US INDIA MEMORANDUM
Believing Six Impossible Patents
PROFESSOR Robert Merges, (Law, Berkeley) has called the patent scene in the US as an Alice in Wonderland situation, where its patents office believes, like the Red Queen, six impossible patents before breakfast. On December 20, 2006, the US and India have signed a memorandum of understanding by which the US Patent Office will now teach how the Indian Patent office can also follow the US into this Wonderland Patentscape. No wonder the press release issued by the US Patents Office calls it a historic agreement. Having failed last year to change the Indian patent system through appropriate amendments, the Indian Patent Act is now to be subverted by using standards and procedures that has made the US patents system one of the most dysfunctional in the world.
For the uninitiated, the United States Patent and Trademark Office (USPTO) is another US institution, which has done well for the US. Every year, it grants about 200,000 patents. Yet, in the last few years, the criticism of USPTO and the current patenting system has been mounting, with USPTO being held responsible for holding back progress from biotechnology to software. And it is not the radical critics alone who have spoken out against the US existing patenting system but traditional supporters of the US establishment, the well-known business magazine such as Fortune, premiere technical journal IEEE Spectrum and even the National Academy of Sciences. A Fortune article, (The Law of Unintended Consequences, September 19, 2005) showed that while the biotechnology revolution spawned by the patenting fever in publicly funded academic institutions have made a few of the institutions fabulously rich, it has also held back medical and pharmaceutical research significantly. Adam B Jaffe and Josh Lerner conclude (Innovation and Its Discontents, Princeton University Press, 2004), Increasingly, the firm with the best lawyers or the greatest capacity to withstand the risk of litigation wins the innovation wars rather than the company with the brightest scientists or most original, valuable ideas. Leading figures in software development such as Tim Berners-Lee, held to be one of the fathers of the Internet, have warned against the possibility of the future web being tripped by software patents and identified this as the biggest threat to future innovation in this field.
The Indian patent law differs in three significant ways from the US Patents system. The first is that it does not allow either algorithms or business methods to be patented, both permissible in the US. In software, Indian Patents Act does not allow software per se to be patented and would demand that any such patent has to be enabled by some physical realisation in hardware before a patent can be granted: it has to be some kind of embedded software; and the device as a whole has to be patented. The US allows software, as in computer programs, running on any general-purpose computer to be patented and this was what was attempted under the Patents Ordinance in 2005. One of the successful battles fought last year was against software patents and it was the CPI(M) and its opposition in parliament that forced the UPA to take this clause out in the final Amended Act.
The second major difference is in the process of fighting a bad patent. The problem of clever lawyers and weak patents office is that people can file bogus patents couched in a language that makes it difficult for the patent examiner to understand the patent. This has led to various bogus patents being granted including that of swinging on a swing filed on behalf of a five-year old by his father, a patent attorney.
One of the correctives in the system would be to allow patents to be formally opposed by other groups with formal evidence and proceedings. In Europe, this is called post grant opposition as distinct from what the US law allows, which grants only a post grant review. In the Indian patent law currently in place, there is scope for even a pre-grant opposition, which permits challenges to patents before it is granted. This is the clause that is being used by various groups to challenge the bogus patents that pharma companies file (Amit Sengupta, Peoples Democracy, January 7, 2007). In the US, influential groups including the National Academy of Sciences have suggested that some form of patent opposition would help the US Patent Office in not issuing such bogus patents that currently plague the system. Incidentally, pre-grant opposition was sought also to be withdrawn in 2005 and it was only the insistence of the Left that this provision was retained.
The third major difference between patenting in the US and in India is what can be patented. The US allows life form patenting and even a part of a natural gene sequence to be patented. It also allows a new use of an old substance, change of dosage and a mixture of known chemicals or even a minor physical variant of a molecule to be patented. The Indian patent law as it stands today, rejects life form patents (except a micro-organism as dictated by TRIP Agreement), or any new use or a new variant of an old substance unless found to have significant improved efficacy. This provision of what cannot be patented is what the Left strengthened in 2005 in the Amended Patent Act, the 3(d) section, which has been challenged now by Norvartis in Chennai High Court
By agreeing to allow the USPTO to teach the Indian Patent Office how to look to patents, what is being proposed is to subvert the Indian Patent Act by interpretations, which would be quite different from the intention of the Act. Before people think that this could not possibly happen, a look at the US law itself and how the interpretation has been changed to make what was originally not patentable to be patentable would be worthwhile. It is not the law that changed in the US but the philosophy of the Patent Office and the US Jurisprudence on patents.
The premise of all patent law was that the monopoly given to the patent holder was for public good and was a limited monopoly that would allow disclosure and therefore put the invention in the public domain. However, as any monopoly was held to be essentially restrictive, patents were given only when the patent application was able to show that the invention was novel, not obvious and had utility: the burden of proof lay with the inventor, the patent office rejecting a patent if it was not satisfied on any of the above counts. It was also common practice, followed by both courts and the patent office that inventions had to be tangible; a mere idea without an artefact could not be patented. In other words, if you put it in a bag and shook it, it would make some noise! In other words, a written idea without a physical device could not be patented. Neither could naturally occurring substances nor life forms; in such a case, it was held that God held the first patent!
The US Supreme Court in various judgements had affirmed all the above as non-patentable. All this changed in the 80s. The major changes were accepting that life forms could be patented: the famous 1980 Diamond vs Chakrabarty case, where Chakrabarty received a patent for an oil-eating microbe with a narrow 5:4 Supreme Court split verdict. The breach in the barrier against patenting ideas came from patenting software (1981, Diamond vs Diehr). Once software was held to be an artefact, the dyke was breached. If an idea could be patented through a software program, why could not be other ideas such as business methods? Why was it necessary for a computer program to exist to show the idea? It could be shown through an implemented business method as well. Thus was born the idea of patenting business methods, the most famous (or infamous) being Amazon.coms one click shopping.
Three major trends, which threaten the future of innovation in the US, the basis of the patents system, are the filing of trivial patents, the ease of securing such patents from the USPTO and the rising cost of litigation. Today, it is much more likely that if a patent is filed in the US, even for stupid inventions, if it is worded suitably, an overworked Patents Office handling 350,000 patents that are filed per year will grant it. And if a patent is granted, the patent holder is more likely to take others to court for its enforcement. And with increased litigation that is now becoming the feature of the patent landscape, there is also the increased likelihood that the US Courts will uphold such patents. All this means that for small companies and individuals, innovation has become increasingly a risky business.
While it is easy to understand why the US should move to a rentier economy and move towards increased monopoly protection to corporations, why should India? All countries in the development phase, including the US, have benefited from a weaker patent regime, consequently allowing less scope for monopolies of patent holders permitting indigenous development of its industries. It does not take too much intelligence to figure out that developed countries hold the majority of the worlds patents. As long as a country stays within the flexibilities permitted by TRIPS/WTO regime, their interest is to restrict monopoly and expand public good. That is why Indian pharma companies provide the cheapest drugs in the world for what is patented medicine elsewhere. Why should we allow a Glaxo Smith Kline or a Novartis to patent drugs which are life saving on some trivial variations that they have worked out? Such as seeking a patent for a different crystalline salt in the case of Gleevec (Novartis); or a mixture the anti-leukaemia drug Combivir (Glaxo Smith Kline) of two anti-retrovirals bonded by silicon (or sand!).
Before we conclude that US benefits from a strong patenting regime, it is also worthwhile to see who in the US benefits from such a regime. The consumers today pay $179 billion for prescription medicines, up from $12 billion in 1980. The ballooning of the cost of medicine for the consumers is directly related to the strong patent (or patent everything you see) regime that the US system today encourages. While the big pharma companies laugh all the way to the bank.
The US Indian IPR cooperation is nothing but another attempt to brainwash the Indian patent office to follow the US route of allowing patenting of anything and everything. While it is easy to see why the US should be following this path, it is difficult to understand the motive of the Indian government. Or is offering the Indian market to the US a part of its strategic understanding?