Avoiding the Fall after TRIPS *

Journal of Intellectual Property Rights Vol 4 September 1999 pp 265-273

Avoiding the Fall after TRIPS *

S Suresh Chandran

National Institute of Immunology, Aruna Asaf Ali Marg, New Delhi 110067

The paper reviews various provisions of TRIPS and points out inconsistencies in many of them vis-a-vis its overall objective. It suggests some remedial measures to be taken by developing countries during the remaining time of transition period before making appropriate changes in their patent laws in conformity with TRIPS.

Intellectual property rights is a game of un- equals! The technological 'haves' who reached where they are by imitation, strive to maintain the technology gap with lesser nations by devising legislative hurdles that prevent the latter from catching up. The end of the Uruguay round of negotiations of GAIT created one such instrument - the Trade-Related Intellectual Property Rights (fRIPS). It must be noted that intellectual property (IP) was never a part of trade nego- tiations. That it emerged in such a forum reflects the realization that IP could be a potent instrument for regulating the flow of technology and information, the starting ma- terial for all economic prosperity. TRIPS does not, however, try to create a level play- ing field as its preamble would try to im- press. Even though TRIPS provides for

• Views expressed in the paper are of the author.

member States to adopt measures to ·protect sectors of vital importance for socio-eco- nomic and technological development' (Ar- ticles 7 & 8), these carry a rider! These measures must be 'consistent with provi- sions of the Agreement'l. International treaty provisions would in practice be domi- nant over national laws. It is within this framework then that we should evaluate the implications of the transition and devise counter-strategies if they harm our national interests. Most developing countries includ- ing India have few resourcs to establish a niche, excepting perhaps their abundant bio- diversity. TRIPS creates inroads into these resources itself diminishing what little op- portunity these nations are left with to com- pete in the global market.

266 J INTELLEC PROP RIGHTS, SEPTEMBER 1999

Over-protection

The patent system strives to balance individ- ual reward for innovation with the greatest public good. It grants limited monopoly to the inventor for inventing an object of utility so that he can commercially exploit his in- vention without fear of competition for some time. In return, the inventor must fully dis- close the invention in such manner that any person 'of ordinary skills in the art' can re- produce the invention by following the pat- ent document. This serves the purpose of disseminating the knowledge to catalyze yet another round of innovations. TRIPS in- vests excessive, even coercive powers on the patent-holdel2. In an era of rapid obsoles- cence of technology, TRIPS ensures a longer duration of monopoly rights. An in- ventor enjoying a product patent for 20 years can easily increase it by another 20 years by filing for a process patent before his product patent runs out. Normally, several process patents should emerge soon after the extinc- tion of a product patent. However, in the TRIPS scenario, this is highly unlikely for a number of reasons. Primarily, Article (Art.) 34 concerning reversal of the burden of proof, discourages a second inventor, who must first establish that the process he de- vised is unique in terms of prior art. The fU'st inventor need not demonstrate any elabo- rate effort to establish the veracity before making an allegation that his patented proc- ess is being infringed. The onus of disprov- ing his presumed guilt falls on the second inventor. For all his pains, the second inven- tor would not have the assurance that he would get protection for his process, and indeed if he does, to what degree. Such an atmosphere would sufficiently inhibit any investment is a process patent. It may safely be assumed that the first applicant may have unopposed monopoly for a substantial pe-

riod of time. TRIPS thus strengthens the hands of the patent holder considerably, cre- ating stronger monopolies and shifting the balance away from dissemination for greater public benefit. Not only does it increase the period of monopoly from the current 5/7 years for product patents in the food, phar- maceutical and agrochemical sectors to 20 years, it also confers on the patentee coer- cive powers against even potential competi- tors as has been discussed above.

Patenting Life-fonus

A radical change is ushered by Art. 27 which lists patent-eligible su bject matter. Arts. 27.2 and 27.3 describe the exclusion list. Mem- bers can keep out inventions that are preju- dicial to the environment or are injurious to health or are against morality and ordre pub- lic. Art 27.3 (a) provides for excludlI1g pat- ents to methods of therapy, surgery or diagnostics. Patenting life-forms has been given legitimacy by the wording 'all tech- nologies' in Art. 27. Specifically, Art. 27.1 mandates protection for inventions for prod- ucts and processes in all fields oftechnology.

It also redefines the working of a patent (which would be discussed later). Art 27.3 (b), however, impacts the strongest by in- cluding amongst protection-eligible inven- tions, plant varieties, microorganis IS and microbiological or non-biological processes for producing a plant or animal.

Patenting Microorganisms

Granting of patents to microorganisms is a complex issue and invokes the grey areas befuddling invention and discovery. In the USA and many European nations, the stand- ards applied to inventiveness appear to be less stringent. A composition of matter or substance existing in nature, isolated in a relatively pure form that it has no previously

SURESH CHANDRAN: AVOIDING THE FALL AFTER TRIPS 267 recognized existence, is patent-eligible. This

logic has been stretched in relation to com- plementary DNA patents by arguing that cDNAs are not known to occur in nature and therefore are novel and patent-eligible. Mi- croorganisms have not been defined by many nations including the USA. Case laws interpret what microorganisms are on a case- to-case basis. Europe was initially a little more circumspect in patenting life- forms. However, the Biotechnology Direc- tive¹ (which is yet to be fully adopted by member nations) encourages life-form pat- ents. TRIPS mandates protection for micro- organisms without really defining microorganisms. US, Japanese and Euro- pean interpretations enfold within this term entities such as bacteria, viruses, nucleotide sequences, plasm ids, vectors, cosmids, pro- moters and enhancer elements, transfor- mants, seeds, cells and cell lines, amongst others. Some inventions such as expressed sequence tags and single nucleotide poly- morphisms having dubious claims to utility

(in patent parlance) also benefit from such a position.

Despite any systematic study on the subject, based on the patent-filing behaviour, one may safely assume that truly novel and path- breaking indigenous inventions, at least in the life-sciences, are rare⁴,5. A high percent- age of the research material used in Indian R&D laboratories has been procured from overseas under material transfer agree- ments that leave little room for commercial exploitation. Indians, in marked contrast have, however, been generous in providing biogenetic materials outside the country un- encumbered by such documents_ It may yet be quite sometime before indigenous com- mercially valuable patents will emerge. It is desirable to have strong laws only if you have a strong industry that churns out new

and patentable products in sufficient num- bers to wan-ant a change in that direction. The author hence feels that India should exercise restraint and try its utmost to ex- ploit the transitional period provided by Art.

65.

A biogenetically rich nation need not barter away its rights to its resources. It is common knowledge that many depositories in devel- oped countries have already added to their collections, seeds, cells and genetic material from the developing world. It may safely be presumed that not all the materials have been obtained with the prior infonned con- sent of their custodians. TRIPS does not address the issue of equitable returns for sharing biogenetic resources. Nations whose biogenetic wealth has been eroded or systematically carted away, stand to lose considerably. First, because what has been enjoyed as traditional knowledge, after only minor value addition can reappear on their shores as a patented product. The creators and custodians of that knowledge who are responsible for its maintenance would not receive any acknowledgement or financial returns for their efforts. Very often, such nations seldom have the wherewithal to even inventory their biogenetic resources to be able to contest an ownership claim.

There have been of late, some pronuncia- tions on the administrative modalities of pay- ing community owners of bioresources, which have nearly succeeded in detracting from the central issue of adequate compen- sation for the custodians of knowledge/re- sources. Even the attempt to create biodiversity registers is a double-edged sword wherein we lay bare the resources in sufficiently documented form for their sys- tematic exploitation by vested interests!

India currently does not recognize plants or plant varieties as patent-eligible. TRIPS re-

268 J INTELLEC PROP R1GHTS, SEPTEMBER 1999 quires that plant varieties be protected.

However, it would need to do so by patent and/ or effective sui generis system. How will a plant/animal variety be defined if the vari- able is only a single, stable, uniform, inherit- able trait? Would a transgenic be deemed a variety? What constitutes a plant variety and how does it differ from a plant, continue to be controversial issues in Europe⁶. Will UPOV 1991 be the reference point for defin- ing a plant variety, is a moot issue at this juncture. UPOV 1991 suffers from a bias towards transnational seed corporations, is devoid of farmers' exemptions and lays pro- prietory claims over propagative material⁷. Taking into consideration the Indian sce- nario dotted with small land- holdings, sub- sistence farming and the practice of seed-sharing amongst the farming commu- nity, a sui generis approach is preferable.

Exclusive Marketing Rights

Art 70.9 dictates that member countries shall grant exclusive marketing rights (EMR) for a product for five years provided it obtains patent and regulatory clearances from a member country. The wording 'shall' is deliberate and· calculated to preclude any opposition. A five-year monopoly is the cur- rent equivalent of a product patent granted for pharmaceuticals, food, etc. in India.

However, the most significant aben-ation is that, while in a patent examination there is scope for rejection of the application if it violates any section of the patent law, in EMR applications it is binding on the State to accord protection without even an exami- nation. The patent office has thus been shorn of its powers when dealing with EMR applications. Some commentators have even interpreted this as a transgression of a na- tion's sovereignty itself. By altering the syn- tax, what was once categorized as

unpatentable subject matter in the Indian law has been rendered eligible! Even in the USA, pendency period of patent applications has been reduced to two years and therefore it stands to reason that we may encounter a flood of EMR applications spilling out of the mail box.

Reversal of the Burden of Proof

Art. 34, as has been mentioned earlier, slips in stronger protection for process patents by taking a position that infringement will be presumed if a second inventor were to pro- duce an 'identical' product obtained by a patented process, even if the results are un- anticipated by the first inventor. Identical and same need not be synonymous in legal terms especially if biological entities are con- cerned. A process patent for a product cov- ers only the process to obtain the said product and is not extended to identical products. This change widens the protection to even identical products. Thus if a given gene product has been obtained by cloning and expression using a particular patented process, another gene product, having iden- tical biological properties but with a few ad- ditional or truncated sequences, and obtained in a different system would still be ineligible for a patent. Even if the first inven- tor merely suspects that his process is being infringed, he could without any demonstra- tion of genuine effort to verify the facts, force the suspected infringer to prove his inno- cence in a civil court. Lot of coercive powers thus accrues to the patent holder. Newen- trants would be walY as they must first es- tablish the uniqueness of their process.

Compulsory licensing Provisions

Patent laws generally provide the State with powers of compulsory licensing so that itcan counter excessive monopoly and restrict the

SURESH CHANDRAN: AVOIDING THE FALL AFrERTmrS 269 patentee from making the patented product

ill-affordable to its citizens. Any interested party could invoke the Indian Controller General of Patents to grant non-exclusive licence on the grounds that the patented product is not available in sufficient quan- tum or available at an affordable cost. Com- pulsory licensing provisions have been diluted by the TRIPS. Strong causes need to be indicated for granting licence of right and that too on a case-to-case basis. The change also favours the patent holder by obligating the State to primarily provide for "adequate protection of the legitimate interest of the patent holder" (Art. 31), and by making avail- able to him, a provision of judicial review of any decision to revoke a patent (Art.32).

Importation Equated

with

Working of Patent

Indian patents Act, 1970, mandates that a patent must be worked in the country after three years of its grant. A report that it is satisfactorily being worked would suffice to prevent the Controller from revoking the patent. This provision was incorporated so that inventions would be indigenously worked and that local production of the pat- ented product is encouraged. Art. 27.1 neu- tralizes this function by equating importation with the working of a patent. A patented product can be imported info the country without any local manufacture, and still would not violate the law. The patent holder can prevent imports without his authorization [Art. 28.1 (a)

J .

He can impose restrictions on production of his patented product for export [Art. 31 (t)

I.

The product exclusively thus is for exploitation only in the domestic market. The level of technolo- gies coming from MNCs to developing coun- tries would be the kind designed only for local markets and not for exports.

No Transition Period

TRIPS stipulates signatories to set-up a mechanism to accept product applications in areas of technology that were not patentable before the entry into force of the Agreement namely, the mail-box provision. Even though applications received by the mail- box need be opened only by December 2004 to examine patent eligibility, if these come with an EMR, they need to be preferentially disposed. The ten-year moratorium (Art. 65) for developing countries that do not extend product patent protection to such areas of technology on the date of entry into force of the Agreement, has been extinguished asfar as EMR are concerned. The pundits may yet be proved wrong when they say that the EMR applications will be few. Taking into consideration the drastically reduced pen- dancy period of approximately two years even for biotech applications in the USPTO, a flood of EMR applications may await the Indian patent examiner.

Protection of Databases

In addition to copyrights, compilations of data will be protected if there is a creative element in the selection or arrangement of the contents of a database (Art. 10.2). Exten- sive database protection may prove detri- mental for scientific research for all the obvious reasons ranging from increasing costs to declining access to informationS.

Is There a Way Out?

Has TRIPS foreclosed all our options to achieve technological competitiveness? It depends on the approach we adopt. A reac- tive approach has not helped and we must try to be pro-active. Can we walk out ofWTO saying that it was an unequal treaty? Even if we could, it would not make sense to isolate

270 J INTELLEC PROP RlGHTS, SEPTEMBEI~ 1999 oneself when one tries to become a global

player. The loss of trade besides, it would also make LIS look like a nation of fools. It would be prudent therefore to examine all the possible steps and their implications in the remaining time. (We have already frit- tered away a great chunk of the transition period). Some of the possible approaches outlined below may be considered.

The Remedy

TRIPS allows for only limited manoeuver- ability. National'laws must eventually con- form to TRIPS. Two issues need careful consideration. TRIPS being a multilateral treaty allows for unilateral sanctions by one member country over another. There ap- pears an anomaly here and experts of inter- national law need to address this issue.

Secondly, if a country is a signatory to two international treaties, some of the provisions of which are in conflict with the other, which one should prevail? India is a member of the WTO as well as the Convention on Biodiver- sity (CBD). Can we not apply provisions of the CBD to override problem areas imposed by TRIPS? The spirit of Arts 3 and 15 ofCBD which states that a country has sovereign rights over its biogenetic resources may be invoked to prevent bioprospecting without equitable returns, both to the country and the custodians of b-aditional knowledge sys- tems⁹. Art. 15.5 states prior and informed consent can lead to access to biological re- sources. Arts 8 and 10 of CBD requires pro- motion and protection of rights of farmers, indigenolls communities and indigenous peoples vis-a-vis their biological resources and knowledge systems. Art. 16.5, CBD as- serts that IPR must not conflict with the conservation and sustainable use of biodi- versity. An attempt to pkly the CBD against

the TRIPS should create interesting possi- bilities.

Review of article 27.3b is to take. place in end 99. Since there is no consensus on the scope of the review, developing countries wou d try to redefine the text and clariiy issues; the developed nations will probably look at the level of TRIPS implempntation. Some con- flict between the TRIPS a!1d CBD may also be raised. To determine an appropriate na- tional policy, actions at various levels are mandated. Various studies on the impact the transition would have on conservation and sustainable use of natural resources, on local production of plants and animals, on communities and their collective knowledge systems and on biologically based indus- tries must be carried out at the earliest, be- fore objective conclusions can be made.

These should also be assessed on short and long-term modes. It is advisable to wait and watch the developments at the TRIPS 27.3b review scheduled at the end of 1999, before venturing to amend our patent laws.

TRIPS 27.3b requires grant of patent protec- tion to microorganisms without really defin- ing several key terms such as microorganisms, essentially biological processes, etc. These are left to inteq)feta- tion by member States. Il we perceive that till 2004, our biotechnology industry would not be in a position to favourably compete with its overseas counterparts, then this window in the TRIPS document may be ex- ploited favourably. US and many other na- tions have been using case laws to interpret the term and did not opt for statutory defini- tions. In a litigation-happy society, a case- by-case approach may be favoured. In the Indian scenario however, definitions may settle a lot of ambiguities (and litigations).

We may define microorganisms either by including subject mattcr ... as in 'microorgan-

SURESH CHANDRAN: AVOIDING THE FALL AFTER TRIPS 271 isms would include ... bacteria, fungi, . .' orwe

may exclude undesirable subject matter.

Human/animal cell lines, transformants, fe- tal and embryonic totipotent cells, etc. may be kept out by such a strategy. Plant or animal cells (including human cells), cell lines, may be kept out of the purview of TRIPS perhaps by interpreting them as con- travening Section 3b of the Indian Patents Act pertaining to morality and public order.

That many indigenous microorganisms al- ready are in type culture collections over- seas and that many of these have not been related to their economic value documented in indigenous literature or folklore must be borne in mind while deciding a response.

Certificate of origin and 'prior consent' from indigenous community owners may be in- sisted prior to grant of patent, so that bio- prospecting without equitable returns can be countered. PriO!; use or description in any manner before filing should be a crite- rion to deny patents. There would be at- tempts to differentiate higher life-forms from microbes when the dispute settlement mechanism is activated, and we should be prepared with an alternative definition. Per- haps keeping only non-naturally occurring or genetically engineered organisms on the list of microorganisms, with a rigorous ex- amination of novelty and non-obviousness parameters can be a remedial measure.

Some changes in the 1970 Act would contrib- ute towards amelioration of the discomfort brought about by TRIPS. In order to rein- force exclusion of biotechnology inventions that involVl~ very litt.le human intervention, sub-section (iv) may be added to 2G) to read as:

'Substances or compositions of

matter that do

not occur either freely or in association with other substances in nature'. Very often, isola-

tion of a pure microorganism from its natural environment is patentable. This step would help ensure that substantial human inter- vention would be required for obtaining a patent.

Sec

3

(d)

The following are not inventions within the meaning of the Act, may be modi- fied to read as:

'the mere discovery of

a substance occurring in nature either free or in association

or combi-

nation with other substances',

the discovery of a new property or new use of a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.

Examination standards for inventiveness, and non-obviousness can be raised with re- spect to processes for begetting a 111-

mals/plants other than by breeding.

Microorganisms may be defined in the In- dian Patents Act as 'microscopic and submi- croscopic unicellular entities capable of

selfreplication. These include, but are not lim- ited to, bacteria,

fungi, antinomycetes, yeast

and protozoa. Nucleotide sequences includ- ing derived genetic sequences,

cells

and

cell-

lines derived from plant or animal including humans, are

not

microorganisms within

the

meaning of this Act.

'

TRIPS mandates protection of plant varieties by patent and/or sui generis system. Plants would definitely be unpatentable. India can take a stance that it would protect plant va- rieties by an appropriate sui generis system and leave it out of the purview of the Indian Patents Act.

To counter misappropriation of biogenetic resources, a National Biodiversity Authority may be set-up. Patents involving biological

272 J INTELLEC PROP RlCHTS, SEPTEMBER 1999

material would need to include a certificate from this body and a new sub-section 10.4 (d) may be added to the 1970 Act to read as:

Section 10. Contents of specifications- (4) EvelY complete specification shall-

(d) be accompanied by a Certificate o/Origin and Prior In/ormed Consent from the Na- tional Biodiversity Authority i/ the invention employs any biological material.

This sub-section should alert the Controller of possible biogenetic piracy if the biological material is accessed without the knowledge of its custodians. When the notification is published in the gazette, this can lead to effective opposition to the grant. If facts are misrepresented, the Controller is anyway within his rights under Section 25 to revoke the patent.

Section 25, opposition to grant of patent, sub-section (h) may be amended to read as:

(1) At any time within four months from the date of advertisement of the acceptance of a complete specification under this Act (or within such further period not exceeding one month in the aggregate as the Control- ler may allow an application made to him in the prescribed manner before the expiry of the four months aforesaid) any person inter- ested may give notice to the Controller of opposition to the grant of the patent on any of the following grounds, namely:

(h) that the applicant has failed to disclose to the Controller the information required by Sections 8 and Section 10, or has furnished the information which is material particular was false to his knowledge.

After the experience of turmeric and basmati rice patents, it may be appropriate to intro-

duce another new sub-section 13.1 (c) in the 1970 Act.

Sec 13.1 Search for anticipation by previous publication and by prior claim or public dis- closure

The examiner to whom an application ror a patent is refelTed under Section 12 shall make an investigation for the purpose of ascertaining whether rhe invention so far claimed in any claim of the complete specifi- cation-

(c) the use

0/

which has been disclosed in folklore or other per/orming arts

0/

indige-

nous/local communities.

It is dangerous to commit the nation to a particular course of action without realizing the full implications of the entire provisions of the Agreement on the domestic industry.

It is prudent that in the limited time avail ble before all the provisions of the Agreement become operational, studies on the possible effects of the transition be conducted. More importantly, the loopholes in TRIPS mm:.t be exploited in a manner that favours domestic industry. All this should be done before the door swings shut.

Acknowledgement

The author is indebted to Prof Sandip K Basll, Director, NIl, for his encouragement, the numerous discussions and critiquing on the theme. The support of the Department of Biotechnology is acknowledged.

References

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0/

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