding application has also been filed before the Controller in India. ' ( 1 ~ The ) filing date of an application referred to in sub-section (1A) and its complete specification processed by the patent office as designated office or elected office shall be the international filing date accorded under the Patent Cooperation Treaty.] (2) Where the application is made by virtue of an assignment of the right to apply for a patent for the invention, there shall be furnished with the application, or within such period as may be prescribed after the filing of the application, proof of the right to make the application. (3) Every application under this section shall state that the applicant is in possession of the invention and shall name the 2[person] claiming to be the true and first inventor; and where the person so claiming is not the applicant or one of the applicants, the application shall contain a declaration that the applicant believes the person so named to be the true and first inventor. 3 [(4) Every such application (not being a convention application or an application filed under the Patent Cooperation Treaty designating India) shall be accompanied by a provisional or a complete specification.] 8. Information and undertaking regarding foreign applications (1) Where an applicant for a patent under this Act is prosecuting either alone or jointly with any other persoil an applicatio~lfor a patent in any country outside India in respect of the same or substantially the same invention, or where to his knowledge such an application is being prosecuted by some person through whom he claims or by some person deriving title from him, he shall file along with his application or subsequently *[within the prescribed period as the Controller may allowl(a) a statement setting out detailed particulars of such applications; and (b) an undertaking that, 5[upto the date of grant of patent in India], he would keep the Controller informed in writing, from time to time, of detailed particulars as required under clause (a) in respect of every other applicatioi~relating to the same or substantially the sarne 7.

1 2 3 4

5

Ins. by Acl 15 of 2005, sec. 5(a) (w.r.c.f.1-1-2005). Subs. By Act 15 of 2005, aec. 5 (b), for "owner" ( w r.e.f.1-1-2005). Subs. by Act 15 of 2005, sec. 5(c),for sub-scctlon (4) (w.r.e.f.1-1-2005). Subs. by Act 15 of 2005, sec. 6(a)(i),for "within such period as the Controller may, for good and sufficient reasonsallow" (w.r.e.f. 1-1-2005). Subs. by Act 15 of 2005, sec. 6 (a)(ii),for "upto the date of the acceptance of his complete specification filed in India" (w.r.e.f.1-1-2005).

436

EVOLUTION OF PATENT LAWS

ANNEXURE 1X

invention, if any, filed in any country outside India subsequently to the filing of the statement referred to in the aforesaid clause, within the prescribed time. '[(2) At any time after an application for patent is filed in India and till the grant of a patent or refusal to grant of patent made thereon, the Controller may also require the applicant to furnish details, as may be prescribed relating to the processing of the application in a country outside India, and in that event the applicant shall furnish to the Controller information available to him within such period as may be prescribed.] 9. Provisional and complete specifications 2[(1)Where an application for a patent (not being a convention application or an application filed under the Patent Cooperation Treaty designating India) is accompanied by a provisional specification, a complete specification shall be filed within twelve months from the date of filing of the application, and if the complete specification is not so filed, the application shall be deemed to be abandoned.] (2) Where two or more applications in the name of the same applicant are accompanied by provisional specifications in respect of inventions which are cognate or of which one is a modification of another and the Controller is of opinion that the whole of such inventions are such as to constitute a single invention and may properly be included in one patent, he may allow one complete specification to be filed in respect of all such provisional specifications: 3 [ ~ r o v i d e that d the period of time specified under sub-section (1) shall be reckoned from the date of filing of the earliest provisional specification.] "(3) Where an application for a patent (not being a convention application or an application filed under the Patent Cooperation Treaty designating India) is accompanied by a specification purporting to be a complete specification, the Controller may, if the applicant so requests at any time within twelve months from the date of filing of the application, direct that such specification shall be treated, for the purposes of this Act, as a provisional specification and proceed with the application accordingly.] (4) Where a complete specification has been filed in pursuance of an application for a patent accompanied by a provisional specification or by a specification treated by virtue of a direction under sub-section (3) as a provisional s ecification, the Controller may, if the applicant so requests at any time before [grant of patent], cancel the provisional specification and post date the application to the date of filing of the complete specification.

10. Contents of specifications (1)Every specification, whether provisional or complete, shall describe the

2'

1 2 3 4

5

Subs. by Act 15 of 2005, sec. 6 (b), for sub-section (2) (w.r.e.f.1-1-2005). Subs. by Act 15 of 2005, sec. 7 (a),for sub-section (1) (w.r.e.f.1-1-2005). Ins. by Act 15 of 2005, sec. 7(b) (w.r.e.f.1-1-2005). Subs. by Act 15 of 2005, sec. 7(c), for sub-section (3) (w.r.e.f.1-1-2005). Subs. by Act 15 of 2005, sec. 7(d), for "the acceptance of the complete specification" (w.r.e.f.1-1-2005)

437

invention and shall begin with a title sufficiently indicating the subject-matter to which the invention relates. (2) Subject to any rules that may be made in this behalf under this Act, drawings may, and shall, if the Controller so requires, be supplied for the purposes of any specification, whether complete or provisional; and any drawings so supplied shall, unless the Controller otherwise directs be deemed to form part of the specification, and references in this Act to a specification shall be construed accordingly. (3) If, in any particular case, the Controller considers that an application should be further supplemented by a model or sample of anything illustrating the invention or alleged to constitute an invention, such model or sample as he may require shall be furnished '[before the application is found in order for grant of a patent], but such model or sample shall not be deemed to form part of the specification. (4) Every complete specification shall(a) fully and particularly describe the invention and its operation or use and the method by which it is to be performed; (b) disclose the best method of performing the invention which is known to the applicant and for which he is entitled to claim protection; and (c) end with a claim or claims defining the scope of the invention for which protection is claimed; (d) be accompanied by an abstract to provide technical information on the invention: Provided that(i) the Controller may amend the abstract for providing better information to third parties; and (ii) if the applicant mentions a biological material in the specification which may not be described in such a way as to satisfy clauses (a) and (b), and if such material is not available to the public, the application shall be completed by depositing 2[the material to an international depository authority under the Budapest Treaty] and by fulfilling the following conditions, namely:3 [ ( ~ the ) deposit of the material shall be made not later than the date of filing the patent application in India and a reference thereof shall be made in the specification within the prescribed period;] 1

2 3

Subs. by Act 15 of 2005, sec. 8(a). for "before the acceptance of the application" (w.r.e.f.1-1-2005). Subs. by Act 15 of 2005, sec. 8(b)(i).for "the material to an authorised depository institution as may be notified by thecentral Government in theofficial Gazette" (w.r.e.f.1-1-2005). Subs. by Act 15 of 2005, sec. R(b)(ii),for sub-clause (A) (w.r.e.f.1-1-2005).

438

---

-.

EVOLUTION OF PATENT LAWSANNEXURE IX

(B) all the available characteristics of the material required for it to be correctly identified or indicated are included in the specification including the name, address of the depository institution and the date and number of the deposit of the material at the institution; (C) access to the material is available in the depository institution only after the date of the application of patent in India or if a priority is claimed after the date of the priority; (D) disclose the source and geographical origin of the biological material in the specification, when used in an invention.] ' ( 4 ~ In ) case of an international application designating India, the title, description, drawings, abstract and claims filed with the application shall be taken as the complete specification for the purposes of this Act.] (5) The claim or claims of a complete specification shall relate to a single invention, or to a group of inventions linked so as to form a single inventive concept, shall be clear and succinct and shall be fairly based on the matter disclosed in the specification. (6)A declaration as to the inventorship of the invention shall, in such cases as may be prescribed, be furnished in the prescribed form with the complete specification or within such period as may be prescribed after the filing of that specification. (7) Subject to the foregoing provisions of this section, a complete specification filed after a provisional specification may include claims in respect of developments of, or additions to, the invention which was described in the provisional specification, being developments or additions in respect of which the applicant would be entitled under the provisions of Section 6 to make a separate application for a patent. 11. Priority dates of claims of a complete specification (1)There shall be a priority date for each claim of a complete specification. (2) Where a complete specification is filed in pursuance of a single application accompanied by(a) a provisional specification; or (b) a specification which is treated by virtue of a direction under sub-section (3) of Section 9 as a provisional specification, and the claim is fairly based on the matter disclosed in the specification referred to in clause (a) or clause (b), the priority date of that claim shall be the date of the filing of the relevant specification. (3) Where the complete specification is filed or proceeded with in pursuance of two or more applications accompanied by such specifications as are

I

mentioned in sub-section (2) and the claim is fairly based on the matter disclosed(a) in one of those specifications, &e priority date of that claim shall be the date of the filing of the application accompanied by that specification; (b) partly in one and partly in another, the priority date of that claim shall be the date of the filing of the application accompanied by the specification of the later date. [(3A)Where a complete specification based on a previously filed application in India has been filed within twelve months from the date of that application and the claim is fairly based on the matter disclosed in the previously filed application, the priority date of that claim shall be the date of the previously filed application in which the matter was first disclosed.] (4) Where the complete specification has been filed in pursuance of a further application made by virtue of sub-section (1)of Section 16 and the claim is fairly based on the matter disclosed in any of the earlier specifications, provisional or complete, as the case may be, the priority date of that claim shall be the date of the filing of that specification in which the matter was first disclosed. (5) Where, under the foregoing provisions of this section, any claim of a complete specification would, but for the provisions of this sub-section, have two or more priority dates, the priority date of that claim shall be the earlier or earliest of those dates. ] , and (5)d o not apply, (6)In any case to which sub-sections (2),(3), [ ( 3 ~ ) (4) the priority date of a claim shall, subject to the provisions of Section 137, be the date of filing of the complete specification. (7)The reference to the date of the filingof the application or of the complete specification in this section shall, in cases where there has been a post-dating l~nderSection 9 or Section 7 or, as the case may be, an ante-dating under Section 16, be a reference to the date as so post-dated or ante-dated. (8) A claim in a conlplete specification of a patent shall not be invalid by reason only of(a) the publication or use of the invention so far as claimed in that claim on or after tlie priority date of such claim; or (b) the grant of another patent which claims the invention, so far as claimed in the first nientioned claim, in a claim of the same or a later

'

I

I

Subs. by Acl 15 of 2005, sec. 8(c), for sub-section (4A) (w.r.e.f. 1-1-2005),

I

1

Ins. by Act 15 of 2005 (w.r c. f. 1-1-20()5)

440

--

EVOLUTION OF PATENT LAWS

IX -ANNEXURE -

CHAPTER IV PUBLICATION AND EXAMINATION OF APPLICATIONS 11A.Publication of applications '[(I) Save as otherwise provided, no application for patent shall ordinarily be open to the public for such period as may be prescribed. (2) The applicant may, in the prescribed manner, request the Controller to publish his application at any time before the expiry of the period prescribed under sub-section (1) and subject to the provisions of sub-section (3), the Controller shall publish such application as soon as possible. (3) Every application for a patent shall, on the expiry of the period specified under sub-section (I), be published, except in cases where the application(a) in which secrecy direction is imposed under Section 35; or (b) has been abandoned under sub-section (1) of Section 9; or (c) has been withdrawn three months prior to the period specified under sub-section (I).] (4) In case a secrecy direction has been given in respect of an application under Section 35, then it shall be published after the expiry of the period 2[prescribed under sub-section (I)] or when the secrecy direction has ceased to operate, whichever is later. (5)The publication of every application under this section shall include the particulars of the date of application, number of application, name and address of the applicant identifying the application and an abstract. (6) Upon publication of an application for a patent under this section(a) the depository institution shall make the biological material mentioned in the specification available to the public; (b) the patent office may, on payment of such fee as may be prescribed, make the specification and drawings, if any, of such application available to the public. 3 [(7) On and from the date of publication of the application for patent and until the date of grant of a patent in respect of such application, the applicant shall have the like privileges and rights as if a patent for the invention had been granted on the date of publication of the application: Provided that the applicant shall not be entitled to institute any proceedings for infringement until the patent has been granted: Provided further that the rights of a patentee in respect of applicaticns made under sub-section (2) of Section 5 before the 1st day of January, 2005 shall accrue from the date of grant of the patent:

1 2 3

Subs. by Act 15 of 2005, scc. 10(a), for sub-sections (1) to (3) (w.r.e.f.1-1-2005). Subs. by Act 15 of 2005, sec. 10(b),for "of cightcen months" (w.r.e.f.1-1-2005). Ins. by Act 15 of 2005, Sec. 10(c) (w.r.e.f.1-1-2005).

441

%

Provided also that after a patent is granted in respect of applications made ~ m d e rsub-section (2) of Section 5, the patent-holder shall only be entitled to receive reasonable royalty from such enterprises which have made significant investment and were producing and marketing the concerned product prior to the 1st day of January, 2005 and which continue to manufacture the product covered by the patent on the date of grant of the patent and no infringement proceedings shall be instituted against such enterprises.] 11B. Request for examination '(1) No application for a patent shall be examined unless the applicant or any other interested person makes a request in the prescribed manner for such examination within the prescribed period.] 2 [xxxl 3((3)In case of an application in respect of a claim for a patent filed under sub-section (2) of Section 5 before the 1st day of January, 2005 a request for its examination shall be made in the prescribed manner and within the prescribed period by the applicant or any other interested person.] (4) In case the applicant or any other interested person does not make a request for examination of the application for a patent within the period as specified under sub-section (1) 4[xxx]or sub-section (3), the application shall be treated as withdrawn by the applicant: 5[~rovided that(i) the applicant may, at any time after filing the application but before the grant of a patent, withdraw the application by making a request in the prescribed manner; and (ii) in a case where secrecy direction has been issued under Section 35, the request for examination may be made within the prescribed period from the date of revocation of the secrecy direction.] 12. Examination of application (1) When a request for examination has been made in respect of an application for a patent in the prescribed manner 6[under sub-section (1) or sub-section (3) of Section 11B, the application and specification and other documents related thereto shall be referred at the earliest by the Controller] to an examiner for making a report to him in respect of the following matters, namely:-

1 2 3 4 5 6

Subs. by Act 15 of 2005, sec. ll(a), for sub-section (1) (w.r.e.f.1-1-2005). Sub-section (2) omitted by Act 15 of 2005, sec. I I@), (w.r.e.f.1-1-2005). Subs. by Act 15 of 2005, sec ll(c), for sub-section (3) (w.r.e.f.1-1-2005), The words "or sub-section (2)"omitted by Act 15 of 2005, sec. ll(d)(i)(w.r.e.f.1-1-2005). Subs. by Act 15 of 2005,sec. ll(d)(ii),for prolriso(w.r.e.f.1-1-2005). Subs. by Act 15 of 2M5, sec. 12(a), for "under sub-section (1) or sub-section (2) or sub-section (3) of section 118, the application and specification and other documents relating thereto shall be referred by the Controller" (w.r.e.f.1-1-2005).

EVOLUTION OF PATENT LAWS

(a) whether the application and the specification and other documents relating thereto are in accordance with the requirements of this Act and of any rules made tnereunder; (b) whether there is any lawful ground of objection to the grant of the patent under this Act in pursuance of the application; (c) the result of investigations made under Section 13; and (d) any other matter which may be prescribed; (2) The examiner to whom the application and the specification and other documents relating thereto are referred under sub-section (1)shall ordinarily make the report to the Controller within '[such period as may be prescribed.] 13. Search for anticipation by previous publication and by prior claim (1) The examiner to whom an application for a patent is referred uilder Section 12 shall make investigation for the purpose of ascertaining whether the invention so far as claimed in any claim of the complete specification(a) has been anticipated by publication before the date of filing of the applicant's complete specification in any specification filed in pursuance of an application for a patent made in India and dated on or after the 1st day of January, 1912; (b) is claimed in any claim of any other complete specification published on or after the date of filing of the applicant's complete specification, being a specification filed in pursuance of an application for a patent made in India and dated before or claiming the priority date earlier than that date. (2) Theexaminer shall, in addition, makesucl~in\restigationfor the purpose of ascertaining whether the invention, so far as claimed in any claim of the complete specification, has been anticipated by publication in India or elsewhere in any document other than those mentioned in sub-section (1) before the date of filing of the applicant's complete specification. (3) Where a complete specification is amended under the provisions of this Act before 2[the grant of patent], the amended specification shall be examir~ed and investigated in like manner as the original specification. (4) The examination and investigations required under Section 12 anci this section shall not be deemed in any way to warrant the validity of any patent, and no liability shall be incurred by the Central Government or any officer thereof by reason of, or in connection with, any such examination or investigation or any report or other proceedings consequent thereon.

i

I

I

__.-___-

1

2

_

.

-.

_

_

-

Subs. by Act 1Sof2(W)5,sr~t.12(b), for",^ pcriod of eighteen months from Iheclatc of s~tchrcferc~~cc"(w.rc f. 1-1-2005). Subs. by Act 15 o f 2005, s e c 13, for " ~ thas hecn ;lcccptcd" ( w r e f .1-1-2005).

'[14.~onsiderationof the report of examiner by Controller Where, in respect of an application for a patent, the report of the examiner received by the Controller is adverse to the applicant or requires any amendment of the application, the specification or other documents to ensure compliance with the provisions of this Act or of the rules made thereunder, the Controller, before proceeding to dispose of the application in accordance with the provisions hereinafter appearing, shall communicate as expeditiously as possible the gist of the objections to the applicant and shall, if so required by the applicant within the prescribed period, give him an opportunity of being heard.] '15. Power of Controller to refuse or require amended applications, etc., in certain case Where the Controller is satisfied that the application or any specification or any other document filed in pursuance thereof does not comply with the requirements of this Act or of any rules made thereunder, the Controller may refuse the application or may require the application, specification or the other documents, as the case may be, to be amended to his satisfaction before he proceeds with the application and refuse the application on failure to do so.] 16. Power of Controller to make orders respecting division of application (1) A person who has made an application for a patent under this Act may, at any time 3[before the grant of the patent], if he so desires, or with a view to remedy the objection raised by the Controller on the ground that the claims of the complete specification relate to more than one invention, file a further application in respect of an invention disclosed in the provisional or complete specification already filed in respect of the first mentioned application. (2) The further application under sub-section (1) shall be accompanied by a complete specification, but such complete specification shall not include any matter not in substance disclosed in the complete specification filed in pursuance of the first mentioned application. ( 3 )The Controller may require such amendment of the complete specification filed in pursuance of either the original or the further application as may be necessary to ensure that neither of the said complete specifications includes a claim for any matter claimed in the other. 4[~xplnnatio~z - For the purposes of this Act, the further application and the complete specification accompanying it shall be deemed to have been filed on the date on which the first mentioned application had been filed, and the further application shall be proceeded with as a substantive application and be examined when the request for examination is filed within the prescribed period.] 1 2

3 4

Subs. by Act 15 of 2005,sec. 14, forsrction 14 (w.r.e.f.1-1-2005). Subs, by Act 15 of 2005, sec. 14, for section 15 (w.r.e.f.1-1-2005). Subs. by Act 15 of 2005. scc. 15(a), for "bcfore the acceptance of the cr,mpletc specification" (w.r.e.f. 1-1-2005). Subs. by Act 15 of 2005, scc. 15(b), for Exp1.1nation (w.r.e.f.1-1-2005).

442

_____-- EVOLUTION OF PATENT LAWS

--

(a) whether the application and the specification and other documents relating thereto are in accordance with the requirements of this Act and of any rules made thereunder; (b) whether there is any lawful ground of objection to the grant of the patent under this Act in pursuance of the application; (c) the result of investigations made under Section 13; and (d) any other matter which may be prescribed; (2) The examiner to whom the application and the specification and other documents relating thereto are referred under sub-section (1) shall ordinarily make the repcrt to the Controller within '[such period as may be prescribed.] 13. Search for anticipation by previous publication and by prior claim (1) The examiner to whom an application for a patent is referred under Section 12 shall make investigation for the purpose of ascertaining whether the invention so far as claimed in any claim of the complete specification(a) has been anticipated by publication before the date of filing of the applicant's complete specification in any specification filed in pursuance of an application for a patent made in Jndia and dated on or after the 1st day of January, 1912; (b) is claimed in any claim of any other complete specification published on or after the date of filing of the applicant's complete specification, being a specification filed in pursuance of anapplication for a patent made in India and dated before or claiming the priority date earlier than that date. (2) The examiner shall, inaddition,make such investigation for the purpose of ascertaining whether the invention, so far as claimed in any claim of the complete specification, has been anticipated by publication in India or elsewhere in any document other than those mentioned in sub-section (1) before the date of filing of the applicant's complete specification. (3) Where a complete specification is amended under the provisions of this Act before *[the grant of patent], the amended specification shall be examined and investigated in like manner as the original specification. (4) The examination and investigations required under Section 12 and this section shall not be deemed in any way to warrant the validity of any patent, and no liability shall be incurred by the Central Government or any officer thereof by reason of, or in connection with, any such examination or investigation or any report or other proceedings consequent thereon.

II

--

1

2

Subs,by Act 1501 2(X)!i,st~c.12(b),ic\r"a period ofeightren monthsirom thedattioi such refcrencr"(w.r.~.i. 1-1-2005) Subs by Act 15 of 2005, src 13, for "it has hecn ;~cccptcd"(\%..r.c.f.1-I-2Oo5).

-

443

'[14.~onsiderationof the report of examiner by Controller Where, in respect of an application for a patent, the report of the examiner received by the Controller is adverse to the applicant or requires any amendment of the application, the specification or other documents to ensure compliance with the provisions of this Act or of the rules made thereunder, the Controller, before proceeding to dispose of the application in accordance with the provisions hereinafter appearing, shall communicate as expeditiously as possible the gist of the objections to the applicant and shall, if so required by the applicant within the prescribed period, give him anopportunity of being heard.] *15. Power of Controller to refuse or require amended applications, etc., in certain case Where the Controller is satisfied that the application or any specification or any other document filed in pursuance thereof does not comply with the requirements of this Act or of any rules made thereunder, the Controller may refuse the application or may require the application, specification or the other documents, as the case may be, to be amended to his satisfaction before he proceeds with the application and refuse the application on failure to do so.] 16. Power of Controller to make orders respecting division of application (1) A person who has made an application for a patent under this Act may, at any time 3[beforethe grant of the patent], if he so desires, or with a view to remedy the objection raised by the Controller on the ground that the claims of the complete specification relate to more than one invention, file a further application in respect of an invention disclosed in the provisional or complete specification already filed in respect of the first mentioned application. (2) The further application under sub-section (1) shall be accompanied by a complete specification, but such complete specification shall not include any matter not in substance disclosed in the complete specification filed in pursuance of the first mentioned application. (3) The Controller may require such amendment of the complete specification filed in pursuance of either the original or the further application as may be necessary to ensure that neither of the said complete specifications includes a claim for any matter claimed in the other. 4f~.rplnnntiorr - For the purposes of this Act, the further application and the complete specification accompanying it shall be deemed to have been filed on the date on which the first mentioned application had been filed, and the further application shall be proceeded with as a substantive application and be examined when the request for examination is filed within the prescribed period .] 2

1

ANNEXURE IX

3 4

Subs. by Act IS of 2005, sec. 14, for section 13 (w.r.e.f. 1-1-2005). Subs. by Act 15 of 2005, sec. 14, for section 15 (w.r.e.f. 1-1-2M15). Subs. by Act 15 of 2005, sec. 15(a), for "before the acceptance of the cornplctz specification" (w.r.r.f. 1-1-2005). Subs by Act 15 of 2005, scc. lS(b), for Explanation (w.r.e.f. 1-1-2005).

EVOLUTION OF PATENT LAWS

17. Power of Controller to make orders respecting dating of application (1)Subject to the provisions of Section 9, at any time after the filing of an application and '[before the grant of the patent] under this Act, the Controller may, at the request of the applicant made in the prescribed manner, direct that the application shall be post-dated to such date as may be specified in the request, and proceed with the application accordingly: Provided that no application shall be post-dated under this sub-section to a date later than six months from the date on which it was actually made or would, but for the provisions of this sub-section, be deemed to have been made. (2)Where an application or specification (including drawings) or any other document is required to be amended under Section 15, the application or specification or other document shall, if the Controller so directs, be deemed to have been made on the date on which the requirement is complied with or where the application or specification or other document is returned to the applicant on the date on which it is re-filed after complying with the requirement. 18. Powers of Controller in cases of anticipation (1) Where it appears to the Controller that the invention so far as claimed in any claim of the complete specification has been anticipated in the manner referred to in clause (a) of sub-section (1)or sub-section (2)of Section 13, he may refuse 2[the application] unless the applicant(a) shows to the satisfaction of the Controller that the priority date of the claim of his complete specification is not later than the date on which the relevant document was published; or (b) amends his complete specification to the satisfaction of the Controller. (2) If it appears to the Controller that the invention is claimed in a claim of any other complete specification referred to in clause (b) of sub-section (1)of Section 13, he may, subject to the provisions hereinafter contained, direct that a reference to that other specification shall be inserted by way of notice to the public in the applicant's complete specification unless within such time as may be prescribed-

(a) the applicant shows to the satisfaction of the Controller that the priority date of this claim is not later than the priority date of the claim of the said other specification; or (b) the complete specification is amended to the satisfaction of the Controller. (3) If it appears to the Controller, as a result of an investigation under Section 13 or otherwise,-

ANNEXURE IX

445

(a) that the invention so far as claimed in any claim of the applicant's complete specification has been claimed in any other complete specification referred to in clause (a) of sub-section (1)of Section 13; and (b) that such other complete specification was published on or after the priority date of the applicant's claim, then, unless it is shown to the satisfaction of the Controller that the priority date of the applicant's claim is not later than the priority date of the claim of that specification, the provisions of sub-section (2) shall apply thereto in the same manner as they apply to a specification published on or after the date of filing of the applicant's complete specification. 1

[xxxl

19. Powers of Controller in case of potential infringement e r Act], it (1) If, in consequence of the investigations required 2 [ ~ ~ n dthis appears to the Controller that an invention in respect of which an application for a patent has been made cannot be performed without substantial risk of infringement of a claim of any other patent, he may direct that a reference to that other patent shall be inserted in the applicant's complete specification by way of notice to the public, unless within such time as may be prescribed(a) the applicant shows to the satisfaction of the Controller that there are reasonable grounds for contesting the validity of the said claim of the other patent; or (b) the complete specification is amended to the satisfaction of the Controller. (2) Where, after a reference to another patent has been inserted in a complete specification in pursuance of a direction under sub-section (1)(a) that other patent is revoked or otherwise ceases to be in force; or (b) the specification of that other patent is amended by the deletion of the relevant claim; or (c) it is found, in proceedings before the court or the Controller, that the relevant claim of that other patent is invalid or is not infringed by any working of the applicant's invention, the Controller may, on the application of the applicant, delete the reference to that other patent. 20. Powers of Controller to make orders regarding substitution of applicants, etc. (1) If the Controller is satisfied, on a claim made in the prescribed manner at any time before a patent has been granted, that by virtue of any assignment .p p

1 2

Subs. by Act 15 of 2005, sec. 16 f o r "before thc acceptance o f the complctc spec~ficntion"(hr.r.e.f.1-1-2005)Subs. by Act 15 of 2(X)5,scc. 17(a), for "to accept the complete spec~fication"(w.r.e.f. 1-1-2005).

1 2

Sub-section (4) omitted by Act 15 of 2005, sec. 17(b) (w.r.e.f. 1-1-2005). Subs. by Act 15 of 2005, sec. 18, for "by the foregoing provisions of this Act or of proceedings under section 25" (w.r.c.f. 1-1-2005).

EVOLUTION OF -

PATENT LAWS

or agreement in writing made by the applicant or one of the applicants for the patent or by operation of law, the claimant would, if the patent were then granted, be entitled thereto or to the interest of the applicant therein, or to an ~ui~divided share of the patent or of that interest, the Controller may, subject to the provisions of this section, direct that the application shall proceed in the name of the claimant or in the names of the claimants and the applicant or the other joint applicant or applicants, accordingly as the case may require. (2) No such direction as aforesaid shall be given by virtue of any assignment or agreement made by one of two ox more joint applicants for a patent except with the consent of the other joint applicant or applicants. (3) No such direction as aforesaid shall be given by virtue of any assignment or agreement for the assignment of the benefit of an invention unless(a) the invention is identified therein by reference to the number of the application for the patent; or (b) there is produced to the Controller an acknowledgement by the person by whom the assignment or agreement was made that the assignment or agreement relates to the invention in respect of which that application is made; or (c) the rights of theclaimant in respect of the invention have been finally of~a court; or established by the d e c i s i o ~ (d) the Controller gives directions for enabling the application to proceed or for regulating the manner in which it should be proceeded with under sub-section (5). (4) Where one of two or more joint applicants for a patent dies at any time , Controller may, upon a request in that before the patent has been g r a n t ~ dthe behalf made by the survivor or survivors, and with the consent of the legal representative of the deceased, direct that the application shall proceed in th.e name of the survivor or survivors alone. (5)If any dispute arises between joint applicants for a patent whether or in what manner the application should be proceeded with, the Controller may, upon application made to him in the prescribed manner by any of the parties, and after giving to all parties concerned an opportunity to be heard, give such directions as he thinks fit for enabling the application to proceed in the name of one or more of the parties alone or for regulating the manner ir: which it should be proceeded with, or for both those purposes, as the case may require. 21. Time for putting application in order for grant (1) An application for a patent shall be deemed to have been abandoned unless, within such period as may bc prescribed, the applicant has complied with all the requirements imposed on him by or under this Act, whether in connectiorl with the complete specification or otherwise in relation to the application from the date on which the first statement of objections to the application or complete specification or other documents related thereto is forwarded to the applicant by the Controller.

ANNEXURE IX

_-

447

Explanation -Where the application for a patent or any specification or, in the case of a convention application or an application filed under the Patent Cooperation Treaty designating India any document filed as part of the application has been returned to the applicant by the Controller in the course of the proceedings, the applicant shall not be deemed to have complied with such requirements unless and until he has re-filed it or the applicant proves to the satisfaction of the Controller that for the reasons beyond his control such document could not be re-filed. (2) If at the expiration of the period as prescribed under sub-section (I),(a) an appeal to the High Court is pending in respect of the application for the patent for the main invention; or (b) in the case of an application for a patent of addition, an appeal to the High Court is pending in respect of either that application or the application for the main invention, the time within which the requirements of the Controller shall be complied with shall, on an application made by the applicant before the expiration of the period as prescribed under sub-section (I),be extended until such date as the High Court may determine. (3) If the time within which the appeal mentioned in sub-section (2) may be instituted has not expired, the Controller may extend the period as prescribed under sub-section (1)to such further period as he may determine: Provided that if an appeal has been filed during the said further period, and the High Court has granted any extension of time for complying with the requirements of the Controller, then the requirements may be complied with within the time granted by the Court. CHAPTER V '\OPPOSITION PROCEEDINGS TO GRANT OF PATENTS] 2[25.0pposition to the patent (1)Where an application for a patent has been published but a patent has not been granted, any person may, in writing, represent by way of opposition to the Controller against the grant of patent on the ground(a) that the applicant for the patent or the person under or through whom he claims, wrongfully obtained the invention or any part thereof from him or from a person under or through whom he claims; (b) that the invention so far as claimed in any claim of the complete specification has been published before the priority date of the claim-

1 2

Subs. by Act 15of 2005, sec. 22, for the headrng"OPPOSIT1ONTOGRANTOFI'ATENT" (w.r.e.f.1-1-2ry)S). Subs. by ~ c 15 t of 2005, sec. 23, for section 25 (w.r.e.f.1-1-2005).

EVOLUTION OF PATENT LAWS .-

or agreement in writing made by the applicant or one of the applicants for the patent or by operation of law, the claimant would, if the patent were then granted, be entitled thereto or to the interest of the applicant therein, or to an undivided share of the patent or of that interest, the Controller may, subject to the provisions of this section, direct that the application shall proceed in the name of the claimant or in the names of the claimants and the applicant or the other joint applicant or applicants, accordingly as the case may require. (2)No such direction as aforesaid shall be given by virtue of any assignment or agreement made by one of two or more joint applicants for a patent except with the consent of the other joint applicant or applicants. (3)No such direction as aforesaid shall be given by virtue of any assignment or agreement for the assignment of the benefit of an invention unless(a) the invention is identified therein by reference to the number of the application for the patent; or (b) there is produced to the Controller an acknowledgement by the person by whom the assignment or agreement was made that the assignment or agreement relates to the invention in respect of which that application is made; or (c) the rights of the claimant in respect of the invention have been finally established by the decision of a court; or (d) the Controller gives directions for enabling the application to proceed or for regulating the manner in which it should be proceeded with under sub-section (5). (4) Where one of two or more joint applicants for a patent dies at any time , Controller may, upon a request in that before the patent has been g r a n t ~ dthe behalf made by the survivor or survivors, and with the consent of the legal representative of the deceased, direct that the application shall proceed in th.e name of the survivor or survivors alone. (5)If any dispute arises between joint applicants for a patent whether or in what manner the application should be proceeded with, the Controller may, upon application made to him in the prescribed manner by any of the parties, and after giving to all parties concerned an opportunity to be heard, give such directions-as he thinks fit for enabling the application to proceed in the name of one or more of the parties alone or for regulating the manner in which it should be proceeded with, or for both those pLirposes, as the case may require. 21. Time for putting application in order for grant (1) An application for a patent shall be deemed to have been abandoned unless, within such period as may bc prescribed, the applicant has complied with all the requirements imposed on him by or under this Act, whether in connection with the complete specifjcation or otherwise in relation to the application from the date on which the first statement of objections to the application or complete specification or other documents related thereto is forwarded to the applicant by the Controller.

-

- -IX ---ANNEXURE -

-

447

Explanation- Where the application for a patent or any specification or, in the case of a convention application or an application filed under the Patent Cooperation Treaty designating India any document filed as part of the application has been returned to the applicant by the Controller in the course of the proceedings, the applicant shall not be deemed to have complied with such requirements unless and until he has re-flled it or the applicant proves to the satisfaction of the Controller that for the reasons beyond his control such document could not be re-filed. (2) If at the expiration of the period as prescribed under sub-section (I),(a) an appeal to the High Court is pending in respect of the application for the patent for the main invention; or (b) in the case of an application for a patent of addition, an appeal to the High Court is pending in respect of either that application or the application for the main invention, the time within which the requirements of the Col~trollershall be complied with shall, on an application made by the applicant before the expiration of the period as prescribed under sub-section (I),be extended until such date as the High Court may determine. (3) If the time within which the appeal mentioned in sub-section (2) may be instituted has not expired, the Controller may extend the period as prescribed under sub-section (1)to such further period as he may determine: Provided that if an appeal has been filed during the said further period, and the High Court has granted any extension of time for complying with the requirements of the Controller, then the requirements may be complied with within the time granted by the Court.

CHAPTER V

OPPOSITION PROCEEDINGS TO GRANT O F PATENTS] 2[25.~ppositionto the patent (1) Where an application for a patent has been published but a patent has not been granted, any person may, in writing, represent by way of opposition to the Controller against the grant of patent on the ground(a) that the applicant for the patent or the person under or through whom he claims, wrongfully obtained the invention or any part thereof from him or from a person under or through whom he claims; (b) that the invention so far as claimed in any claim of the complete specification has been published before the priority date of the claim1

2

Subs. by Act 15of 2005, sec. 22, for the heading "OPPOSITIONTOGRANTOF PATENT" (w.r.e.l. 1-1-2W5). Subs. by Act 15 of 2005, sec. 23, for section 25 (w.r.e.f. 1-1-2005).

EVOLUTION OF PATENT LAWS p p

(i) in any specification filed in pursuance of an application for a patent made in India on or after the 1st day of January, 1912; or (ii) in India or elsewhere, in any other documel~t: Provided that the ground specified in sub-clause (ii) shall not be available where such publication does not constitute an anticipation of the invention by virtue of sub-section (2) or sub-section (3) of Section 29; (c) that the invention so far as claimed in any claim of the complete specification is claimed in a claim of a complete specification published on or after priority date of the applicant's claim and filed in pursuance of an application for a patent in India, being a claim of which the priority date is earlier than that of the applicant's claim; (d) that the invention so far as claimed in any claim of the complete specification was publicly known or publicly used in India before the priority date of that claim. Explamtion- For the purposes of this clause, an invention relating to a process for which a patent is claimed shall be deemed to have been publicly known or publicly used in India before the priority date of the claim if a product made by that process had already been imported into India before that date except where such importation has been for the purpose of reasonable trial or experiment only; (e) that the invention so far as claimed in any claim of the complete specification is obvious and clearly does not involve any inventive step, having regard to the matter published as mentioned in clause (b) or having regard to what was used in India before the priority date of the applicant's claim; (f) that the subject of any claim of the complete specification is not an invention within the meaning of this Act, or is not patentable under this Act; (g) that the complete specification does not sufficiently and clearly describe the invention or the method by which it is to be performed; (h) that the applicant has failed to disclose to the Controller the information required by Section 8 or has furnished the information which in any material particular was false to his knowledge; (i) that in the case of a convention application, the application was not made within twelve months from the date of the first application for protection for the invention made in a convention country by the applicant or a person from whom he derives title; (j) that the complete specification does not disclose or wrongly mentions the source or geographical origin of biological material used for the invention;

At'l_NE5uRE_I_xXp-p

449

(k) that the invention so far as claimed in any claim of the complete specification is anticipated having regard to the knowledge, oral or otherwise, available within any local or indigenous community in India or elsewhere, but on no other ground, and the Controller shall, if requested by such person for being heard, hear him and dispose of such representation in such manner and within such period as may be prescribed. (2) At any time after the grant of patent but before the expiry of a period of one year from the date of publication of grant of a patent, any person interested may give notice of opposition to the Controller in the prescribed manner on any of the following grounds namely(a) that the patentee or the person under or through whom he claims, wrongfully obtained the invention or any part thereof from him or from a person under or through whom he claims; (b) that the invention so far as claimed in any claim of the complete specification has been published before the priority date of the claim(i) in any specification filed in pursuance of an application for a patent made in 1ndia on or after the 1st day of January, 1912; or (ii) in India or elsewhere, in any other document: Provided that the ground specified in sub-clause (ii) shall not be available where such publication does not constitute an anticipation of the invention by virtue of sub-section (2) or sub-section (3) of Section 29; (c) that the invention so far as claimed in any claim of the-complete specification is claimed in a claim of a complete specification published on or after the priority date of the claim of the patentee and filed in pursuance of an application for a patent in India, being a claim of which the priority date is earlier than that of the claim of the patentee; (d) that the invention so far as claimed in any claim of the complete specification was publicly known or publicly used in India before the priority date of that claim. Explanation- For the purposes of this clause, an invention relating to a process for which a patent is claimed shall be deemed to have been publicly known or publicly used in India before the priority date of the claim if a product made by that process had already been imported into India before that date except where such importation has been for the purpose of reasonable trial or experiment only; (e) that the invention so far as claimed in any claim of the complete specification is obvious and clearly does not involve any inventive step, having regard to the matter published as mentioned in clause

4 5 0

_

EVOLUTION OF PATENT LAWS ___----____------_____

(b) or having regard to what was used in India before the priority date of the applicant's claim; (f) that the subject of any claim of the complete specification is not an invention within the meaning of this Act, or is not patentable under this Act; (g) that the complete specification does not sufficiei~tlyand clearly describe the invention or the method by which it is to be performed; (h) that the patentee has failed to disclose to the Controller the information required by Section 8 or has furnished the information which in any material particular was false to his knowledge; (i) that in the case of a patent granted on a convention application, the application for patent was not made within twelve months from the date of the first application for protection for the invention made in a convention country or in India by the patentee or a person from whom he derives title; (j) that the complete specification does not disclose or wrongly mentions the source and geographical origin of biological material used for the invention; (k) that the invention so far as claimed in any claim of the complete specification was anticipated having regard to the knowledge, oral or otherwise, available within any local or indigenous community in India or elsewhere; but on no other ground. (3) (a) Where any such notice of opposition is duly given under sub-section (2),the Controller shall notify the patentee. (b)On receipt of such notice of opposition, the Controller shall, by order in writing, constitute a Board to be known as the Opposition Board consisting of such officersas he may determine and refer such notice of opposition along with the documents to that Board for examination and submission of its recommendations to the Controller. (c) Every Opposition Board constituted under clause (b) shall conduct the examination in accordance with such procedure as may be prescribed. (4) On receipt of the recommendation of the Opposition Board and after giving the patentee and the opponent an opportunity of being heard, the Controller shall order either to maintain or to amend or to revoke the patent. (5) While passing an order under sub-section (4) in respect of the ground mentioned in clause (d) or clause (e) of sub-section (2), the Controller shall not take into account any personal document or secret trial or secret use. (6) In case the Controller issues an order under sub-section (4) that the patent shall be maintained subject to amendment of the specification or any other document, the patent shall stand amended accordingly.

ANNEXURE p IX , _ _ - p - - ~

'~26.1t-tcases of "obtaining" Controller may treat the patent as the patent of opponent (1)Where in any opposition proceeding under this Act the Controller finds that(a) the invention, so far as claimed in any claim of the complete specification,was obtained from the opponent in the manner set out in clause (a) of sub-section (2) of Section 25 and revokes the patent on that ground, he may, on request by such opponent made in the prescribed manner, direct that the patent shall stand amended in the name of the opponent; (b) a part of an invention described in the complete specification was SO obtained from the opponent, he may pass an order requiring that the specification be amended by the exclusion of that part of the invention. (2) Where an opponent has, before the date of the order of the Controller requiring the amendment of a complete specification referred to in clause (b) of sub-section (I),filed an application for a patent for an invention which included the whole or a part of the invention held to have been obtained from him and such application is pending, the Controller may treat such application and specification insofar as they relate to the invention held to have been obtained from him, as having been filed, for the purposes of this Act relating to the priority dates of claims of the complete specification, on the date on which the corresponding document was or was deemed to have been filed by the patentee in the earlier application but for all other purposes the application of the opponent shall be proceeded with as an application for a patent under this Act.] 28. Mention of inventor as such in patent (1)If the Controller is satisfied, upon a request or claim made in accordance with the provisions of this section, (a) that the person in respect of or by whom the request or claim is made is the inventor of an invention in respect of which application for a patent has been made, or of a substantial part of that invention; and (b) that the application for the patent is a direct consequences of his being the inventor, the Controller shall, subject to the provisions of this section, cause him to be mentioned as inventor in any patent granted in pursuance of the application in the complete specification and in the register of patents: Provided that the mention of any person as inventor under this section shall not confer or derogate from any rights under the patent. (2)A request that any person shall be mentioned as aforesaid may be made in the prescribed manner by the applicant for the patent or (where the person 1

Subs. by Act 15 of 2005, sec. 23,for section 26 (w.r.e.f.1-1-2005).

452

-

E V O L U T E F PATENT LAWS

alleged to be the inventor is not the applicant or one of the applicants) by the applicant and that person. (3) If any person (other than a person in respect of whom a request in relation to the application in question has been made under sub-section (2)) desires to be mentioned as aforesaid, he may make a claim in the prescribed manner in that behalf. ' ~ ( 4 )A request or claim under the foregoing provisions of this section shall be made before the grant of patent.] 2 [xxxl ( 6 )3 [ ~ h e r ea]claim is made under sub-section (3),the Controller shall give notice of the claim to every applicant for the patent (not being the claimant) and to any other person whom the Controller may consider to be interested; aitd before deciding upon any request or claim made under sub-section (2), or sub-section (3), the Controller shall, if required, hear the person in respect of or by whom the request or claim is made, and, in the case of a claim under sub-section (3), any person to whom notice of the claim has been given as aforesaid. (7) Where any person has been mentioned as inventor in pursuance of this section, any other person who alleges that he ought not to have been so mentioned may at any time apply to the Controller for a certificate to that effect, and the Controller may, after hearing, if required, any person whom he may consider to be interested, issue such a certificate,and if he does so, he shall rectify the specification and the register accordingly. CHAPTER VI ANTICIPATION 29. Anticipation by previous publication (1)An invention claimed in a complete specification shall not be deemed to have been anticipated by reason only that the invention was published in a specification filed in pursuance of an application for a patent made in India and dated before the 1st day of January, 1912. (2) Subject as hereinafter provided, an invention claimed in a complete specification shall not be deemed to have been anticipated by reason only that the invention was published before the priority date of the relevant claim of the specification, if the patentee or the applicant for the patent proves(a) that the matter published was obtained from him, or (where he is not himself the true and first inventor) from any person from whom he derives title, and was published without his consent or the consent of any such person; and

1

2 3

Subs. by Act 15 of 2005, sec. 25(a), for sub-section (4) (w.r.e.f.1-1-2005). Sub-section (5) omitted by Act 15 of 2005, sec. 25(b), (w.r.e.f.1-1-2005). Subs. by Act 150f 2005,sec 25(c), for"Subject to theprovisionsof sub-section (5), where"(w.r.e.f.1-1-2005).

-

ANNEXURE IX

453

(b) where the patentee or the applicant for the patent or any person from whom he derives title learned of the publication before the date of the application for the patent, or, in the case of a convention application, before the date of the application for protection in a convention country, that the application or the application in the convention country, as the case may be, was made as soon as reasonably practicable thereafter: Provided that this sub-section shall not apply if the invention was before the priority date of the claim commercially worked in India, otherwise than for the purpose of reasonable trial, either by the patentee or the applicant for the patent or any person from whom he derives title or by any other person with the consent of the patentee or the applicant for the patent or any person from whom he derives title. (3) Where a complete specification is filed in pursuance of an application for a patent made by a person being the true and first inventor or deriving title from him, an invention claimed in that specification shall not be deemed to have been anticipated by reason only of any other application for a patent in respect of the same invention made in contravention of the rights of that person, or by reason only that after the date of filing of that other application the invention was used or published, without the consent of that person, by the applicant in respect of that other application, or by any other person in consequence of any disclosure of any invention by that applicant. 30. Anticipation by previous communication to Government An invention claimed in a complete specification shall not be deemed to have been anticipated by reason only of the communication of the invention to the Government or to any person authorized by the Government to investigate the invention or its merits, or of anything done, in consequence of such a communication, for the purpose of the investigation. 31. Anticipation by public display, etc. An invention claimed in a complete specification shall not be deemed to have been anticipated by reason only of(a) the display of the invention with the consent of the true and first inventor or a person deriving title from him at an industrial or other exhibition to which the provisions of this section have been extended by the Central Government by notification in the Official Gazette, or the use thereof with his consent for the purpose of such an exhibition in the place where it is held; or (b) the publication of any description of the invention in consequence of the display or use of the invention at any such exhibition as aforesaid; or (c) that use of the invention, after it has been displayed or used at any such exhibition as aforesaid and during the period of the exhibition, by any person without the consent of the true and first inventor or a

!'54

EVOLUTION OF PATENT -LAWS

-

(d) the descriptioi~of the invention in a paper read by the true and first inventor before a learned society or published with his consent in the transactions of such a society. if the application for the a tent is made by the true and first inventor or a person deriving title from him [not later than twelve months] after the opening of the exhibition or the reading or publication of the paper, as the case may be. 32. Anticipation by public working An invention claimed in a complete specification shall not be deemed to have been anticipated by reason only that at any time within one year before the priority date of the relevant claim of the specification, the invention was publicly worked in India(a) by the patentee or applicant for the patent or any person from whom he derives title; or (b) by any other person with the consent of the patentee or applicant for the patent or any person for whom he derives title, if the working was effected for the purpose of reasonable trial only and if it was reasonably necessary, having regard to the nature of the invention, that the working for .that purpose should be effected in public. 33. Anticipation by use and publication after provisional specification (1)Where a complete specification is filed or proceeded with in pursuance of an application which was accompanied by a provisional specification or where a complete specification filed along with an application is treated by virtue of a direction under sub-section ( 3 )of Section 9 as a provisional specification, then, notwithstanding anything contained in this Act, the Controller shall not refuse to grant the patent, and the patent shall not be revoked or invalidated, by reason only that any matter described in the provisional specification or in the specification treated as aforesaid as a provisional specification was used in India or published in India or elsewhere at any time after the date of the filing of that specification. (2) Where a complete specification is filed in pursuance of a convention application, then, notwithstanding anything contained in this Act, the Controller shall not refuse to grant the patent, and the patent shall not be revoked or invalidated, by reason only that any matter disclosed in any application for protection in a convention country upon which the convention application is founded was used in India or published in India or elsewhere at any time after the date of that application for protection.

P

' 1

34. No anticipation if circumstances are only as described in Sections 29,30, 31 and 32 Notwithstanding anything contained in this Act, the Controller shall not refuse '[xxx] or togrant a patent,and a patent shall not be revoked or invalidated by reason only of any circumstances which, by virtue of Section 29 or Section 30 or Section 31 or Section 32, d o not constitute an anticipation of the invention claimed in the specification. CHAPTER Vlll '[GRANT OF PATENTS AND RIGHTS CONFERRED THEREBY] 3[43.~rantof Patents (1)Where an application for a patent has been found to be in order for grant of the patent and either(a) the application has not been refused by the Controller by virtue of any power vested in him by this Act; or (b) the application has not been found to be in contravention of any of the provisions of this Act, the patent shall be granted as expeditiously as possible to the applicant or, in the case of a joint application, to the applicants jointly, with the seal of the patent office and the date on which the patent is granted shall beentered in the register. (2) On the grant of patent, the Controller shall publish the fact that the patent has been granted and thereupon the application, specification and other documents related thereto shall be open for public inspection.] 44. Amendment of patent granted to deceased applicant Where, at any time after a patent has been 4[granted]in pursuance of an application under this Act, the Controller is satisfied that the person to whom the patent was 4[granted]had died, or, in the case of a body corporate, had ceased to exist, before the patent was granted, the Controiler may amend the patent by substituting for the name of that person the name of the person to whom the patent ought to have been granted, and the patent shall have effect, and shall be deemed always to have had effect, accordingly. 45. Date of patent (1)Subject to the other provisions contained in this Act, every patent shall be dated as of the date on which the application for patent was filed. (2) The date of every patent shall be entered in the register.

1

2

1

Subs. by Acl 15 ot 2005, sec. 26, tor "not later than six months" (w.r.c.f.1-1-2005).

3 4

Words "toacceptcompletespeciftcation for a patentor"omitted by Act 15of 2005,sec. 27(w.r.e.f. 1-1-2005). Subs, by Act 15 of 2005, src. 32. for t h e heading "GRANT A N D SEALING OF I'ATENTS AND RIGHTS CONFERIIED THEREBY" (w,r.c.f. 1-1-2005). Sub.;. by Act 15oi 2005, scc. 33, for section43 (w.r.e.f.1-1-2005). Subs. by Act 15 of 2005, sec. 34, for "sealed" (w.r.e.f. 1-1-2005).

ANNEXURE IX -

EVOLUTION OF PATENT LAWS ~

(3) Notwithstanding anything contained in this section, no suit or other proceeding shall be commenced or prosecuted in respect of an infringement committed before '[the date of publication of the application.] 46. Form, extent and effect of patent (1) Every patent shall be in the prescribed form and shall have effect throughout India. (2) A patent shall be granted for one invention only: Provided that it shall not be competent for any person in a suit or other proceeding to take any objection to a patent on the ground that it has been granted for more than one invention. 47. Grant of patents to be subject to certain conditions The grant of a patent under this Act shall be subject to the conditions that(1) any machine, apparatus or other article in respect of which the patent is granted or any article made by using a process in respect of which the patent is granted, may be imported or made by or on behalf of the Government for the purpose merely of its own use; (2) any process in respect of which the patent is granted may be used by or on behalf of the Government for the purpose merely of its own use; (3) any machine, apparatus or other article in respect of which the patent is granted or any article made by the use of the process in respect of which the patent is granted, may be made or used, and any process in respect of which the patent is granted may be used, by any person, for the purpose merely of experiment or research including the imparting of instructions to . pupils; and (4) in the case of a patent in respect of any medicine or drug, the medicine or drug may be imported by the Government for the purpose merely of its own use or for distribution in any dispensary, hospital or other medical institution maintained by or on behalf of the Government or any other dispensary, hospital or other medical institution which the Central Government may, having regard to the public service that such dispensary, hospital or medical institution renders, specify in this behalf by notification in the Official Gazette. 48. Rights of patentees Subject to the other provisions contained in this Act and the conditions specified in Section 47, a patent granted under this Act shall confer upon the patentee(a) where the subject-matter of the patent is a product, the exclusive right to prevent third parties, who d o not have his consent, from the -

1

Subs. by Act 15 of 2005, scc 35, for "the date of advertisement of the acceptance of the complete specification" (w.r.e.f. 1-1-2005).

act of making, using, offering for sale, selling or importing for those purposes that product in India; (b) where the subject-matter of the patent is aprocess, theexclusive right to prevent third parties, who do not have his consent, from the act of using that process, and from the act of using, offering for sale, selling or importing for those purposes the product obtained directly by that process in India; 1 [xxxl 49. Patent rights not infringed when used on foreign vessels etc., temporarily or accidentally in India (1) Where a vessel or aircraft registered in a foreign country or a land vehicle owned by a person ordinarily resident in such country comes into India (including the territorial wastes thereof) temporarily or accidentally only, the rights conferred by a patent for an invention shall not be deemed to be infringed by the use of the invention(a) in the body of the vessel or in the machinery, tackle, apparatus or other accessories thereof, so far as the invention is used on board the vessel and for its actual needs only; or (b) in the construction or working of the aircraft or land vehicle or of the accessories thereof, as the case may be. (2)This section shall not extend to vessels, aircrafts or land vehicles owned by persons ordinarily resident in a foreign country the laws of which do not confer corresponding rights with respect to the use of inventions in vessels, aircraft or land vehicles owned by persons ordinarily resident in India while in the ports or within the territorial waters of that foreign country or otherwise within the jurisdiction of its courts. 50. Rights of co-owners of patents (1)Where a patent is granted to two or more persons, each of those persons shall, unless an agreement to the contrary is in force, be entitled to an equal undivided share in the patent. (2) Subject to the provisions contained in this section and in Section 51, where two or more persons are registered as grantee or proprietor of a patent, then, unless an agreement to the contrary is in force, each of those persons shall be entitled, by himself or his agents, to rights conferred by Section 48 for his own benefit without accounting to the other person or persons. (3) Subject to the provisions contained in this section and in Section 51 and to any agreement for the time being in force, where two or more persons are registered as grantee or proprietor of a patent, then, a licence under the patent

I

I'roviso omitted by Act 15 of 2005, sec. 36 (w.r.e.f. 1-1-2005)

458

--

EVOLUTION OF PATENT LAWS

shall not be granted and share in the patent shall not be assigned by one of such persons except with the consent of the other person or persons. (4)Where a pa tented article is sold by one of two or more persons registered as grantee or proprietor of a patent, the purchaser and any person claiming through him shall be entitled to deal with the article in the same manner as if the article had been sold by a sole patentee. (5) Subject to the provisions contained in this section, the rules of law applicable to the ownership and devolution of movable property generally shall apply in relation to patents; and nothing contained in sub-section (1)or sub-section (2) shall affect the mutual rights or obligations of trustees or of the legal representatives of a deceased person or their rights or obligations as such. (6) Nothing in this section shall affect the rights of the assignees of a partial interest in a patent created before the commencement of this Act. 51. Power of Controller to give directions to co-owners (1) Where two or more persons are registered as grantee or proprietor of a patent, the Controller may, upon application made to him in the prescribed manner by any of those persons, give such directions in accordance with the application as to the sale or lease of the patent or any interest therein, the grant of licences under the patent, or the exercise of any right under Section 50 in relation thereto, as he thinks fit. (2) If any person registered as grantee or proprietor of a patent fails to execute any instrument or to do any other thing required for the carrying out of any direction given under this section within fourteen days after being requested in writing so to do by any of the other persons so registered, the Controller may, upon application made to him in the prescribed manner by any such other person, give directions empowering any person to execute that instrument or to d o that thing in the name and on behalf of the person in default. (3) Before giving any directions in pursuance of an application under this section, the Controller shall give an opportunity to be heard(a) in the case of an application under sub-section (1) to the other person or persons registered as grantee or proprietor of the patent; (b) in the case of an application under sub-section (2), to the person in default. (4) No direction shall be given under this section so as to affect the mutual rights or obligations of trustees or of the legal representatives of a deceased person or of their rights or obligations as such, or which is inconsistent with the terms of any agreement between persons registered as grantee or proprietor of the patent.

ANNEXURE IX

459

--

52. Grant of patent to true and first inventor where it has been obtained by another in fraud of him (1) '[where the patent has been revoked under Section 641 on the ground that the patent was obtained wrongfully and in contravention of the rights of the petitioner or any person under or through whom he claims, or where in a petition for revocation, the '[Appellate Board or Court], instead of revoking the patent, directs the complete specification to be amended bjr the exclusion of a claim or claims in consequence of a finding that the invention covered by such claim or claims had been obtained from the petitioner, the '[Appellate Board or court] may, by order passed in the same proceeding, permit the grant to the petitioner of the whole or such part of the invention which the 2 [ ~ p p e l l a t~e o a r d or court] finds has been wrongfully obtained by the patentee, in lieu of the patent so revoked or is excluded by amendment. (2)Where any such order is passed, the Controller shall, on request by the petitioner made in the prescribed manner grant to him(i) in cases where the 2 [ ~ p p e l l a tBoard e or Court] permits the whole of the patent to be granted, a new patent bearing the same date and number as the patent revoked; e or Court] permits a part only (ii) in cases where the 2 [ ~ p p e l l a tBoard of the patent to be granted, a new patent for such part bearing the same date as the patent revoked and numbered in such manner as

1

1

I

may be prescribed: Provided that the Controller may, as a condition of such grant, require the petitioner to file a new and complete specification to the satisfaction of the Controller describing and claiming that part of the invention for which the patent is to be granted. (3)No suit shall be brought for any infringement of a patent granted under this section committed before the actual date on which such patent was granted. 53. Term of patent (1) Subject to the provisions of this Act, the term of every patent granted, after the commencement of the Patents (Amendment) Act, 2002 and the term of every patent which has not expired and has not ceased to have effect, on the date of such commencement, under this Act, shall be twenty years from the date of filing of the application for the patent. j [Explunatio~z- For the purposes of this sub-section, the term of patent in case of International applications filed under the Patent Cooperation Treaty designating India, shall be twenty years from the international filing date accorded under the I'atent Cooperation Treaty.]

1

1 2 3

Subs by Act 15 ot 2005, scc 37 ( a ) ( ~ fol."Wherc ), .I patent has been revoked" (w.r.e.f. 1-1-2005) Sub5 by Act I S of 2005, bet. 37 (J(II), for "court". Ins by .Act I5 of 2005, Sec. 38(,1)(w.r.e.f.1-1-2005).

L

460 -

ANNEXURE I(

EVOLUTION OF PATENT LAWS

(f) that the patent right is not abused by the patentee or person deriving title or interest on patent from the patentee, and the patentee or a person deriving title or interest on patent from the patentee does not resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology; and (g) that patents are granted tomake the benefit of the patented invention available at reasonably affordable prices to the public. 84. Compulsory licences (1) At any time after the expiration of three years from the date of the '[gant] of a patent, any person interested may make an application to the Controller for grant of compulsory licence on patent on any of the following grounds, namely:(a) that the reasonable requirements of the public with respect to the patented invention have not been satisfied, or (b) that the patented invention is not available to the public at a reasonable affordable price, or (c) that the patented invention is not worked in the territory of India. (2) An application under this section may be made by any person notwithstanding that he is already the holder of a licence under the patent and no person shall be estopped from alleging that the reasonable requirements of the public with respect to the patented invention are not satisfied or that the patented invention is not worked in the territory of India or that the patented invention is not available to the public at a reasonably affordable price by reason of any admission made by him, whether in such a licence or otherwise or by reason of his having accepted such a licence. (3) Every application under sub-section (I)shall contain a statement setting ch as may out the nature of the applicant's interest together with s ~ ~ particulars be prescribed and the facts upon which the application is based. (4)The Controller, if sa tisfied that the reasonable requirements of the public with respect to the patented invention have not been satisfied or that the patented invention is not worked in the territory of India or that the patented invention is not available to the public at a reasonably affordable price, may grant a licence upon such terms as he may deem fit. (5) Where the Controller directs the patentee to grant a licence he may as incidental thereto exercise the power set out in Section 88. (6) In considering the application filed under this section, the Controller shall take into account,-

(2) A patent shall cease to have effect notwithstanding anything therein or in this Act on the expiration of the period prescribed for the ayment of any renewal fee, if that fee is not paid within the prescribed period [or within such extended period as may be prescribed.] 2 [xxxl (4)Notwithstanding anything contained in any other law for the time being in force, on cessation of the patent right due to non-payment of renewal fee or on expiry of the term of patent, thc subject-matter covered by the said patent shall not be entitled to any protection.

P

CHAPTER XVI WORKING OF PATENTS, COMPULSORY LICENCES AND REVOCATION 82. Definition of "patented articles" and "patentee" In this Chapter, unless the context otherwise requires,(a) "patented article" includes any article made by a patented process; and (b) "patentee" includes an exclusive licensee. 83. General principles applicable to working of patented inventions.Without prejudice to the other provisions contained in this Act, in exercising the powers conferred by this Chapter, regard shall b; had to the following general considerations, namely:(a) that patents are granted to encourage inventions and to secure that the inventions are worked in India on a commercial scale and to the fullest extent that is reasonably practicable without undue delay; (b) that they are not granted merely to enable patentees to enjoy a monopoly for the importation of the patented article; (c) that the protection and enforcement of patent rights contribu te to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations; (d) that patents granted do not impede protection of public health and nutrition and should act as instrument to promote public interest specially in sectors of vital importance for socio-economic and technological development of India; (e) that patents granted do not in any way prohibit Central Government in taking measures to protect public health;

1

2

Subs by Act 15 oi 2005, sec. 3H(b). for "or within that period as exten~dc~i u n d e r this zt,cl~on" (w.r.e-f. 1-1-2005). Sub-section (3) omitted by Act IS of 2005, scc 3R(c) (w.r.r.f.1-1-2005).

46 1

1

,

I

Subs, by Act 15 of 2005, bet. 52, fur 'sealing' (w.r.e.f.1-1-2005).

462-

--

EVOLUTION OF PATENT LAWS

-

--

(i) the nature of the invention, the time which has elapsed since the sealing of the patent and the measures already taken by the patentee or any licensee to make full use of the invention; (ii) the ability of the applicant to work the invention to the public advantage; (iii) the capacity of the applicant to undertake the risk in providing capital and working the invention, if the application were granted; (iv) as to whether the applicant has made efforts to obtain a licence from the patentee on reasonable terms and conditions and such efforts have not been successful within a reasonable period as the Controller may deem fit: Provided that this clause shall not be applicable in case of national emergency or other circumstances of extreme urgency or in case of public non-commercial L I S ~or on establishment of a ground of anti-competitive practices adopted by the patentee, but shall not be r e q ~ ~ i r etodtake into account matters subsequent to the making of the application. ' ~ x ~ l a n a t i o n For - the purposes of clauses (iv), "reasonable period" shall be construed as a period not ordinarily exceeding a period of six months.] (7) For the purposes of this Chapter, the reasonable req~iirementsof the public shall be deemed not to have been satisfied(a) if,by reason of the refusal of the patentee to grant a licence or licences on reasonable terms,(i) an existing trade or industry or the development thereof or the establishment of any new trade or industry in India or the trade or industry in India or the trade or industry of any person 01. class of persons trading or manufacturing in India is prej~idiced; or (ii) the demand for the patented article has not been met to an adequate extent or on reasonable terms; or (iii) a market for export of the patented article manufactured in India is not being supplied or developed; or (iv) the establishment or development of commercial activities ill India is prejudiced; or (b) if, by reason of conditions imposed by the patentee upon the grant of licences under the patent or upon the purchase, hire or use of the patented article or process, the manufacture, use or sale of materials not protected by the patent, or the establishment or development of any trade or industry in India, is prejudiced; or 1

Subs. by Act 15 of 2005, sec. 52 (w.r.c..f.1-1-2005).

--

. -

.-

-

ANNEXURE IX

(c) if the patentee imposes a condition upon the grant of licences under the patent to provide exclusive grant back, prevention to challenges to the validity or coercive package licensing; or . of patent (d) if the patented invention is not being worked in the territory of India on a commercial scale to an adequate extent or is not being so worked to the fullest extent that is reasonably practicable; or (e) if the working of the patented invention in the territory of India on a commercial scale is being prevented or hundred by the importation from abroad of the patented article by(i) the patentee or persons claiming under him; or (ii) persons directly or indirectly purchasing from him; or (iii) other persons against whom the patentee is not taking or has not taken proceedings for infringement. 85. Revocation of patents by the Controller for non-working (1) Where, in respect of a patent, a compulsory licence has been granted, the Central Government or any person interested may, after the expiration of two years from the date of the order granting the first compulsory licence, apply to the Controller for an order revoking the patent on the ground that the patented invention has not been worked in the territory of India or that reasonable requirements of the public with respect to the patented invention has not been satisfied or that the patented invention is not available to the public at a reasonably affordable price. (2) Every application under sub-section (1)shall contain such particulars as may be prescribed, the facts upon which the application is based, and, in the case of an application other than by the Central Government, shall also set out the nature of the applicant's interest. (3) The Controller, if satisfied that the reasonable requirements of the public with respect to the patented invention has not been satisfied or that patented invention has not been worked in the territory of India or that the patented invention is not available to the public at a reasonably affordable price, may make an order revoking the patent. (4) Every application under sub-section (1)shall ordinarily be decided within one year of its being presented to the Controller. 86. Power of Con troller to adjourn applications for compulsory licences, etc., in certain cases (1)Where an application under Section 84 or Section 85 as the case may be, is made on the grounds that the patented invention has not been worked in the territory of India or on the ground mentioned in clause (d) of sub-section (7)of Section 84 and the Controller is satisfied that the time which has elapsed since the sealing of the patent has for any reason been insufficient to enable the invention to be worked on a commercial scale to an adequate extent or to enable the invention to be so worked to the fullest extent that is reasonably practicable, he may, by order, adjourn the further hearing of the application for such period

EVOLUTION OF PATENT LAWS

-

not exceeding twelve months in the aggregate as appears to him to be sufficient for the invention to be so worked: Provided that in any case where the patentee establishes that the reason why a patented invention could not be worked as aforesaid before the date of the application was due to any State or Central Act or any rule or regulation made thereunder or any order of the Government imposed otherwise than by way of a condition for the working of the invention in the territory of India or for the disposal of the patented articles or of the articles made, by the process or by the use of the patented plant, machinery, or apparatus, then, the period of adjournment ordered under this sub-section shall be reckoned from the date on which the period durirtg which the working of the invention was prevented by such Act, rule or regulation or order of Government as computed from the date of the application, expires. (2) No adjournment under sub-section (1) shall be ordered unless the Controller is satisfied that the patentee has taken with promptitude adequate or reasonable steps to start the working of the invention in the territory of India on a commercial scale and to an adequate extent. 87. Procedure for dealing with applications under Sections 84 and 85 (1) Where the Controller is satisfied, upon consideration of an application under Section 84, or Section 85, that a prima facie case has been made out for the making of an order, he shall direct the applicant to serve copies of the application upon the patentee and any other person appearing from the register to be interested in the patent in respect of which the application is made, and '[shall publish the application in the official journal.] (2) The patentee or any other person desiring to oppose the application may, within such time as may be prescribed or within such further time as the Controller may on application (made either before or after the expiration of the prescribed time) allow, give to the Controller notice of opposition. (3) Any such notice of opposition shall contain a statement setting out the grounds on which the application is opposed. - .. (4) Where any such notice of opposition is duly given, the Controller shall notify the applicant, and shall give to the applicant and the opponent an opportunity to be heard before deciding the case. 88. Powers of Controller in granting compulsory licences (1)Where the Controller is satisfied an application made under Section 84 that the mannfacture, use or sale of materials not protected by the patent is prejudiced by reason of conditions imposed by the patentee upon the grant of licences under the patent, or upon the purchase, hire or use of the patented article or process, he may, subject to the provisions of that section, order the

1

Subs. by Act 15of 2005,sec.53,for"shall advertise theapplicat~onintheofficial Gar.ette"(w.r.e.f.1-1-2005)

-

ANNEXURE IX

465

grant of licences under the patent to such customers of the applicant as he thinks fit as well as to the applicant. (2) Where an application under Section 84 is made by a person being the holder of a licence under the patent, the Controller may, if he makes an order for the grant of a licence to the applicant, order the existing licence to be cancelled, or may, if he thirtks fit, instead of making an order for the grant of a licence to the applicant, order the existing licence to be amended. (3) Where two or more patents are held by the same patentee and an applicant for a compulsory licence establishes that the reasonable requirements of the public have not been satisfied with respect to some only of the said patents, then, if the Controller is satisfied that the applicant cannot efficiently or satisfactorily work the licence granted to him under those patents without infringing the other patents held by the patentee and if those patents involve important technical advancement or considerable economic significance in relation to the other patents, he may, by order, direct the grant of a licence in respect of the other patents also to enable the licensee to work the patent or patents in regard to which a licence is granted under Section 84. (4) Where the terms and conditions of a licence have been settled by the Controller, the licensee may, at any tiine after he has worked the invention on a commercial scale for a period of not less than twelve months, make an application to the Controller for the revision of the terms and conditions on the ground that the terms and conditions settled have proved to be more onerous than originally expected and that in consequence thereof the licensee is unable to work the invention except at a loss: Provided that no such application shall be entertained a second time. 89. General purposes for granting compulsory licences The powers of the Controller upon an application made under Section 84 shall be exercised with a view to securing the following general purposes, that is to say,(a) that patented inventions are worked on a commercial scale in the territory of India without undue delay and to the fullest extent that is reasonably- practicable; (b) that the interests of any person for the time being working or developing an invention in the territory of India under the protection of a patent are not unfairly prejudiced. 90. Terms and conditions of compulsory licences (1)In setting the terms and conditions of a licence under Section 84, the Controller shall endeavour to secure.(i) that the royalty and other remuneration, if any, reserved to the patentee or other person beneficially entitled to the patent, is reasonable, having regard to the nature of the invention, the expenditure incurred by the patentee in making the invention or in

ANNEXURE . _ _ _ IX

developing it and obtaining a patent and keeping it in force and other reievant factors; (ii) that the patented invention is worked to the fullest extent by the person to whom the licence is granted and with reasonable profit to him; (iii) that the patented articles are made available to the pubic at reasonably affordable prices; (iv) that the licence granted is a non-exclusive licence; (v) that the right of the licensee is non-assignable; (vi) that the licence is for the balanceterm of the patent unless a shorter term is consistent with public interest; '[(vii) that the licence is granted with a predominant p~lrposeof sr~pplyin the Indian market and that the licensee may alsoexport the patented product, if need be in accordance with the provisions of sub-clause (iii) of clause (a) of sub-section (7) of Section 84; (viii) that in the case of semi-conductor technology, the licence granted is to work the invention for public non-commercal use; (ix) that in case the licence is granted to remedy a practice determined or administrative process to be anti-competitive, the after j~~dicial licensee shall be permitted to export the patented product, if need be.] (2) No licence granted by the Controller shall authorize the licensee to import the patented article or an article or substance made by a patented process from abroad where such importation wonld, brlt for s~lchauthorization, constitute an infringement of the rights of the patentee. (3) Notwithstanding anything contained in srlb-section (2), the Central Government may, if in its opinion it is necessary so to do, in the public interest, direct the Controller at any time to authorisr any licensee in respect of a patent to import the patented article or an article or substance made by a patented process from abroad (snbject to such conditions as it considers necessary to impose relating among other matters to the royalty and other remuneration, if any. payable to the patentee, the quantum of import, the sale price of the imported article and the period of importation), and thereupon the Controller shall give effect to the directions. 91. Licensing of related patents (1) Notwithstanding anything contained in the other provisions of this Chapter, at any time after the sealing of a patent, any person who has the right to work any other patented invention either as patentee or as licensee thereof, exclusive or otherwise, may apply to the Controller for the grant of a licence 01 --I

Subs. by Act 15 of 2005, Set. 5.1, f o r clcluse (vii), (w.r.rf. 1-1-2005)

-

...--

the first mentioned patent on the ground that he is prevented or hindered without such licence from working the other invention efficiently or to the best advantage possible. (2) No order under s~~b-section (1) shall be made unless the Controller is satisfied(i) that the applicant is able and willing to grant, or procure the grant to the patentee and his licensee if they so desire, of a licence in respect of the other invention on reasonable terms; and (ii) that the other invention has made a substantial contribution to the establishment or development of commercial or industrial activities in the territory of India. (3) When the Controller is satisfied that the conditions niention~din sub-section (1) have been established by the applicant, he mrjv make an order on such terms as he thinks fit granting a licence under the first mentioned patent and a similar order under the other patent if so requested by the proprietor of the first mentioned patent or his licensee: Provided that the licence granted by the Controller shall be non-assignable except with the assignment of the respective patents. (4) The provisions of Sections 87, 88, 89 and 90 shall apply to Iicer'1ces granted under this section as they apply to licences granted under Section 84. 92. Special provision for compulsory licences on notifications by Central Government (1) If the Central Government is satisfied, in respect of any patent in force in circumstances of national emergency or in circumstances of extreme urgency or in case of public non-commercial use, that it is necessary that compulsory licenses should be granted at any time after the sealing thereof to work the invention, it may make a declaration to that effect, by notification in the Official Gazette, and thereupon the following provisions shall have effect, that is to say(i) the Controller shall on application made at any time after the notification by any person interested grant to the applicant a licence under the patent on such terms and conditions as lie thinks fit; (ii) in settling the terms and conditions of a licence granted under this section, the Controller shall endeavour to secure that the articles manufactured under the patent shall be available to the public at the lowest prices consistent with the patentees deriving a reasonable advantage from their patent rights. (2)The provisions of Sections 83,87,88,89 and 90 shall apply in relation to the grant of licences under this section as they apply in relation to the grant of licences under Section 84. (3) Notwithstanding anything contained in sub-section (2),where the Controller is satisfied on consideration of the application referred to in clause (i) of sub-section (1) that i t is necessary in-

468_-__

EVOLUTION OF PATENT LAWS ---

-

--- -

----

(i) a circumstance of national emergency; or (ii) a circumstance of extreme urgency; or (iii) a case of public non-commercial use, w l ~ i cmay l ~ arise or is required, as the case may be, including public health crises, relating to Acquired lmmuno Deficiency Syndrome, human immuno deficiency virus, tuberculosis, malaria or other epidemics, he shall not apply any procedure specified in Section 87 ill relation to that application for grant of licence under this section: Provided that the Controller shall, as soon as may be practicable, inform, the patentee of the patent relating to the application for such non-application of Section 87. ' 1 9 2 ~ . ~ o m ~ u llicence s o r ~ for export of patented pharmaceutical products in certain exceptional circumstances (1) Compulsory licence 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 compulsory licence has been granted by such country or such country has, by notification or otherwise, allowed importation of the patented pharmaceutical products from India. (2) The Controller shall, on receipt of an applicatiol~in the prescribed manner, grant a compulsory licence solely for manufacture and export of the concerned pharmaceutical product to such country under such terms and conditions as may be specified and published by him. (3)The provisions of sub-sections (1) and (2) shall be without prejudice to the extent to which pharmaceutical products produced under a compulsory license can be exported under any other provision of this Act. Explatzatinn -For the purposes of this section, "pharmaceutical products" means any patented product, or product manufactured through a patented process; of the pharmaceutical sector needed to address public health problems and shall be inclusive of ingredients necessary for their manufacture and diagnostic kits required for their use.] 93. Order for licence to operate as a deed between parties concerned Any order for the grant of a licence under this Chapter shall operate as if it were a deed granting a licence executed by the patentee and all other necessary parties embodying the terms and conditions, if any, settled by the Controller. 94. Termination of compulsory licence (1) On an application made by the patentee or any other person deriving title or interest in the patent, a compulsory licence granted under Section 84 may

-

I

Ins. by Act 15 of 2005, Sec. 55 (w.r.e.f.1-1-2005).

--. ---

ANNEXURE IX

.

be terminated by the Controller, if and when the circumstances that gave rise to the grant thereof no longer exist and such circumstances are unlikely to recur: Provided that the holder of the compulsory licence shall have the right to object to such termination. (2) While considering an application under Section (I), the Controller shall take into account that the interest of the person who had previously been granted the licence is not unduly prejudiced.]

CHAPTER XVlll SUITS CONCERNING INFRINGEMENT OF PATENTS 104. Jurisdiction NOsuit for a declaration under Section 105 or for any relief under Section 106 or for infringement of a patent shall be instituted in any court inferior to a district court having jurisdiction to try the suit: Provided that where a counter-claim for revocation of the patent is made by the defendant, the suit, along with the counter-claim, shall be transferred to the High Court for decision. 104A. Burden of proof in case of suits concerning infringement (1) In any suit for infringement of a patent, where the subject-matter of patent is a process for obtaining a product, the court may direct the defendant to prove that the process used by him to obtain the product identical to the product of the patented process, is different from the patented process if,(a) the subject-matter of the patent is a process for obtaining a new product; or (b) there is a substantial likelihood that the identical product is made by the process, and the patentee or a person deriving title or interest in the patent from him, has been unable through reasonable efforts to determine the process actually used: Provided that the patentee or a person deriving title or interest in the patent from him first proves that the product is identical to the product directly obtained by the patented process. (2) In considering whether a party has discharged the burden imposed upon him by sub-section il), the court shall not require him to disclose any manufacturing or commercial secrets, if it appears to the Court that it would be unreasonable to do so. 105. Power of court to make declaration as to non-infringement (1)Notwithstanding anything contained in Section 34 of the SpecificRelief Act, 1963 (47 of 1963), any person may institute a suit for a declaration that the use by him of any process, or the making, use or sale of any article by him does not, or would not, constitute an infringement of a claim of a patent against the patentee or the holder of an exclusive licence under the patent, notwithstanding that no assertion to the contrary has been made by the patentee or the licensee, if it is shown-

EVOLUTION OF PATENT LAWS ----___

--

-

__ __---

(a) that the plaintiff has applied in writing to the patentee or exclusive licensee for a written acknowledgements to the eftect of the in declaration claimed and has furnished him with full partic~~lars writing of the process or article in question; and (b) that the patentee or licensee has refused or neglected to give such an acknowledgement. (2) The costs of all parties in a suit for a declaration brought by virtue of this section shall, unless for special reasons the court thinks fit to order otherwise, be paid by the plaintiff. ( 3 )The validity of a claim of the specification of a patent shall not be called in question in a suit for a declaration brought by virtue of this section, and accordingly the making or refr~salof such a declaration in the case of a patent shall not be deemed to imply that the patent is valid or invalid. (4) A suit for a declaration may he brought by virtue of this section at any time '[after the publication of grant of a patent], and references in this section to the patentee shall be construed accordingly. 106. Power of court to grant relief in cases of groundless threats of infringement proceedings (1) Where any person (whether entitled to or interested in a patent or an application for patent or not) threatens any other person by circulars or advertisements or by communications, oral or in writing addressed to that or any other person, with proceedings for infringement of a patent, any person aggrieved thereby mav bring a suit against him praying for the following reliefs, that is to say(a) a declaration to the effect that the threats are unjustifiable; (b) an injunction against the continuance of the threats; and (c) such damages, if any, as he has sustained thereby. (2) IJnless in such suit the defendant proves that the acts in respect of which the proceedings were threatened constitute or, if done, would constitute, an infringement of a patent or of rights arising from the publication of a complete specification in respect of a claim of the specification not shown by the plaintiff to be invalid the court may grant to the plaintiff all or any of the reliefs prayed for. Explanation- A mere notification of the existence of a patent does not constitute a threat of proceeding within the meaning of this section. 707. Defences, etc., in suits for infringement (1) In any suit for infringement of a patent every ground on which i t may be revoked under Section 64 shall be available as a ground for defence. (2) In any suit for infringement of a patent by the making, using or importation of any machine, apparatus of other article or by the using of any

process or by the importation, use or distributionor any illedicine or drug, it shall be a ground for defence that such making, using, importation or distribution is in accordance with any one or more of the conditions specified in Section 47. 107A. Certain acts not to be considered as infringement For the purposes of this Act.(a) any act of making, constructing, '[using, selling or importing) a patented inventionsolely for ~lsesreasonablyrelatedto the development and submission of information required under any law for the time k i n g in force, in India, or in a country 2 other than India, that regulates the manufacture, construction, [use, sale or import] of any product; (b) in~portationof patented products by any person from a person "[who is duly authorized under the law to produce and sell or distribute the product] shall not be considered as a infringement of patent rights. 108. Reliefs in suit for infringement (1)The reliefs which a court may grant in any suit for infringement include an injunction (subject to such terms, if any, as the court thinks fit) and, at the option of the plaintiff, either damages or an account of profits. (2) The court may alsoorder that the goods which are found to be infringing and materials and implements, the predominant use of which is in the creation of infringing goods shall be seized, forfeited or destroyed, as the court deems fit under the circumstances of the case without payment of any compensation. 109. Right of exclusive licensee to take proceedings against infringement ( I ) The holder of an exclusive licence shall have the like right as t l ~ patentee e to institute a suit in respect of any infringement of the patent committed after the date of the licence, and in awarding damages or an account of profits or grsntil~gally other relief in any such suit the court shall take into consideration anv loss suffered or likely to be suffered by the exclusive licensee as such or, as the case may be, the profits carned by means of the infringement so far as it constitutes an infringement of the rights of the excl~lsivelicensee as such. (2) In any suit for infringement of a patent by the holder of an exchlsive licence under sub-section (I), the patentee shall, unless he has joined as a plaintiff in the suit, be added as a defendant, but a patentee so added as defendant shall not be liable for any costs unless he enters an appearance and takes part in the proceedings. 110. Right of licensee under s. 84 to take proceedings against infringement Any person to whom a licence has bcen granted under Section 84 shall be entitled to call upon the patentee to take proceedings to prevent any infringe]

1

Subs by Act 15 of 2005, sec 57, for "after the date of advertlscment of acceptance of the complete speclflcat~on of a patynt" (w r e f 1-1-2005)

2 3

Sul... h v Act 15 20115, SLY5H(ii)(i),for "u51ngo r selling" (w.r.c f . 1-1-21IOT'J L,;Act 15 < ) f ~ I I O S , S C ~ C5.~ ( a ) ( i i for ) , "using or s.i\e" (w.r.e.f.1-1-2005). S u b . iYv r\ct 15 of 2005, Scc. 5H(b), f o r " ~ 1 1 ~is) d u l y authi,r~,cd by the patentee to scll or dlstribut<>thc

sub+

(?z-_____-

- _ _ - - _EVOLUTION _ _ _ - OF PATENT LAWS _

mfnt of the patent, and, if the patentee refuses or neglects to do so within two months after being so-called upon, the licensee may institute proceedings for the infringement in his own name as though he were the patentee, making the patentee a defendant; but a patentee so added as defendant shall not be liable for any costs unless he enters an appearance and takes part in the proceedings. 111. Restriction on power of court to grant damages or account of profits for infringement (1) In a suit for infringement of patent, damages or an account of profits shall not be granted against the defendant who proves that at the date of the infringement he was not aware and had no reasonable grounds for believing that the patent existed. Explanation.- A person shall not be deemed to have been aware or to have had reasonable grounds for believing that a patent exists by reason only of the application to an article of the word "patent", "patented" or any word or words expressing or implying that a patent has been obtained for the article, unless the number of the patent accompanies the word or words in question. (2) In any suit for infringement of a patent the court may, if it thinks fit, refuse to grant any damages or an account of profits in respect of any infringement committed after a failure to pay any renewal fee with the prescribed period and before any extension of that period. (3)Where an amendment of a specification by way of disclaimer, correction or explanation has been allowed under this Act after the publication of the specification, no damages or account of profits shall be granted in any proceeding in respect of the use of the invention before the date of the decision allowing the amendment, unless the court is satisfied that the specification as originally published was framed in good faith and with reasonable skill and knowledge. (4) Nothing in this section shall affect the power of the court to grant an injunction in any suit for infringement of a patent. 113. Certificate of validity of specification and costs of subsequent suits for infringement thereof '[(I) If in any proceedings before the Appellate Board or a High Court for the revocation of a patent under Section 64 and Section 104, as the case may be, the validity of any claim of a specification is contested and that claim is found by the Appellate Board or the High Court to be valid, the Appellate Board or the High Court may certify that the validity of that claim was contested in those proceedings and was upheld.] (2) Where any such certificate has been granted, then, if in any subsequent suit before a court for infringement of that claim of the patent or in any subsequent proceeding for revocation of the patent insofar as it relates to that claim, the patentee or other person relying on the validity of the claim obtains a final order or judgment in his favour, he shall be entitled to an order for the 1

Subs b y Act 15 ol2005, sec. 5Y(a), for s u b - s e c t ~ o n(1)

_

ANNEXURE IX

473

payment of h s hll costs, charges and expenses of and incidental to 'my such suit or proceeding properly incurred so far as they concern the claim in respect of which the certihcat~wmgranted, ~ d e sthe s court p i n g the suit or proceeding otherwise directs: Provided that the costs as specific, in this sub-section shall not be ordered when the party disputingthe validity of the claim satisfies the court that he was not aware of the grant of the certificate when he raised the dispute and withdrew forthwith such defence when he became aware of such a certificate. '(3) Nothing contained in this section shall be construed as authorising the courts or the Appellate Board hearing appeals from decrees or orders in suits for infringement or petitions for revocation, as the case may be, to pass orders for costs on the scale referred to therein.] 114. Relief for infringement of partially valid specification (1)If in proceedings for infringement of a patent it is found that any claim of the specification, being a claim in respect of which infringement is alleged, is valid, but that any other claim is invalid, the court may grant relief in respect of any valid claim which is infringed: Provided that the court shall not grant relief except by way of injunction save in the circumstances mentioned in sub-section (2). (2) Where the plaintiff proves that the invalid claim was framed in good faith and with reasonable skill and knowledge, the court shall grant relie: in respect of any valid claim which is infringed subject to the discretion of the court as to costs and as to the date froin which damages or an account of profits should be reckoned, and in exercising such discretion the court may take into consideration the conduct of the parties in inserting such invalid claims in the specification or permitting them to remain there. 115. Scientific advisers (1) In ally suit for infringement or in any proceeding before a court under this Act, the court may at any time, and whether or not an application has been made by any party for that purpose, appoint an independent scientific adviser, to assist the court or to inquire and report upon any such question of fact or of opinion (not involving a question of interpretation of law) as it may formulate for the purpose. (2) The remuneration of the scientific adviser shall be fixed by the court and shall include the costs of making a report and a proper daily fee for any day 011 which the scientific adviser may be required to attend before the court, and such remuneration shall be defrayed out of moneys provided by Parliament by law for the purpose. CHAPTER XXII-INTERNATIONAL ARRANGEMENTS 2 [133.Convention countries Any country, which is a signatory or party or a group of countries, union of countries or intergovernmental organisations which are signatories or parties i

2

Subs. by Act 15 of 2005, scBc5Y(b), for sub-wction (3). Subs. by Act 15 01 2005, sec. (78, for section 133 (w.r c.t. 1-1-2005).

474-

.

_

--

_

~

EVOLUTION OF PATEN-T LAWS

-

ANNEXURE IX

- ...

to an international, regional or bi-lateral treaty, conventioi~or arrangement to which India is also a signatory or party and which affords to the applicants for patents in India or to citizens of India similar privileges as are granted to their own citizens or citizens to their number countries in respect of the grant of patents and protection of patent rights shall be a convention country or convention countries for the purposes of this Act.] 134. Notification as to countries not providing for reciprocity Where any country specified by the Central Government in this behalf by notification in the Official Gazette does not accord to citizens of India the same rights in respect of the grant of patents and the protection of patent rights as it accords to its own nationals, no national of such country shall be entitled, either solely or jointly with any other person,(a) to apply for the grant of a patent or be registered as the proprietor of a patent; (b) to be registered as the assignee of the proprietor of a patent; or (c) to apply for a licence or hold any licence under a patent granted under this Act. 135. Convention applications (1) Without prejudice to the provisions contained in section 6, where a person has made an application for a patent in respect of an invention in a convention country (hereinafter referred to as the "basic application"), and that person or the legal representative or assignee of that person makes an application under this Act for a patent within twelve months after the date on which the basic application was made, the priority date of a claim of the complete specification, being a claim based on matter disclosed in the basic application, is the date of making of the basic application. Esp1aliation.- Where applications have been made for similar protection in respect of an invention in two or more convention countries, the period of twelve months referred to in this sub-section shall be reckoned from the date on which the earlier or earliest of the said applications was made. (2) Where application for protection have been made in one or more convention countries in respect of two or more inventions which are cognate or of which one is a n~odificationof another, a single convention application may, subject to the provisions contained in section 10, be made in respect of those inventions at any time within twelve rnoliths from the date of the earliest of the said applications for protection: Provided that the fee payable on the making of any such applicatioi~shall be the same as if separate applications have been made in respect of each of the said invention, and the requirements of clause (b) of sub-section (1) of section 136 shall, in the case of any such application, apply separately to the application for protection in rcspcct of each of the sciid inventions.

,

i

II i I I

475

'[(3) In case of an application filed under the Patent Cooperation Treaty designating India and claiming priority from a previously filed application in India, the provisions of sub-sections (1) and (2) shall apply as if the previously filed application were the basic application: Provided that a request for examination under section 11B shall be made only for one of the applications filed in India.] 136. Special provisions relating to convention application (1)Every convention application shall(a) be accompanied by a complete specification; and (b) specify the date on which and the convention country in which the application for protection, or as the case may be, the first of such application was made; and (c) state that no application for protection in respect of the invention had been made in a convention country before that date by the applicant or by any person from whom be derives title. (2) Subject to the provisions contained in section 10, a complete specification filed with a convention application may include claims in respect of development of, or additions to, the invention in respect of which the application for protection was made in a convention country, being developments or additions in respect of which the applicant would be entitled under the provisions of section 6 to make a separate application for a patent. (3) A convention application shall not be post-dated under sub-section (1) of section 17 to a date later than the date on which under the provisions of this Act the application could have been made. 137. Multiple priorities (1) Where two or more applications for patents in respect of inventions have been made in one or more convention countries and those inventions are so related as to constitute one invention, one application may be made by m y or all of the persons referred to in sub-section (1)of section 135 within twelve months from the date on which the earlier or earliest of those application was made, in respect of the inventions disclosed in the specifications which accompanied the basic applications. (2) The priority date of a claim of the complete specification, being a claim based on matters disclosed in one or more of the basic applications, is the date on which that matter was first so disclosed. (3) For the purposes of this Act, a matter shall be deemed to have been disclosed in a basic application for protection in a convention country if it was clain~edor disclosed (otherwise than by way of disclaimer or acknowledgement of a prior art) in that application, or any documents submitted by the applicant for protection in support of and at the same time as that application but no account 1

Ins. by Act 15 of 2005,sec. 69 (w.r.e.f.1-1-2005).

476

OF PATENT LAWS ___- EVOLUTION .__-

- _

--

shall be taken of any disclosure effected by any such document unless a copy of the documents is filed at the patent office with the convention application or within such period as may be prescribed after the filing of that application. 138. Supplementary provisions as to convention applications '[(I) Where a convention application is made in accordance with the provisions of this Chapter, the applicant shall furnish, when required by the Controller, in addition to the complete specification, copies of the specifications or corresponding documents filed or deposited by the applicant in the patent office of the convention country as referred to in section 133 verified to the satisfaction of the Controller, within the prescribed period from the date of communication by the Controller.] (2) If any such specification or other document is in a foreign language, a translation into English of the specification or document, verified by affidavit or otherwise to the saiisfaction of the Controller, shall be furnished when required by the Controiler. (3) For the purposes of this Act, the date on which an application was made in a convention coimtry is such date as the Controller is satisfied, by certificate of the official chief or head of the patent office of the convention country or otherwise, is the date on which the application was made in that convention country. (4)An international application filed under the Patent Co-operation Treaty designating India shall have effect of filling an application for patent under section 7, section 54 and section 135, as the case maybe, and the title,description, claim and abstract and drawings, if any, filed in the internationa! application shall be taken as complete specification for the purposes of this Act. (5) The filing date of application for patent and its complete specification processed by the patent office as designated office shall be the international filing date accorded under the Patent Cooperation Treaty. (6) Amendment, if any, proposed by the applicant for an international application designation designating India or designating and electing India before international searching authority or preliminary examination authority shall, if the applicant so desires, be taken as an amendment made before the patent office. 139. Other provisions of Act to apply to convention applications Save as otherwise provided in this Chapter, all the provisions of this Act shall apply in relation to a convention application and a patent granted in pursuance thereof as they apply in ]-elation to an ordinary application and a patent granted in pursuance thereof.