The Hindu Business Line : Patents, boon or bane?

Fears have rightly been expressed that the drug industry, the food-processing industry and even the software industry may face a crisis if the new WTO law governing patents is adopted from January 1, 2005. Unless we go into the basic rationale behind the patent regime, the interest of the poorer sections will suffer.

America's patent system has "become sand rather than lubricant in the wheels of American progress.

— Adam Jafee & Josh Lerner

"MORE than 1,100 patented technologies (for) digital cameras, more than 5,600 patented technologies (for) multifunctional printers, more than 2,300 patented technologies (for) ink-jet printers, more than 200 patented technologies (for) scanners." So ran a recent blazing advertisement in a financial daily, from a multinational, supposed to be the world's No 2 holder of US patents, having obtained 1,992 patents in 2003 alone in digital imaging.

The grant of a patent is the grant of a monopoly right to exploit an invention for the exclusive pecuniary benefit of the patent holder. In the UK, patents are granted for 20 years for exclusive rights only in that country. For other countries in Europe, the European patent office has to be approached. Such a right excludes others from making, using or selling one's invention, and it includes the right to license others to make, use or sell it.

Product versus process patents

India now faces the obligation to comply with a regime of product patents as opposed to the present system of process patents. Under Indian law, the process patent protects the manufacturing process.

A rival can use a different manufacturing process and market the product. The product patent bars a rival from manufacturing or marketing products made through different processes, and this monopoly accrues to patent owners for 20 years, leading to unconscionably high prices, especially in the pharmaceutical, agricultural and food-processing sectors, what with the advanced industrial countries holding 97 per cent of all patents world wide and 90 per cent of all technology patents.

Fears have rightly been expressed that the drug industry, the food-processing industry and even the software industry may face a crisis if the new WTO law is adopted from January 1, 2005. The grant of exclusive marketing rights to multinational drug firms will make drug prices 10 times higher.

The debate now centres around the legal provision for `pre-grant opposition procedure' which can block frivolous patents. In this situation, unless we go into the basic rationale behind the patent regime, the interest of the poorer sections will suffer.

Do we need the patent regime?

Two professors from Princeton University, Adam Jaffe and Josh Lerner, have brought out a new book Innovations and its Discontents, pointing out how the patent system is endangering innovation and progress because of the splintering of the patent system along national lines. Once awarded, a patent is hard to revoke.

America is the home of all patent absurdities, and even there it is estimated that over 30 per cent of patents make duplicate claims, raising questions about their validity.

The American Patent and Trade Mark Office has received over 3,50,000 patent applications and has a backlog of over half a million to review.

In a recent article on the `Cost of Ideas,' The Economist, referring to the proposed draft legislation on harmonising policy on computer innovations now under the consideration of the European Council of Ministers, points out how this may be the first step towards adopting software patents, already awarded in America, which could block different implementations of the same features.

The Microsoft Chairman, Mr Bill Gates, has called on employees to increase the number of patents that the company files. Patents are used to reach cross-licensee agreements with firms that lack patents.

The Economist argues that poor countries have been complaining about America trying to export its tough intellectual property protection regime.

The Princeton professors have called for a pre-grant notice period, when third parties can come forward with `prior art' that would invalidate the patent.

Calling for the abolition of the patent system itself, a Californian correspondent exposes the hollowness of the argument about providing incentives for research.

No evidence suggests that the Wright brothers would not have invented the plane in 1903 unless they got a patent on it.

Yet, the brothers launched patent litigation against Glenn Curtiss and other domestic competitors that kept the US far behind France, Britain and Germany. By 1917, the government forced the big aviation pioneers to create a "patent pool" available for licence by all.

The Seldon patent, taken out at the birth of petrol and electric cars, stifled the development of those new technologies. Earlier, James Watt's exploitation of his steam engine patent enriched him while slowing progress as a whole. Many other examples show that patent systems do more harm than good.

The Patent law has dragged such prestigious universities as the Columbia into litigation with many biotech companies, such as Amgen and Genentech.

The experimental use of the product clashes with legitimate business objectivities to increase the status of the institution. American Congress is now toying with the idea of legislating for exemption for all universities in respect of the validity of experimental use.

America can openly declare that whatever the international commitments or agreements signed by it, in the event of conflict between the agreement and the interest of the American people, the US law will prevail and subdue the international commitment (read interest of American MNCs for American people's interest).

Indira Gandhi had similar ideas when she declared at the World Health Assembly in Geneva in 1981: "My idea of a better ordered world is one in which medical discoveries would be free of patents and there would be no profiteering from life or death".

In her new book on the role of patents, Innovations and Incentives, Prof Suzanne Scotchmer concludes: "The innovation system is broken in that there is too much emphasis on intellectual property rights",

More than ever, she says, inventions that would otherwise go into the public domain because they are funded by taxpayers or charities, become "cordoned off" by the patent system. " If so," argues The Economist, "perhaps, the patent system not only needs to be repaired, but shrunk" (The Economist November 13, 2004).

For ages, our ayurveda and siddha medicines have been freely available all the world over, and so also agricultural products such as basmati rice, neem and tulsi.

Nobody ever thought of patenting our age-old wisdom. Globalisation has meant adherence to WTO norms and guidelines. Mr Rahul Bajaj is right when he said that the WTO helps developed countries by design and developing countries by default.