Opinion Patent relief

India escapes being downgraded by the US for IP violations, with a compelling self-defence.

May 2, 2014 01:20 AM IST First published on: May 2, 2014 at 01:20 AM IST

India escapes being downgraded by the US for IP violations, with a compelling self-defence.

The annual Special 301 report of the US Trade Representative has retained status quo — India has not been downgraded to the “priority foreign country list”, a directory of the worst intellectual property rights (IPR) offenders, a move that might have led to, among other things, the US not renewing duty concessions on select Indian exports. Instead, it has been retained on the “priority watch list”, a set of countries with lax IPR regimes. There had been real fears of a downgrade, given the efforts of the powerful US pharma lobby, which is unhappy with India’s IPR protection record. India, in turn, has rightly pointed to the fact that it is WTO-compliant and that disputes should be settled through that forum. This is a sensible bargaining position, since bilateral negotiations are inevitably stacked in favour of the stronger party.

The two allegedly problematic features of India’s IPR regime are Section 3(d) of its patents act, which prevents companies from being able to evergreen patents by making minor alterations to compositions (this was why Novartis lost its Glivec case), and compulsory licences, by which the government, on a case to case basis, allows a generics manufacturer to produce patented drugs in the public interest, without the consent of the patent holder. This has only been used once, to allow Natco Pharma to make and sell copies of Bayer’s patented kidney and liver cancer drug, Nexavar. While the developmental imperatives of countries like India are understandably different from the US, India must tread carefully and not be indiscriminate about the use of these mechanisms. Compulsory licences should be used as a last resort, when there is a justifiably large number of patients who need the concerned drug. If not, the government should devise other ways to subsidise the treatment of poorer patients.

The Special 301 report experience also shows how it helps to give global businesses a stake in India. India had three unexpected ambassadors for its IPR regime in Boeing, Abbott (a pharma company) and Honeywell. This, along with election-time uncertainty, may explain why it was not downgraded. In other words, India’s interests are best served by maintaining an investment-friendly environment, and creating global lobbies invested in its progress.