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MONTHLY OCTOBER IPR NEWS LETTER
MONTHLY DECEMBER IPR NEWS LETTER
January-2007 IPR News Letter
TRIPS COMPLIANT INDIAN PATENT SYSTEM -Product
Patents Regime-Working of the Patent, Compulsory Licenses & Revocation of
Patents
With the enactment
of the Patents (Amendment) Bill 2003, India will have a fully TRIPS compliant
patent system which hopefully will be operative from 1.1.2005 as per the mandate
. The draft Bill, also termed the Third Amendment presented on December 22nd to
the Lok Sabha has covered the provisions left out of the First and Second
Amendments notably the ones concerning the introduction of the Product Patent
regime for all classes of products without discrimination. Once again the
Government has attempted to bring in a balanced legislation which would not hurt
the interests of either the inventors or the users of the inventions. To what
extent has it succeeded?
The stated objectives of the new Bill to further amend IPA (1970) are to not
only make the law, TRIPS compliant, but also to simplify and rationalise the
procedures for grant of patents; in other words, to make the practice of the
system more user-friendly.. The salient objectives of the Bill are to introduce
the product patent regime for all inventions, to delete the provisions relating
to EMRs which will become redundant with the advent of the Product Patent
regime, to introduce the provision of grant of Compulsory Licenses to supply
drugs to Countries which have no manufacturing capacities to meet their acute
public health problems as per the TRIPS Agreement on the DOHA Declaration on
Public Health and to strengthen issues related to national security.
Product Patents Regime
The Amendment has deleted Section 5 of IPA 1970 which had, specified that only
methods or processes of manufacture are patentable for certain inventions, so as
to allow product patent protection in all fields of technology including areas
of foods, medicines and drugs. However the new uses of known substances are
still non-patentable unlike in the case of patent laws in many other Countries,
which afford protection for new uses (Swiss type of claims). It would have been
appropriate if Utility Patents were allowed under the Indian Law, considering
Indian strengths in this area and its R&D capabilities.
Biological material or traditional knowledge and any other subject matter of
strategic importance that may be notified by the Government from time to time
cannot be a subject for patent applications as per the new Amendment.
Working of the Patent, Compulsory Licenses & Revocation of Patents
Under Section 82 , conditions for grant of Compulsory Licenses, such as National
emergency, circumstances of extreme urgency, public non-commercial use etc which
are all causes for grant of Compulsory Licenses have been defined. Under Section
83, abuse of patent rights which restrain trade and adversely affect
international transfer of technology are additional causes which can lead to
grant of Compulsory Licenses. If a patent is not worked in India for three years
from the date of sealing of the patent. and efforts to obtain license from the
patentee has failed the government can grant Compulsory License on terms to be
agreed upon between the patentee and the licensee and if there is no agreement,
the royalty payable will be fixed at not more than 5% of the annual sales
turnover at ex-factory prices. The term of the license will be co-terminus with
the life of the patent. Compulsory licenses also could be revoked for
non-working of the license for a period of two years after the license is
granted. Further, under Section 85, if patented invention is not worked in India
by the patentee or his licensee or if the product is not available at affordable
prices to the public, the Government can order even the forfeiture of the
patent.
Under new Section 92 (A), Compulsory License shall be available for manufacture
and export of patented pharmaceutical products to any country having
insufficient or no manufacturing capacity in the pharmaceutical sector for the
concerned product to address public health problems, provided a Compulsory
License has been granted by such Country. The Controller shall grant a
Compulsory License solely for this purpose under terms and conditions decided by
him. This particular provision has been included to support the letter and
spirit of the DOHA Declaration on TRIPS and Public Health, which the TRIPS
Council approved in August 2003. However, the terms stipulated to qualify for
the import of the patented product by the Country which has acute need for the
product and for the Country which manufactures the product and exports it , are
far too cumbersome, complex and bureaucratic to make it effective, according to
most experts primarily from the developing countries.
Under Section 95, the patentee should transfer technology along with the license
to manufacture the product for which Compulsory License has been granted. If the
patentee does not cooperate, appropriate means could be considered by the
designated authority to enforce this requirement. This particular provision is
extremely difficult to implement since the authorities designated in
India
have no jurisdictional powers or legal recourse over the patentee or his
licensee from another Country.
Outcome of the Third Amendment
The compulsion for the proposed Amendments to the IPA 1970 was primarily to
introduce product patents for all inventions as mandated by the TRIPS Agreement.
While meeting that requirement, Government also introduced fresh legislations to
take care of some of the specific features which would ensure an equitable
patent system in the Country benefiting all the stake holders. Provisions for
enhancement and strengthening National security considerations, protection of
indigenous knowledge, heritage and biological diversity from unauthorized third
party exploitation, provision for compulsory licenses both for domestic use as
well as for exports of drugs to countries which have acute medical needs , but
have no manufacturing capabilities, prevention of anti-competitive practices
through monopolies granted by the patent system, provision for parallel imports
to make patented drugs available from the cheapest licensed sources, removal of
exclusivity under EMR provisions during the transition period and stream lining
and rationalization of the entire system, are some of the other major objectives
to be achieved by this Amendment.
While there are no serious conflicts with the provisions, mandated under TRIPS,
a few of the issues addressed through this Amendment are likely to be questioned
as not being fully compliant with the TRIPS mandate. They are related to lack of
patentability of biological materials and various life forms including
microorganisms, provision for parallel imports under the exhaustion of rights
principle, liberal interpretation of the scope for issue of Compulsory Licenses,
authority of the Controller and the Government to grant Compulsory Licenses for
the domestic and export markets or even revocation or forced forfeiture of
patent rights under a variety of conditions including high and unaffordable
prices of drugs, definition of working of an invention not to include imports of
the patented article, insistence on transfer of technology along with license to
use the invention etc. There are a large number of implementation problems that
will crop up as the various provisions get to be enforced apart from the serious
problems of lack of infrastructure to put the new system in a fully operational
mode.
The powers of the Appellate Board to decide on various tricky legal and
technical issues which will come up during the implementation need to be
carefully defined and their relative positioning vis-à-vis the judicial set up
in the country also needs to be clearly established. Framing appropriate rules
to support the various legislative provisions is bound to be a very tricky
exercise and a nightmare to the Rule makers.
The final legislation incorporating and embodying all the essential provisions
under the TRIPS Agreement need to be implemented by the end of 2004 for which
all procedural matters including legislative debates in the Parliament, framing
of the Rules and notification for effecting the implementation process
collectively or in phases need to be finalized in a defined time frame to meet
the deadline.
The road ahead after IPA 1970 becomes an effective pathway for encouraging
inventions and innovations and spreading a culture of R&D among all the
industrial segments. It is important for India, in view of the high quality and
quantity of intellectual capital available in this Country, to realize its full
potential to create economic wealth for the Nation and its people through a well
laid out and implemented system for Intellectual Property Protection
Vijay Pal Dalmia
Intellectual Property Attorney
