People’s Democracy

(Weekly Organ of the Communist Party of
India (Marxist)



June 02,2002

to India’s Patent Act


Amit Sen


Indian Patents, (Second Amendment) Bill has finally been passed by both houses
of parliament. The passage of the Bill brings down the curtain on a long and
contentious debate in the country regarding India’s Patent system. 
It is a debate that stretches back more than a decade and a half.



1986 a new round of negotiations was initiated under GATT (General Agreement on
Tariffs and Trade). Popularly known as the Uruguay Round of negotiations, this
new round was sought to be used by the developed countries to orient world trade
in a manner that was beneficial to their interests. More importantly, the
Uruguay Round of negotiations was used by the developed countries led by the US
to introduce a number of issues on the agenda, which were hitherto not
considered as trade issues and hence not covered by GATT. Prominent among these
were issues related to Patents, Investment, Environment and Labour standards.
The ploy was clear – to use the threat of trade embargoes to force developing
countries to follow the diktats of developed countries on a whole range of
economic and industrial policies on one hand, and on the other to use these new
issues to create barriers against developing countries wishing to access the
domestic markets of developed countries.


basis for negotiations was the infamous Dunkel Draft (named after Arthur Dunkel
– the key author of the negotiating text). The most contentious portion of the
Dunkel Draft was that which related to Patents – termed as Trade Related
Intellectual Property Rights (TRIPS) in the Dunkel Draft. 
Patent is a form of monopoly that is granted to an inventor for a limited
period, during which the inventor has the sole right to use the invention and
benefit from its applications. Patents are granted as an incentive for
innovation. At the same time Patent laws all over the world have safeguards to
prevent the abuse of the monopoly granted to the Patent holder. Thus Patent
laws, traditionally, have been a balance between the rights and the obligations
of the patent holder.




is important to understand why the US and other developed countries were so keen
to introduce the issue of Patents as part of the negotiating agenda in GATT.
Faced with competition in the traditional manufacturing sectors, the US and
other developed countries wished to secure their dominance over the global
economy through the medium of Patents. In other words the US saw Patents as a
means to legitimise creation of monopolies. In order to do so the balance
between the rights and obligations of Patent holders was skewed in favour of the
former. The TRIPS text in the Dunkel Draft sought to sanctify the monopoly power
of the Patent holder while reducing its obligations.


since 1970, had a Patent law that was seen by many as a model for other
developing countries. As would logically be expected, the Indian Law stressed on
the obligations of the Patent holder and had strong provisions that prevented
the abuse of the Patent holder’s monopoly rights. Of
particular importance was the fact that the Indian Patent law did not provide
for monopoly rights in the area of drugs and agro-chemicals. The results were
clear – the Indian drug industry developed to become the strongest and most
self-reliant industry in the developing world
. Today the campaign on access
to drugs draws strength from Indian companies like Cipla who are offering
anti-AIDS drugs at one tenth to one fortieth of the prices being charged by
large pharmaceutical companies. This became possible because of India’s
liberal Patent law of 1970.


was, hence, natural that India (along with Brazil, Argentine, Thailand and other
developing countries with a strong industrial base) opposed the inclusion of
TRIPS in the negotiating agenda. They argued that the issue of Patents was a
non-trade issue. They further argued that the history of Patent laws across the
globe shows that all countries have evolved their domestic laws in consonance
with the stage of economic development and development of science and technology
capabilities. Laws that provide strong Patent protection limit the ability of
developing countries to enhance their S&T capabilities and retard
dissemination of knowledge. Japan, for example, was able to enhance its domestic
capabilities through the medium of weak patent protection for decades—well
into the second half of the twentieth century. Japan provided very weak Patent
protection till well into the seventies. Italy changed to a stronger protection
regime only in 1978 and Canada as late as in 1992. It was argued that it would
be illogical to thrust a single patent structure on all countries of the globe,
irrespective of their stage of development.


notwithstanding the rhetoric, the TRIPS accord was not pushed through just to
access markets of developing countries. These markets represent just a fraction
of the global market – India, for example, accounts for 0.8 per cent of the
market, in contrast to 33 per cent, 24 per cent and 20 per cent for the US,
Europe and Japan respectively. Rather the
TRIPS agreement became a necessity to protect the markets of large
pharmaceutical companies in the developing world against competition from
cheaper generic drugs manufactured in countries like India and Brazil. TRIPS, in
other words, is not about “free” trade, but has to do with protection of
markets in developed countries
. In order to safeguard this market giant
pharmaceutical companies railroaded all opposition and forced the signing of the
TRIPS accord. The draft which formed the basis of the accord was prepared by
industry representatives from the US, Europe and Japan.




in 1988-89 India made a complete volte
and agreed to the inclusion of TRIPS in the GATT negotiations. The then
Congress(I) government succumbed to pressure from the US and even went to the
extent of replacing India’s chief negotiator at GATT, S P Shukla because of
the latter’s strong opposition to the inclusion of Patents in the negotiating
agenda. The capitulation by India punctured the opposition of other developing
countries, and TRIPS entered the negotiations on world trade. Subsequently the
TRIPS text in the Dunkel Draft became the WTO agreement that came into force in
1995. At that time virtually all opposition parties, including the BJP and its
present partners in the NDA criticised the Congress government for its surrender
to the US on this issue.


It is
important that we recall the above history, because it is only then that we
shall be able to understand the implication of the recent amendment that has
been passed in Parliament. Any amendment to the 1970 Act is a retrograde step,
if we have in mind the interests of the Indian people and the Indian industry.
Today the same parties and individuals who had castigated the Congress in 1989
have taken the lead in getting the new Amendment Bill passed. They now use the
argument that after India became a signatory to the TRIPS Agreement as part of
the WTO Agreement in 1995, the obligations need to be fulfilled. What they
however do not say is that the new amendments do not fully reflect even the
safeguards provided for in the TRIPS agreement. We have adopted a national
legislation that is more stringent than what is required of us to satisfy our
international obligations. Both the Congress and the NDA have combined to push
this legislation through, and it is only the left parties led by the CPI (M) and
some other parties like the Samajwadi Party which put forward a principled
opposition to the passage of the Bill.




us look at the safeguards that could have been incorporated in the new Act. Many
of these pertain to the provision of Compulsory Licensing. This is a provision
that allows the government to curb the monopoly power of the Patent holder by
issuing a license to other interested parties to use the patented invention.
This is a provision that the TRIPS agreement provides for. While the new
amendments do provide for compulsory licensing, many areas have been left vague.
The terms on which a compulsory licence can be issued, i.e. the royalty required
to be paid to the patent holder (as compensation) has not been defined.  Moreover the time frame for settling a dispute between the
patent holder and an applicant for a licence has not been specified. Knowing the
way courts function, these ambiguities would allow for delaying tactics to be
employed by Patent holders to frustrate applicants. This is particularly
important as applicants would not risk pledging resources to set up
manufacturing facilities if there a great deal of uncertainty built into the
whole process.


new amendments make the law open to interpretations, and rely on the judicial
system to interpret it. It may be mentioned here that while the TRIPS agreement
allows for compulsory licensing, not a single Compulsory Licence has been
granted anywhere in the world since the TRIPS agreement came into force in 1995.
This is a tremendous psychological barrier today, and it will require a brave
system to be the first one to break the barrier. Developing country governments and their institutions, including the
judiciary, are under tremendous pressure from Multinational Corporations 
– through the US and other developed countries – not to curb their
monopoly powers by issuing compulsory licenses.
A chronically
genuflexing government seems ill equipped to interpret its laws in a manner that
favours its citizens over the interests of foreign multinational corporations. 
Especially if the government appears to be so hesitant to even
incorporate provisions that are allowed by the TRIPS agreement.




should be understood that the global climate regarding drug MNCs has changed
drastically since 1995. In large measure this is because of the outcry regarding
the AIDS epidemic. Since the nineties almost the whole continent of Africa has
come under the grip of this epidemic and in some countries an estimated third of
the adult population is infected by AIDS.  The
tragedy was compounded when drugs to contain AIDS started being developed. These
drugs allowed AIDS patients the opportunity to live normal lives even if they
were infected. But there was a catch. Because of Patent protection these drugs
were priced beyond the reach of patients in developing countries. The ridiculous
effect of Patent protection was evident when one found that the cost of treating
AIDS patients in some African countries was many times their total GNP! Even
more ridiculous, and tragic, when we know that these drugs can be produced at
one fortieth of prices being charged by MNCs.


has become a rallying point for activists from all parts of the world and
developing country governments alike. The coalition that was built around the
AIDS issue then pressed for clarifications from the WTO that the TRIPS accord
did not prevent country governments from legislating in favour of protection of
public health. In this they were supported by almost the entire community of
developing nations. The global drug MNCs fought to the last to prevent this. But
the momentum of the global movement was able to force the adoption of a
declaration at the WTO Ministerial Conference in Doha that clarified that
countries could legislate to curb the monopoly powers provided by patent
protection to drug MNCs, in order to safeguard public health.


the present time was possibly the most opportune to put through a more liberal
legislation, that went beyond the TRIPS agreement. Post-Doha and post the
momentum created by the campaign for access to drugs, there exists the
possibility to force the renegotiation of the TRIPS agreement. This is a window
that may not remain for long, and it was important to capture the moment,
because the manner in which international treaties are interpreted is as much
political as legal. Unfortunately India’s new Patent Act has been constrained
within the straitjacket of the TRIPS Agreement.




are the implications of the new Act? The implications will not be evident
overnight. The new amendments still do not provide for Patent protection to
drugs. India is required to provide such protection only by 2005, and the
minister for commerce has indicated that a subsequent amendment shall provide
for this. When this happens Indian companies will lose the opportunity to
develop processes for patent protected drugs in the country. India will become
dependant on MNCs for technology to produce new drugs. Votaries of the new
Patents Act argue that old drugs will not be affected by this Act. While this is
true, it must be understood that the rate of obsolescence of old drugs is
extremely fast today. Further, technological dependence on MNCs is the
proverbial “thin edge” which will be used by the MNCs to establish their
dominance over the Indian drug market once again (a position they had lost after
the mid seventies). They will then again start charging exorbitant prices for
drugs in the Indian market.  Since the early eighties, the categories of drugs which show
the maximum rise in sales are categories which include overwhelming majority of
drugs still under Product Patent or whose Product patents have expired recently. 
In other words if we had a product patent regime today, the drugs showing
fastest growth would have been priced way beyond the capacity of the average


may feel that with the adoption of the new Amendment Bill the fight on Patents
is over. Nothing could be far from the truth. Across the globe developing
country governments and activists groups are fighting for a more liberal
interpretation of the TRIPS agreement and even its renegotiation. 
India could be the crucial player in this fight given its pre-eminent
position as the developing world’s largest supplier of drugs. We can only hope
that the government of the day will discover some day that it is in possession
of a spine!