[Ip-health] Novartis, Article 27 of TRIPS and Mashelkar Report

[dshanker@deakin.edu.au]

Section 3(d) of the Indian Patent Act, Article 27 of the TRIPS
Agreement and Mashelkar Report
Dear Gopa Kumar
I would normally have not written on this bulletin but the urgency of
the circumstances in relation to Novartis?s case and compulsory
licensing in Thailand have changed the situation. My purpose of
writing this analysis is also that if somebody with legal experience
can correct my analysis and improve it, I will be really happy and our
argument can have some more weight.
I have a good legal experience in personally fighting cases both in
India and abroad. As a Commissioner of Customs and Central Excise
before I resigned and moved to academics, I have fought in more than
half a dozen High Courts in India including Bombay, Delhi and Gujarat
High Courts and in the Indian Supreme Court. I have fought cases in
hundreds and not merely as a lawyer. My responsibilities were much
much deeper. In fact, I think in 1994-95, I fought against Mr. Soli
Sorabjee in a steel case in the Indian Supreme Court and we won the
case. KTS Tulasi, then Solicitor General or Additional Solicitor
General  appeared on our behalf. I have never fought any case against
Mr. Shanti Bhushan but I do not remember him appearing in any of the
economic offences case. I mentioned my background to make it clear
that I know the Indian judicial system a little better than average
NGOs or academics whether independent or paid by the pharmaceutical
industry. In this part I will be discussing Novartis cases and in
subsequent parts, I will discuss Thailand?s compulsory licensing.
I have gone through each and every document pertaining to the Novartis
case including Shamnad Basheer?s pamphlet prepared on behalf of
INTERPAT, an association of foreign based multinational pharmaceutical
companies. In my analysis, there are basically three issues.
1. TRIPS compatibility of Section 3(d) of the India Patent Act
2. Plagiarized Mashelkar Report along with INTERPAT document prepared
by Shamnad Basheer from which the Mashelkar Report was plagiarized
3. Whether TRIPS Agreement is a Valid and Legitimate Treaty

1.=09TRIPS Compatibility of Section 3(d) of the Indian Patent Act

Section 3(d) of the Indian Patent Act reads as under
Section 3(d) ? What are not inventions
?The mere discovery of a new form of a known substance which does not
result in the enhancement of the known efficacy of that substance or
the mere discovery of a new property or new use of a known substance
or of the mere use of a known process, machine, or apparatus unless
such known process results in a new product or employs at least one
new reactant.
Explanation:- For the propose of this clause, salts, esters, ethers,
polymorphs, metabolites, pure form, particle size, isomers, mixtures
of  isomers, complexes, combination and other derivatives of known
substance shall be considered to be the same substance, unless they
differ significantly in properties with regard to efficacy?
The affidavit filed by Novartis and the subsequent argument of Soli
Sorbajee and Shanti Bhushan questions the validity of Section 3(d) of
the Indian Patent Act in that it is arbitrary, illogical and in
violation of India?s obligation under the TRIPS Agreement.
Particularly, two articles of TRIPS Agreement have been mentioned in
this connection. Article 1 saying that ?Members shall give effect to
the provisions of this Agreement.? And Article 27 saying that patents
shall be available in all fields of technology without discrimination.
I will deal with Soli Sorabjee?s argument followed by Shanti Bhushan?s
argument. I will discuss Novartis?s affidavit later because it does
not contain any relevant argument at this stage.
Mr. Soli Sorabjee?s argument as reported by Anand and Chan is that
since this provision is unique to India and was introduced at the late
stage, it is not in compliance with the TRIPS Agreement. Mr.
Sorabjee?s argument appears to be the argument by a person whose
understanding of the TRIPS Agreement is quite limited and is totally
misplaced. It appears that he has not read the submission of his party
i.e. Novartis on whose behalf he is arguing. Article 1 of the TRIPS
Agreement has been quoted in the Novartis affidavit which in its
second part says
?Member?s may, but, shall not be obliged to, implement in their law
more extensive protection than is required by this agreement, provided
that such protection does not contravene the provisions of the s
agreement.?
The plain meaning of the second part of Article 1 of the TRIPS
Agreement is that any member country of the WTO can have any level of
monopoly depending upon the role and presence of monopolistic
industries in that country. Considering the strong presence of
monopolistic industries in the USA and the EC and their iron grip on
Japan in the form of the so called special relationship, the
monopolistic enhancement does not have any limit. The monopolistic
power has been consistently expanded in recent times beyond these
countries or group of countries through a large number of bilateral
and multilateral agreements, through the use of the WIPO as in the
case of African countries which had to have some of the most strict
patent regime while staying at the bottom of the poverty ladder and
the constant pressure on the countries to follow dictates of the USTR
and a other multinationals as was seen in the case of Brazil?s local
working and Thailand?s compulsory licensing and  through the use of
academic output generated by industry paid academics and NGOs.
Patenting provisions around the world are so diverse that the practice
of one or more countries cannot be any criteria to judge the
compatibility of the Indian provision with the TRIPS Agreement.
The second part of Article 1 of the TRIPS Agreement is the most
mischievous part of any international treaty, particularly a treaty
meant for promoting monopoly which permits Member countries to have
extensive monopolization on the products under their patent and other
monopoly laws and to block the import of goods claiming to have those
products or incorporating products which have used patented processes
to produce those products. In fact the second part permits unbridled
and unlimited expansion of monopolization through the patenting and
other rights. Similarity in patenting provisions are not present even
among  the Members of the European Union and even the EC
Biotechnological Directive which was virtually forced on Member
countries of the EC  through every type of manipulation have not been
able to bring about uniformity even in the biotechnological field
among the members of the European Union. The TRIPS compatibility has
to be read directly from the TRIPS Agreement and not in relation to
the practice with any other nations? patent law and definitely not in
conjunction with the patents acts of any major countries such as the
USA, Members of the EU or Japan where the expansion of monopolizations
at the behest of multinationals virtually operates without any limit
to the extent that the US Supreme Court has intervened to make
observations in this regard in Laboratory Corporation v. Metabolite
Corporation (548 U.S. 2006) and Ebay v. Merck to say that unbridled
extension of patenting is against the innovation. I will quote from
Laboratory Corporation of Justice Breyer?s observation
?The reason for the exclusion (from the patentable subject matter) is
that sometimes too much patent protection can impeded rather than
?promote the Progress of Science and useful Arts,? the Constitutional
objective of patent and copyright protection. U.S. Const. Art. I =A78,
cl. 8. ??
The expansion of patentable subject matter, the dilution of
obviousness criteria, in the discriminatory manner of use of prior art
by a policy institution such as the Court of Appeals for the Federal
Circuit with judicial powers has transformed the monopolization scene
from any previously recognizable form. The patent practices in the
last decade or two cannot be used as a guideline to define whether the
Indian act is in conformity with the TRIPS Agreement. This game has
been played by Mr. Mashelkar in his report which I will discuss later
where he has put practices of other countries including the USA, the
EC and Japan along with patenting done by Indians on the new use of
previously patented substances, the information which is totally
irrelevant for the analysis of the TRIPS compatibility of the section
3(d) of the Indian patent act.
In fact the presence of Article 1 of the TRIPS Agreement makes the
TRIPS Agreement an invalid treaty  as it removes certaintity and
predctiveness from the international agreement (Daya Shanker (2002),
India the Pharmaceutical Industry and the Validity of TRIIPS, Journal
of World Intellectual Property, vol. 5, pp. 315-371).
Mr. Soli Sorabjee argued on the vagueness of the term ?efficacy? and
?significantly? in section 3(d) of the Indian Patent Act. Indian
Section 3(d) of the Indian Patent Act is basically a reproduction of
Article 10(2) of the Directive 2001/83/Ec as amended by the EC
Directive 2004/27/EC of the European Parliament and of the Council of
31 March 2004 (amending Directive 2001/83/EC on the Community Code
Relating to Medicinal Products for Human Use (official Journal of the
European Union (L/136-34) dated 30.4.2004).
Article 10(2) of the said Directive reads as
?generic medicinal product? shall mean a medicinal product which has
the same qualitative and quantitative compositions in active
substances and the same pharmaceutical form as the reference medicinal
product, and whose bioequivalence with the reference medicinal product
has been demonstrated by appropriate bioavailability studies. The
different salts, esters, ethers, isomers, mixtures of isomers,
complexes or derivatives of an active substance shall be considered to
be the same active substance, unless they differ significantly in
properties with regard to with regard to safety and/or efficacy. In
such cases, additional information providing proof of the safety, and
/or efficacy of the various salts, esters or derivatives of an
authorized substance must be supplied by the applicant. The various
immediate release oral pharmaceutical forms shall be considered to be
one and the same pharmaceutical form. Bioavailability studies need not
be required of the applicant if he can demonstrate that the generic
medicinal products meet the relevant criteria as defined in the
appropriate detailed guidelines.?
This provision talking about significant and efficacy was introduced
in the year 2004 vide Directive 2004/27/EC to clarify Directive
2001/83/EC in order to ensure legal certainty  ?to achieve high
standards for the quality, safety and efficacy of medicinal products
for human use.? What has been used to clarify existing provisions in
the EC and to ensure legal certainty is being used to claim violation
of Indian Constitution. We are not dealing with arguments here. We are
not even dealing with personal assertions. What we are dealing with is
the attempted perversion of the Indian judicial system by a
multinational showing its contempt for anything not in conformity with
its monopolization drive.

The use of the term ?significantly? regarding the ?efficacy? of a drug
which was used as vague enough to question the unconstitutionality of
the Indian patent act has been repeatedly used by the courts in Europe
and other places to ensure incorporation of certainty and clarity in
the concerned provisions. In a case relating to the similarity between
generic and branded medicinal drugs, the European Court of Justice
observed
?Having regard to the foregoing , the answer to the first part of the
first question must be that Article 4.8(a)(iii) of Directive 65/65, as
amended, is to be interpreted as meaning that a medicinal product is
essentially similar to an original medicinal product where it
satisfies the criteria of having the same qualitative and quantitative
composition in terms of active principles, of having the same
pharmaceutical form and of being bioequivalent unless it is apparent
in the light of scientific knowledge that it differs significantly
from the original product as regards safety or efficacy.? (The Queen
v. The Licensing Authority, Generics, Wellcome Foundation and others
(1998 ECJ CELEX LEXIS 349; 1998 ECR I-7967).
The use of terms ?significant? and efficacy? again came up in
Kohlpharma v. bundesrepublik (2004 ECRI-3369) where the European Court
of Justice observed
?When, in particular in the case of an importer the applicant does not
have access to all the necessary information but provides data that
make it at least plausible that the two medicinal products do not
differ significantly for the purpose of assessing their safety and
efficacy, ?.?.
Coming to Mr. Shanti Bhushan?s argument, as I have mentioned that I
have never seen him appearing in any economic offences cases, I do not
know his competence but he has used the decision of the House of Lords
in Equal Opportunities Commission and another v. Secretary of State
for employment to suggest that domestic courts have jurisdiction to
declare provision of statute as incompatible with an international
treaty or an agreement. I do not know of Mr. Shanti Bhushan's
understanding of international law but the direct effect of
international agreements on domestic law is a very complex issue. I
have discussed this in connection with the introduction by the USA and
the EC of laws in their domestic context by including them in the
international treaty where the US and EC trophallaxis has unhindered
say in my article  The Paragraph 6 solution of the Doha Public Health
Declaration and Export under the TRIPS Agreement, pp. 392-399 (Journal
of Journal of World Intellectual Property, 7(3), pp. 365-400, 2004).
The House of Lords in the Equal Opportunities case observed ?The EOC
(Equal Opportunities Commission) is concerned simply to obtain a
ruling which reflects the primacy of Community law enshrined in s. 2
of the 1972 Act and determines whether the relevant United Kingdom law
is compatible with the equal pay directive and the equal treatment
directive.?
S. 2 of the 1972 EC Act says ?From the 1st day of January, 1973, the
treaties governing the European Communities and the existing and
future acts adopted by the instructions of those communities shall be
binding on the States an shall be part of the domestic law thereof of
under the conditions  laid down in those treaties.?
There are different types of international treaties and the European
community is virtually a union operating as a single entity where the
countries have delegated their powers to the Union. S. 2 of the 1972
Act made the provisions of the Communities Rules as a part of the
domestic law. In the case of the TRIPS Agreement there is no such
thing that any proviso of the TRIPS Agreement becomes the part of the
domestic law. It has to be enacted by the parliament to have any force
in domestic jurisdiction.
Apart from this, the House of Lords observation was based on the
decision of the European Court of Justice in Bilk-Kaufhaus v. Weber
von Hartz case 170/84 [1986] ECR 1607 on the basis of which House of
Lords observed ?It is for the national court, which has sole
jurisdiction to assess the facts and interpret the national
legislation, to determine whether and to what extent a legislative
provision, which, though applying independently of the sex of the
worker, actually affects a greater number of women than men, is
justified by reasons which are objective and unrelated to any
discrimination on grounds of sex.?
A unitary organization such as the European community has a unitary
judicial system as per which the European Court of Justice is the
designated institutions to decide the compatibility of the provisions
of the Member countries of the EC with the EC treaty. There is no
doubt that major proponents of the WTO have all kept reservations in
their acts not to apply the provisions of WTO in their domestic law
and countries like the USA have specifically provided in its law that
the WTO provisions would be irrelevant if it contradicts any of the
domestic provisions of the USA. ?(1)UNITDE STATES LAW TO PREVAIL IN
CONFLICT ? No provision in any of the Uruguay Round Agreements, nor
the application of any such provision to any person or circumstance,
that is inconsistent with any law of the United States shall have
effect.
(2) Construction. ?Nothing in this Act shall be construed  -?
(A)=09to limit any authority conferred under any law of the United
States, including section 301 of the Trade Act of 1974 unless
specifically provided of in this Act?.
Whether members of the EC or countries like the USA follow the
doctrine of direct effect where individuals could move the court for
implementations of the provisions of an international treaty entered
in by the countries concerned or accepts provisions of international
treaty as providing dominant context is a question that has been
recently discussed by a number of scholars including Eeckhout, Berkey,
Petersmann, Hilf, Kuilwijk, Bontinck and Conway M.  Hilf, The
Application of GATT within the member States of the European
Community, with Special Reference to the Federal Republic of Germany,
in Hilf, Jacobs and E.U. Petersmann, supra note 148; Philip Lee and
Brian Kennedy, The Potential Direct Effect of GATT 1994 in European
Community Law, 30 Journal of World Trade 67 (1996)  not approving
giving direct effect to GATT 1994.Kuilwijk, K. J., The European Court
of Justice and the GATT dilemma, (1996); Gaelle Bontinck, The TRIPS
Agreement and the ECJ: A New Dawn?: Some Comments About Joined Cases
C-300/98 and C-392/98, Parfums Dior and Assco Geruste, Jean Monnet
Working Paper 16/01, New York University School of Law (2001); Gerard
Conway, Breaches of EC Law and the International Responsibility of
Member States 13 EJIL  l 679-695 (2002); Carlos D. Esposito, The Role
of the European Court of Justice in the Direct Applicability and
Direct Effect of WTO Law, with a Dantesque Metaphor, 16 Berkeley J.
International Law 138, 141 (1998) and Gaell Bontinck, supra note 150,
at 1, note 5.
Normally there are four principles governing domestic legal effect of
international agreements. These principles are (a) direct application,
(b) direct effect, (c) supremacy and (d) interpretation although many
authors have combined direct application and direct effect together in
their analysis.
The effect of the provisions of the WTO and its various agreements and
understandings whether already present or attempted to be incorporated
in the WTO Member countries domestic law has two aspects. One is in
terms of Article XVI:4 of the GATT 1994 that enjoins ?each Member
shall ensure the conformity of its laws, regulations and
administrative procedures with its obligations  [under  WTO
Agreements].? Article XVI:4 as per the US explanation to the Panel?s
question in U.S. Sections 301-310 says that Article XVI:4 of the GATT
1994 ?provides an overarching statement in the WTO Agreements, clearly
applicable to all annexed agreements and not just the GATT 1994, that
no measures are grandfathered. Article XVI:4 thus serve to remove any
doubt which might have existed in its absence that all measures must
be brought into conformity as from January 1, 1995.
The other implication is where if the negotiating countries introduce
a new provision or a particular interpretation in the WTO or its
Agreements, whether that attempt would amount to introducing a
particular provision directly in their domestic laws or indirectly
through its obligations in terms of Article XVI:4 of the GATT 1994.
The ECJ did not grant direct effect in the case of International Fruit
Company(ECJ Joined Cases 21-24/72, International Fruit company v.
Produktschap voor Groents en Fruit (1972) ECR 1219;, ECJ Case 9/73),
an Article 177b preliminary reference decision prohibiting individuals
to enforce GATT 1947 provisions because the agreement lacked direct
effect although a number of countries have the provisions of direct
effect of international treaties  in their laws (For example, the
relevant section dealing with the effect of International treaty in
the UK says (Section 53(5) No order or entry shall be made in
pursuance of an application under 48 to 51 above which would be at
variance with any treaty or international convention to which the
United Kingdom is a party).?
However, the actual position as adopted by the proponents of TRIPS and
its modifications is what has been pronounced by the European Court of
Justice (ECJ) in the Portuguese Republic case. The ECJ in para 49,
made it clear that unlike other international treaties, the provisions
of the WTO along with its Agreements and Understandings cannot be
applied directly except:
?  where the Community intended to implement a particular obligation
assumed in the context of the WTO, or where the Community measures
refers expressly to the precise provision of the WTO agreements, that
it is for the Court to review the legality of the Community measures
in question in the light of the WTO rules (See, as regards GATT 1947,
Fediol, paragraphs 1 to 22, and Nakajima, paragraph 31)(Portuguese
Republic v. Council, Case C-149/96 EC Reports 1999 p. I-08395,  para 49)
Conway identified some of the instances showing direct application of
international treaty by the ECJ (or the Court of First Instance)
(Gerard Conway, n. 14 ?Generally among the rules of general public
international law that the ECJ (or the Court of First Instance) has
applied, or accepted the status of, are law making international
treaties to which it is not a party, including rules concerning treaty
interpretation (e.g. Hauptzollamt Mainz v. CA Kupferberg & Cie KG
[1982] ECR I-3641; and Case T-115/94, Opel Austria v. Council [1997]
ECR II-39 concerning t 1969 Vienna Convention on the Law of Treaties,
8 ILM (1969) 683; rules of nationality (e.g. Case 41/74, Van Duyn v.
Home Office [1974] ECR 1337; rules concerning the Law of the Sea (e.g.
Case C-286/90, Anklagemyndhigeden v. Poulsen Diva navigation Corp.
[1992]ECR I-601; rules concerning treaty suspension (e.g. Case
C-162/96, Racke v. Hauptzollamt Mainz [1998] ECR I-3655); and rules
concerning the allocation of extraterritorial jurisdiction (e.g. Case
T-102/96, Gencor v. Commission [1999] ECR II-753)?
Broek has discussed some of the pronouncements of the ECJ in this
respect. Some of the recent pronouncements of the ECJ in the field of
application of provisions of the GATT and its interpretations apart
from Portuguese Republic v. Council, are Parfums Christian Dior v. Tuk
Consultancy  and Schieving-Nijstad v. Robert Groenveld Naboth van den
Broek, Legal Persuasion, Political Realism, and Legitimacy: The
European Court?s Recent Treatment of the Effect of WTO Agreements in
the EC Legal Order, Journal of International Economic Law (2001), pp.
411-440
Portuguese Republic v. Council, Case C-149/96 EC Reports 1999 p.
I-08395; Parfums Christian Dior v. TUK Consultancy, Joined Cases
C-300/98 and C-392/98; Schieving-Nijstad v. Robert Groenveld, Case
C-89/99, ECR 2001 I-05851)
Similarly, while dealing with the effect of international obligations
accepted by the USA pertaining to the USA, it is only those provisions
which have been proposed by the USA and its allies are accepted to be
relevant either for domestic judicial institutions in interpreting a
law or for introduction of any change or amendment in their internal
laws.
I have seen enough criminality in the international treaty
negotiations but to extend that criminality to the Indian judicial
system is the dirtiest perversion of rule of law I can think of. In
the same way when these multinationals went to the court, on purely
baseless issue, they questioned the South African constitutionality of
the South African patent act. Wait and see the judgment of the Madras
High Court. If it does not come in their favor,  there would be abuses
and abuses hurled against Indian judiciary in general and Madras High
Court in particular by not only the likes of the American Enterprise
Institute, a neo conservative propaganda institutions but by the
pamphlet writers such as the editors of the Financial Times and the
Wall Street Journal. We have just seen their abusive comments in the
case of Thailand.
Tomorrow I will discuss Plagiarized Report by Mashelkar and Shamnad
Basheer?s Pamphlet dealing with Article 27 of the TRIPS Agreement.
Sometimes one wants to throw up.
Daya Shanker