Was The TRIP Worthwhile?
n 1994, India signed the Trips agreement mandated by the World Trade Organisation (WTO). The agreement, which came into effect on January 1, 1995, is the most important multilateral agreement on intellectual property (IP). By enforcing a minimum standard of IP rights internationally, Trips encourages trade and technology transfer between countries.
Why IP Protection?
IP rights are exclusive rights given to the creator of an innovation for a fixed tenure. While IP rights take many forms, the most important right pertains to patents granted for inventions. Many products require substantial R&D investments to be conceived, for example, pharmaceutical companies invest millions to discover the native molecule of a drug. These companies hope that the returns from the launched product will compensate the upfront cost. Patents help to protect returns by legally discouraging imitation of products. This protection, in turn, promotes R&D. It is on this belief that several countries have strengthened Intellectual Property Regimes (IPRs).
|
|
As with most policies, granting patents comes at a cost. Patents provide an immunity that discourages competition. This immunity causes a price increase during the patent term which, in turn, restricts access to the product itself.
The benefits of Trips, for countries such as India, have been debated extensively. While advocates of this policy point out that immunity stimulates innovation (pro-innovation effect), skeptics argue that less competition (due to stronger IPR) may have long-term consequences which will retard innovation (anti-competitive effect). Another concern is that, a stronger IPR will result in huge transfer of royalties and license fees to foreign companies that own state of the art technology.
The Transition
Although the Trips treaty was signed in 1994, India took about ten years to establish a patent law that was in line with the WTO mandate. The new patent law was officially enforced on January 1, 2005, but retrospective from 2004.
This new law is similar in spirit to the liberal protection that the British Patent and Design Act of 1911 granted to patent holders. After attaining independence from British rule, India opted to continue with the British Act until 1972. The British law permitted patenting both processes and products for 14 years. India adopted a different patent law in 1972 to facilitate acquisition of indigenous industrial capability. Under this law, the life of a patent was limited to between five to seven years and only patenting of processes was permitted. This new law was mainly geared towards the pharmaceutical sector and it significantly weakened the Intellectual Property Regime (IPR). By signing Trips in 1994, India committed to reforming the 1972 law.
When the Indian parliament passed the new patent law in 2005, it not only brought back product patents, but also granted all patents a term of 20 years. Moreover, the new law paved way for the formation of the Intellectual Property Appellate Board, a specialised judiciary to hear IP cases.
Law vs. Enforcement
This transition has been chaotic. Patent litigations have increased three-fold since 1995, and many of these have been highly controversial and long-drawn affairs. Interestingly, it appears that the courts are also grappling with how to balance the pro-innovation and anti-competitive effects of IPR. The court battle of Cipla and Roche is one such instance.
In early 2009, the Delhi High Court rejected a temporary injunction against Cipla for manufacturing a copy-cat version of the drug Erlotinib, manufactured by Roche, to treat lung cancer. Roche claimed that rejection of its plea would be against public interest and hurt R&D. Cipla argued that granting an injunction would deprive the needy of an important drug. Although the main reason for rejecting Roche's plea was its inability to prove that Erlotinib was substantially more efficacious, the judgment received a lot of publicity due to certain observations by Justice Bhatt, who decided this case. Noting that Roche's original drug was at least three times more expensive than the copy-cat version and was not manufactured in India he opined:
"... I come to the interesting and novel point as to whether the court ought ever, and in particular, in this case to exercise its discretion to grant an injunction the effect of which will be, temporarily at any rate, to deprive members of the public of the benefit of a ‘life saving drug which may be prescribed’... If the evidence shows it to be the fact there may and well be cases where it would make little, if any, difference to the public, apart from satisfying personal preference, whether a particular drug was no longer available or not, then in such a case it may well be proper to grant an injunction. At the other end of the scale, however, there is the unique life-saving drug where, in my judgment, it is at least very doubtful if the court in its discretion ever ought to grant an injunction…”
Roche vs. Cipla is just one instance of how IPR’s enforcement has been at odds with the actual intent behind the law. My research suggests that the Indian judiciary has not been as liberal in upholding IP rights. Since 2005, the (average) chances of winning IP litigation have declined to17%, from about 50% before Trips.
Single Page View
