An Innovative Policy in the Law of Innovation: So Why the Outcry?

November 13, 2007 by Raghvendra Singh

In January 2006, the Patent Office of Chennai rejected the patent
application by Novartis for patent of the drug Gleevec (chemically known
as imatinib mesylate). Since then till date, the Novartis saga has
prompted numerous headlines and scores of commentaries. What is so unique
about the entire controversy? After all, aren’t patent applications
rejected by Patent Offices around the globe? And, ironically, the patent
application has not been strictly rejected. Novartis has appealed to the
Intellectual Property Appellate Board and though unlikely, there is a
possibility that it might be granted patent for Gleevec. I believe that
there are two reasons for the event to snowball into such a controversy.
One is the wording of section 3(d) of the Indian Patent Act, and second is
the parties involved in the dispute and the manner of assertion of their

Section 3(d) of the Indian Patent Act, amended in 2005, says, inter alia,
that, “the mere discovery of a new form of a known substance which does
not result in the enhancement of the known efficacy (emphasis added) of
that substance” shall not be treated as invention. The term efficacy is
not found in the patent regime of other countries and therefore, it has
been vehemently argued by Novartis and other foreign pharmaceutical
industries that this statutory provision stifles incremental innovation on
which drug manufacturing is based and is not TRIPS-compliant and should be
removed. It is trite to say that such an interpretation is fallacious
because section 3(d) of the Act has been designed to encourage innovation,
be it incremental or breakthrough, by disallowing trivial claims to be
patented through the commonly known phenomenon of ever-greening. Thus by
allowing only genuine claims, it provides incentive for R&D activities.
Further the High Court of Madras has ruled that section 3(d) is not an
unreasonable or an arbitrary provision. It is also important to keep in
mind that innovation depends not just on effective patent laws but also on
skilled workforce, infrastructure etc. It will be important to note that
many South Asian countries are planning to amend their patent legislation
to incorporate section 3 (d).

But what I see to be at the heart of the controversy, which is the second
aspect mentioned above, is the attempt by a multinational corporation to
influence the IP policy of a sovereign country. I believe that every
country should have the liberty to structure its IP policy guided by its
national interest and in keeping with its international obligations, and
not merely by copying the IP legislation of other countries. The
structuring can be, in the area of pharmaceutical patents, through various
methods such as providing R&D facilities, adoption of compulsory licensing
policy, price control mechanism, or most importantly, having an effective
patent legislation. This is exactly what India has done. In keeping with
its TRIPS obligations, it has amended its patent law to providing for
product patents but at the same time has been cautious to not give a free
hand to the pharmaceutical companies and thus has maintained a well
thought out balance between the right holders and the users. In fact, the
demand to factor in public health into patent law is happening elsewhere
as well. Policy makers in the U.S. are contemplating to introduce the
compulsory licensing of certain drugs to lower the price of prescription
drugs. Even the judicial decisions indicate a change in approach. If one
is to go by the recent decision of the U.S. Supreme Court in K.S.R. v.
Teleflex, the obviousness test has been tilted in the favour of users.

This is not to say that the users have been innocent in this entire
episode. Due to the aggressive strategies adopted by Novartis (as a
bullying tactic, it threatened to withdraw its investments from India and
direct it to China; ironically, a country having lower IPR protection),
the biggest casualty has been patent law itself. Widespread protests were
held by the public and NGOs labelling patent law per se as anti-patients
resulting in an oversimplification of the entire issue. Patent law is
definitely needed, and especially so, in the pharmaceutical field;
otherwise no drug company would want to invest millions of dollars in the
R&D for the invention of drugs. But then they should be allowed to reap
the benefits only to the extent that is just. And what is just is for the
concerned state to decide by keeping issues such as public health in mind,
and not for a company to dictate.

  1. One Response to “An Innovative Policy in the Law of Innovation: So Why the Outcry?”

  2. The author aptly characterized Novartis’ actions following the patent decision as bullying. I find it very disturbing that companies like Novartis use such tactics to influence the IP policy of countries that refuse to grant them a patent. As the author states, as long as India’s IP laws comply with TRIPs, why should they be forced to change their IP policies?

    One argument mentioned by the author is that without patents, the pharmaceutical industry would never be able to recoup the R&D costs associated with drug development. In this case, however, the drug in question was apparently not much different from an existing drug. It is arguable that there is not as much R&D investment in such a case. India’s provision is a valid attempt to adhere to one of the basic principles of IP: rewarding true innovation.

    There is no doubt that patent laws could be improved but the changes to the law should not be driven solely by rich patent owners and wealthy countries. Changes in IP policy should reflect the needs of rightholders as well as users in a particular society. For example, IP needs in a developing countries are likely very different from those in the US. The power imbalance is especially problematic. Developing countries might agree to adopt US patent policies in exchange for medical aid for example. Unfortunately, the reality is that those with money often have the strongest influence and it might be naïve to expect a more principled approach to IP reform.

    By tthomas on Nov 29, 2007

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