Will India bend to US pressure on IP rights?

While Indian and American business moguls are bullish about the future, Indian generic drug-makers as well as health activists within and outside India are deeply anxious about the shape of things to come.

Context

Obama was the first US President to be the Chief Guest at India’s Republic Day Parade on 26 January, and the first sitting US President to visit India twice. Mr Obama and Mr Modi touched on an expansive range of issues. Political analysts in India point to two major breakthroughs in the wake of Mr Obama’s visit — easing of the nuclear logjam besetting the two countries and a big push in defence cooperation. The two leaders have carved out a highly ambitious agenda for the future in which greater economic engagement between the two countries will play a pivotal part.

Where does intellectual property rights, a long-standing sticking-point between the US and India, figure in the list of bilateral priorities?

Arguably it did not figure as the most contentious issue in the public discourse during Obama’s visit to India but IP-related issues, including piracy of films and software, were very much on the agenda. It figured prominently during the India-US CEO Forum attended by Modi and Obama, and has been referred to in the Joint Statement (”Shared Effort; Progress for All”).

The joint statement looks forward “to enhancing engagement on Intellectual Property Rights (IPR) in 2015 under the High Level Working Group on Intellectual Property, to the mutual benefit of both the countries” and reiterates both countries’ interest “in sharing information and best practices on IPR issues”, and reaffirms their “commitment to stakeholders’ consultations on policy matters concerning intellectual property protection.”

Of strategic importance is also the statement’s reference to the proposed bilateral investment treaty, viewed in industry circles as an important building block for expanding the relationship between India and the United States. Health activists are suspicious of the proposed treaty. They say that it could have a detrimental impact on the flexibilities and public interest safeguards allowed presently under TRIPS and India’s patent law.

The joint statement notes that the leaders have “instructed their officials to assess the prospects for moving forward with high-standard bilateral investment treaty discussions given their respective approaches.”

According to reports in the Indian media, the US President flagged his concern about India’s IPR regime during the India-US CEO Forum.

Recent public statements from other US officials, however, suggest that the United States is not that unhappy about the direction in which India is moving in the realm of IP. In its Special 301 Report for 2014, the Office of the United States Trade Representative (USTR) had placed India on its priority watch list and scheduled an Out-of-Cycle Review (OCR) for the fall of 2014.

In his statement during the 27 January hearing on President Obama’s Trade Policy Agenda convened by the Senate Finance Committee, US Trade Representative Mike Froman said, “Use of the out-of-cycle review helped to secure commitments from India in the 2014 Trade Policy Forum on a broad range of IP issues of concerns to the United States and its stakeholders.”

“We’ve got a good dialogue going now with the new government on intellectual property, and we’re committed to working to achieve concrete progress in this area,” Froman told lawmakers during the recent congressional hearing, according to reports in the Indian media.

There are other signals as well.

Patrick Kilbride, executive director, International IP, Global Intellectual Property Center of the US Chamber of Commerce told Intellectual Property Watch that “discussions around a bilateral investment treaty (BIT) are a signal that our respective leaders are serious about taking the US-India relationship to a new level. This is welcome news. BITs can be an invaluable tool for providing legal certainty for investors, a factor that is particularly important to investors in innovative industries where up-front research and development costs can be extremely high.”

“We believe that the United States and India will increasingly recognize that we share the same objectives of expanding commerce to improve the welfare of all our people. In that environment, many issues including intellectual property may not seem as challenging as they do today,” Kilbride added.

Sections of Indian industry are elated about the broad direction in which things are moving.

“IPR was one of the key issues raised and discussed at the India-US CEO Forum,” Kiran Mazumdar-Shaw, Chairman and Managing Director of Biocon Ltd, an Indian biopharmaceutical company, told IP-Watch. Mazumdar-Shaw was one of the participating CEOs in the business forums during Obama’s visit to Delhi.

“The US raised concerns around counterfeiting, piracy and Pharma,” she said. “India has taken some major steps on the IPR front. The Prime Minister has constituted an IPR think tank under the auspices of DIPP (Department of Industrial Policy and Promotion) with a mandate to formulate a National IPR Policy through stakeholder consultation. A joint committee has also been set up between the two countries to discuss and resolve key IPR issues. The perception and reality are very different. India is highly TRIPS-compliant and the one compulsory licence that has been granted has followed the provisions of TRIPS in doing so. Moreover a number of CL applications have been turned down.” [TRIPS refers to the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights.]

The BioCon chief asserts that “India’s IPR Regime needs to balance the country’s needs of affordable access whilst providing IPR protection.”

“There are many MNCs guilty of ‘patent squatting’ by not marketing patented drugs and denying patients access to life saving drugs,” Mazumdar-Shaw continued. “On the other hand, Gilead Pharma has introduced a very innovative ‘Open Licence’ model for its blockbuster hepatitis C drug Sovaldi that allows access to their patents on the payment of a modest royalty. The model also allows its licensees to market its path-breaking Hep C drug to 90 developing world markets thus enabling affordable access to this life-saving drug in India and the developing world. As an innovator, I am in favour of a regime that provides patent protection. However, I am also of the view that we must guard against the issue of frivolous patents.”

Ranjana Smetacek, Director General, Organisation of Pharmaceutical Producers of India (OPPI), which represents multinational pharmaceutical companies told Intellectual Property Watch that following on from Prime Minister Modi’s September visit to the US and subsequent discussion on IP rights under the India-US Trade Policy Forum in November, “the recent visit by US President to India enhances the ongoing engagement between the two countries on IPR. The proposed High Level Working Group on IP will mutually benefit both countries.”

India’s generic drug makers view the evolving IPR landscape in India from a very different perspective.

D G Shah, Secretary General of the Indian Pharmaceutical Alliance (IPA), says he is deeply concerned about the Indian government conceding “patent linkage” and “data exclusivity” to please what he describes as “a vocal section of the US pharmaceutical industry.” The reference is to two of the most contentious issues in the India-US conversation about IP.

”This could happen very fast, impacting access to medicines,” he told Intellectual Property Watch. “These concessions may not wait for the bilateral investment treaty.”

A note furnished by the IPA to the Indian side of the Indo-US CEO Forum ahead of President Obama’s visit to India ( which IP-Watch has accessed) flags concerns of India’s generic drug makers.

The background brief argued: “Firstly, they are using the US regime as benchmark to evaluate India’s IP regime. But India has never agreed to conform to the US standards. India has accepted international standards as embodied in the TRIPS Agreement. The US is a signatory to the TRIPs Agreement. India is fully compliant with it. Hence, these concerns are misplaced.”

“Secondly,” it says, “a cursory glance at patents granted in various fields including pharmaceuticals, from 1 January 2005 to 10 October 2014 show that 82% of patents granted are to foreign companies. Thus, it would be incorrect to say that India does not recognize patents or it discriminates against foreign companies. They argue that protection and enforcement is inadequate in India. This is not true. India has adequate laws for protection and an independent judiciary for the enforcement of IP.”

Anand Grover, Director of the Delhi-based Lawyers Collective and a former United Nations Special Rapporteur on the right to health, said: “There are indications that the Indian government is changing its stand and taking a favourable view to the US-demand for data exclusivity and patent linkage. What is most troubling is that this move would only benefit foreign MNCs, leaving Indian generics in the lurch and risking the health of millions of patients in the bargain.”

A letter to the US President [pdf] on the eve of his visit to India by health activists around the world reiterated that India’s laws fully comply with the WTO TRIPS Agreement, and that millions around the world depend on affordable generic medicines that would disappear if India acceded to US proposals, including many beneficiaries of US-funded programmes. The open letter also echoed activists’ concern about proposals for a bilateral investment treaty with India.

Indian officials privately say that India is unlikely to go in for changes in the patents law in the immediate future. However, there is speculation in Delhi about the possibility of changes through administrative rules. At this point, there is no official confirmation on whether this is likely, and how. Given the sensitivity of the issues, the controversy is not going away.

“Lawmaking through rule-making can be legally challenged,” Médecins Sans Frontières (MSF) Access Campaign’s Leena Menghaney told Intellectual Property Watch.

“The US model BIT [bilateral investment treaty] of 2012 is very clear to the extent that it contains provisions investor-state arbitration. This allows private actors to challenge India’s IPR measures. So even if BITs do not go beyond the common minimum standards of the TRIPS agreement, the very fact that intellectual property is treated as investment and by binding such BITs to TRIPS standards itself can lead to a host of legal challenges. Primarily, even while member states of the World Trade Organization may not be interested in bringing disputes against other member states, BITs can be used to bring disputes in investor-state arbitration. But as scholars working in this area have pointed out, there is not so much in common among what US and India think about the utility of BITs. How far India will concede to US demands needs to be seen. I wouldn’t speculate at this moment,” Yogesh Pai, Assistant Professor of Law at the National law University, Delhi, told Intellectual Property Watch.

“Until we don’t tinker with the fundamentals of policy and the legislations per se, I don’t think there is much that can be done to harm the balanced system that Indian patent regime envisages. For example, look at the case of Sofosbuvir. The government cannot meddle where the law is there. But wherever there is administrative discretion without proper guidance in the law/rules, there are surely changes that are bound to happen. This I wouldn’t see as a radical shift but would call it as policy manoeuvring,” said Pai.

The denial of a patent to pharmaceutical company Gilead for the hepatitis C drug Sofosbuvir is cited as “an example of how important India’s law is to encouraging price-lowering generic competition,” in a MSF statement. (Gilead has since appealed the patent office decision.)

Pharma companies both in the United States and in India are eagerly watching to see what happens next in India’s IP eco-system. So are health advocates.

Source: Intellectual Property Watch