WTO Trade Policy Review of India- EU, Japan, Switzerland and the US question India over Section 3(d) and Compulsory Licensing

June 2015 - WTO Trade Policy Review of India: Section 3(d) and Compulsory Licensing under the Spotlight

On 2 June 2015 and 4 June 2015, the World Trade Organization (WTO) conducted a Trade Policy Review of India. All members of the WTO are subject to review under the Trade Policy Review Mechanism (TPRM). The TPRM takes place in the "Trade Policy Review Body which is actually the WTO General Council — comprising the WTO’s full membership — operating under special rules and procedures" (Source: WTO, Trade Policy Reviews: Brief Introduction).

In July 2015, the WTO released the records of the meeting including WT/TPR/M/313 (the official minutes of the meeting) and WT/TPR/M/313/Add.1 which "contains the advance written questions and additional questions by WTO Members, and replies provided by India (Source: WT/TPR/M/313/Add.1).

According to the WTO,

The Trade Policy Review Mechanism was an early result of the Uruguay Round, being provisionally established at the Montreal Mid-Term Review of the Round in December 1988. Article III of the Marrakesh Agreement, agreed by Ministers in April 1994, placed the TPRM on a permanent footing as one of the WTO’s basic functions and, with the entry into force of the WTO in 1995, the mandate of the TPRM was broadened to cover services trade and intellectual property. The objectives of the TPRM, as expressed in Annex 3 of the Marrakesh Agreement, include facilitating the smooth functioning of the multilateral trading system by enhancing the transparency of Members’ trade policies.

All WTO Members are subject to review under the TPRM. The Annex mandates that the four Members with the largest shares of world trade (currently the European Communities, the United States, Japan and China) be reviewed each two years, the next 16 be reviewed each four years, and others be reviewed each six years. A longer period may be fixed for least-developed country Members (Source:WTO, Trade Policy Reviews: Brief Introduction).

During India's Trade Policy Review (TPR) in June 2015, WTO members including Australia, Canada, the European Union, Japan, Switzerland and the United States of America submitted detailed written questions to the Government of India (and in some cases, follow up questions) on Section 3(d), standards of patentability, local working, the issuance of a compulsory license on the anti-cancer medicine -sorafenib tosylate and the protection of test data. The following piece is a walkthrough of the trade policy review of India in the context of IPRs and health technologies. Although the activities of the WTO TRIPS Council receive much scrutiny during discussions of controversial issues including innovation and IP, public health and tobacco plain packaging and the LDC request for an extension of the transition period for pharmaceutical products, the WTO’s trade policy reviews have not traditionally attracted the same level of attention. While discussions within the Trade Policy Review Mechanism are often routine in nature, this is not always the case – as this post will highlight. Perhaps a more diligent examination of the goings-on of the WTO's Trade Policy Review Mechanism is merited, to provide more insight into how TRIPS flexibilities are treated in the WTO system.

The following extracts are taken from document: WT/TPR/M/313/Add.1.

Australia

We note that India has implemented a special compulsory license regime for exports.

Question 19: Could India provide more information on its anti-diversionary measures and safeguards to protect the interests of patent holders and ensure that the goods produced under the system reach the intended market and are not re-exported?

Reply: Section 92 A of the Indian Patent Act prescribes clearly that the Compulsory licence for export of patented pharmaceutical products shall be available for manufacture and export of such products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned production to address public health problems, only when the country under reference has already granted a compulsory licence or has, by notification or otherwise allowed importation of the patented pharmaceutical products from India.

The controller shall on receipt of an application in the prescribed manner, grant a compulsory license solely for manufacture and export of the concerned pharmaceutical product to such country under such terms and conditions as specified and published by him.

Application for compulsory license can be made under Form 17 of the Patents Act and Rules However, no such compulsory licence has been granted in India so far.

Question 20: Could India provide more information on the patentability of biological materials that are related to those produced by nature, but are produced by artificial means? For example can CDNA, human proteins expressed in microbial hosts, genetically engineered microorganisms be patentable subject matter in India?

Reply: According to Section 3 (c) of the Patents Act, the mere discovery of a scientific principle or the formulation of an abstract theory or discovery of any living thing or non-living substance occurring in nature is not a patentable invention. Accordingly, products such as microorganisms, nucleic acid sequences, proteins, enzymes, compounds, etc., which are directly isolated from nature, are not patentable subject-matter. However, processes of isolation of these products can be considered for grant of patents subject to fulfilling the requirements of Section 2 (1) (j) of the Act.

According to Section 3(j) of the Patents Act, plants and animals in whole or any part thereof, other than micro organisms , but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals are not patentable inventions.

Canada

PART III. TRADE POLICIES AND PRACTICES BY MEASURE: (3) MEASURES AFFECTING PRODUCTION AND TRADE; (5) INTELLECTUAL PROPERTY RIGHTS; (2) PATENTS: PARAGRAPH 3.207, PAGE 84:

India's National Manufacturing Policy, while defining the functions of the Technology Acquisition and Development Fund, has stated that the Fund will have the option to approach the Government for issue of a Compulsory Licence for the technology which is not being provided by the patentholder at reasonable rates or is not working in India to meet the domestic demand in a satisfactory manner. It is stated that such compulsory licences will be issued only within the provisions of the TRIPS.

PART III. TRADE POLICIES AND PRACTICES BY MEASURE: (3) MEASURES AFFECTING PRODUCTION AND TRADE; (5) INTELLECTUAL PROPERTY RIGHTS; (2) PATENTS: PARAGRAPH 3.218, PAGE 87:

Another important development in the area of patents since the last Review is the issuance in March 2012 of India's first and only compulsory licence so far…. India has not issued any other compulsory licence since even though two more applications for such licences have been received by the Controller General of Patents, Designs and Trademarks in the fiscal years 2011/12 and 2012/13.

Question 34: Could India indicate whether the Fund mentioned in paragraph 3.207 has ever approached the Government to issue a compulsory license for technology, including the applications mentioned in paragraph 3.218, and if so, what were the circumstances of the case(s) and the outcome(s)?

Reply: The Technology Acquisition and Development Fund has not approached the Government for issues of compulsory license.

PART III. TRADE POLICIES AND PRACTICES BY MEASURE: (3) MEASURES AFFECTING PRODUCTION AND TRADE; (5) INTELLECTUAL PROPERTY RIGHTS; (2) PATENTS: PARAGRAPH 3.219, PAGE 87:

It is not entirely clear how India intends to address the issue of safeguards against diversion that are part of both the August 2003 decision and the subsequent Protocol Amending the TRIPS agreement that proposes to transpose the decision into the text of TRIPS Agreement in a new provision, Article 31bis"

Question 35: Can India clarify whether there are any plans to address the issue of safeguarding against diversion that are part of both the August 2003 decision and the subsequent Protocol Amending the TRIPS agreement, if so could they provide some insight into these plans?

Reply: Section 92 A of the Indian Patent Act prescribes clearly that the Compulsory licence for export of patented pharmaceutical products shall be available for manufacture and export of such products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned production to address public health problems, only when the country under reference has already granted a compulsory licence or has, by notification or otherwise allowed importation of the patented pharmaceutical products from India.

The controller shall on receipt of an application in the prescribed manner, grant a compulsory license solely for manufacture and export of the concerned pharmaceutical product to such country under such terms and conditions as specified and published by him.

Application for compulsory license can be made under Form 17 of the Patents Act and Rules. However, no such compulsory licence has been granted in India so far.

PART III. TRADE POLICIES AND PRACTICES BY MEASURE: (3) MEASURES AFFECTING PRODUCTION AND TRADE; (5) INTELLECTUAL PROPERTY RIGHTS; (2) PATENTS: PARAGRAPH 3.225, PAGE 89:

The TADF [Technology Acquisition and Development Fund] would reserve the right to license more than one company for a particular patent (Section 4.4.2); and to address the second issue, the Fund will have the option to approach the Government for issue of a compulsory licence for the technology which is not being provided by the patent holder at reasonable rates or is not being worked in India to meet the domestic demand in a satisfactory manner.

Question 39: Could India clarify the idea behind the requirement that technology must be worked in India? What if the domestic demand market can be met by working the invention outside India?

Reply: Article 7 and 8 of TRIPS set out the objectives and principles on which protection is provided to right holders, Article 31 postulate the various conditions on the basis of which an authorization could be provided without permission of the right holder and the Doha declaration on TRIPS and Public health address the issue of access to medicines. These provisions of TRIPS and the Doha Declaration on TRIPS and Public Health are enshrined in Section 83 of the Indian Patent Act that lays down the guiding principles applicable for working of patented inventions. It states that patents are granted to encourage inventions and to secure that the inventions are worked in India on a commercial scale and to the fullest extent that is reasonably practicable without undue delay; that they are not granted merely to enable patentees to enjoy a monopoly for the importation of the patented article; that the protection and enforcement of patent rights contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations; that patents granted do not impede protection of public health and nutrition and should act as instrument to promote public interest specially in sectors of vital importance for socio-economic and technological development of India; that patents granted do not in any way prohibit Central Government in taking measures to protect public health; that the patent right is not abused by the patentee or person deriving title or interest on patent from the patentee, and the patentee or a person deriving title or interest on patent from the patentee does not resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology; and that patents are granted to make the benefit of the patented invention available at reasonably affordable prices to the public.

The interpretation of the term "working of a patent" has been dealt with in the Bayer Vs Natco Compulsory License case by the Intellectual Property Appellate Board (IPAB) which was later upheld by the High Court of Bombay. The hon'ble court stated that "…when a patent holder is faced with an application for compulsory license, it is for the patent holder to show that the patented invention/ drug is worked in the territory of India by manufacture or otherwise. Manufacture in all cases may not be necessary to establish working in India as held by the Tribunal. However, the patent holder would nevertheless have to satisfy the authorities under the Act as to why the patented invention was not being manufactured in India keeping in view Section 83 of the Act. This could be for diverse reasons but it would be for the patent holder to establish those reasons which makes it impossible/ prohibitive for it to manufacture the patented drug in India. However, where a patent holder satisfies the authorities, the reason why the patented invention could not be manufactured in India then the patented invention can be considered as having been worked in the territory in India even by import. This satisfaction of the authorities is necessary particularly when the petitioner admittedly has manufacturing facilities in India."

CANADA

ADDITIONAL QUESTIONS

Follow-up question to India's reply to question 39 on pages 33 and 34 of RD/TPR/432:

Question 3: Could India please provide more information and clarify Section 83 of the Indian Patent Act and their position in light of TRIPS Article 27, which states: "…patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced"? [Emphasis Added]

Reply: The interpretation of the term "working of a patent" has been dealt with in the Bayer vs Natco Compulsory License case by the Intellectual Property Appellate Board (IPAB) which was later upheld by the High Court of Bombay. The hon'ble court stated that "…when a patent holder is faced with an application for compulsory license, it is for the patent holder to show that the patented invention/drug is worked in the territory of India by manufacture or otherwise. Manufacture in all cases may not be necessary to establish working in India as held by the Tribunal. However, the patent holder would nevertheless have to satisfy the authorities under the Act as to why the patented invention was not being manufactured in India keeping in view Section 83 of the Act. This could be for diverse reasons but it would be for the patent holder to establish those reasons which makes it impossible/prohibitive for it to manufacture the patented drug in India. However, where a patent holder satisfies the authorities, the reason why the patented invention could not be manufactured in India then the patented invention can be considered as having been worked in the territory in India even by import. This satisfaction of the authorities is necessary particularly when the petitioner admittedly has manufacturing facilities in India."

EUROPEAN UNION

Page 79 para 3.184- price controls/patents/pharmaceutical pricing policy EU

Question 56: Could India provide further information on whether it plans to expand the existing National Pharmaceutical Pricing Policy and Drugs (Price Control) Order? Does India consider covering medical devices (such as stents) and patented drugs? If so could India provide a timeline on the implementing such measures?

Reply: The Government has constituted a Core Committee to review and recommend the revision of National List of Essential Medicines, 2011 (NLEM) in the context of contemporary knowledge of use of therapeutic products. Once the revision takes place, the proposal for including the list under price control would be initiated. The revision of the NLEM list is expected in the current years. Presently no patented drugs are included in the NLEM. Further only two medical devices viz. Intra-Uterine Device (IUD) and Condoms are in the list of Essential Medicines and are under price control.

Page 86 para 3.216.

The Supreme Court of India in its judgement [Novartis A.G. vs. Union of India] said that "The amended portion of Section 3(d) clearly sets up a second tier of qualifying standards for chemical substances/pharmaceutical products in order to leave the door open for true and genuine inventions but, at the same time, to check any attempt at repetitive patenting or extension of the patent term on spurious grounds." Further it was said that "efficacy" should be understood as "therapeutic efficacy", which must be judged "strictly and narrowly". In paragraph 190 of the judgement, the Court held that "in whichever way Section 3(d) may be viewed, whether as setting up the standards of "patentability" or as an extension of the definition of "invention",

EU Question 63: Can India clarify how it ensures that the interpretation of section 3(d) of India's Patent Act does not introduce a patentability criterion ("enhanced therapeutic efficacy") additional to the three provided for under the Agreement on Trade-Related Aspects of Intellectual Property Rights TRIPs which in Article 39.3 requires that "any inventions … in all fields of technology" to be patentable "provided that they are new, involve an inventive step and are capable of industrial application"?

Reply: The provision Section 3(d) applies to all fields of technology. As per section 3(d) of the patents Act, efficacy requirement is invoked when the subject matter involves "mere discovery of a new form of a known substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus". Unless the requirement of the efficacy is met with, a new form of a known substance or mere use of a known process, machine or apparatus is not an invention -meaning thereby that the criteria of patentability are not fulfilled. Thus, the efficacy requirement is the inventive step.

The Hon'ble Court states in this regard that "efficacy means the ability to produce a desired or intended result. Hence the test of efficacy in the context of section 3(d) would be different depending upon the result the product under consideration is desired or intended to produce. In other words, the test of efficacy would depend upon the function, utility or the purpose of the product under consideration. Therefore, in the case of a medicine that claims to cure a disease, the test of efficacy can only be 'therapeutic efficacy'."

Page 85 para 3.218.

Another important development in the area of patents since the last Review is the issuance in March 2012 of India's first and only compulsory licence so far. The Controller General of Patents, Designs and Trade Marks issued a compulsory licence under Section 84 of the Patents Act deciding that the reasonable requirements have not been satisfied with respect to the patented invention; the patented invention is not available to the public at a reasonable price; and that the patented invention has not been worked in the territory of India as required by the law.

EU Question 64: Can India clarify how it ensures that the interpretation being worked in the territory of India reflects the text of the Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS") that eliminates discrimination based on whether inventions are produced locally or imported in Article 27.1 which states that "… patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced")

Reply: Article 27 relates to patentable subject matter and states that patents shall be available in all fields of technology provided they are new, involve an inventive step and are capable of industrial application. The issue in question relates to "Nexavor" which is an existing patent in India. The patent was given after evaluating it against the Indian patent law which is compliant with TRIPS Article 27.

However, Article 31 of TRIPS allows members States to issue compulsory license. Article 31 concerns only those inventions on which a patent has been granted. The authorizations are to be considered on individual merits. In addition Article 8 of TRIPS mandates countries to adopt measures to protect public health and nutrition and the Doha declaration on TRIPS and Public Health clearly states that WTO member States are free to set down conditions to enable issue of compulsory license. Section 84 of the Patent Act is therefore compliant with Articles 8, 31 and the Doha declaration. Since it can only apply after the patent has already been granted, it is erroneous to link Art 27.1 with Section 84 of the Patent Act.

In keeping with the provision, India's section 84 sets down conditions when such a grant of compulsory license could be considered. The Compulsory license was issued in the case of "Nexavar" as it did not meet the reasonable requirements of the public, was exorbitantly priced and was not worked in the territory. The interpretation of the term "working of the patent" has been given by the Intellectual Property Appellate Board (IPAB) in the Bayer Vs Natco case and has been upheld by the hon'ble High Court.(this decision has been explained in detail in Q39 raised by Mexico, may not be required here because the import of the question is different)

Page 88 para 3.225 3.225.

India's National Manufacturing Policy of 2012 the Fund will have the option to approach the Government for issue of a compulsory licence for the technology which is not being provided by the patent holder at reasonable rates or is not being worked in India.

EU Question 65: Can India clarify how it ensures that the interpretation being worked in the territory of India reflects the text of the Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS") that eliminates discrimination based on whether inventions are produced locally or imported in Article 27.1 which states that "…patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced)".

Reply: Same as in reply to Q. 65. Compulsory license can only issue under the relevant provisions of the Patent Act. These provisions of the Act are compliant with TRIPS provisions

JAPAN

Question 16 (Page 86, Paragraph 3.216): India's Patent Act section 3(d) sets a different standard for pharmaceutical /chemical products from other industrial fields. Could India explain the consistency with the non-discriminatory principle declared in TRIPs 27.1?

Reply: Section 3(d) applies to all fields of technology and is therefore compliant with TRIPS 27.1. As per section 3(d) of the patents Act, efficacy requirement is invoked when the subject matter involves "mere discovery of a new form of a known substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus". Unless the requirement of the efficacy is met with, a new form of a known substance or mere use of a known process, machine or apparatus is not an invention -meaning thereby that the criteria of patentability are not fulfilled. Thus, the efficacy requirement is the inventive step.

Question 17 (Page 86, Paragraph 3.216): The Secretariat Report mentions that in the judgment of the Supreme Court of India "it was said that 'efficacy' should be understood as 'therapeutic efficacy', which must be judged 'strictly and narrowly'". Could India clarify the consistency between this interpretation and the above mentioned principle in TRIPs 27.1?

Reply: The decision of the Supreme Court of India is consistent with the commitments under Article 27.1 of the TRIPS Agreement.

The provision Section 3(d) applies to all fields of technology. As per section 3(d) of the patents Act, efficacy requirement is invoked when the subject matter involves "mere discovery of a new form of a known substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus". Unless the requirement of the efficacy is met with, a new form of a known substance or mere use of a known process, machine or apparatus is not an invention -meaning thereby that the criteria of patentability are not fulfilled. Thus, the efficacy requirement is the inventive step.

The Hon'ble Court states in this regard that "efficacy means the ability to produce a desired or intended result. Hence the test of efficacy in the context of section 3(d) would be different depending upon the result the product under consideration is desired or intended to produce. In other words, the test of efficacy would depend upon the function, utility or the purpose of the product under consideration. Therefore, in the case of a medicine that claims to cure a disease, the test of efficacy can only be 'therapeutic efficacy'."

Question 18 (Pages 86-87, Paragraph 3.217): In the report, it was noted that a very specific type of product (a breakthrough innovative pharmaceutical product) suffered from 3(d) rejection. Could India elaborate on the efficacy standard of 3(d) in the case of protecting such a breakthrough innovation?

Reply: The reference in the paragraph relates to the drug "Sovaldi" used for treatment of Hepatitis C.

The application filed by the concerned company was rejected by the Controller after examination of facts. However, the applicant had appealed in the High Court of Delhi and the case has since then been remanded back to the patent office by the Hon'ble Court. Therefore there is no decision yet on the case.

However, it may be stated that the provisions in Indian Patents Act including those for patentability as mentioned under section 2(1)(j) and the exclusions from patentability as mentioned in section 3 and 4 are completely TRIPS compliant. During examination of applications, these criteria are applied equally to all types of inventions including breakthrough innovation. If any breakthrough innovative pharmaceutical product was rejected under section 3(d), as alleged, it must have been on the merits and on application of the relevant provisions in the Patents Act without any sort of discrimination. The legal regime in India provides the avenue to the applicant to appeal the decision with which it is aggrieved in the Intellectual Property Appellate Board or under Writ in the High Court.

Question 19 (Page 87, Paragraph 3.218): The Secretariat Report notes that India's first Compulsory License had been issued under the Patent Act, Sec 84. Sec 84 requires "not worked in the territory of India". Could India explain the relationship between this wording and TRIPs 27.1?

Reply: Article 27 relates to patentable subject matter and states that patents shall be available in all fields of technology provided they are new, involve an inventive step and are capable of industrial application. The issue in question relates to "Nexavar" which is an existing patent in India. The patent was given after evaluating it against the Indian patent law which is compliant with TRIPS Article 27.

However, Article 31 of TRIPS allows members States to issue compulsory license. Article 31 concerns only those inventions on which a patent has been granted. The authorizations are to be considered on individual merits. In addition Article 8 of TRIPS mandates countries to adopt measures to protect public health and nutrition and the Doha declaration on TRIPS and Public Health clearly states that WTO member States are free to set down conditions to enable issue of
compulsory license. Section 84 of the Patent Act is therefore compliant with Articles 8, 31 and the Doha declaration. Since it can only apply after the patent has already been granted, it is erroneous to link Art 27.1 with Section 84 of the Patent Act.

In keeping with the provision, India's section 84 sets down conditions when such a grant of compulsory license could be considered. The Compulsory license was issued in the case of "Nexavar" as it did not meet the reasonable requirements of the public, was exorbitantly priced and was not worked in the territory. The interpretation of the term "working of the patent" has been given by the Intellectual Property Appellate Board (IPAB) in the Bayer Vs Natco case and has
been upheld by the Hon'ble High Court.(this decision has been explained in detail in Q39 raised by Mexico, may not be required here because the import of the question is different).

SWITZERLAND

3.3.5 Intellectual property rights

3.3.5.2 Patents

Question No: 23: Para. 3.216: The Secretariat's Report makes reference to the Supreme Court's reading of the term "efficacy" to be understood as "therapeutic efficacy". It further cites the Court that Section 3(d) clearly sets up a second tier of qualifying standards for chemical substances/pharmaceutical products. Can India explain how that additional criterion and the second tier of qualifying standards required for pharmaceutical products is compliant with the three patentability criteria and the obligation to make patents available without discrimination as to the field of technology under Art. 27.1 TRIPS?

Reply: The Supreme Court of India has not set up an additional criterion for grant of a patent beyond that prescribed under Art 27.1 of the TRIPS Agreement.

As per section 3(d) of the patents Act, efficacy requirement is invoked when the subject matter involves "mere discovery of a new form of a known substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus". Unless the requirement of the efficacy is met with, a new form of a known substance or mere use of a known process, machine or apparatus is not an invention -meaning thereby that the criteria of patentability are not fulfilled. Thus, the efficacy requirement is the inventive step.
Section 3(d) sets up the standard for patentability as mentioned by the Court. The provision Section 3(d) applies to all fields of technology. The hon'ble Court states in this regard that "efficacy means the ability to produce a desired or intended result. Hence the test of efficacy in the context of section 3(d) would be different depending upon the result the product under consideration is desired or intended to produce. In other words, the test of efficacy would depend upon the function, utility or the purpose of the product under consideration. Therefore, in the case of a medicine that claims to cure a disease, the test of efficacy can only be 'therapeutic efficacy'."

Question no: 24: In 2012, India issued a compulsory license for the anti-cancer drug patent sorafenib tosylate. The Report summarizes in para 3.218 the Controller General's decision and makes reference to the legal grounds for the issuance of the compulsory license under Section 84 of the Patents Act, including the ground that the patented invention was not worked in the territory of India as required by the law. The legal basis for this ground is Section 84(1)(c) Patents Act. Could India provide clarification with regard to the scope and application of Section 84(1)(c)? Under this provision, does the importation of a patented product satisfy the working requirement? Please explain how Section 84(1)(c) relates to the requirements under Section 84(1)(a) in conjunction with 84(7)(e)?

Reply: The interpretation of the term "working of a patent" has been dealt with in the Bayer Vs Natco Compulsory License case by the Intellectual Property Appellate Board (IPAB) which was later upheld by the High Court of Bombay. The hon'ble court stated that "…when a patent holder is faced with an application for compulsory license, it is for the patent holder to show that the patented invention/drug is worked in the territory of India by manufacture or otherwise.

Manufacture in all cases may not be necessary to establish working in India as held by the Tribunal. However, the patent holder would nevertheless have to satisfy the authorities under the Act as to why the patented invention was not being manufactured in India keeping in view Section 83 of the Act. This could be for diverse reasons but it would be for the patent holder to establish those reasons which makes it impossible/prohibitive for it to manufacture the patented
drug in India. However, where a patent holder satisfies the authorities, the reason why the patented invention could not be manufactured in India then the patented invention can be considered as having been worked in the territory in India even by import. This satisfaction of the authorities is necessary particularly when the petitioner admittedly has manufacturing facilities in India."

Question No. 25: Para 3.225: In Section 4.4.3, India's National Manufacturing Policy provides for the option for the "Technology Acquisition and Development Fund" to request from the Government the issuance of a compulsory license if the patented green technology is not being worked in India to meet the domestic demand in a satisfactory manner. The policy paper states that compulsory licenses will be issued only within the provisions of TRIPS. Can the Indian Government confirm that under the policy, the working requirement can be met by the importation of the patented technology? Can India clarify how the requirements under Section 4.4.3 of the Manufacturing Policy relate to the requirements under Section 84 Patents Act?

Reply: Any issue of Compulsory license will only be as per the provisions of the Indian patent Act.
As far as the 'interpretation of the term "working of a patent" has been dealt with in the Bayer Vs Natco Compulsory License case by the Intellectual Property Appellate Board (IPAB) which was later upheld by the High Court of Bombay. The hon'ble court stated that "…when a patent holder is faced with an application for compulsory license, it is for the patent holder to show that the patented invention/ drug is worked in the territory of India by manufacture or otherwise.
Manufacture in all cases may not be necessary to establish working in India as held by the Tribunal. However, the patent holder would nevertheless have to satisfy the authorities under the Act as to why the patented invention was not being manufactured in India keeping in view Section 83 of the Act. This could be for diverse reasons but it would be for the patent holder to establish those reasons which makes it impossible/ prohibitive for it to manufacture the patented drug in India. However, where a patent holder satisfies the authorities, the reason why the patented invention could not be manufactured in India then the patented invention can be considered as having been worked in the territory in India even by import. This satisfaction of the authorities is necessary particularly when the petitioner admittedly has manufacturing facilities in India."

3.3.5.8 Trade secrets and test data protection

Question No. 26: Para 3.261: The Report indicates that there is no specific legislation in place
to protect test data submitted for regulatory approval of pharmaceuticals and agricultural chemicals against disclosure and reliance by third parties. Some general protection is provided by Indian law against disclosure of test data under the Official Secrets Act and common law principles, but not against reliance. How does Indian law and practice comply with the obligation to also protect test data against unfair commercial use pursuant to Article 39.3 TRIPS? How is reliance by a second applicant being prevented? Further to the Inter-Ministerial Committee's recommendations of 2007 to introduce a protection period for test data for agrochemical products and medicines of three and five years respectively, can India indicate a timeline by when the implementation of such a protection regime is expected? Are there any other legislative plans to ensure protection against reliance as per Article 39.3 TRIPS?

Reply: Article 39 of TRIPS relates to protection of undisclosed information. It deals with protection of such information when it is a trade secret and its protection when shared with the marketing regulator for seeking approval.

Article 39.3 relates to the specific case when data pertinent for seeking approval of the authority is shared with the marketing regulator. The text of this Article does not specifically state that member countries would need to comply with the requirement of data exclusivity. It only states that the regulator will need to protect it from unfair commercial use. Therefore, no additional obligations which are not present in text can be interpreted. The obligation on the authorities is to keep the test data secret and not allow it to be accessed by third parties through unfair means. India complies completely with its obligations under Article 39.3 of TRIPS.

There are no bills in the Parliament on this issue.

SWITZERLAND

FOLLOW-UP QUESTIONS

Report by the Secretariat

3.3.5 Intellectual property rights
3.3.5.2 Patents
Para 3.218

Re. Reply to Question 24 by Switzerland (p. 164/165; RD/TPR/432):

Do we understand India's response correctly that under Indian law a local working requirement applies in the sense that a patent holder is required to manufacture the patented product in India, with the exception that the holder is able to show/prove that local manufacturing was impossible/prohibitive for him to do? Can India explain how this condition complies with Article 27.1 TRIPS which requires nondiscrimination as to whether products are imported or locally produced?

Reply: Article 27.1 of the TRIPS Agreement states that patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application and that patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.

It may be noted that Article 27(1) also offers some flexibility as it does not define the parameters of novelty, inventive step and industrial applicability, giving WTO members the scope to determine the criteria for how these should be interpreted and applied. Moreover, Article 27 should not be read in isolation and other relevant provisions of the TRIPS like preamble of the TRIPS (which recognizes the public policy objectives of national systems while adopting TRIPS), Article 7 and 8 of TRIPS and provisions of Article 30 (Exceptions to Rights Conferred) and 31 (Other Use Without Authorization of the Right Holder) need to be read conjointly with the Article 27. This conjoined reading makes clear the true aspects of some of the flexibilities to the member countries to safeguard the public policy objectives of national system.

UNITED STATES OF AMERICA

3.3.5 Intellectual Property Rights
3.3.5.1 Introduction

Page 84, paragraph 3.207: The Secretariat’s Report states that "India has an important economic interest in protecting the intellectual property rights (IPRs) of its creators and inventors, particularly in the creative and knowledge-based industries."

Question 90: Please provide updated data regarding civil and criminal copyright, trademark, and patent infringement actions during this TPR review period. Despite the absence of a unitary law on trade secrets, please also provide data and information on civil and criminal court cases involving this important IPR during this TPR review period.

Page 84, paragraph 3.209: The Secretariat’s Report notes that while "India has laws covering different aspects of IPRs that have been amended from time to time, including in order to take into account its TRIPS obligations [citation omitted], only the Copyright Act, 1957 has been amended since 2011."

Reply: India has federal set up with civil and criminal cases filed in various courts- at the district level in case of criminal enforcement and trade secret violations and in the high courts. The information on civil cases is not maintained centrally. Information on criminal enforcement is compiled by the National Crime Record Bureau and it is available on the web site (http://www.ncrb.gov.in)

Page 86, paragraphs 3.216-3.217: The Secretariat’s Report discusses a Supreme Court of India judgment relating to Section 3(d) of the Patents Act.

Question 94: In consideration of this decision and the new pharmaceutical patent examination guidelines which recite the language of the judgment, please provide information on applications which have been granted following a rejection under Section 3(d). For example: how many there are and what sort of evidence and/or argument examiners may consider persuasive as to significant enhancement of therapeutic efficacy over the closest prior art compounds so as to remove a 3(d) rejection after it is made.

Reply: The cummulative data on examination and grant based on section 3(d) along with the the reasons/evidences etc. in respect thereof has not been compiled by the Office, as the details for each individual case is available in the IPO website. The examination, grant and rejections all are done strictly as per provisions of the Patents Act and the Guidelines ( which has also taken into consideration the Supreme Court decision in this regard) without any discrimination.

Question 95: More generally, please provide information relating to the number of patent applications rejected under Section 3(d) by IPO examiners that concern patent applications outside of the pharmaceutical and biologics technology sectors. Please identify which sectors outside of pharmaceuticals, biologics, and chemicals, if any, have received rejections and how many have rejections have been made in each sector.

Reply: The Cummulative data on examination and grant based on section 3(d) along with the the reasons/evidences etc. in respect thereof has not been compiled by the Office, as the details for each individual case is available in the IPO website

Page 87, paragraph 3.219: The Secretariat's Report indicates that it is not entirely clear how India intends to address the issue of safeguards against diversion that are part of both the August 2003 General Council decision and the subsequent protocol amending the TRIPS Agreement.

Question 96: Given that India has already implemented this type of compulsory licensing of pharmaceuticals, has India undertaken efforts or given consideration to anti-diversion measures, in light of the General Council decision and protocol for amending the TRIPS Agreement?

Reply: Section 92A of the Indian Patent Act prescribes clearly that the Compulsory licence for export of patented pharmaceutical products shall be available for manufacture and export of such products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned production to address public health problems, only when the country under reference has already granted a compulsory licence or has, by notification or otherwise allowed importation of the patented pharmaceutical products from India.

The controller shall on receipt of an application in the prescribed manner, grant a compulsory license solely for manufacture and export of the concerned pharmaceutical product to such country under such terms and conditions as specified and published by him.

Application for compulsory license can be made under Form 17 of the Patents Act and Rules.

However, no such compulsory licence has been granted in India so far.

Page 88, paragraph 3.225: The Secretariat’s Report discusses issues of intellectual property and climate change by referencing India’s National Manufacturing Policy of 2012. Under Section 4.4 of the National Manufacturing Policy, India contemplates two methods for assisting companies with obtaining access to the latest patented green technologies: 1) establishing a Technology Acquisition and Development Fund to purchase relevant patents from rights holders for use in patent pools to license to interested companies; and 2) allowing the Technology Acquisition and Development Fund to "approach the Government for issue of a Compulsory License for the technology which is not being provided by the patent holder at reasonable rates or is not being worked in India to meet the domestic demand in a satisfactory manner". Although this section deals with two distinct methods for facilitating access to patented technologies, it is entitled "Compulsory licensing" which suggests that compulsory license is favored by the Government. Please confirm that India will not favor the compulsory licensing method over more market-driven methods, such as licensing agreements among private parties or between private parties and the Technology Acquisition and Development Fund, and that if the compulsory licensing method is used, it would be done only in a way that is fully compliant with TRIPS. In Section 4.4.3 of the National Manufacturing Policy, criteria such as "not being provided by the patent holder at reasonable rates" and "not being worked in India to meet the domestic demand in a satisfactory manner" may be used by the Technology Acquisition and Development Fund to approach the Indian Government for a compulsory license.

Question 97: Are these terms broader than the criteria contained in Article 31 of TRIPS (e.g., "reasonable commercial terms and conditions")? Please provide more detail on the terms cited in the National Manufacturing Policy.

Reply: The terms would be interpreted in accordance with the Indian Patent Act which is consistent and compliant with TRIPS.

Page 96, paragraphs 3.261-3.262: The Secretariat’s Report discusses legislation for pharmaceutical test data protection and the TRIPS provisions on protection of such data from unfair commercial use.

Question 126: Please indicate India's plans to implement unfair commercial use protection for undisclosed information relating to pharmaceutical products utilizing new chemical entities. Please also explain India's plans to implement such protection for undisclosed information relating to agricultural chemical products utilizing new chemical entities.

Reply: Article 39.3 relates to the specific case when data pertinent for seeking approval of the authority is shared with the marketing regulator. The text of this Article does not specifically state that member countries would need to comply with the requirement of data exclusivity. It only states that the regulator will need to protect it from unfair commercial use. Therefore, no additional obligations which are not present in text can be interpreted. The obligation on the authorities is to keep the test data secret and not allow it to be accessed by third parties through unfair means. India complies completely with its obligations under Article 39.3 of TRIPS. There is no
decision yet on this issue.