India loses out to US in patents row

GENEVA, Dec 19: The World Trade Organisation's highest body of appeal, backing a US complaint, has found that India is violating its intern...

GENEVA, Dec 19: The World Trade Organisation8217;s highest body of appeal, backing a US complaint, has found that India is violating its international intellectual property commitments by failing to establish a mechanism to comply with obligations for product patents in pharmaceuticals and agricultural chemicals. The appellate body has backed Washington8217;s claim that New Delhi has not reworked its domestic patent laws in pharmaceuticals and agricultural chemicals and has failed to establish a mandatory 8220;mailbox8221; to receive new patents.

In its complaint upheld earlier by a WTO dispute panel, the United States argued that a mailbox to receive patents must be established through changes in Legislation and not through Executive order as India claimed it had.

As per procedure now, the appellate body8217;s report has to be adopted within 30 days by the WTO8217;s Dispute Settlement Body DSB unless there is a consensus against adoption. Following this, India is required to state its intentions in respect of its implementation of the recommendation. If it is impractical to comply immediately, the member country will be given a 8220;reasonable period of time8221; to be set by the DSB to do so.

If India fails to act within this period it is obliged to enter into negotiations with the complainant in order to determine a mutually acceptable compensation 8212; for instance tariff reductions in areas of particular interest to the complainant. If no satisfactory compensation is agreed, the complainant may request DSB authorisation to suspend concessions or obligations against the other party. In principle, concessions should be suspended in the same sector but the new WTO rules permit cross-sectoral retaliation.

India8217;s 1970 Patents Act only recognises process patents. Broadly, the US and European Union want India to grant product and process patents and establish a mailbox where patent applications for pharmaceutical and chemicals can be received while India changes its laws. While examination and grant of patents can be delayed until after the 10-year transition period 2005 has expired India is required to grant exclusive marketing rights of up to five years even during the transitional period.

In other words, India has committed itself to grant marketing rights to companies which may have got product patents in these areas in other WTO countries making the ten year lock-in period largely irrelevant.