Chapter 1

INTRODUCTION

1.1 What is Intellectual Property

Intellectual property refers to creations of the mind: inventions; literary and artistic
works; and symbols, names and images used in commerce. Intellectual property is
divided into two categories:
i. Industrial Property includes patents for inventions, trademarks, industrial
designs and geographical indications.
ii. Copyright covers literary works (such as novels, poems and plays), films,
music, artistic works (e.g., drawings, paintings, photographs and sculptures)
and architectural design. Rights related to copyright include those of
performing artists in their performances, producers of phonograms in their
recordings, and broadcasters in their radio and television programs1.

Intellectual property (IP) pertains to any original creation of the human intellect
such as artistic, literary, technical, or scientific creation. Intellectual property rights
(IPR) refers to the legal rights given to the inventor or creator to protect his
invention or creation for a certain period of time2. These legal rights confer an
exclusive right to the inventor/creator or his assignee to fully utilize his
invention/creation for a given period of time. It is very well settled that IP play a
vital role in the modern economy. It has also been conclusively established that the
intellectual labor associated with the innovation should be given due importance so
that public good emanates from it. There has been a quantum jump in research and

1
IPO, World Intellectual Property Organization (1983), page-02
2
Singh R., 'Law relating to intellectual property', New Delhi: Universal Law Publishing Co.
Pvt. Ltd., Vol. 1. (2004), p. 41

1
development (R&D) costs with an associated jump in investments required for
putting a new technology in the market place3. The stakes of the developers of
technology have become very high, and hence, the need to protect the knowledge
from unlawful use has become expedient, at least for a period, that would ensure
recovery of the R&D and other associated costs and adequate profits for continuous
investments in R&D4. IPR is a strong tool, to protect investments, time, money,
effort invested by the inventor/creator of an IP, since it grants the inventor/creator
an exclusive right for a certain period of time for use of his invention/creation. Thus
IPR, in this way aids the economic development of a country by promoting healthy
competition and encouraging industrial development and economic growth. Present
review furnishes a brief overview of IPR with special emphasis on pharmaceuticals.

1.2 Brief History

The laws and administrative procedures relating to IPR have their roots in Europe.
The trend of granting patents started in the fourteenth century. In comparison to
other European countries, in some matters England was technologically advanced
and used to attract artisans from elsewhere, on special terms. The first known
copyrights appeared in Italy. Venice can be considered the cradle of IP system as
most legal thinking in this area was done here; laws and systems were made here
for the first time in the world, and other countries followed in due course. Patent act
in India is more than 150 years old. The inaugural one is the 1856 Act, which is
based on the British patent system and it has provided the patent term of 14 years
followed by numerous acts and amendments.

1.3 Types of Intellectual Properties and their Description

Originally, only patent, trademarks, and industrial designs were protected as
‘Industrial Property’, but now the term ‘Intellectual Property’ has a much wider
meaning. IPR enhances technology advancement in the following ways:

3
Research and development statistics, New Delhi: Department of Science and Technology
(DST), Government of India, (Jan, 2002), p. 75.
4
Ibid, p. 77

2
(a) it provides a mechanism of handling infringement, piracy, and unauthorized use
(b) it provides a pool of information to the general public since all forms of IP are
published except in case of trade secrets. IP protection can be sought for a variety
of intellectual efforts including-
(i) Patents
(ii) Industrial designs relates to features of any shape, configuration, surface pattern,
composition of lines and colors applied to an article whether 2-D, e.g., textile, or 3-
D, e.g., toothbrush
(iii) Trademarks relate to any mark, name, or logo under which trade is conducted
for any product or service and by which the manufacturer or the service provider is
identified. Trademarks can be bought, sold, and licensed. Trademark has no
existence apart from the goodwill of the product or service it symbolizes
(iv) Copyright relates to expression of ideas in material form and includes literary,
musical, dramatic, artistic, cinematography work, audio tapes, and computer
software.
(v) Geographical indications are indications, which identify as good as originating
in the territory of a country or a region or locality in that territory where a given
quality, reputation, or other characteristic of the goods is essentially attributable to
its geographical origin.
A patent is awarded for an invention, which satisfies the criteria of global novelty,
non-obviousness, and industrial or commercial application. Patents can be granted
for products and processes. As per the Indian Patent Act 1970, the term of a patent
was 14 years from the date of filing except for processes for preparing drugs and
food items for which the term was 7 years from the date of the filing or 5 years from
the date of the patent, whichever is earlier. No product patents were granted for
drugs and food items5. A copyright generated in a member country of the Berne
Convention is automatically protected in all the member countries, without any
need for registration. India is a signatory to the Berne Convention and has a very
good copyright legislation comparable to that of any country. However, the

5
The Patents Act, 1970 as amended by Patents (amendment) Act 2005.

3
copyright will not be automatically available in countries that are not the members
of the Berne Convention. Therefore, copyright may not be considered a territorial
right in the strict sense. Like any other property IPR can be transferred, sold, or
gifted.

1.4 Role of Undisclosed Information in Intellectual Property

Protection of undisclosed information is least known to players of IPR and also least
talked about, although it is perhaps the most important form of protection for
industries, R&D institutions and other agencies dealing with IPR. Undisclosed
information, generally known as trade secret or confidential information, includes
formula, pattern, compilation, programme, device, method, technique, or process.
Protection of undisclosed information or trade secret is not really new to humanity;
at every stage of development people have evolved methods to keep important
information secret, commonly by restricting the knowledge to their family
members. Laws relating to all forms of IPR are at different stages of implementation
in India, but there is no separate and exclusive law for protecting undisclosed
information/trade secret or confidential information.
Pressures of globalization or internationalization were not intense during 1950s
to 1980s, and many countries, including India, were able to manage without
practicing a strong system of IPR. Globalization driven by chemical,
pharmaceutical, electronic, and IT industries has resulted into large investment in
R&D. This process is characterized by shortening of product cycle, time and high
risk of reverse engineering by competitors. Industries came to realize that trade
secrets were not adequate to guard a technology. It was difficult to reap the benefits
of innovations unless uniform laws and rules of patents, trademarks, copyright, etc.
existed. That is how IPR became an important constituent of the World Trade
Organization (WTO).

1.5 What are intellectual property rights?

Intellectual property rights are like any other property right. They allow creators, or
owners, of patents, trademarks or copyrighted works to benefit from their own work
or investment in a creation. These rights are outlined in Article 27 of the Universal

4
Declaration of Human Rights6, which provides for the right to benefit from the
protection of moral and material interests resulting from authorship of scientific,
literary or artistic productions. The importance of intellectual property was first
recognized in the Paris Convention for the Protection of Industrial Property (1883)
and the Berne Convention for the Protection of Literary and Artistic Works (1886).
Both treaties are administered by the World Intellectual Property Organization
(WIPO).

1.6 Why promote and protect intellectual property?

There are several compelling reasons. First, the progress and well-being of
humanity rest on its capacity to create and invent new works in the areas of
technology and culture. Second, the legal protection of new creations encourages
the commitment of additional resources for further innovation. Third, the promotion
and protection of intellectual property spurs economic growth, creates new jobs and
industries, and enhances the quality and enjoyment of life. An efficient and
equitable intellectual property system can help all countries to realize intellectual’s
potential as a catalyst for economic development and social and cultural well-being.
The intellectual property system helps strike a balance between the interests of
innovators and the public interest, providing an environment in which creativity and
invention can flourish, for the benefit of all.

1.7 What is a Patent?

A patent is an exclusive right granted for an invention – a product or process that
provides a new way of doing something, or that offers a new technical solution to a
problem.
A patent provides patent owners with protection for their inventions. Protection
is granted for a limited period, generally 20 years. Patents provide incentives to
individuals by recognizing their creativity and offering the possibility of material

6
Universal Declaration of Human Rights, Article 27, (2000)

5
reward for their marketable inventions. These incentives encourage innovation,
which in turn enhances the quality of human life7.
Patent protection means an invention cannot be commercially made, used,
distributed or sold without the patent owner’s consent. Patent rights are usually
enforced in courts that, in most systems, hold the authority to stop patent
infringement. Conversely, a court can also declare a patent invalid upon a successful
challenge by a third party.
A patent owner has the right to decide who may – or may not – use the patented
invention for the period during which it is protected. Patent owners may give
permission to, or license, other parties to use their inventions on mutually agreed
terms. Owners may also sell their invention rights to someone else, who then
becomes the new owner of the patent. Once a patent expires, protection ends and
the invention enters the public domain. This is also known as becoming off patent,
meaning the owner no longer holds exclusive rights to the invention, and it becomes
available for commercial exploitation by others.
Patented inventions have pervaded every aspect of human life, from electric
lighting (patents held by Edison and Swan) and sewing machines (patents held by
Howe and Singer), to magnetic resonance imaging (MRI) (patents held by
Damadian) and the iPhone (patents held by Apple). In return for patent protection,
all patent owners are obliged to publicly disclose information on their inventions in
order to enrich the total body of technical knowledge in the world. This ever-
increasing body of public knowledge promotes further creativity and innovation.
Patents therefore provide not only protection for their owners but also valuable
information and inspiration for future generations of researchers and inventors.

1.8 Rationale of Patent

Patent is recognition to the form of IP manifested in invention. Patents are granted
for patentable inventions, which satisfy the requirements of novelty and utility
under the stringent examination and opposition procedures prescribed in the Indian

7
IPO, World Intellectual Property Organization (1983), Page-5

6
Patents Act, 1970, but there is not even a prima-facie presumption as to the validity
of the patent granted.
Most countries have established national regimes to provide protection to the IPR
within its jurisdiction. Except in the case of copyrights, the protection granted to the
inventor/creator in a country (such as India) or a region (such as European Union)
is restricted to that territory where protection is sought and is not valid in other
countries or regions8. For example, a patent granted in India is valid only for India
and not in the USA. The basic reason for patenting an invention is to make money
through exclusivity, i.e., the inventor or his assignee would have a monopoly if,
(a) the inventor has made an important invention after taking into account the
modifications that the customer, and
(b) if the patent agent has described and claimed the invention correctly in the patent
specification drafted, then the resultant patent would give the patent owner an
exclusive market.
The patentee can exercise his exclusivity either by marketing the patented invention
himself or by licensing it to a third party.
The following would not qualify as patents:
(i) An invention, which is frivolous or which claims anything obvious or contrary
to the well-established natural law. An invention, the primary or intended use of
which would be contrary to law or morality or injurious to public health
(ii) A discovery, scientific theory, or mathematical method
(iii) A mere discovery of any new property or new use for 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.
(iv) A substance obtained by a mere admixture resulting only in the aggregation of
the properties of the components thereof or a process for producing such substance
(v) A mere arrangement or re-arrangement or duplication of a known device each
functioning independently of one another in its own way.

8
Singh R., ' Law relating to intellectual property', New Delhi: Universal Law Publishing Co.
Pvt. Ltd; Vol. 1. (2004), p. 47.

7
(vi) A method of agriculture or horticulture
(vii) Any process for the medicinal, surgical, curative, prophylactic diagnostic,
therapeutic or other treatment of human beings or any process for a similar
treatment of animals to render them free of disease or to increase their economic
value or that of their products
(viii) An invention relating to atomic energy
(ix) An invention, which is in effect, is traditional knowledge

1.9 Rationale of License

A license is a contract by which the licensor authorizes the licensee to perform
certain activities, which would otherwise have been unlawful. For example, in a
patent license, the patentee (licensor) authorizes the licensee to exercise defined
rights over the patent. The effect is to give to the licensee a right to do what he/she
would otherwise be prohibited from doing, i.e., a license makes lawful what
otherwise would be unlawful9.
The licensor may also license ‘know-how’ pertaining to the execution of the
licensed patent right such as information, process, or device occurring or utilized in
a business activity can also be included along with the patent right in a license
agreement. Some examples of know-how are:
(i) technical information such as formulae, techniques, and operating procedures
and
(ii) commercial information such as customer lists and sales data, marketing,
professional and management procedures.
Indeed, any technical, trade, commercial, or other information, may be capable of
being the subject of protection.
Benefits to the licensor:
(i) Opens new markets
(ii) Creates new areas for revenue generation

9
Abbott F, Cottier T, Gurry F., ' The international intellectual property system: Commentary
and materials', Part I. (London: Kluwer Law International; 1999), p. 34

8
(iii) Helps overcome the challenge of establishing the technology in different
markets especially in foreign countries – lower costs and risk and savings on
distribution and marketing expenses
Benefits to the licensee are:
(i) Savings on R&D and elimination of risks associated with R&D
(ii) Quick exploitation of market requirements before the market interest wanes
(iii) Ensures that products are the latest

1.10 The Role of Patent Cooperation Treaty

The patent cooperation treaty (PCT) is a multilateral treaty entered into force in
1978. Through PCT, an inventor of a member country contracting state of PCT can
simultaneously obtain priority for his/her invention in all or any of the member
countries, without having to file a separate application in the countries of interest,
by designating them in the PCT application. All activities related to PCT are
coordinated by the world intellectual property organization (WIPO) situated in
Geneva.
In order to protect invention in other countries, it is required to file an independent
patent application in each country of interest; in some cases, within a stipulated time
to obtain priority in these countries. This would entail a large investment, within a
short time, to meet costs towards filing fees, translation, attorney charges, etc. In
addition, it is assumed that due to the short time available for making the decision
on whether to file a patent application in a country or not, may not be well founded.
Inventors of contracting states of PCT on the other hand can simultaneously obtain
priority for their inventions without having to file separate application in the
countries of interest; thus, saving the initial investments towards filing fees,
translation, etc. In addition, the system provides much longer time for filing patent
application in the member countries.
The time available under Paris convention for securing priority in other countries is
12 months from the date of initial filing. Under the PCT, the time available could
be as much as minimum 20 and maximum 31 months. Further, an inventor is also
benefited by the search report prepared under the PCT system to be sure that the

9
claimed invention is novel. The inventor could also opt for preliminary examination
before filing in other countries to be doubly sure about the patentability of the
invention.

10
 Chapter 2
INTELLECTUAL PROPERTY ACCESS TO MEDICINE

2.1 Management of Intellectual Property in Pharmaceutical Industries

More than any other technological area, drugs and pharmaceuticals match the
description of globalization and need to have a strong IP system most closely.
Knowing that the cost of introducing a new drug into the market may cost a
company anywhere between $ 300 million to $1000 million along with all the
associated risks at the developmental stage, no company will like to risk its IP
becoming a public property without adequate returns. Creating, obtaining,
protecting, and managing IP must become a corporate activity in the same manner
as the raising of resources and funds. The knowledge revolution, which we are sure
to witness, will demand a special pedestal for IP and treatment in the overall
decision-making process.
Competition in the global pharmaceutical industry is driven by scientific knowledge
rather than manufacturing know-how and a company's success will be largely
dependent on its R&D efforts. Therefore, investments in R&D in the drug industry
are very high as a percentage of total sales; reports suggest that it could be as much
as 15% of the sale. One of the key issues in this industry is the management of
innovative risks while one strives to gain a competitive advantage over rival
organizations. There is high cost attached to the risk of failure in pharmaceutical
R&D with the development of potential medicines that are unable to meet the
stringent safety standards, being terminated, sometimes after many years of
investment. For those medicines that do clear development hurdles, it takes about
8-10 years from the date when the compound was first synthesized. As product
patents emerge as the main tools for protecting IP, the drug companies will have to
shift their focus of R&D from development of new processes for producing known

11
drugs towards development of a new drug molecule and new chemical entity
(NCE). During the 1980s, after a period of successfully treating many diseases of
short-term duration, the R&D focus shifted to long duration (chronic) diseases.
While looking for the global market, one has to ensure that requirements different
regulatory authorities must be satisfied10.
It is understood that the documents to be submitted to regulatory authorities have
almost tripled in the last ten years. In addition, regulatory authorities now take much
longer to approve a new drug. Consequently, the period of patent protection is
reduced, resulting in the need of putting in extra efforts to earn enough profits. The
situation may be more severe in the case of drugs developed through the
biotechnology route especially those involving utilization of genes. It is likely that
the industrialized world would soon start canvassing for longer protection for drugs.
It is also possible that many governments would exercise more and more price
control to meet public goals. This would on one hand emphasize the need for
reduced cost of drug development, production, and marketing, and on the other
hand, necessitate planning for lower profit margins so as to recover costs over a
longer period. It is thus obvious that the drug industry has to wade through many
conflicting requirements. Many different strategies have been evolved during the
last 10 to 15 years for cost containment and trade advantage. Some of these are out
sourcing of R&D activity, forming R&D partnerships and establishing strategic
alliances.

2.2 Nature of Pharmaceutical Industry

The race to unlock the secrets of human genome has produced an explosion of
scientific knowledge and spurred the development of new technologies that are
altering the economics of drug development. Biopharmaceuticals are likely to enjoy
a special place and the ultimate goal will be to have personalized medicines, as
everyone will have their own genome mapped and stored in a chip. Doctors will
look at the information in the chip(s) and prescribe accordingly. The important IP

10
Lexchin J., 'Intellectual property rights and the Canadian pharmaceutical marketplace: Where
do we go from here?', (Int. J Health Serv. 2005), p. 35:237–56.

12
issue associated would be the protection of such databases of personal information.
Biotechnologically developed drugs will find more and more entry into the market.
The protection procedure for such drug will be a little different from those
conventional drugs, which are not biotechnologically developed. Microbial strains
used for developing a drug or vaccine needs to be specified in the patent document.
If the strain is already known and reported in the literature usually consulted
by scientists, then the situation is simple. However, many new strains are discovered
and developed continuously and these are deposited with International depository
authorities under the Budapest Treaty.
While doing a novelty search, the databases of these depositories should also
be consulted. Companies do not usually go for publishing their work, but it is good
to make it a practice not to disclose the invention through publications or seminars
until a patent application has been filed. While dealing with microbiological
inventions, it is essential to deposit the strain in one of the recognized depositories
who would give a registration number to the strain which should be quoted in the
patent specification. This obviates the need of describing a life form on paper.
Depositing a strain also costs money, but this is not much if one is not dealing with,
for example cell lines. Further, for inventions involving genes, gene expression,
DNA, and RNA, the sequences also have to be described in the patent specification
as has been seen in the past. The alliances could be for many different objectives
such as for sharing R&D expertise and facilities, utilizing marketing networks and
sharing production facilities11.
While entering into an R&D alliance, it is always advisable to enter into a
formal agreement covering issues like ownership of IP in different countries,
sharing of costs of obtaining and maintaining IP and revenue accruing from it,
methods of keeping trade secrets, accounting for IP of each company before the
alliance and IP created during the project but not addressed in the plan, dispute
settlements. It must be remembered that an alliance would be favorable if the IP

11
Mrudula BS, Durgadevi NK, Madhavi BR, Tejeswi B, Durga PV, 'Intellectual property
rights pinpoint at IPR spotlights coveted R and D', (Drug Inv. Today. 2009), p. 2:197–201.

13
portfolio is stronger than that of concerned partner. There could be many other
elements of this agreement. Many drug companies will soon use the services of
academic institutions, private R&D agencies, R&D institutions under government
in India and abroad by way of contract research. All the above aspects mentioned
above will be useful. Special attention will have to be paid towards maintaining
confidentiality of research.
The current state of the pharmaceutical industry indicates that IPR are being
unjustifiably strengthened and abused at the expense of competition and consumer
welfare. The lack of risk and innovation on the part of the drug industry underscores
the inequity that is occurring at the expense of public good. It is an unfairness that
cannot be cured by legislative reform alone. While congressional efforts to close
loopholes in current statutes, along with new legislation to curtail additionally
unfavorable business practices of the pharmaceutical industry, may provide some
mitigation, antitrust law must appropriately step in.
While antitrust laws have appropriately scrutinized certain business practices
employed by the pharmaceutical industry, such as mergers and acquisitions and
agreements not to compete, there are several other practices that need to be
addressed. The grant of patents on minor elements of an old drug, reformulations
of old drugs to secure new patents, and the use of advertising and brand name
development to increase the barriers for generic market entrants are all areas in
which antitrust law can help stabilize the balance between rewarding innovation
and preserving competition.
Traditional medicine dealing with natural botanical products is an important
part of human health care in many developing countries and also in developed
countries, increasing their commercial value. The world market for such medicines
has reached US $ 60 billion, with annual growth rates of between 5% and 15%.
Although purely traditional knowledge based medicines do not qualify for patent,
people often claim so. Researchers or companies may also claim IPR over
biological resources and/or traditional knowledge, after slightly modifying them.
The fast growth of patent applications related to herbal medicine shows this trend
clearly. The patent applications in the field of natural products, traditional herbal

14
medicine and herbal medicinal products are dealt with own IPR policies of each
country as food, pharmaceutical and cosmetics purview, whichever appropriate.
Medicinal plants and related plant products are important targets of patent claims
since they have become of great interest to the global organized herbal drug and
cosmetic industries12.

2.3 Some Special Aspects of Drug Patent Specification

Writing patent specification is a highly professional skill, which is acquired over a
period of time and needs a good combination of scientific, technological, and legal
knowledge. Claims in any patent specification constitute the soul of the patent over
which legal proprietary is sought. Discovery of a new property in a known material
is not patentable. If one can put the property to a practical use one has made an
invention which may be patentable. A discovery that a known substance is able to
withstand mechanical shock would not be patentable but a railway sleeper made
from the material could well be patented. A substance may not be new but has been
found to have a new property. It may be possible to patent it in combination with
some other known substances if in combination they exhibit some new result. The
reason is that no one has earlier used that combination for producing an insecticide
or fertilizer or drug. It is quite possible that an inventor has created a new molecule
but its precise structure is not known. In such a case, description of the substance
along with its properties and the method of producing the same will play an
important role.
Combination of known substances into useful products may be a subject matter
of a patent if the substances have some working relationship when combined
together. In this case, no chemical reaction takes place. It confers only a limited
protection. Any use by others of individual parts of the combination is beyond the
scope of the patent. For example, a patent on aqua regia will not prohibit any one
from mixing the two acids in different proportions and obtaining new patents.
Methods of treatment for humans and animals are not patentable in most of the

12
Gottlieb S., 'Drug firms use legal loopholes to safeguard brand names' BMJ, [PMC free
article], (2000), p. 321, 320.

15
countries (one exception is USA) as they are not considered capable of industrial
application. In case of new pharmaceutical use of a known substance, one should
be careful in writing claims as the claim should not give an impression of a method
of treatment. Most of the applications relate to drugs and pharmaceuticals including
herbal drugs. A limited number of applications relate to engineering, electronics,
and chemicals. About 62% of the applications are related to drugs and
pharmaceuticals.

16
 Chapter 3
ACCESS TO MEDICINES

3.1 Intellectual Property Protection: Impact On Public Health

Public health principles, in the context of access to medicines, are supported by a
range of national and international legal and policy instruments, including the
Constitution of the World Health Organization (WHO). From a human rights
perspective, implementation of intellectual property rules should be governed by
those principles which support public health goals and access to medicines, thus
ensuring:
i. a rapid and effective response to public health needs and crises;
ii. supply of quality medicines at affordable prices;
iii. effective competition through a multiplicity of potential suppliers;
iv. the provision for a wide range of pharmaceuticals to meet the basic health
needs of the population; and
v. equality of opportunities for countries in need, irrespective of their
membership in the WTO, level of technological capacity, or lack of
manufacturing capacity.

In 2001, World Trade Organization (WTO) members drew up the Doha

Declaration to clarify ambiguities between the need for governments to apply the
principles of public health and the terms of the Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS). In particular, concerns had been
growing that patent rules might restrict access to affordable medicines for
populations in developing countries in their efforts to control diseases of public
health importance, such as HIV, tuberculosis and malaria.

17
Although the impact of intellectual property on access to affordable medicines
predated the TRIPS Agreement, the impending expiry of deadlines for
implementing the TRIPS Agreement by developing countries has added impetus to
the debate. Legal challenges by the pharmaceutical industry to legislation enabling
parallel imports of medicines, and provisions enacted on compulsory licenses,
highlighted the differing interpretations of the TRIPS Agreement obligations. That
this was taking place against the backdrop of the HIV/AIDS pandemic afflicting the
developing world further fuelled the need to focus international public attention on
the manner in which intellectual property protection impacted areas of public
health13.

3.2 Affordability of essential medicines

The HIV pandemic and consequent urgency to make treatment available for
millions of people brought to the fore the issue of affordability of antiretroviral
therapy. When patent-protected antiretroviral treatments were first introduced, the
cost was over US$ 10000 per patient per year, putting them out of reach of the vast
majority of HIV patients in developing countries where over three billion people
live on less than US$2 a day. Although efforts have been made to reduce prices by
pharmaceutical companies, including proposed donation programmes or heavy
discounts, the scale of the crisis in developing countries clearly demanded a more
systematic and sustainable strategy.
The announcement in 2001, by a pharmaceutical manufacturer to supply a
generic version of antiretroviral triple therapy at US$ 350 per patient per year,
together with the subsequent entry of other generic manufacturers into the arena,
has brought about market competition resulting in significant reductions in prices
of antiretroviral therapy. Additionally, there has been increased reliance on low-
cost generic antiretroviral therapy as a strategy for treating patients in developing
countries.

13
Intellectual property protection: impact on public health, WHO Drug Information Vol 19,
No. 3, (2005).

18
In many developing countries, the current concern is how adoption of intellectual
property regimes as required under the TRIPS Agreement can be balanced with
efforts to maintain public health treatment programmes while boosting multiple
sources of pharmaceuticals and controlling cost.

Although patent protection systems for pharmaceutical products are available

in most developing countries, multinational companies have not patented their
products in all of them. This may be because companies may not think it worth the
expense to obtain and maintain patent protection in countries where the market is
small and the risk of infringement low.

3.3 Public health crisis management and patents

Anthrax
At the height of the Doha negotiations, mysterious anthrax attacks were causing
panic in the USA, and health authorities began building stockpiles of ciprofloxazine
to treat exposure. Concerns about the price and the patent holder’s ability to produce
adequate quantities of ciprofloxazine to protect its citizens led US and Canadian
authorities to consider granting compulsory licences for generic production. In the
event, significant price reductions and guaranteed supplies were finally negotiated
with the manufacturer14.

Avian flu
Current concerns of a possible avian flu pandemic are now raising similar questions
on the need for access to antivirals. As countries work out plans to prevent a human
flu outbreak, the question of cost and availability of existing treatments under patent
is once again being balanced with the need to call on public health measures to

14
t’Hoen, E. TRIPS, 'Pharmaceutical patents and access to medicines: Seattle, Doha and
beyond', Chicago Journal of International Law, (June 2002), p. 31(1).

19
contain a highly pathogenic disease and ensure adequate protection of
populations15.

3.4 Provisions of TRIPS

Generic production is possible for the great majority of essential medicines, since
they are currently not protected by patents in developing countries. However, this
is not true for new medicines. The TRIPS Agreement introduced global minimum
standards for protecting and enforcing nearly all forms of intellectual property rights
(IPR), including those for patents. International conventions prior to TRIPS did not
specify minimum standards for patents.
At the time that negotiations began, over 40 countries in the world did not grant
patent protection for pharmaceutical products. The TRIPS Agreement now requires
all WTO members, with few exceptions, to adapt their laws to the minimum
standards of IPR protection. In addition to the minimum protection standards, the
TRIPS Agreement also introduced detailed obligations on the enforcement of
intellectual property rights.

3.5 Patent protection

The TRIPS Agreement requires WTO Members to provide protection for a
minimum term of 20 years from the filing date of a patent application for any
invention including for a pharmaceutical product or process. Prior to the TRIPS
Agreement, patent duration was significantly shorter in many countries.
For example, both developed and developing countries provided for patent
terms ranging from 15 to 17 years, whilst in a number of developing countries like
India, patents were granted for shorter terms of 5 to 7 years.
The TRIPS Agreement also requires countries to provide patent protection for both
processes and products, in all fields of technology. Before TRIPS, many countries
provided only process — but not product — patents. Product patents provide for
absolute protection of the product, whereas process patents provide protection in
respect of the technology and the process or method of manufacture. Protection for

15
Tsang, 'KWT. H5N1 influenza pandemic: contingency plans' (Lancet, 2005), p. 366:533–534.

20
process patents would not prevent the manufacture of patented products by a
process of reverse engineering, where a different process or method from that which
has been invented (and patented) is used.
For example, national legislation requiring only process patent protection has
enabled manufacturers in certain countries to make generic versions of patented
medicines. These countries have opted to make use of the transition period that
permitted countries to delay, until 2005, patent protection in the areas of technology
that had not been so protected before the TRIPS Agreement.

3.6 Protection of Data Submitted for The Registration of Pharmaceuticals

As a condition for permitting the sale or marketing of a pharmaceutical product,
drug regulatory authorities require pharmaceutical companies to submit data
demonstrating the safety, quality and efficacy of the product. The TRIPS
Agreement requires that WTO Members protect undisclosed test data, submitted to
drug regulatory authorities for the purposes of obtaining marketing approval,
against unfair commercial use. Since countries have considerable discretion to
define “unfair commercial use”, it is argued that countries can meet their obligations
to protect test data by prohibiting “dishonest” use of data. Use by government
authorities to assess the efficacy and toxicity of a pharmaceutical would not be
affected, in this case. However, it is now argued that data exclusivity is a
requirement of the TRIPS Agreement. The data exclusivity approach grants the
originator exclusive rights over their test data and prevents regulatory authorities
from relying on the test data to register generic substitutes16.
Prior to the TRIPS Agreement coming into force, most countries allowed reliance
on originator test data to approve generic products. Once test data was submitted by
the originator company, the regulatory authorities could rely on the data to approve
subsequent applications on similar products, or to rely on proof of prior approval of
a similar product in another country. Generic manufacturers need only to prove that
their product is chemically identical to the brand-name, original product, and in

16
Access to Medicines, WHO Drug Information Vol 19, No. 3, (2005)

21
some countries, that it is bioequivalent. This approach enabled swift introduction of
generics into the market without registration data-related costs. Within the data
exclusivity approach, once a company has submitted original test data, no
competing manufacturer is allowed to rely on these data for a period of time17.

3.7 Public health considerations

The current minimum standards in the TRIPS Agreement — historically derived
from those of developed countries — may not necessarily be appropriate for
developing countries struggling to meet health and development needs. The new
obligations have dramatically changed the legal framework for the production,
supply and access to affordable medicines in developing countries.

3.8 The use of safeguard mechanisms in practice

Use of safeguards in developed countries
There has been considerable debate as to why the safeguard mechanisms provided
in the TRIPS Agreement (notably compulsory licensing and government use) are
seldom used by developing countries to improve access to medicines. As already
noted, most developed countries have strong compulsory licensing and government
use provisions in their domestic laws.
The United States provides for broad government use provisions in its law
(covered by USC 1498). The only remedy that is available to the patent holder is
award of compensation, but there is no injunction on use of a patented invention by
the government.
U.S. courts are also known to set compensation (royalty) rates at as low as 1%
in cases of government use of a patented product, as for example in a case involving
the US government and Hughes Aircraft Company in 1994. In 2001, in the wake of
the anthrax scare in the country, the U.S. government threatened to use the
government use provision against the patent on ciprofloxacin. This resulted in a
substantial price reduction by the originator.

17
Ibid, p. 55

22
The United States has also regularly used compulsory licenses as remedy to
anticompetitive practices. Prominent examples of this include Monsanto corn
patents and Microsoft patents. The use of non-voluntary licenses in the U.S. and
Europe has a long history and has contributed to the development of many important
sectors. In 1917, the United States created the Manufacturers Aircraft Association
patent pool (a pool of essential patents with 60 manufacturers as users) to overcome
barriers for the scaling-up of aircraft manufacturing. The decision was taken when
the United States was on the verge of entering World War I and needed to scale up
aircraft manufacturing in the country. Later evidence shows that this step was
instrumental in promoting the aircraft industry across the globe. Similar experience
exists in the area of radio technology.
The patent law of France also has broad provisions for issuing of CLs with
specific remedies in anticompetitive cases: “When the license aims at correcting a
practice found to be anticompetitive or in case of an emergency, the minister
responsible for industrial property is not obligated to seek a voluntary agreement”18.
Another example of a provision enabling the grant of CLs in Europe can be found
in Directive 98/44 of the European Parliament on the legal protection of
biotechnological inventions; this directive provides for guaranteed access to a
compulsory license for genetically engineered plant varieties on payment of a fee19.
These examples illustrate how developed countries have used the patent system to
promote their concrete technological and developmental needs in a particular period
in which laws have evolved in order to keep pace with the stage of development.
Within the patent system, the compulsory licensing system has been regularly used
and continues to be used in developed countries to act as a check on the monopoly
powers that patents confer.

18
Commission on Intellectual Property Rights. Integrating intellectual property rights and
development policy. (London: CIPR, 2002.) [http://www.iprcommission.org/home.html -
last visited on 30 November 2017].
19
James L. Remuneration guidelines for non-voluntary use of a patent on medical technologies.
Geneva: World Health Organization, 2005. Document WHO/TCM/2005.1.
(http://whqlibdoc.who.int/hq/2005/WHO_TCM_2005.1_eng.pdf [las visited on 27 November
2017].

23
3.9 Use of safeguard mechanisms in developing countries
While TRIPS safeguards have been used sparingly by developing countries, some
countries have started to use them. In 2002, Zimbabwe declared an emergency (in
line with Zimbabwe’s national law; however, this is not a TRIPS requirement),
which was followed by the issuing of a compulsory license. This compulsory
license is broad; it covers all HIV/AIDS-related drugs and covers local production
as well as importation. Zambia also issued a compulsory license for local production
of specific HIV/AIDS drugs.

In Asia, Indonesia and Malaysia have starting using TRIPS safeguards to

improve access to ARVs. Both countries have opted for "Government use".

3.10 Other strategies to safeguard access to medicines

Thailand has opted for generic production of ARV drugs that are not under patent
in Thailand. This includes the generic production of didanosine in powder form.
This was possible because only didanosine tablets were patented in Thailand; thus,
the powder form did not infringe the patent. Alongside this, the patent on didanosine
has been challenged by activists. Recently, however, Thailand has issued
compulsory licenses for two antiretroviral medicines, a cardiovascular drug and
several cancer medicines.
The experience till date on the use of TRIPS safeguards in developing countries
shows that there is still considerable reluctance to use them effectively. Part of the
problem is related to the necessity to change domestic laws before such safeguards
can be used. As some of the above examples show, it is perhaps not necessary to
wait for perfect laws to be enacted; countries can make use of existing laws and
procedures to facilitate access to medicines.

24
 Chapter 4
New paradigms for supporting research and development

The global IPR system is increasingly being questioned with regard to both its
implications on access to medicines as well as its effectiveness in stimulating
research and development (R&D), notably for diseases that are mostly prevalent in
developing countries. Meanwhile, the role of public sector investments in medical
R&D is probably not always appreciated sufficiently, in spite of several instances
where publicly funded R&D has contributed enormously to the advancement of
medical knowledge. The Human Genome project is a prominent example. Thus,
interest to develop alternative or complementary models to stimulate R&D is
growing; this is, among others, illustrated by the relatively recent creation of several
public– private partnerships.

4.1 Proposed “Global Framework on Essential Health R&D”

Aware of the constraints with regard to R&D for diseases that mainly affect
developing countries, in May 2006 the World Health Assembly (WHA) adopted
resolution WHA59.24 that urges Member countries to make global health and
medicines a priority in research and development, and particularly to focus on the
needs of patients in resource-poor settings. The WHA furthermore decided to
establish an intergovernmental group to develop a global plan on research and
development for diseases predominantly affecting developing countries. This
intergovernmental working group is open to all Member countries. Its task is to
“draw up a global strategy and plan of action in order to provide a medium-term
framework based on the recommendations of the commission”. It further suggested
that the strategy and plan of action should secure “an enhanced and sustainable basis
for needs-driven, essential health research and development relevant to diseases that
disproportionately affect developing countries”. The intergovernmental working

25
group is to complete its work by the Sixty-first World Health Assembly in May
2008.
Several proposals for possible additional or alternative ways to stimulate and
fund medical and pharmaceutical R&D have been developed, and are discussed in
the context of the intergovernmental working group. These include, but are not
limited to, proposals for a prize fund and an R&D treaty20.

4.2 Medical Innovation Prize Fund

This innovative approach seeks to ensure the affordability of medicines while
keeping in mind the therapeutic value of an innovation. The approach proposes that
every medicine be treated as a generic drug that can be produced by any
manufacturer. A separate fund would be created to compensate and reward the
innovators. There are different ways to design a prize fund; e.g. for ten successive
years, innovators could be rewarded from this fund, based on the number of people
that benefited from the innovation and the extent to which it benefited them. A
portion of the fund could be used in a developing country to promote domestic
R&D. The key feature of this approach is that it would separate the market for
innovation from the market for the product. It would thus potentially create a
market-based approach without the high prices created by patent monopolies21.

4.3 Case studies:

Bangladesh: Increasing self-sufficiency in the pharmaceutical sector
The pharmaceutical sector is one of the fastest growing sectors in Bangladesh, with
an average annual growth rate of 9% since 1982. Total retail market size in 2005
was US$ 500 million and the sector is the second-highest contributor to the national
exchequer. In the export policy of 2003-2006, the pharmaceutical sector was
designated as a high-priority sector.
A total of 164 pharmaceutical companies operate in the country. There are 5300
registered pharmaceutical formulations and 8300 brands based on these

20
Hubbard T, Love J., 'A new trade framework for global healthcare R&D', (PLoS Biol. 2004
Feb), 2 (2): p. 52.
21
Ibid, p. 54

26
formulations. The sector is dominated by local manufacturers; out of the top ten
pharmaceutical companies, eight are local companies.
Bangladesh is almost entirely self-sufficient in the production of formulations,
with about 96% locally manufactured (except for some selected products like
vaccines and insulin). Technologies for manufacture of active pharmaceutical
ingredients are being developed and the country is self-sufficient in this regard in
some therapeutic categories.
This is a major turnaround from the situation in 1972, when just 30% of
formulations were locally manufactured. Even in 1982, eight multinational
corporations controlled 75% of the market. In contrast, the market share of
multinational corporations in 2005 was just 7%.
This level of self-sufficiency has been achieved without adversely affecting
affordability, though some prices have started to go up in recent years.
A major reason for this turnaround has been the Bangladesh Drug Policy,
which was implemented in 1982 and which addresses the issues of access and
affordability. The implementation of the policy led to a sharp drop in drug prices.
Key features of this policy were:
i. restriction on irrational and hazardous drugs;
ii. control over the pharmaceutical market and promotion of rational use of
drugs, with priority given to locally manufactured drugs;
iii. ban on import of drugs, raw materials and packaging materials that are
locally manufactured; and
iv. drug price control.
Subsequently, policies related to quality control, such as the promotion of good
manufacturing practices, were also introduced.
In recent years, major investment has taken place in this sector (estimated at
US $250 million over a 3-year period). Bangladesh provides, thus, an example of
how an import-dependent sector transformed into a relatively self-reliant industry
with export capability.
Pharmaceutical exports from Bangladesh started in the late 1980s, and were
initially limited to neighboring countries. Subsequently, pharmaceutical exports

27
extended to moderately regulated markets. Today, Bangladesh is exporting
pharmaceuticals to about 60 countries.
Bangladesh is an LDC and hence is in a position to make use of the waiver
delaying provision for patents on medicines until 2016. This provides Bangladesh
the possibility of becoming a major source of generic drug manufacturing, not just
for meeting its own needs but also for exporting to developing countries and other
LDCs. This opportunity is particularly significant given that countries like India are
now required to provide for product patents on medicines, making it much more
difficult to manufacture and export drugs that are under patent protection.
In order for Bangladesh to make use of this opportunity and further increase its
potential to export generic medicines, amendments to the national law would be
required.

28
 CHAPTER 5
Recommendations & Conclusion

5.1 Recommendations
The recommendations are as follows:
i. Development of mechanisms for prior consent and benefit- sharing:
insistence on prior consent from holders of TK if their knowledge is to be a
subject matter of further research, and mandatory sharing of benefits with
the holders of the TK, if benefits accrue from the research.
ii. Recording of TK (in the form of databases, archives, etc.) to ensure that it
does not die out with the drastic reduction, in some places, of practitioners
who use this knowledge. This will also make TK more accessible, but could
entail losing rights over this knowledge.
iii. Support of in situ conservation of medicinal plants and biodiversity, and the
use of traditional remedies.
iv. Measures to preserve land used to grow traditional medicines, preservation
of local cultures and recognition of customary laws.
v. equity–addressing the issue of exploitation of TK by “outsiders” without
sharing the benefits with those who have nurtured the knowledge;
vi. moral recognition–recognition of practitioners of TK, without necessarily
assuming that communities will be satisfied with or seek to receive
monetary compensation;
vii. conservation of biodiversity–especially in situations when there is no
incentive to preserve biodiversity;
viii. preservation of traditional cultural practices and lifestyles;

29
ix. commercialization–to address the need to make traditional medicines
commercially viable and a source of income for local communities and
companies;
x. dissemination of knowledge in traditional systems with the objective that
existing knowledge continues, expands and is used for protecting health of
the people;
xi. promotion of public health goals by facilitating the use of and access to
traditional medicines

30
5.2 Conclusion
The TRIPS Agreement requires that all WTO member countries provide for
pharmaceutical patents in their national laws. It also incorporates flexibilities that
can be used to protect the public health interest and to fit different national contexts.
Subsequently, the Doha Declaration clarified that TRIPS safeguards can indeed be
used to protect public health, and allows LDCs to postpone the implementation of
pharmaceutical patents until 2016. As indicated in this report, some countries have
used these safeguards to their advantage, while others have not yet felt the need to
do so. Meanwhile all countries should ensure that their national legislation contains
safeguards that enable them to protect the public health interest, if and when need
arises.
This report furthermore highlights the challenges to access to medicines and
public health created by increasingly extensive protection for intellectual property,
including “TRIPS-plus” provisions that are promoted through FTAs. Effective
policy responses are needed, and will require intersectoral consultations,
coordination and cooperation. These responses and discussions should address both
national policies and laws, as well as positions taken in international negotiations.
Meanwhile, new approaches may be required to address the need for new
medicines for diseases prevalent in the developing world, for which the current
system provides insufficient incentives. Countries should be encouraged to support
the exploration of alternative ways to promote R&D that can complement strategies
based on IPR/patents.
Access to essential and needed medicines is a human right, and a key element
of a well-functioning health care system. Thus, the public health interest should be
taken into account when trade agreements are negotiated and patent laws enacted.
International laws and treaties provide room for manouvering, but it is up to each
country to make use of that flexibility and to safeguard it.

31
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32