[Ip-health] Statement of Kamal Nath, India's Minister of Commerce and Industry on Patent Amendments

[mpalmedo@cptech.org]

http://athens-olympics-2004.newkerala.com/?action=3Dfullnews&id=3D50676

Kamal Nath=92s statement on the Ordinance relating to Patents (Third)
Amendment:

[Business India]: The following is the text of the statement made by Shri
Kamal Nath, Union Minister of Commerce & Industry, on the Ordinance
relating to Patents (Third) Amendment at a news conference here today:

1. With the coming of the New Year, two significant developments in the
world of commerce and industry open themselves to India. Both are
connected with the world trading order, of which India is a part: one is
the final phase-out of the Multi-Fibre Agreement, and the other is marked
by India=92s conformity with the international Intellectual Property System
in all respects, on terms that are practical and credible.

2. When India decided ten years ago to accept and adopt the world trading
order, we committed ourselves to fulfilling certain obligations on the
understanding that other countries of the world too would commit
themselves to the same obligations. And out of these common commitments
would arise opportunities =96 opportunities that would not have come our wa=
y
had we stayed outside the system.

3. The WTO system provides an organized multilateral framework within
which India can claim trade demands as a legitimate right; and in this we
have succeeded. Ten years ago, our exports stood at less than 32 billion
dollars. A decade later they had doubled to 64 billion dollars. Now we
look to doubling our exports in five years. This year we are already set
to cross 75 billion dollars. All this translates into more employment
opportunities and greater economic activity, with its concurrent benefits.

4. It must be remembered that it is not only India that is conforming =96
for every commitment of ours, there is a parallel commitment of other
member States. Because of our stand on special and differential treatment,
our major trading partners have had to reduce their tariffs to a greater
extent. Where dissatisfied we have recourse to the Dispute Settlement
Mechanism of the WTO. Of the 22 cases involving India which have so far
been decided, India has won 9, and 7 were amicably settled on terms
favourable to us.

5. The pharma industry and the IT industry are the two sunrise sectors for
India. The ordinance amending the Patent Act provides for an enabling
environment for both of these. Among the sectors that have experienced the
greatest transformation in India, the Pharmaceutical Industry is perhaps
the most significant. India=92s WTO involvement during the last decade has
encouraged our pharma companies to adopt a strategy of R & D based
innovative growth. Thus, while Indian companies spent not even a fraction
of a percent on R & D ten years ago, today the larger Indian companies are
spending in the region of 6 to 8 percent of their turnover on R & D. (The
norm for major MNCs is 12%). The transformed Indian pharma industry is
itself looking for patent protection =96 particularly the bio-tech sector,
in which India has aggressive prospects.

6. When we joined the WTO ten years ago Indian pharma exports were less
than 4000 crore rupees. A decade later our pharma exports are 14,000 crore
rupees, and account for more than a third of the industry=92s turnover. Thi=
s
is the result of the confidence built up in our industry due to our
progressive adherence to our IP commitments. Now we are poised to achieve
an annual compounded growth rate of 30% in order to double our pharma
exports in three years. Some 60 billion dollars worth of drugs are going
off patent in the next few years. Indian industry can grab a lion=92s share
of this =96 provided we are a bona fide member of the international trading
community, and are not in a questionable position, open to the possibility
of retaliatory measures and sanctions, threatening not only our pharma
exports, but other sectors as well =96 including our textiles sector.

7. Apart from manufacture of drugs, the pharma industry offers huge scope
for outsourcing of clinical research. We have a vast pool of scientific
and technical personnel, and recognized expertise in medical treatment and
health care. India can take advantage of our strength in this provided we
have the right legal framework in place, which provides IP protection to
the results of that research.

8. In IT, the trend is to have software in combination with or embedded in
hardware =96 such as in computers or cell phones or a variety of other
gadgets. Software as such has no patent protection (the protection
available is by way of copyright); but the changing technological
environment has made it necessary to provide for patents when software has
technical applications in industry in combination with hardware. This has
been a demand of NASSCOM.

9. This Third Amendment is only the culmination of a process begun ten
years ago. The provisions of the Ordinance are to be seen in conjunction
with, and in the context of the Act, as well as of the earlier two
Amendments of 1999 and 2002. Our Patents Act always provided for process
patents in all fields, and product patents in all fields except drugs,
food and chemicals. The Act had to be amended in order to provide for
product patents in these also with effect from 1st January 2005. A Bill
had been introduced in Parliament a year ago by the previous government,
but lapsed.

10. The new Government set up a Group of Ministers on the matter. It was
our desire to bring the Bill to Parliament first. But it was also
necessary to consult with all stakeholders and political parties. The last
comments we received were on the 21st of December =96 and so it was not
possible to bring the Bill to this session of Parliament. This has
necessitated the Ordinance. The ordinance will be discussed in detail in
Parliament in the Budget session. The ordinance is an interim measure to
fulfill our legal obligations within the stipulated time.

11. The ordinance is the same as the Bill introduced last year with
improvements in some significant respects. We have introduced a provision
for patenting of software that is embedded in hardware. We have also
provided for a definite pre-grant opposition procedure. The earlier bill
had only a post-grant opposition, with a weak pre-grant representation.
After extensive discussions we have decided to have both pre-grant as well
as post-grant opposition. Of course, we have rationalized the timelines,
so as not leave everything open-ended, but have a definite time-table
within which each of the stages should take place. This reduces by half
the maximum time it would take for the processing of an application, from
more than nine years to about four. Another significant modification is
the introduction of a provision to protect Indian industry from
infringement proceedings with retrospective effect. We have specifically
provided that patent rights for mail box applications will only be
available prospectively. We have made these changes after wide
consultation, and we feel that these considerably improve the proposals.

12. The fear that prices of medicines will spiral is unfounded. In the
first place we must realize the fact that 97% of all drugs manufactured in
India are off-patent, and so will remain unaffected. These cover all the
life-saving drugs, as well as medicines of daily use for common aliments.
In the patented drugs also, in most cases there are always alternatives
available. In fact a feature of patent protection is that it spurs
research, so that constantly alternatives keep appearing in the market =96
and often the alternatives are better ones. Thus price control is
inherently built in.

13. We have 13 Compulsory Licensing provisions under Chapter XVI in place.
The Joint Parliamentary Committee discussed this issue threadbare three
years ago. Their recommendations were the basis of the Second Amendment.
The Act also has strong provisions under Chapter XVII for outright
acquisition of the patent to meet national requirements. There is also the
Drug Price Control Order administered by the National Pharmaceuticals
Price Authority. With this framework in place it is clear that the
concerns and fears expressed by various sections are wholly misplaced.

14. The Act ensures that the reasonable requirements of the public with
respect to availability and affordability are taken care of. Public
interest particularly public health and nutrition is protected. The law
effectively balances and calibrates Intellectual Property protection with
public health concerns and national security. By participating in the
international system of intellectual property protection, India unlocks
for herself vast opportunities in both exports as well as her potential to
become a global hub in the area of R&D based clinical research
outsourcing, particularly in the area of bio-technology.