Patent Wars And The Indian Scenario

Prabir Purkayastha

THE past few months have been quite important for
developments in the patents front. Most of the action has come from the US, with
the US Supreme Court giving two important judgements on the scope and reach of
patents. On the software front, Microsoft has started what was on the cards for
quite some time –– a threat of patents war. It has claimed that the Free and
Open Source Software (FOSS) community has breached 235 of its patents, a claim
that Fortune magazine called as Microsoft’s declaration of war against the Free
World! All in all, it shows that the patents regime is changing even in the US,
which had hitherto considered almost everything as patentable, even Yoga asanas.
Obviously, the crisis of the patents system, which we have been talking about
for some time, is now beginning to catch up even in the homeland of global
capital.

This brings us to the second issue we need to address.
The now discredited Mashelkar Committee’s report talked about incremental versus
breakthrough innovations and also on what is not TRIPS compliant in terms of
patentability. In this, they provided little argument or evidence to
substantiate their belief that making only New Chemical Entities patentable
would not be TRIPS compliant. The recent US Supreme Court judgement focuses its
attention on when does incremental innovation becomes patentable and shows that
Masheklar Committee did not apply its mind on the issue.

US SUPREME COURT VERDICTS

Let us take the US Supreme Court judgements first. One
was on the global reach of US patents. The US Supreme Court has rightly held
that US patent regime does not extend beyond the US. This was the Microsoft Vs
AT&T case, in which AT&T had sued Microsoft for violating its US patents while
shipping software to other countries. The second is KSR vs Teleflex case and
involved whether combining two elements – in this case a gas pedal and an
electronic sensor – passes the test of non-obviousness. The Supreme Court ruled
that combining two elements, which are independent innovations, if obvious to a
skilled practitioner of the art, couldn’t be patented. In this, they overturned
the judgement of the Court of Appeals for the Federal Circuit (CAFC), the
specialised Federal Court Bench that oversees all patent case appeals in the US.
The CFAC had set up some tests of non-obviousness, in which it was not enough to
show that the patent claim was obvious, but it had also to be shown in writing
that people had suggested or taught about it earlier. The US Supreme Court held
that this test should not be followed rigidly, but should be flexible enough to
take into account common sense.

This brings us to an important issue. The US system of
patents did not change over the years by changing its patents law. The three
major changes that came about in the patenting system in the US – patenting life
forms, software and business methods – all came from the way either the law was
interpreted by courts or the way law was administered by the US patents office.
This also shows that in India too, the threat of patenting everything could come
not from the law in which we have now introduced various limitations, but the
patents office and from courts interpreting the law. And lest we think that this
is not an immediate threat, let me share what a project done by some of our
colleagues has accidentally uncovered. The Indian Patents Office has granted a
patent for “a broom” or the lowly jhadoo! From the claims, it does nothing more
than any other jhadoo does. It appears that if we are not careful, the Indian
Patents Office, now being trained by experts from the European Patents office
and elsewhere, will give us a “world class patents system” in which we will have
the same problems that now exist in the developed world.

In the developed countries, the belief that having
lost their manufacturing base, they need to protect their economic interests by
strengthening Intellectual Property Rights has made the patents system there
dysfunctional. The scope of patenting was increased by allowing software and
life form patents; even methods of doing business are now patentable. This has
resulted in a rush to patent any and everything under the sun, and a spate of
law suits. For bigger companies, the threat has been less. Each have a patent
pool and this can be used to negotiate a mutual truce of not suing each other.
These are called cross-licensing agreements. The smaller companies, threatened
by big companies quite often pay up even if they know the claim is bogus. The
cost of going to war with big guys with deep pockets effectively allows an
extortion racket to be played by those with large patent holdings.

SOFTWARE PATENTS

The software patents in the US started when a patent,
in which software was used in conjunction with hardware to vulcanise rubber.
This 1982 decision of the US Supreme Court was broadened in the 90s to allow
stand-alone software also to be patented and subsequently included business
method patenting also.

Unlike other areas, software patents not only has the
problem of creating a monopoly, but also the completely uncertain nature of the
monopoly. The patent system arose from allowing inventors a limited time
monopoly in lieu of public disclosure. The invention was supposed to be an
artefact and the patent offices initially required models of the invention to be
submitted along with the written description. Patents were therefore for ideas
converted to tangible form. Software patents, unlike other areas, are patents
for ideas without a tangible form. The code is not what is patented but the idea
behind the code. Going though any software patents makes clear the difficulty in
understanding what is being claimed – neither the nature nor the extent of the
claim can be defined concretely when it comes to ideas.

The key argument against software patents has been
that it is equivalent to patenting algorithms. A computer program is nothing but
a sequence of instructions to a machine. This sequence of instructions is
therefore an algorithm for solving specific problems. As laws of nature and
algorithms cannot be patented, therefore software – unless it is specifically
embodied in hardware and is only a component of a larger invention – cannot be
patented. This is the position in law in most countries including the US.
Unfortunately, the US Federal Court effectively de-railed the patent regime by
allowing software patents, even without any hardware.

Initially, the software companies were quite happy
with the changed patents regime. The older players like IBM had a large body of
patents that it could and did exploit. The system of big players living ever
happily after in an oligopoly, the rule of the few, could have continued in this
way. There were many reasons why this scenario changed. The most significant was
the birth of the Free Software Movement, which showed that good quality software
could emerge by people working together in a collaborative way without claiming
special proprietary rights. In fact, the GPL license was explicitly designed in
a way that nobody could privatise what the software community was jointly
creating. With the power of Microsoft growing, increasingly other software
companies found the answer to Microsoft’s portfolio not in products within their
fold but in the Gnu/Linux community. It was no longer possible to fight the
Microsoft behemoth without taking the support of the Free and Open Source
Software (FOSS) community. Today, all the major companies in the world have
Gnu/Linux powering their business in some way, either in their Internet servers
or in the data centres. Even if the desktop market has remained largely with
Microsoft, the server market has been largely taken over by Gnu/Linux. This
meant that if Microsoft declares war on Gnu/Linux, they also would need to
attack the most powerful companies in the world. This is why their declaration
of war claiming that 235 of their patents are being violated by the FOSS
community has not gone down well in the business world. It is no longer a war
against just the FOSS community. The collateral damage will engulf the rest of
the world too. That is why Fortune, generally a mouthpiece of big business, was
so unsympathetic to Microsoft’s claims. The bigger gain from all this is the
general realisation in software companies that they need to move away from
software patents and their willingness to work together with the free software
community for these objectives.

INDIAN SITUATION

Let us get back to India. As far as software patents
are concerned, we are as well protected in law as much as currently TRIPS
allows. Software per se cannot be patented and we have explicit provisions
against patenting of algorithms and business methods. Certainly, we have a
strong position in law for preventing software patents. However, the patent
office has also to accept that this is the position in law and not grant such
patents. There was a small window of time, in which software patents could have
been considered valid – that between the Patent Amendment Ordinance allowing
some forms of software patents and passing of the amendments in parliament, when
this clause was modified. A number of software patents were filed before and
during this window. The patents office should now reject all such applications.
A number of companies have continued to file business method and software
patents in spite of an adverse position in law. The patent office must reject
all such patents. We should also keep an oversight of all such cases so that
software patenting does not arrive from the backdoor, particularly when it is
fading out elsewhere!

The other issue is Mashelkar’s claim regarding
incremental innovation versus breakthrough innovation, and how it is in India’s
national interest to have incremental innovation to be patentable, not only
breakthrough innovations. It is in this light the argument of not restricting
patentability to just New Chemical Entities but also to others was presented. We
have already argued that Mashelkar’s brief was to only examine whether
restricting patents in pharmaceuticals to New Chemical Entities would violate
TRIPs. Instead of examining this question, he took up the question of what is in
India’s national interest, which was not within his scope.

However, let us take up the Mashelkar’s argument
regarding incremental innovation versus breakthrough innovation. The Patents Act
defines what is innovation that is patentable. In this, any incremental
innovation that meets the criteria of non-obviousness, novelty and usefulness
can be patented. Whether this makes the innovation ‘breakthrough innovation’ or
an ‘incremental innovation’ is not a matter of law but of its significance in
the field. If we take Mashelkar’s argument seriously, what Mashelkar seems to be
saying is that Indian companies are incapable of making major innovations and
therefore the bar of what is patentable should be lowered. Whether his judgement
on Indian companies is right or not is not the point at issue. The consequence
of lowering the bar of patenting would mean a virtual floodgate of trivial
patents and considerably strengthen the monopoly position of capital against the
consumers.

The argument for not allowing chemical entities that
are not new does not flow from the non-obviousness provision of the Patents Act.
The Patents Act defines the degree of innovation that would be required to
qualify to be a patent. The US Supreme Court now agrees that giving patent
protection to ordinary progress – incremental innovation in Meshelkar’s words –
retards progress. However, in the chemical world, we could limit patentability
to only New Chemical Entities (NCE’s) on the basis not of obviousness but of
novelty. Patent laws world over make specific provisions for specific areas. The
biotechnology area has seen internationally such provisions. It is therefore
permissible for India to declare that only NCE’s would pass the test of novelty.

REVIEW TRIPS

Would this be TRIP compatible? TRIPS allows different
countries to set up different patentability criteria. It also allows differences
such as whether the patent should be considered on ‘first to file’ basis or
‘first to discover’ basis. TRIPs is not a “harmonisation” of Patents Laws. It
only prescribes certain elements that must be incorporated in all patent laws.
This pertains to granting of product patents, no discrimination between domestic
and foreign companies, no discrimination between different sectors and a common
duration of the patents. As chemicals entities are specific only to
pharmaceuticals and agro-chemicals, etc., it is possible to introduce area
specific criteria such as New Chemical Entity for defining patentability. This
would not violate discrimination between sector clause of TRIPs.

Of course, the global MNCs would cry foul and so would
their parent governments. This would also help in taking up the matter of TRIPs
review. It is now obvious that AIDS, malaria, TB are major killers in the
developing countries. The economic consequence of a patent regime that helps
drug MNCs at the expense of the people cannot be allowed to continue. The
developed countries today give as aid and charity, money which ultimately
subsidises the global pharma companies. Billions of dollars given for AIDS
treatment sources medicines from global pharma companies at 50-100 times the
price of its actual cost of production. This is a rip-off not only of the poor
in developing countries but also of the tax payers in the rich countries.

This is what the government needs to put in its
agenda. The current patent regime has yet not caught up with us as we have the
window that if the drugs were discovered before 1995, they cannot be patented
here. This position is going to change soon, as newer pharma entities would now
be patented as they were discovered after 1995. What are we going to do when
diseases resistant to non-patented drugs make their appearance? If we want to
protect the health of the people, we need to take up on a multiple front the
challenge of TRIPs and the patent regime. One is to seek review of TRIPS,
specifically on public heath issues. The second is to tighten up the patent
provision in pharmaceuticals, agro-chemicals and food even further. The third is
to prepare for compulsory licensing in those areas where the disease load is
significant, posing a public health danger. It is time that the Indian
government views the world from the lens of the people and not through those
provided by pharmaceutical companies.