Date: 01/02/2023

Relevance: GS-3: Issues relating to Intellectual Property Rights.

Key phrases: National IPR Policy, Intellectual Property Appellate Board, dedicated IP benches, IP-friendly jurisdiction, Evergreening of the patent, Patent-friendliness, Patent Bargain Innovation-driven competition.

Why in News?

• In May 2016, the then Department of Industrial Policy and Promotion (now known as the Department for Promotion of Industry and Internal Trade) under the Ministry of Commerce released the 32-page National IPR Policy.
• The overall purpose of this document was to spell out the government’s comprehensive vision for the IPR ecosystem in the country toward shaping a more innovative and creative Bharat.

Objective of National IPR Policy:

• Under the head “Legal and Legislative Framework”:
  • The goal was “to have strong and effective IPR laws, which balance the interests of right owners with the larger public interest”.
• Under “Administration and Management”:
  • The objective was “to modernize and strengthen service-oriented IPR administration”.
• Under “Enforcement and Adjudication”:
  • The focus was “to strengthen the enforcement and adjudicatory mechanisms for combating IPR infringements”.

Structural and legislative changes in the IPR ecosystem:

• Dissolution of IPAB:
  • The Intellectual Property Appellate Board (IPAB) was dissolved in April 2021 as part of tribunal reforms, and its jurisdiction was re-transferred to high courts.
• IP division:
  • This was followed by the establishment of dedicated IP benches (“the IP Division”) by the Delhi High Court, arguably the country’s leading court on the IPR front, for speedier disposal of IPR disputes.
• Infrastructure:
  • Conscious efforts are made to improve the infrastructure and strength of the Indian Patent Office.

Benefits of such reforms:

• Such measures are intended to convey to investors and innovators that Bharat is an IP-savvy and even IP-friendly jurisdiction without compromising on national interest and public health commitments.
• This is evident from the very same National IPR Policy which, among other things, expressly recognizes “the contribution of the Indian pharmaceutical sector in enabling access to affordable medicines globally and its transformation to being the pharmacy of the world”.

Evergreening of the patent:

• Patent-friendliness, rather than patentee-friendliness:
  • It appears that the patent establishment of the country has drawn a very different message — it has gone on an overdrive to prove its patent-friendliness, rather patentee-friendliness, in the pharmaceutical sector at the expense of public health and national interest respectively.
• 20-year patent:
  • This is despite the presence of legislative safeguards in the Patents Act which were introduced between 1999 and 2005 to secure national interest and to balance Bharat’s decision to grant product patents for 20 years for “substances intended for use or capable of being used as food, or as medicine or drug”.
• Mischievous Evergreening:
  • Provisions such as Sections 3(d), 53(4), and 107A of the Patents Act were expressly introduced between 2002 and 2005 to prevent the mischievous practice of “evergreening” of patents, which pharmaceutical “innovator” companies had successfully resorted to in patentee-friendly jurisdictions such as the United States.
  • “Evergreening patents” on drugs that relate to the treatment of diabetes, cancers, cardiovascular diseases, and other serious conditions continue to be granted to pharmaceutical innovator companies by the Indian Patent Office.
  • They are regularly enforced through courts at the expense of the statutory rights of generic manufacturers and to the detriment of patients.
• Supreme court’s verdict:
  • What is also disquieting is the non-application of the Supreme Court’s verdict in Novartis AG v. Union of India & Others (2013) wherein the apex court shed brilliant light on the legislative intent behind the insertion of Section 3(d) in the Act — to prevent the evergreening of a patent monopoly on a drug by making inconsequential additions or changes that in no way enhance the drug’s therapeutic efficacy.
  • However, the SC’s verdict has not yielded any positive outcomes both from the Patent Office and subordinate courts, rather it delays the entry of generic versions.
  • This, in turn, adversely affects the availability of affordable medicines to patients in countries such as Bharat where most middle-class or below families are on the verge of spending their hard-earned funds after a hospital visit.

Patent Bargain:

• Patent quid pro quo:
  • It must be understood that IP legislations such as the Patents Act do not exist for the sole benefit of IP rights owners.
  • The intended beneficiary of the quid pro quo underlying the Patents Act, better known as “the Patent Bargain”, is the society that is expected to benefit from dynamic innovation-based competition between market players.
  • Patent monopolies are granted to innovators in the hope that they disclose something new, inventive, and of industrial value to the public that the public may use without the need for a license from the patentee after the expiry of the patent monopoly.
  • This quid pro quo between patentees and society, in theory, increases the general pool of knowledge in the public domain.
• Innovation-driven competition:
  • The other economic assumption behind the Patent Bargain is that it is expected to trigger innovation-driven competition between market players which results in increasing the basket of quality options for the consuming public.
  • However, when an evergreening patent is granted by the Patent Office and enforced by courts, the Patent Bargain becomes a Faustian bargain (An agreement in which a person abandons his or her spiritual values, or moral principles to obtain knowledge, wealth, or other benefits.) since it results in the illegal extension of the twenty-year term of the monopoly.
  • This, in turn, undermines competition in the market and enables patentees to extract more from society than permitted.

Conclusion:

• There are four stakeholders under the Patents Act - the society, government, patentees, and their competitors. Each of these stakeholders has rights under the statute which makes all of them right owners.
• The legal rights of other stakeholders are curtailed when the Act is interpreted, applied, and enforced exclusively in the patentees' favour, especially when those patentees are evergreening.
• Thus, the IPR ecosystem must strike a fine balance to attract investment on one hand and promote public health obligations, and long-term national interest on the other.

Source: The Indian Express

Mains Question:

Q. What is the "Evergreening" of patents? Discuss the issues concerning it, with special reference to the pharmaceutical sector in India, and suggest solutions to address them.