Pharmaceutical Patent in India: Access to Medicines

Akshay Khandelwal

Abstract

Patents provide the Patent owner with the legal means to prevent others from making, using, or selling the new invention for a limited period of time, subject to a number of exceptions. Patents do not constitute marketing authorizations. The TRIPS Agreement stipulates that it must be possible for all inventions to be protected by a patent for 20 years, whether for a product (such as medicine) or a process (a method of producing an ingredient for a medicine).

TRIPS (The Agreement on Trade Related Aspect of Intellectual Property Rights) attempt the arduous task of balancing private and public rights. On one hand, it protects the interest of the pharmaceutical companies that invest heavily in R & D of Drugs and, on the other; it allows nations that belong to the WTO to promote public health in their respective countries. However, patents on pharmaceutical products have adversely affected industrially developing and least developed countries, hampering their ability to formulate appropriate public health policies that would enable their ailing citizen to access medicines. For instance Pharmaceutical patents have raised the cost of life saving drugs, effectively putting them out of the reach of the majority of the World’s population.

The Article will analyze the effect on availability of medicines to the public due to the pharmaceutical patent system in the light of Indian Patent Act, 1970 and TRIPS agreement. The Author will identify the difficulties which the common people are facing and the unlawful gains which the patent holders are making, due to this patenting system.

“The idea of a better ordered world is one in which medical discoveries will be free of patents and there will be no profiteering from life and death.”

Indira Gandhi at the World Health Assembly in 1982

INTRODUCTION:

The patent system is social policy tool that aims to stimulate innovation. Internationally, patent protection is governed by the World Trade Organization (WTO) Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. TRIPS do not establish a uniform international law, but sets out minimum standards of patent protection that must be met by all WTO members. Developed countries have already implemented the agreement, and other countries such as India are implementing it now, in 2005. Least-developed countries are not obliged to do so until 2016.

Medicines are expensive when they are protected by patents. The patent holder has a monopoly on the drug for a minimum of 20 years, and uses that period to maximize profit. But as soon as generic competition is possible, prices of medicines plummet: for instance, after the Brazilian government began producing generic AIDS drugs in 2000, prices dropped by 82%.

Protection of public health was one of India’s major concerns when the TRIPS Agreement was being negotiated. The Patents Act, 1970 did not provide for product patents for inventions relating to medicines. The duration of protection of process patents for medicines was also limited to a maximum of seven years. This conscious policy choice adopted in India’s Patent Act yielded positive results over a period of three decades in building a good industrial infrastructure for manufacturing generic medicines, while also to keeping the price of essential drugs at a relatively low level. During the final stages of negotiations that resulted in the TRIPS Agreement, India attempted to ensure that TRIPS provisions would not substantially affect the public health needs of the large sections of the population that are below the poverty line. Subsequently, India made conscious efforts to incorporate the flexibilities available in TRIPS and the Doha Declaration when India amended the Patents Act in 1999, 2002 and 2005.

The reasons for the lack of access to essential medicines are manifold, but in many cases the high prices of drugs are a barrier to needed treatments. Prohibitive drug prices are often the result of strong intellectual property protection. Governments in developing countries that attempt to bring the price of medicines down have come under pressure from industrialized countries and the multinational pharmaceutical industry. The World Trade Organization (WTO) Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS) sets out the minimum standards for the protection of intellectual property, including patents for pharmaceuticals. While TRIPS does offer safeguards to remedy negative effects of patent protection or patent abuse, in practice it is unclear whether and how countries can make use of these safeguards when patents increasingly present barriers to medicine access.

The lack of protection for product patents in pharmaceuticals and agrochemicals had a significant impact on the Indian pharmaceutical industry and resulted in the development of considerable expertise in reverse engineering of drugs that are patentable as products throughout the industrialized world but unprotectable in India. As a result of this, the Indian pharmaceutical industry grew rapidly by developing cheaper versions of a number of drugs patented for the domestic market and eventually moved aggressively into the international market with generic drugs once the international patents expired. In addition, the Patents Act provides a number of safeguards to prevent abuse of patent rights and provide better access to drugs. The Indian Patents (Amendment) Act, 2005 introduced product Patents in India and marked the beginning of a new patent regime aimed at protecting the Intellectual property rights of patent holders. The Act was in fulfillment of India’s Commitment to World Trade Organization (WTO) on matters relating to Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement).

Background:

Sick people in India and around the world depend on the willingness of Indian producers to carry out the research to develop and manufacture affordable generic versions of second-line AIDS drugs and other new medicines. India has a long history of fighting for protection of public health over intellectual property: it led developing countries’ resistance to the TRIPS Agreement during the Uruguay Round of WTO negotiations, and also played a key role during the 2001 WTO ministerial conference in Doha, which resulted in the adoption of the Doha Declaration on TRIPS and Public Health. Unlike other developing countries, it has also waited as long as was permitted by TRIPS before introducing patents on pharmaceutical products. In the new post-2005 TRIPS context, it is crucial that India continue to develop policies that promote access to medicines, not just out of responsibility to its own people, but as a lifeline to patients in other developing countries.

At the time of independence in 1947, India’s pharmaceutical market was dominated by Western MNCs that controlled between 80 and 90 percent of the market primarily through importation. Approximately 99 percent of all pharmaceutical products under patent in India at the time were held by foreign companies and domestic Indian drug prices were among the highest in the world. The Indian pharmaceutical market remained import-dependent through the 1960s until the government initiated policies stressing self-reliance through local production. At that time, 8 of India’s top 10 pharmaceutical firms, based on sales, were subsidiaries of MNCs. To facilitate an independent supply of pharmaceutical products in the domestic market, the government of India founded 5 state-owned pharmaceutical companies. Today, India is the world’s fifth largest producer of bulk drugs.

Government policy culminated in various actions including: the abolition of product patents on food, chemicals, and drugs; the institution of process patents; the limitation of multinational equity share in India pharmaceutical companies, and the imposition of price controls on certain formulations and bulk drugs. Subsequently, most foreign pharmaceutical manufacturers abandoned the Indian market due to the absence of legal mechanisms to protect their patented products. Accordingly, the share of the domestic Indian market held by foreign drug manufacturers declined to less than 20 percent in 2005. As the MNCs abandoned the Indian market, local firms rushed in to fill the void, and by 1990, India was self-sufficient in the production of formulations and nearly self-sufficient in the production of bulk drugs.

Regulatory framework for Pharmaceutical Patent before TRIPS Agreement:

The focus of the intellectual property regime that India has had to adopt since it took Commitments under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) have remained on the ability of the country to provide mechanisms which can ensure that the country is able to provide access to medicines to its citizens at affordable prices. India has had a unique position among the countries in the developing world for it has a strong generic pharmaceutical industry, which has been able to provide medicines at prices that were among the lowest in the world. Much of the credit for this development goes to the Patents Act that India enacted in 1970. Two key provisions facilitated this process.

• The first was introduction of a process patent regime for chemicals and,
• The second, shortening of the life of patents granted for pharmaceuticals.
The Patent Act 1970 stated objective was to foster the development of an indigenous Indian pharmaceutical industry and to guarantee that the Indian public had access to low-cost drugs. The Act replaced intellectual property rights laws left over from the British colonial era and ended India’s recognition of Western-style “product” patent protection for pharmaceuticals, agricultural products, and atomic energy. Product-specific patents were disregarded in favor of manufacturing “process” patents that allowed Indian companies’ to reverse engineer or copy foreign patented drugs without paying a licensing fee. This allowed the domestic industry build up considerable competencies and offer a large number of cheaper “copycat” generic versions legally in India at a fraction of the cost of the drug in the West, as long as they employed a production process that differed from that used by the patent owner. The Act protected process patents for 7 years instead of the usual 15 years needed to develop and test new drugs.

Indian Patent (Amendment) Act, 2005 (In consensus with TRIPS Agreement):

On March 23, 2005, the Indian Parliament passed the Patent (Amendment) Bill 2005 (Bill No. 32-C of 2005). It was the third amendment to the Indian Patent Act (1970). The amended Patent Act conforms to requirements set forth by the World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Since the new law came into effect on January 1, 2005, there have been serious concerns regarding the role of the domestic Indian generic industry in the new product patents regime, and the continued availability of essential medicines at affordable prices.
To meet its TRIPs obligations, India amended its patent law on March 22, 2005, abolishing its “process” patents law and reintroduced Western style “product” patents for pharmaceuticals, food, and chemicals. This action effectively ended 36 years of protection for Indian pharmaceutical companies and stipulated that Indian companies selling copycat drugs must pay foreign patent holders a “reasonable” royalty for copies sold in the Indian market. The amendment made reverse engineering or copying of patented drugs illegal after January 1, 1995.

The Act allowed for only two types of generic drugs in the Indian market:

• Off-patent generic drugs and,
• Generic versions of drugs patented before 1995.

At present, nearly 97 percent of all drugs manufactured in India are off patent and therefore will not be affected by this Act. It also introduced a provision establishing compulsory licenses for exports to least developed countries with insufficient pharmaceutical manufacturing capacities. The Amendment grants new patent holders a 20-year monopoly starting on the date the patent was filed and, without a compulsory license, no generic copies can be sold during the duration of the patent.

Compulsory Licensing:

Compulsory Licensing is a procedure whereby a Government can allow any company, agency or designated person the right to make a patented product, or use a patented process under license, without the consent of the original patent holder. 36 Under section 84(1) of the amended Act, an application can be made for compulsory license three years after the grant of a patent: “At any time after the expiration of three years from the date of the grant a patent, any person interested may make application to the Controller for grant of compulsory license.”

Pharmaceutical Patent under TRIPS Agreement and Access to Medicines:

The World Trade Organization (WTO) Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS or “Agreement”), which sets out the minimum standards for the protection of intellectual property, including patents for pharmaceuticals, has come under fierce criticism because of the effects that increased levels of patent protection will have on drug prices. While TRIPS does offer safeguards to remedy negative effects of patent protection or patent abuse, in practice it is unclear whether and how countries can make use of these safeguards when patents increasingly present barriers to medicine access.

The Fourth WTO Ministerial Conference, held in 2001 in Doha, Qatar, adopted a Declaration on TRIPS and Public Health (“Doha Declaration” or” Declaration”) which affirmed the sovereign right of governments to take measures to protect public health. Public health advocates welcomed the Doha Declaration as an important achievement because it gave primacy to public health over private intellectual property, and clarified WTO Members’ rights to use TRIPS safeguards. Although the Doha Declaration broke new ground in guaranteeing Members’ access to medical products, it did not solve all of the problems associated with intellectual property protection and public health. The recent failure at the WTO to resolve the outstanding issue to ensure production and export of generic medicines to countries that do not produce may even indicate that the optimism felt at Doha was premature.

Indian generic drug manufacturers have been manufacturing generic versions of branded drugs. Under the Act, such generic drug manufacturers that had made significant investment and were marketing the product before January 2005 can continue marketing the product in the new regime. The Act grants them immunity from infringement suits from patent holders. They would only have to pay a reasonable royalty to the patentee. Indian generics makers still retain significant scope for copycatting patented Western drugs, legally or illegally, without penalty. And Western companies have seen relatively few of their patent applications approved. Industry observers who expected India’s IPR climate to suddenly change after the 2005 Act may have been overly optimistic in their estimate of how fast things can change in this industry.

India is one of the few developing countries that decided to use the full ten-year transitional period (1995-2004) under the TRIPS Agreement. During this period from 1995 to 2004, India received numerous product patent applications that the Indian Patent Office started examining in 2005. These applications are at various stages of examination and whether they are granted or not will have a significant impact on continued access to generic medicines.

Flexibilities available under TRIPS and its use by the Indian Government to secure access to essential medicines:

The introduction of pharmaceutical patents in India has been particularly controversial. Indian producers have long been suppliers of low-cost medicines (including key HIV/AIDS treatments), domestically and also to other low- and middle-income countries. In amending its patent law to meet new international obligations, India, like many developing countries, attempted to take advantage of flexibilities in TRIPS to ameliorate potentially negative effects that pharmaceutical patents might have on the supply of medicines. India used its full transition period, waiting to introduce pharmaceutical product patents until 2005 (pharmaceutical process patents were already available prior to TRIPS). Applications dating from 1995 onward were received but were not examined on HIV/AIDS (UNAIDS) and civil society groups, defend 3(d) and point to India as a model for developing countries attempting to use TRIPS flexibilities to promote public health.

In 2005, when India was compelled to re-introduce the product patent regime, the Indian Parliament, aware of its responsibility not only to Indians but to patients across the world adopted the only pragmatic solution available — to utilize flexibilities available under TRIPS in an attempt to secure the availability, affordability and accessibility of medicines. According to this approach, TRIPS does not set any universal common standard for the substantial aspects of the patent law. Thus, as the Doha Declaration on the TRIPS Agreement and Public Health (Doha Declaration), clearly states every WTO member has the right “to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose”. Thus the TRIPS implementation strategy was “to find the means within the patent system and outside it, to generate the competitive environment that will help to offset the adverse price effect of patents on developing country consumers. The cautious approach suggests the implementation of TRIPS should be done with minimum damage”.

As noted above, the various amendments to India’s patents law introduced flexibilities at both the pre- and post-grant stage of a patent application. This study explores the potential of three of these key flexibilities in allowing continued generic production of medicines.
• The first relates to medicines invented prior to 1995. Under TRIPS there is no obligation to provide patent protection to products invented prior to 1 January 1995.

• The second is one of the most important flexibilities employed by India which is the restriction of the scope of patentability in relation to known substances. Thus, section 3(d) of the Patents Act, 1970 prohibits the patenting of known medicines unless the patent applicant can demonstrate increased therapeutic efficacy. It must be borne in mind that section 3(d) is not a blanket prohibition on such patents. However, the Indian Patent Office is expected to apply this provision strictly while examining the applications before it. It is also expected to apply the provisions of section 3(e) that prohibits the patenting of mere admixtures and section 3(i) which excludes from patenting any process of “medical or surgical, curative, prophylactic or other treatment of human beings…”

• Finally, section 11A(7) of India’s patents Act, 1970 provides that where a company was already producing and marketing a product before 1 January 2005 on which a patent application was made in the mailbox, should that patent be granted, the company may continue manufacturing that product on the payment of a reasonable royalty. These are only some of the flexibilities available under the Indian law. However, if applied strictly they offer a significant space for generic production.

Judiciary Opinion:
Supreme Court on: Access to Medicines (Novartis Case)

The Indian Supreme Court has refused to allow one of the world’s leading pharmaceutical companies to patent a new version of a cancer drug, a decision campaigner hailed as a major step forward in enabling poor people to access medicines in the developing world.
Novartis lost a six-year legal battle after the court ruled that small changes and improvements to the drug Glivec did not amount to innovation deserving of a patent. The ruling opens the way for generic companies in India to manufacture and sell cheap copies of the drug in the developing world and has implications for HIV and other modern drugs too.

Campaigners were jubilant. A ruling in Novartis’s favour would have reduced poor people’s access to the drug, said Jennifer Cohn, of Médecins Sans Frontières (MSF). “The fact that India says patents is to reward innovation as opposed to small changes does stay true to the concept of what a patent should be.”

F. Hoffman-La Roche Ltd., v. Cipla Ltd. (Delhi High Court):

The Court, while rejecting the application from Roche for a temporary injunction preventing Cipla from manufacturing and selling at very low price the generic version of the cancer drug erlotinib, observed:

“therefore, this Court is of the opinion that as between the two competing public interests, that is, the public interest in granting injunction to affirm a patent during the pendency of an infringement action, as opposed to the public interest in access for the people to a life saving drug, the balance has to be tilted in favour of the latter. The damage or injury that would occur to the plaintiff in such case is capable of assessment in monetary terms. However, the injury to the public which would be deprived of the defendant’s product which may lead to shortening of lives of several unknown persons, who are not parties to the suit, and which damage cannot be restituted in monetary terms, is not only uncompensatable, it is irreparable. Thus irreparable injury would be caused if the injunction sought for is granted.”

Problem of Data Exclusivelity in Access to Medicine in India:

Pharmaceutical companies have to submit test and clinical data to the national health authorities to obtain marketing approval for a new drug. The national health authorities keep the innovator data confidential against “unfair commercial use” for ascertain time period, thus barring generic manufacturers from using the submitted innovator data for the stipulated period.

The US and EU grant “data exclusivity” for five years and eleven years, respectively. Most often, companies use data exclusivity provisions to seek a period of monopoly in a country even if it does not have any patents on the product in the country. As such, data exclusivity provisions have considerable implications for developing countries like India.

So far, India has not introduced provisions pertaining to data exclusivity in the three amendments to the Patents Act, 1970. India is now considering amendments to the Drugs & Cosmetics Act, 1940 and the Indian Insecticides Act, 1968 incorporating provisions for data protection.

Once data exclusivity is introduced, generic companies would have to do their own safety and efficacy tests. The huge cost involved in this exercise could result in generic companies being barred from producing a generic version of a product for a period extending effectively beyond 20 years. It may also result in the ineffective use of compulsory license due to data exclusivity provisions, were such a license issued to a generic manufacturer.

Conclusion:

Since 1970, India’s Patent Act has allowed Indian manufacturers to legally produce generic versions of medicines patented in other countries. India’s expertise in reverse drug engineering and the efficiency of its pharmaceutical manufacturing industry fast established it as the prime source of generic medicines in the world. 2005 marks a fundamental and potentially dramatic change in access to medicines in developing countries: countries which do not yet grant patents on medicines, such as India, now have to implement patent laws in compliance with the World Trade Organization (WTO) Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. The Act has some clear provisions to protect the interests of the domestic generic manufacturers. It has achieved a reasonably fine balance among stringent IP measures, while making use of some of the flexibilities that TRIPS offers. The amended Patents Act has an effective opposition system for challenging frivolous patents, limited patentability exceptions, elaborate provisions pertaining to compulsory licensing, and parallel importation.

The changes to the new Patents Act could enable India to continue playing the pioneer role that it played in the pre-TRIPS period, making drugs available at cheap prices to consumers both domestically, and around the world.

Bio-piracy from India in this intellectual property rights regime: An analysis

Sk Jahangir Ali

The world wide economic integration by the GATT and the TRIPs opened the mind of the national and international policy markers to protect their bio-diversity from the free access and bio-privacy. The Biological Diversity Act 2002, The Protection of Plant Varieties and Farmers’ Rights Act, 2001 and The Patent Act 1970 as amended by the Patents (Amendment) Act 2005 in India have not realized the menance of bio-privacy, ‘re-colonization in the making’, ‘global village global tillage’ and the offspring of WTO.

India is a signatory of WTO and TRIPs and The Patent Act of India is being influenced by the TRIPs. Section 3 of the Patent Act, 1970 deals with the concept of what are not inventions. Sub-Section (j) of section 3 as added by Act 38 of 2002, sec. 4 (w.e.f. 20.05.2003) says:

“Plants and animals in whole or any part thereof other than micro-organism sent including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals.”

Article 27(3)(b) of the TRIPs says:

“Parties may exclude from patentability plants and animals other than micro-organism, and essentially biological process for the production of plants or animals other than non-biological and microbiological process. However, parties shall provide for the protection of plant varieties or any effective sui generis system or by any combination thereof. This provision shall be reviewed four years after the entry into force of this agreement.”

According to the Indian Patent Act, the geographical origin or the anticipation of the invention in local or indigenous knowledge constitute grounds for opposition or revoking a patent. Section 25 of the Patent Act 1970 says about the opposition of the patent. Sub-section (j) and (k) of see 25 runs as under:

See 25 (j) “that the complete specification does not disclose or wrongly mentions the source or the geographical origin of the biological material used for invention.”

See 25(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,….”

Section 64 of the Patent Act, 1970 deals with revocation of patents. See 64(p) and (q) has been inserted by Act 38 of 2002, see 31 (w.e.f. 20.05.2003) which are the repetition of section 25(j) and (k).

The current international framework of the intellectual property law favours for the investment protection and the commercial exploitation of the biological resources and the related knowledge.

It is important to emphasized the Article 27(3)(b) of the TRIPs to protect the indigenous knowledge by a wide interpretation. International Union for Protection of New Varieties of Plants or UPOV deals with the concept of the protection of plant varieties grant of exclusive property right to the plant breeders on the basis of distinct, uniform and stable for the appropriation of biological resources and related knowledge but it does not recognize farmers as a breeders. The main philosophy of UPOV is to protect the interest of the corporate biotechnology and powerful seed companies.

At the present scenario to protect the threat of bio-privacy it is needed in India to evolve its own the generis system on community intellectual rights of farmers and not to follow the UPOV nodal.

The legislature with the objective of incentive to breeders and motivation of private sector for the development of the new varieties of plants recognized the right of the plant breeders and included farmers as breeders in respect of their contribution made at any time in conserving, improving and making available plant genetic resources for the development of new plant varieties. The present law is being rectified by providing farmers right at equal footing of the breeder but the main problem lies on the fact that the farmers can not easily obtain property right, benefit sharing on the financial compensation and the intellectual contribution not taken into account.

The Bio-diversity policy broadly encapsulates survey of bio-diversity, national data base, in situ and ex situ conservation, sustainable utilization, indigenous knowledge system, benefit sharing, people participation, international cooperation, research, education, training and extension. Failing in line with B.D. Policy, the Bio-diversity conservation Bill entail information sharing system, chronicling and documentation of bio-wealth, farmers and breeders right is tantamount to CBD – but the grey area of it is about the silence of conservation and sustainable use of biological resource. Another point is that the farmers have no right to allocation of property right.

The fundamental objectives of CBD are – (1) conservation of biological diversity (2) sustainable use of biological diversity and (3) right to sovereignty and equitable sharing of benefit among the indigenous community. The main problem of India is that CBD is directly learned by WTO and TRIPs on the binding character of the treaty to a country.

TRIPs provides for the IPR protection on the basis of monopoly and capitalistic approaches for the patent holders. The effective sui generis under the TRIPs indicate only the patent protection.

Our legislature should, therefore, refurbish the IPR regime over biological resources including the plant variety protection under the paramount consideration of human right to food, health, environment and socio-economic complexities and peculiarities of the country tune with global integral relation, monetary balance, free and fair trade to achieve, “the greatest good of the greatest number.”

 

 

Patent of Inventions, Innovation in Softwares: Patinformatics

A comparative analysis of Global players

Ankit Kumar Singh

A. Background:

The practice of granting monopolies by patent has a long history of over 600 years. The term patent can be traced to the term Letters Patent, a grant in the form of a document rolled up with the King’s or Queen’s seal appended at the bottom, conferring certain rights and privileges on an individual. The grant was not sealed or closed but it was open to public. Though letters patent were granted for various purposes, they were most often granted to inventors, and hence the word ‘patent’ was eventually used to describe the inventor’s monopoly. It only excludes others from practising his invention without his permission. The patent system achieves this goal by granting limited exclusive rights to inventors in return for public disclosure of inventions that would encourage scientific and technological advancement. An invention is the creation of a new technical idea and of the physical means to accomplish or embody it. Thus, there must be a concept and a way of putting the concept into some practical form. An unimplemented idea is not patentable. Software is a set of interacting programmes. Each programme is a sequence of instructions written in a well-defined language, encoding operations, processes or algorithms applied to data in the broadest sense. The programme is initially written in a programming language understandable to professionals. At this stage, it is in the form of ʺsource codeʺ, which permits the development and production of a software product. Once written, this sequence of instructions can be compiled, which means translated and transformed into a binary sequence (of 1s and 0s) signalling the presence or absence of an electric impulse, comprehensible for a machine, but no longer to a human mind. It is then in the form of an ʺobject codeʺ or binary code. In simple words, a computer program, or software, is a “set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result.” A software-related patent is a “patent that claims as all or substantially all of its invention some feature, function or process embodied in a computer program that is executed on a computer.” A major subject of debate is whether software alone, not in combination with other physical elements or steps, should be, or is, patentable.

B. Arguments in Favour of Patenting:

Although software exists as written text, both as source and object codes, unlike other copyrightable subject matters, its primary purpose is not that they be read by human beings. Rather, software, at least in object code form, is written for the purpose of performing functional tasks. Computer software, in conjunction with the computer, carries out the particular task or set of tasks itself. In short, software is a functional work of technology. Historically, patent protection has always been available for functional subject matters. Patent protection of computer software is that a patent can protect a concept underlying the computer program, and thus would promote the development of the software industry and computer-related industry. Software provides a set of instructions that allow a machine to indicate, perform or achieve a particular function, task or result. In that sense, both hardware and software exhibit technical behaviour.

Since software invention requires considerable investment of time and money, it should be protected. Given the limited ability of copyright to protect the valuable functional aspects of software such as behaviour and structure, sequence, or organization, second comers could simply copy these aspects either directly from the source code or by decompiling the object code. These kinds of practices diminish the real value software and deprive the original developers of the ability to recoup their development costs and from earning money from their inventions. Therefore, the prospect of obtaining an exclusive right to practice and/or license an invention under patent protection gives inventors important financial incentives to invest time and resources in developing new inventions.

The reward in the shape of a patent serves as an incentive to innovators, as it can be argued that developers need means to recuperate their investment. In other areas of innovation, patents have encouraged substantial investment in research and development and have generally promoted innovation. Software development is a vibrant area of innovation, despite the uncertain nature of its legal protection. The success of open source software also serves to diminish the claim, as there is a field of endeavour where thousands of developers innovate without the incentive of patent protection. If a computer program contains elements that meet patentability requirements, it should be awarded software protection. Since software development is a technical field like any other its results should be patentable. Effective protection of the software industry is an economic necessity. Over the few past decades, the software industry has achieved a substantial growth rate which continues to grow unabated. Countries that want to increase or at least to sustain investments in this sector should provide effective protection mechanisms for these technologies.

C. Arguments against Patenting:

Computer programs are already protected by copyright, and thus it is not necessary to provide any other titles of protection. Smaller software developers would not be able to enjoy expensive patent protection, and would be put in a position to pay royalties to patents owned by big corporations. Computer software is actually an algorithm or a mathematical formula. An algorithm is a series of steps to solve a problem and computer program is an implementation of that algorithm, which is like an implementation of mathematical equation. Granting patents for mathematical algorithms would preclude others from performing the same process. So like mathematical algorithms, computer programs should not be patented.

Exclusive rights granted by patents diminish competition by creating monopolies in the market. On the other hand, exclusive rights conferred by a patent owned by small and medium enterprises would strengthen their market position and negotiation power with the possibility to license or assign patents. Patent protection of computer programs would inhibit competition in this field due to the characteristics of software innovation. It is said that software innovation typically involves cumulative, sequential innovation and re-use of others’ work. To a certain extent, this is an inevitable and permitted consequence of the patent system. However, the fact that the software industry has a natural tendency towards monopolies as a consequence of the need for standardization, allows software patents to have a further effect on monopolization in the sector.

Software patents encourage the creation of the so-called ‘patent thickets’: a dense undergrowth of interrelated patents that researchers have to navigate in order to develop new technologies. There are two different types of thickets. The first one is a single technological innovation that may be protected by several patent holders. This situation would require anyone interested in developing software in that area to obtain separate licences from numerous owners. The second type of thicket occurs when a product is covered by a large number of patents, not just one. Patent thickets increase the cost of innovation, they encourage inefficiency through the creation of complex cross-licensing relations between companies, and they may even stop newcomers entering the market if they fail to penetrate the thicket. However, at least one commentator takes issue with critics of patent thickets: even where thickets exist, they have no effect on innovation through research and development spending.

D. Protection of Softwares:

  a) International Perspective:

The most common systems for protecting computer software are: Copyright, Patents, and Trademarks. Copyright protects the expression of an idea in a tangible (material) form. The recent Copyright Treaty by the World Intellectual Property Organization confirms that computer software is to be protected by copyright as a literary work throughout the world. Literary works, such as books and poems, have traditionally been expressed in a written form which is readable to humans. With regards to software, both the source code (human readable form) and object code (machine readable form) qualify for copyright protection. Patents protect the underlying ideas of a product which has commercial value in industry. Computer software incorporates ideas in the form of algorithms and data structures. These ideas can be protected by patents if proven to be innovative enough and of commercial value. Trademarks protect the name that uniquely distinguishes a company or product from the rest. Trademarks are available in regards to computer software in software names and software company names.

In particular, prior to the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement, the status of computer program protection was undefined under the Paris Convention, which regulates global patent rights, and was controversial under the Berne Convention, which regulates the worldwide copyright regime. The TRIPS Agreement places computer programs under the copyright section by stating that “computer programs, whether in source or object code, shall be protected as literary works under the Berne Convention.” Furthermore, TRIPS mandates that all member states create an adequate judicial and administrative enforcement mechanism and provide a dispute resolution mechanism not only for the protection of computer programs but all intellectual property rights.

Despite the TRIPS Agreement, the question of whether or not computer programs can be patented has not been solved. Article 27 of the agreement states that “… patents shall be available for any inventions…in all fields of technology, provided they are … capable of industrial application.” While the second and third paragraphs of the same article allow member states to exclude from patentability some categories such as medical treatment, or inventions dangerous to health or environment, it makes no mention of computer programs. By not commenting on the viability of software patents, TRIPS leaves this decision to the individual signatories. However, even the developed countries differ as to whether computer programs should be patentable, and if so, which limitations should apply.

b) United States:

The U.S. Code defines inventions that are the proper subject matter of U.S. patents as follows: “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title.” Not all “inventions” are patentable in the U.S. because neither a mathematical formula nor an algorithm for making mathematical computations or conversions can be patented. Nevertheless, the U.S. Supreme Court also excluded “laws of nature, natural phenomena, and abstract ideas” from patent protection. Before 1981, the United States Patent and Trademark Office (USPTO) treated computer programs and inventions relating to computer programs as mathematical algorithms or abstract ideas and did not grant patents. Attitudes towards software patents have changed significantly following Diamond v. Diehr, in which the Supreme Court stated that a patent claim could not be denied solely because the invention uses “…a mathematical formula, computer program, or digital computer.” An idea in and of itself is also not patentable. The implication is that any mathematical procedure is akin or identical to a law of nature, which leaves doubt as to whether any computer-implemented inventions are patentable.

Following the decision in In re Freeman, the U.S. Patent and Trademark Office (“USPTO”) applies a two-step test—which was further refined in In re Walter and in In re Abele —to determine whether a particular invention is patentable. The first step is a determination of whether the patent claim describing the invention recites elements or steps that are themselves mathematical algorithms. If a mathematical algorithm is not present, patent protection may be the proper vehicle of protection if the other statutory requirements are met. If a mathematical algorithm is present, a second step attempts to determine whether the claim reciting the mathematical algorithm relates or applies, in a non-trivial fashion, the algorithm to physical elements or process steps, so that the claim as a whole must be analyzed.

In 1981, the U.S. Supreme Court clarified that computer technology should not be treated differently from other technologies under the patent law and that inventions involving a computer program can be the proper subject matter for protection by U.S. patents. Furthermore, the Federal Circuit in In re Alappat held that software has the power to convert a general purpose computer into a special purpose machine, which constitutes patentable subject matter. Today, the U.S. grants patents for a wide range of computer software-related inventions provided that they produce “concrete, useful and tangible” results.

c) Europe:

Traditionally, software has been protected by copyright and excluded from patent protection in Europe. Article 52(2) of the European Patent Convention excludes “schemes, rules and methods for performing mental acts, playing games or doing business, and programming computers” from patentability. These exclusions are made for abstract and intellectual mechanisms, as opposed to useful tangible products or processes. Despite this language, however, patents covering computer software have been granted pursuant to decisions of the European Patent Office Board of Appeal. The panels in those cases interpreted Article 52(2) in light of other provisions of the Convention, including Article 52(3), and concluded that while computer software and business methods cannot be patented as such, they can be patented on the basis of the technical effects produced by the software or method. Over the last fifteen years the Technical Board of Appeal of the European Patent Office (“EPO”) has tried to get over this obstacle, almost even to the point of undermining the clear intent of the entire European patent system, but it is still shackled by its current provisions.

On Aug. 31, 2001, the European Patent Office issued new guidelines with respect to the patenting of computer programs and business methods. The purpose of these amendments was to confirm the guidelines to the aforementioned European Patent Office Board of Appeal decisions concerning the patentability of business methods and computer-related inventions and with current European Patent Office practice on examining such subject matter. Under the 2001 amendments, the European Patent Office, as it had in the past, relied on language in Article 52(3) of the Convention and language in Rules 27 and 29 of the Convention’s Implementing Regulations to issue computer software patents. Under the revised, current guidelines, the European Patent Office may, assuming all other requirements are met, grant a computer software patent provided it is of a “‘technical character’ to the extent that it must relate to a technical field, concern a technical problem, and have technical features in terms of which the matter for which protection is sought can be defined in the claim.” Accordingly, although computer programs per se are not patentable, under the guidelines, “if a computer program is capable of bringing about, when running on a computer, a further technical effect going beyond … normal physical effects, it is not excluded from patentability, irrespective of whether it is claimed by itself or as a record on a carrier.” It is clear that the existing procedure is well established in favour of some limited patentability of software, even after the defeat of the Directive. European Commissioner Benita Ferrero-Waldner has pointed out that, despite the vote, ‘patents for computerimplemented inventions will continue to be issued by national patent offices and the European Patent Office under existing law’.

d) Japan:

Under Article 2(1) of the Japanese Patent Law, computer software, like all other inventions, is patentable if it is a highly advanced creation of technical ideas by which a law of nature is utilized. In February 1997 the Japanese Patent Office issued its Implementing Guidelines for Computer Software-Related Inventions, published, in part, to “adequately protect software related inventions by clarifying that ‘computer-readable media recording computer programs’ ” may constitute statutory subject matter. Just three years later, in 2000, the Japanese Patent Office issued revised Examination Guidelines for Patent and Utility Model in Japan, which included Computer Software-Related Inventions. Under these lengthy guidelines, the Patent Office sought to address the issues raised concerning the patentability of software-related inventions that are not necessarily recorded on computer-readable media (i.e., Internet-related inventions), as well as the patentability of business methods. Its purpose was to, among other things, achieve consistent decisions among patent office examiners and efficient implementation of the patent and utility model laws.

e) India:

Under the Indian law, computer programmes are protected under the Copyright Act, 1957; they are not entitled to protection through patents. The law relating to patents in India is governed by Indian Patents Act, 1970 as amended by Patents (Amendment) Act, 1999 and Patents (Amendment) Act, 2002, which came into force with effect from May 2, 2003. Section 3(k) of Patent Act, 1970“A mathematical or business method or a computer programme per se or algorithms are not patentable.” According to the Draft manual of practice and procedure :

4.11.1 A computer implemented invention mean any invention, the performance of which involves the use of computer, computer network or other programmable apparatus, or an invention one or more features which are realized wholly or partially by means of a computer programme/ programmes.

4.11.2 Computer programmes are a set of instructions for controlling a sequence of operations of a data processing system. It closely resembles a mathematical method. It may be expressed in various forms e.g., a series of verbal statements, a flowchart, an algorithm, or other coded form and maybe presented in a form suitable for direct entry into a particular computer, or may require transcription into a different format (computer language). It may merely be written on paper or recorded on some machine readable medium such as magnetic tape or disc or optically scanned record, or it may be permanently recorded in a control store forming part of a computer.

4.11.3 If the patent application relates only to a machine i.e., hardware based invention, the best mode of operation may be described along with the suitable illustrations. However, in the case of a process related inventions, the necessary sequence of steps should clearly be described so as to distinguish the invention from the prior art with the help of the flowcharts. The source/pseudo/object codes may be incorporated in the description optionally.

4.11.4 In order to distinguish the invention from the prior art, relevant prior art is also required to be given in the specification. It is always essential to analyze the invention in the light of what is described and the prior art, in order to identify the contribution to the art and hence determine whether this advancement resides in, or necessarily includes, technological features and technical application or is solely intellectual in its content. A hardware implementation performing a novel function is not patentable if that particular hardware system is known or is obvious irrespective of the function performed.

4.11.5 Applications related to computer inventions may broadly fall under the following categories:

(a) Method/process:

(b) Apparatus/system:

(c) Computer program product.

The following aspects should be looked into while dealing with such applications.

4.11.6 The method claim should clearly define the steps involved in carrying out the invention. It should have a technical character. In other words, it should solve a technical problem. The claims should incorporate the details regarding the mode of the implementation of the invention via. hardware or software, for better clarity. The claim orienting towards a “process/method” should contain a hardware or machine limitation. Technical applicability of the software claimed as a process or method claim, is required to be defined in relation with the particular hardware components. Thus, the “software per se” is differentiated from the software having its technical application in the industry. A claim directed to a technical process which process is carried out under the control of a programme (whether by means of hardware or software), cannot be regarded as relating to a computer programme as such.

For example, “a method for processing seismic data, comprising the steps of collecting the time varying seismic detector output signals for a plurality of seismic sensors placed in a cable.” Here the signals are collected from a definite recited structure and hence allowable.

4.11.7 The apparatus claim should clearly define the inventive constructional hardware features. The claim for an apparatus should incorporate a “process limitation” for an apparatus, where “limitation” means defining the specific application and not the general application. As a general rule, a novel solution to a problem relating to the internal operations of a computer, although comprising a program or subroutine, will necessarily involve technological features of the computer hardware or the manner in which it operates and hence may be patentable. For example, in a computer comprising means for storing signal data and a first resistor for storing data, the clause starting with “for” describes the function or process carried out by the apparatus, and form the part of “process limitation” here.

4.11.8 The claims relating to software programme product are nothing but computer programme per se simply expressed on a computer readable storage medium and as such are not allowable. For example, if the new feature comprises a set of instructions (programme) designed to control a known computer to cause it to perform desired operations, without special adoption or modification of its hardware or organization, then no matter whether claimed as “a computer arranged to operate etc” or as “a method of operating a computer”, etc., is not patentable and hence excluded from patentability. The claim might stipulate that the instructions were encoded in a particular way on a particular known medium but this would not affect the issue. e.g., A program to evaluate the value of PI or to find the square root of a number are held not allowable. An invention consisting of hardware along with software or computer program in order to perform the function of the hardware may be considered patentable. e.g. embedded systems.

4.11.10 A mathematical method is one which is carried out on numbers and provides a result in numerical form (the mathematical method or algorithm therefore being merely an abstract concept prescribing how to operate on the numbers) and not patentable.

However, its application may well be patentable, for example, in Vicom/Computer-related invention [1987] 1 OJEPO 14 (T208/84) the invention concerned a mathematical method for manipulating data representing an image, leading to an enhanced digital image. Claims to a method of digitally filtering data performed on a conventional general purpose computer were rejected, since those claims were held to define an abstract concept not distinguished from a mathematical method. However, claims to a method of image processing which used the mathematical method to operate on numbers representing an image can be allowed. The reasoning was that the image processing performed was a technical (i.e. non- excluded) process which related to technical quality of the image and that a claim directed to a technical process in which the method used does not seek protection for the mathematical method as such. Therefore the allowable claims as such went beyond a mathematical method.

4.11.11 The patent application No.558/DELNP/2005 related to method of operating the credential management processor. This was refused as it was found to be attracting the provisions of section 3(k) as the alleged method was relating to ‘receiving ‘, ‘de-referencing’ and ‘storing’ being purely a computer implemented software application. As well as the enhancement of security as claimed in method claims was already disclosed in the cited document and is obvious to a person skilled in the art.

E. Conclusion:

Economists view patent protection as a trade-off between the need to encourage innovation and the necessary evil of allowing a temporary monopoly to the innovator. Although it is controversial, no one can deny the importance of software. There are those who argue that software is so fundamental that our society should not allow anyone to own it to the exclusion of others. Some are content to treat software as copyrightable literature, affording protection only to its expressive, but not its functional aspects. Some argue strenuously that the patent system, which has existed since the late eighteenth century, is outdated and cannot handle this new technology and that some different, sui generis, form of protection should be created for software technology. Others argue that the current patent system is working fine and that it will adapt to this new technology, just as it has done many times before. Failure of TRIPS Agreement to determine whether computer programs can be patentable or not and if so which limitations should apply, creates different application among the member states. The U.S. provides for the patent of computer software and even European Union provides for the patent in the Computer programmes if it has “Technical Effect”. On the lines of US, Japan also provides for the patent to the computer software. India too provides for the Patent of the Computer Program in the Hardware form, in spite of its express negation in Patent Act, 1970.

TRIPS AND DEVELOPING COUNTRIES

INTRODUCTION

Thomas Jefferson quoted, “If nature has made any one thing less susceptible than all others of exclusive property, it is the action of thinking power called an idea[1]. But the technological advances of the modern times have not even left this one thing free. Even thinking processes are being commercialised and converted into intellectual property. The developed countries with immense resources at their disposal were the ones who pushed the demand for greater protection of intellectual property as they saw vast possibilities of appropriation of profits from such a property. Thus, an idea too began to be patented and protected. This gave rise to a `rat race’ between the Multinational National Corporations (MNCs) to increase the scope of their R&D activities and invent new products. Developed nations such as the U.S.A. where most of these MNCs are located too tried to develop an international policy which would enable these companies to expand their market base globally and to find ways of creating a monopoly market by way of protection given by the Intellectual Property Rights. Thus, efforts on the part of the developed countries began to strengthen the IPR protection. This led to various Conventions and finally materialized in the Trade Related Intellectual Property Rights or the TRIPS agreement[2]. Certainly, there are both strong advocates and strident critics of a global intellectual property regime. Advocates envision a flowering of innovative activity in developing countries and stronger supports for international technology markets. Critics see higher prices for patented medicines, restricted access to new seed varieties and the potential for monopolistic and abusive technology licensing practices. Generally, the critics far outnumber the advocates. But in reality, TRIPS Agreement is not that monstrous as it is projected to be. Although, it has led to the creation of monopoly markets and hence has led to price rise, making the patented goods almost impossible to fit into the consumption basket of the common man, the huge amount of benefits it is bestowing on the developing economies cannot be overlooked. If we weigh its pros against its cons then definitely the former will prevail. Moreover, by only criticizing this agreement and bringing into limelight solely its negative side then its very purpose would stand defeated. As the above discussion suggests, this paper attempts to present a more humane and just analysis of the Agreement which the developing nations love to hate.

TRIPS: THE GENESIS

After the Second World War, the U.S.economy tumbled. Negative consequences were very much evident at the end of the war. To a significant extent, this spurred the U.S.A. to pursue international multilateral cooperation. In this background the GATT or General Agreement on Tariffs and Trade was negotiated.  GATT was not an international organisation but was a legal entity in its own right.  GATT aimed at regulating trade at the international level. Its objective was to fully utilise and develop the resources of the world and the expansion of production and exchange of goods besides reciprocal and mutually advantageous arrangements involving a substantial reduction of tariffs and a progressive elimination of other barriers to trade[3]. But, the GATT remained unsuccessful in achieving its objectives. Though it was successful in moving countries to liberalise trade and to cooperate, its principles were often bent and regulations circumvented. Its dispute-solving mechanism was weak as it was only an inter-governmental body and had no legal status[4]. It was then increasingly felt by both the developed and developing nations that some sort of an institutional mechanism was needed to safeguard their position. This led to the Uruguay Round and finally the establishment of The World Trade Organisation (WTO) and the signing of the TRIPS Agreement in 1994[5]. The WTO is the legal and institutional framework of multilateral trading system as redefined and extended by the Uruguay Round of trade negotiations[6]. The WTO is quite unique in the family of international organizations not because of the wide scope of contractual obligations but because it is binding and enforceable through the integrated dispute settlement process. The WTO is thus not the usual `best-endeavours’ organisation. Hence, in the WTO there is no backing out without any retribution and the participation in the rule-making process is important[7]. There are three pillars of  the WTO- the first is the revamped version of the GATT, the second pillar is the new agreement on trade in services or GATS and the third pillar is the TRIPS Agreement. The purpose of the TRIPS, in a broad sense is to stimulate research and development by granting owners of intellectual property exclusive rights for a limited period of time[8]. The reason for the inclusion of the IPRs in the negotiations at the Uruguay Round was the significant increase in the International Trade in goods during the Eighties. A number of industrialised countries felt threatened that as a consequence of weak protection extended to the IPRs their interests would be adversely affected. Hence, a demand for strengthening of protection to the IPRs was voiced. Several attempts such as the Paris Convention on Industrial Property and the Berne Convention on Literary and Artistic Works were made in the 19th Century to cover the issue of IPRs under the ambit of the international law. Both treaties were administered by World Intellectual Property Organisation (WIPO)[9]. In the 1970s developing countries sought to obtain more flexibility in the application of the provision of the above –mentioned treaties so as to secure greater access to foreign technologies with a view to promoting their economic and social development.  These efforts led to the revision of Paris Convention in 1971. Similar efforts were made in order to bring about a revision of the Berne Convention where the developing countries called for a loosening of the copyright protection[10]. These conventions indicated that an atmosphere was created for the demand of stronger protection to IPRs. This along with other factors such as the growing competitiveness of newly industrialized developing countries in the manufacturing sector, the increasing globalization of the market place and the growing perception of intellectual property by the enterprises of the developed countries as a strategic asset contributed to the successful culmination of the TRIPS Agreement. TRIPS was a result of a number of negotiations which continued over a span of almost 20 years from Punta Del Este to Marrakesh. The idea of TRIPS was first mooted at the GATT meeting of trade ministers at Punta Del Este in Uruguay in 1986 and was formally concluded in April 1994 at Marrakesh, Morocco along with the other negotiations of the Uruguay Round[11]. When this round got underway, 14 negotiationg groups were established under the group of negotiation on goods, including the negotiating group on Trade related aspects of intellectual property rights. The draft of this agreement popularly known as the Dunkel Draft was heavily criticized by India as it led to the elimination of all options. Eventually, given the complexity, ambiguity and relative novelty in international law of several of the provisions of the TRIPS under the Dunkel Draft, all members were given one year from the entry into force of the WTO and TRIPS, to implement its provisions. It was also agreed that all other provisions of the TRIPS could be delayed by the developing countries upto January, 2000. Product patent protection for areas of technology not so protected by January 1995 could be delayed for a further period of five years, upto January 2005[12]. It is by far the most wide-ranging and far reaching international treaty on the subject of Intellectual Property to date and marks the most important milestone in the development of law in this area. Apart from being the first international intellectual property agreement to dramatically increase the level of minimum standards of such law, TRIPS is also the first international intellectual property law agreement[13] :

i)                    that obliges, in a single undertaking, new standards on as many as seven types of IPRs

ii)                  to be included as a part of the rules governing the multilateral trading system, thus marrying trade law and jurisprudence with intellectual property law, particularly making applicable to the swift and effective dispute settlement process of the WTO, which can impose trade penalties on members violating the agreement.

iii)                That includes fairly detailed standards for domestic enforcement of IPRs, both internally and at the border.

iv)                That covers new subject matter under existing types of intellectual property, at least for some developing countries such as product patents for food, pharmaceuticals, chemicals etc[14].

The TRIPS Agreement was a novel concept introduced in the arena of the IPRs. It had been materialised after a long period and after many controversies. Hence, problems in its implementation were inevitable. The developing countries since its inception were hesitant in adopting the TRIPS regime because compliance with it required amendments and modifications in their existing laws. This paper will further delve in to a detailed analysis of the effect of the TRIPS Agreement on the developing nations.

TRIPS and Developing Nations

TRIPS provides minimum standards for the protection of intellectual property rights or IPRs but does not envisage harmonization of these rights among all WTO members. The demand for the inclusion of intellectual property in the Uruguay Round was mainly put forth by the developed countries such as the U.S.A., EU, Japan etc[15].  Although, one of the reasons for the inclusion of the subject in trade negotiations may well have been the attractiveness of the trade enforcement mechanism, the trade forum was more importantly seen as one in which the chances of making progress from their perspective was higher because of the possibilities of making trade-offs with other areas. Though, the demand was put forward by the developed countries it was also supported and approved by the developing nations. Even if not all developing countries participated in these negotiations in equal measure, it would be fair to say that the developing countries’ perspective was represented[16]. The TRIPS Agreement continues to be the generally accepted point of reference for the protection that countries should give to the intellectual property of others. But, this does not make it immune from criticism. This agreement has been the subject of dual criticism. Developed countries question its effectiveness in providing adequate protection to their intellectual property rights and the developing countries find compliance with the TRIPS Agreement as an attack on their sovereignty. They feel that they have been discriminated against and the bounty is being enjoyed by the developed countries whereas the `left-overs’ are being thrown to them.[17] The main question that arises here is that if the developing nations found TRIPS so unfavourably disposed towards them then why in the first place did they accept it. One major reason for this muted acceptance of the TRIPS regulations is their stake in a successful conclusion of the Uruguay Round as a whole. They had an interest in the survival of a credible multilateral trading system and its reinforcement. This survival depended upon a successful culmination of the Uruguay Round for which it was accepted that a major outcome regarding the intellectual property laws was essential[18]. They also expected benefits from results in specific areas of the negotiations, such as textiles and agriculture. Thus, in return of trading benefits the developing countries agreed to change their intellectual property laws and to further strengthen the protection given to the IPRs. One major question that has been raging since the inception of the TRIPS Agreement and even before it is that are the developing countries discriminated against in matters of Intellectual Property Rights. Many arguments have been put forward in order to come to a satisfactory answer to this question but in vain. The author is of the opinion that the answer to this question should be in negative and has put forward contentions to support her viewpoint.

Intellectual Property can be defined as a category of intangible rights protecting commercially valuable products of the human intellect[19]. The National Consumer Council,1991 has defined it as information with a commercial value[20]. They have also been characterized as a composite of “ideas, inventions and creative expression” plus the “public willingness to bestow the status of property” on them[21].  It becomes explicit from the definition that intellectual property is a bundle of rights and hence it should be protected. Moreover, the subject matter of its protection are the valuable products of the human intellect. This shows that intellectual property rights protect the fruits of someone’s hard labour and skills. The TRIPS regime seeks to protect these rights of the individuals. The Research & Development skills of the developed countries are extremely sophisticated. They also have huge financial resources at their disposal in order to carry out research activities. It is the result of extensive cerebration processes of the best minds that a new product is invented. A large number of energy, money and other resources are spent on such an invention. It will be grossly unfair to the people who are responsible for this invention if they are not given the due credit for their work. Thus, the strengthening of protection extended to the Intellectual Property Rights is a much needed step in order to prevent free-riding and to accord rightful significance to the person or persons responsible for the innovation. But the situation created here is of a perpetual imbalance. If the Intellectual Property Rights are further concretised and protected then a situation of monopoly arises that creates a scarcity in the market which leads to the sky-rocketing of prices and hence makes the situation difficult for the common people especially in the developing countries. This is the main contention that the scholars of the developing countries argue upon. They contend that the TRIPS Agreement and a strong enforcement mechanism of the intellectual property rights are inhumane and opposed to the basic essence of humanity as they completely disregard the plight of the poor while protecting the interests of the rich. A counter-view of this contention can be that `Justice for one is Injustice for others’. The whole world is lopsided. Any attempt to create a perfect or harmonious balance is futile. If in order to accommodate the needs of the poor the rights of the rich are transgressed upon will this not amount to injustice? If the hard labour done by the scientists and other technocrats is not given due recognition will this not amount to a lack of incentive? These questions need to be answered before any measure to provide `justice’ to the masses is taken. The plight of the poor is visible and much talked about hence it has become the concern of every household in the world but what about the rights of the rich which are being trampled upon in the name of humanistic measures. If adequate protection to the Intellectual Property Rights is not provided then the very basis of granting such rights would become meaningless. `Free-riders’ would freely violate such rights and would get unjustly enriched at the cost of others’ labour and hard work. Such a miscarriage of justice should not be allowed to take place in the name of protection of the marginalised section of the world population. The TRIPS Regime led to the amendment of the existing intellectual property laws of the developing countries in order to bring it in conformity with its regulations. One of the major changes that these amendments brought about in the Indian Patent Act was the granting of product patents along with the process patents which were being granted earlier. This led to a huge uproar and furore among the pharmaceutical companies on the domestic front. This was because earlier by resorting to reverse-engineering methods they could produce the same product but now such `plagiarist’ methods were prohibited by the legislation. Again arguments based on humanistic notions were raised against this amendment. It was argued that such a strict implementation of Intellectual Property Rights would lead to the creation of a dominant producer and would adversely affect competition and hence would provide no choice to the consumers. It was also put forth that granting of product patents would lead to escalation in prices and would make the product non-affordable for the poor residing in the developing countries. It was primarily for this reason that reverse-engineering was allowed. Reverse engineering is the process of discovering how an invention works by inspecting and studying it, especially by taking it apart in order to learn how it works and how to copy it and improve it[22]. Thus, reverse-engineering in simple language is nothing but copying an existing process and making some improvements in it based on the original work. Thus, such a method cannot be called `healthy’ with respect to the protection of the intellectual property rights. It is a naked infringement of the IPRs and hence, granting of the product patents is essential in order to prevent such transgressions. The second contention in favour of the TRIPS regime is that such an extensive protection provides an incentive to Research & Development. A strong enforcement mechanism and patent protection system no doubt would lead to the stimulation of Research and Development efforts[23].

If the mechanism of enforcement is lax and weak then the rights of the inventors would be breached left and right. This would prove as a disincentive to them for applying their intellect and coming up with novel inventions. This would lead to a scarcity of innovative products in the market. For instance, taking the case of the pharmaceutical sector, if in order to accommodate the needs of the less fortunate we allow the rules to be flouted openly then no company would waste its resources, time or human capital on the invention of new drugs and there would be a scarcity of new, life-saving drugs. In short, the argument that the scholars of the developing countries are advocating is that if an equitable distribution of the product cannot be achieved then its production should be stopped which is a very impractical argument. The solution to the problem which these scholars are raising should be solved by the governments of the developing countries rather than the producers. The governments should provide subsidies to the poor who cannot afford the highly priced products. This subsidy should be borne by the government and not by the producer. Thus, the method being espoused by the scholars of the developing countries is unfair as they call for placing restrictions upon the protection being extended to the IPRs of the companies which produce these innovative products in order to curtail the prices. Moreover, the whole controversy that was set in motion after the adoption of the TRIPS regime is meaningless in the context that even before the inception of this agreement the developing countries were unfavourably poised as against the developed nations. In fact, in the Uruguay Round, the developing countries participated as equal partners and they even had a say in the matters[24]. Before this Round and before the conclusion of the TRIPS Agreement the developing countries were completely ignored in issues of international trade. Agreements such as Special 301 and Super 301 where developing countries were made to follow the regulations issued by developed countries such as the U.S.A by threatening to restrict the exports cannot certainly be termed to be fair. Section 301 of the US Trade Act of 1974 gives the President of the U.S.A the authority to retaliate against foreign trade practices which discourage US exports. What these practices could be was not mentioned in the legislation. The Trade and Competitiveness Act, 1988 introduced changes to S.301 rendering it even more threatening to foreign traders. The 1988 Act required formal investigation of private complaints, and created a new procedure called Super 301 which required the US Trade Representative (USTR) to create an inventory of unfair practices in foreign countries to select priority targets from that list, set deadlines for removal of the offending measures and restrict the export by these countries if the practices concerned were not eliminated. Super 301 was complemented by a Special 301 provision that pertained to the identification of countries whose protection of intellectual property was inadequate[25]. In a nutshell, these agreements were measures taken by the developed countries to ensure that the developing nations fell in line and formulated policies favourable for the former. Hence, it can be argued here that the deal which the developing countries were getting before the TRIPS Agreement was no less arbitrary and unfair than the latter. The GATT was basically in the nature of a club which was primarily of relevance to the developed countries. Developing countries did not participate fully[26]. On the contrary, at the initial stage of the Uruguay Round, developing countries fully participated in evolving WTO framework significantly expanding the global aspect of the organisation. It is in the Uruguay Round that the developing countries for the first time articulated their demands instead of praying for concessions. Thus, it would be erroneous to say that the Uruguay Round or the TRIPS regime in any way are prejudiced against the developing nations.  Furthermore, one of the main reasons for the developing countries to participate in the Uruguay Round was their interest in gaining trading concessions in the agricultural and textile sector. The deal was that in return for according higher and stronger protection to the Intellectual Property Rights the developing nations would get trading benefits. The developed side of the globe fulfilled their promise as the Multilateral Fibre Agreement (MFA) in the textile sector was eliminated[27]. What was clear to the developed nations at the time of the agreement was that the alternative to negotiating multilateral intellectual property standards would almost certainly have been to negotiate bilateral trade and intellectual property agreements without commonly accepted multilateral points of reference and without functioning restraints on the threats of trade counter-measures. Indeed, when comparing Post-TRIPS to the Pre-TRIPS situation, it is fair to say that there has been significant movement away from the unilateral threats of the withdrawal of GATT market access benefits[28]. In an effort to secure protection of intellectual property and there has been a demand to conclude TRIPS-plus bilateral agreements and these are being concluded. Those countries that have agreed to such higher standards have presumably done so after weighing the market access and the other benefits being offered to them[29]. Thus, it can be said that the developing countries entered into and ratified this agreement not due to compulsion or force on the part of the developed countries but because of advantage that they were going to derive out of it. Keeping this in view, all the blame should not be wiped on the sleeves of the developed nations. In order to provide justification to the TRIPS Agreement an analogy can be drawn with the Indian Penal Code. This Code has been enacted in order to maintain law and order in the society and punish those offenders who disturb the peace and harmony of the society. Similarly, the TRIPS Agreement is an effort on the part of the countries world over to prevent infringement of the intellectual property rights so that the inventor gets due credit for his labour and innovation. The Indian Penal Code imposes fines as well as punishments upon those who breach the law irrespective of their financial condition in order to set an example to the society and to deter the criminals. In the same manner, the TRIPS regime in order to deter counterfeiting and imitation of products advocates strict implementation of its regulations irrespective of the economic status of the countries. When the Indian Penal Code is not placed under criticism for adopting such a non-humanistic approach then why the TRIPS Agreement should be condemned and termed as being discriminatory and violative of the rights of the poor. It is often argued that foreign firms avoid investing in countries with weak IPR Regimes. Hence, one of the greatest advantages of the adoption of this Agreement is the inc[30]rease in the flow of Foreign Direct Investment from the developed countries to the developing nations. As a result of their amended patent legislations and hence, a stronger protection to the intellectual property rights a large number foreign industries would be willing to invest in the developing economies. This would lead to increase in the cash flow in the market and would help improve the economic condition of the country. It would also serve as an incentive for large Indian firms to invest more in Research and Development in order to increase their markets and hence profits. Collaborations between the Indian and the foreign firms can also be seen. This proves to be mutually advantageous for them as the financial and technological resources are provided by the foreign companies and India’s skilled manpower at low cost can convert these inputs into an innovative finished product. IPR regimes also may influence trade flows. Discrepancies among national IPR regimes generate effects analogous to non-tariff barriers[31]. Exporters in the north face additional costs when they export to the south rather than to the other countries in the north, because they must engage in activities to inhibit local imitation. It can also be argued that the the international harmonization of IPR regimes will diminish the transaction costs of operating in different regulatory environments. One of the most traditional arguments for supporting the IPR protection in developing countries is that the risk of piracy makes technology owners less willing to transfer proprietary knowledge to countries with weak IPR regimes[32]. Thus, the demonic character attributed to the TRIPS Agreement is not completely true.

The viewpoint presented above has met with a stiff opposition especially in the developing countries where the negative effects of the TRIPS Agreement are being felt the most. The scholars of these countries argue that the new intellectual property regime is a direct attack on the sovereignty of their respective nations. According to these intellectuals, such a framework of rules would lead to `puppetization’ of the Economic South in the hands of the Economic North. They further contend that agreements such as the TRIPS are nothing but a tool in the hands of the developed nations to bleed the developing countries white and to strip them of their natural, financial and human resources. Some scholars have also termed the new regime as `GATTastrophe’[33]. They feel that through this mechanism the developing countries would be made even more subservient to the developed nations. They believe that the concept of global village has been transformed into global tillage and global pillage[34]. One of the major concerns of the intelligentsia belonging to the Economic South was the adverse effect the TRIPS Regime would have on public health. They were apprehensive that the stringent regulations of the TRIPS Agreement would have a negative impact on the public health systems of the developing countries. As a result of the high cost of Research & Development and huge amount of money being spent on the invention of new and innovative drugs its production cost rises. Hence, in order to earn profits, the prices of these drugs are fixed at a very high level. This makes such drugs practically unavailable to the common man. The scholars thus argue that the TRIPS Regime is inhuman and does not take into account the plight of the common man[35]. They further add that as a result of the unrealistic pricing of drugs, their access would become almost impossible for the general masses and hence public health would suffer. One of the major problems with the arguments posed by these scholars is that they are not at all frugal in criticising the existing regime but they fail to provide us with a better alternative. If the patenting of these drugs is not done then their would be no incentive for the companies to engage into Research and Development and create new life-saving medicines. A harmful consequence of this would be the production of inferior, adulterated and low quality drugs. That would be even worse than the present situation. Hence, it would be incorrect to assume that the TRIPS Agreement poses a threat to the public health systems of the developing nations. Moreover, developing countries’ apprehension that drug prices will shoot up manifold if the TRIPS regulations are complied with are uncalled for. The TRIPS Regime requires that along with process patents even product patents should be granted. It is true that the price of a drug protected by a product patent would be higher than what it would have been if it were not covered by the same. However, the extent of price impact depends upon a number of factors. First, the TRIPS regime will apply only to patent application filed after 1st July 1995. it takes around 7-10 years for a patented drug to come into world market from the date of the patent application. Thus, the pharmaceutical companies of the developing nations are free to produce and sell all those drugs which are already in the world market from the date of the patent application or that will newly come into the world market till the early years of the next century. Secondly, it is likely that the share of the patented drug in our market will not be more than 10-15% of the total drug market and there is no reason why the prices of drugs that are nor covered by the patents should shoot up. Thirdly, apart from the drugs that make a spectacular breakthrough alternative drugs prior to generation of patent drugs are usually available in the market. Their prices would act as a check on the newly introduced patented drugs. Lastly, it is open to use the compulsory licensing system where an essential drug is widely needed by the common man and yet it is not available at reasonable prices then a licence can be issued to any other company other than the patenting company to produce the drug in question[36]. Moreover, levelling such allegations against the TRIPS Agreement that it does not take into account humanistic values and is extremely rigid and dispassionate would be incorrect. Article 7 of the TRIPS Agreement provides that protection and enforcement of intellectual property rights should be done in a manner which is conducive to the social and economic welfare and to a balance of rights and obligations. Similarly, Article 8 of the same agreement states that “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”[37]. But these Articles were misinterpreted by the developing nations and accusations were raised that these provisions are being misused and their true purpose is not being served. Consequently, as an outcome of the constant campaigning of the developing nations, a `Declaration on the TRIPS Agreement and Public Health’ was reached at the Doha Ministerial Conference of the World Trade Organisation in 2000. It was the result of staunch efforts by India Brazil and about fifty-five other African nations that such a compromise could be reached. This is one of the areas where there is an assurance that the restrictive clause under the TRIPS agreement on drug patents will not over ride public health concerns. It is a positive development that in TRIPS, a public health crisis has been included as an exception for granting compulsory license (CL). What is new in the Doha Declaration is that it recognizes the fact which was implicit under Articles 7 and 8 of TRIPS, that considerations of Public Good which includes public health could be the over riding factor while offering IPR protection for medicines for specified diseases and ‘epidemics’ particularly for Developing Countries and Least Developed Countries[38]. Hence, a more humane character was bestowed upon the TRIPS Agreement. Thus, it would be faulty to argue now that the TRIPS Agreement does not cater to public health issues. Hence, in the light of the above mentioned arguments, the TRIPS should not be viewed only as a coercive mechanism to exploit the poor but the benefits accruing from it should also be taken into consideration.

Conclusion

The TRIPS Agreement has always been looked upon as a demon unleashed upon the helpless poor. It has been termed as an exploitative tool in the hands of the developed countries. A misinterpretation of the agreement has been made by the scholars of the developing countries who believe that the agreement only has a negative impact on their economy and sideline its positive effects. What the author has tried to highlight here is the optimistic side of the TRIPS Agreement. The devilish character of this agreement has been exaggerated. It is an accepted fact that protection of rights of some leads to the transgression of rights of others. The strong protection accorded to the intellectual property rights and the consequent creation of a monopoly market has taken its toll on the general masses. They have been systematically denied the fruits of these innovations as they cannot afford to pay such high prices in order to avail them. Thus, it can be said that the `classes’ are enjoying at the expense of the `masses’. But to make the companies which utilise enormous amount of resources in order to create new and innovative products liable for this inequality would be incorrect. This wide gap between the rich and the poor and this inequality of distribution should be corrected by the government. This imbalance should be balanced by the subsidies given by the government. The government should give subsidies to the companies engaging in R&D in order to produce new products. This would serve both as an incentive for the companies and also as a cost-reducing measure. As the costs would reduce the prices too would come down. The government can also correct this tilt by introducing rationing of the essential commodities which have been patented and are not affordable by the poor. The approach which the developing countries suggest is detrimental to both their and the world economy. It is true that economic growth which leaves millions of people hungry, unemployed and oppressed is not growth in its true sense. But, instead of arresting these greater concerns such as poverty and unemployment by active government intervention if the causes of economic growth are eliminated then it would certainly not be called a wise solution to the problem. If the TRIPS Agreement is scrapped and the level of protection given to the intellectual property rights is lowered then a plethora of problems would arise such as lack of foreign investment, scarcity of new and better goods etc. Thus, in order to curtail one problem it should be taken care of that other problems do not arise. The TRIPS negotiations, although initiated at the insistence of certain developed countries, did take account of developing country perspectives, and the final text does provide considerable leeway in implementing this agreement. Such flexibilities have been clarified and further extended in the Doha Declaration on the TRIPS Agreement and Public Health in November, 2001[39]. Thus, it can be safely concluded that the TRIPS Agreement does not pose a threat to the developing economies and does not deserve only brickbats but bouquets as well.

References:


[1] V.R.Krishna Aiyer, “ Off The Bench”

[2] Daniel Gervais, The TRIPS Agreement- Drafting History and analysis, 3rd Edition, 2008,

[3] www.gatt.org

[4] Ibid.

[5] Jayanta Bagchi, World Trade Organisation-An Indian Perspective, 2nd Edition, 2006, pp.2-5

[6] www.wto.org

[7] BM Hoekman, MM Kosteck, “The political economy of the world trading system: the WTO and beyond” 1st Edition, 2001

[8] George A. Bermann and Petros C. Mavroidis, WTO and Developing Countries, 1st Edition,2009, pp.147-148

[9] Supra n.1,  p.47

[10] S.C.Scotchmer, “ The Political Economy of Intellectual Property Treaties”, Journal of Law, Economics and Organization, 2004

[11] G.W.Harrison & T.F.Rutherford, “ Quantifying the Uruguay Round”, The Economic Journal, 1997, www.JSTOR.com

[12] Jayashree Watal, Intellectual Property Rights in the WTO and developing countries, 1st Edition, 2001, pp. 35-37

[13] Supra n.8

[14] Supra n.4, pp. 3-4

[15] Supra n.11

[16] Supra n.2 p.129

[17] L.R.Helfer, “ Regime Shifting: The TRIPS Agreement and dynamics of international intellectual property lawmaking”, Yale Journal Of International Law, 2004, papers.ssrn.com

[18] Supra n.8

[19] Black’s Law Dictionary, 9th Edition

[20] National Consumer Council,1991

[21] R.M.Sherwood, Intellectual Property and Economic Development, 1st Edition,1990

[22] Black’s Law Dictionary, 9th Edition

[23] Uma Suthersanen, Graham Dutfield & Kit Boey Chow, Innovation Without Patents, 1st Edition,2007

[24] Will Martin & L.Alan Winters, “ The Uruguay Round And The Developing Countries”, www. books.google.com

[25] Supra n.1, p.10

[26] Supra n.4

[27] Supra n.8

[28] Ibid.

[29] Supra n.2 pp. 130-131

[30] S.Lall & R.Narula, “ Foreign Direct Investment and its role in economic development: Do we need a new agenda?”, The European Journal Of Development, 2004

[31] R.Stern, Intellectual Property, 1987

[32] Keith.E.Maskus, The WTO, Intellectual Property Rights and the Knowledge Economy, 1st Edition,2004

[33] Justice V.R.Krishna Aiyer, Off the Bench, 1st Edition,2008, p.108

[34] Supra n.16, p. 109

[35] Shyama V. Ramani & Augustin Maria, TRIPS: Its Possible Impact on Biotech Segment Of The Indian Pharmaceutical Industry, Economic And Political Weekly, Feb12-18, 2005

[36] Supra n. 1 pp. 65-66

[37] TRIPS Agreement

[38] Ashok Ram Kumar, Impact of TRIPS on Indian Pharma, The Chronicle, 2nd December, 2004

[39] n.2 p. 142