The Hindu Business Line : Patent Amendment Ordinance

Can the Government, by exercise of Article 123 powers, totally change the basic character and vital provisions of a model welfare legislation serving public interest and convert it into a law designed to promote and protect private interests, giving it primacy over public interest?

Did the Government violate the Constitution in promulgating the Patent Amendment Ordinance, 2004, and the Patents Amendment Rules, 2005?

It may well have, according to Mr Narendra B. Zaveri, a senior advocate and one of the country's foremost authorities on trademark and patent laws. He has written several papers and books on the implications of Trade Related Intellectual Property Rights (TRIPS) with regard to the pharmaceutical industry in the developing countries.

In an exclusive interview to Business Line, Mr Zaveri outlined the Constitutional prerequisites for the promulgation of an ordinance, recounted the events leading up to the eleventh-hour promulgation of the Patent Amendment Ordinance and raised several disturbing questions about the constitutional validity of the exercise which totally changed the basic character and vital provisions of what had been a model welfare legislation serving public interest.

Excerpts from the interview:

Could you give us an insight into the circumstances under which the Constitution envisages the promulgation of an ordinance to introduce changes in legislation?

The Constitution, under Article 123, empowers the President to promulgate an ordinance when

1) Parliament is not in session, and

2) the President (that is, as per Article 74, the Council of Ministers) is satisfied that a situation has arisen requiring immediate action.

Did the Patent Amendment Ordinance, 2004, and the Patents Amendment Rules, 2005, satisfy these criteria?

The basic question that arises here is: Did the Cabinet approve the ordinance?

Consider the facts.

On December 24 (Friday), 2004, after coming out of a Cabinet meeting, the Union Commerce Minister, in a televised briefing, told the waiting media: "The Cabinet discussed the Patent Amendment Bill. Various options have been discussed to meet our obligations under the TRIPS agreement but no decision was taken."

He further said: "We will now finalise the route and what should be done to meet our obligations."

On December 26, PTI reported from Delhi: "The Cabinet, which had discussed the amendments at its last meeting on Friday without taking a decision, is likely to take up the issue again next Wednesday and consider the need for an ordinance."

These facts led to other questions.

Was the President misinformed? In the absence of Cabinet advice, was the ordinance validly promulgated? The President could not have (Article 74) and would not have signed or promulgated the ordinance on December 26, 2004, if he had known or had been informed that the Cabinet had not taken final decision at its meeting on December 24, either on the patents amendments or the ordinance. He must have been misinformed about the Cabinet indecision...

What about the circumstances? Did they justify immediate action through the issuance of an ordinance?

The only circumstance relied upon by the Government to justify recourse to ordinance powers is the obligation under TRIPS to introduce product patents for drugs, medicines, foods and agro-chemicals effective from January 1, 2005.

In this context, the following facts and issues require consideration.

The TRIPS requirements were known long since. The Bill for the proposed amendments adopted through the ordinance had been prepared and introduced in Parliament in December 2003 and was readily available. Apparently, the UPA Government had decided to adopt the same Bill text, and had also prepared and kept ready the draft of the Rules with 70 Clauses, 121 pages and 27 revised forms ready. The notification for amending the Rules was also issued on December 28, 2004.

And, then again, there were two sessions of Parliament between May and December 2004. Why was the Bill not introduced in Parliament earlier? Why did the government avoid introducing the Bill in Parliament and discuss the various proposals, objections openly in the House, or by referring to a committee instead of private discussion? Why did the Government wait till Parliament sessions were over? Why did the Government wait till the last week of December 2004, that is, with only few days left for TRIPS compliance? Was this done to justify ordinance route? Was the government deliberately trying to avoid discussions and a possible adverse vote in Parliament? Was Parliament deprived of its jurisdiction, functions and duties to make laws? And is it now being faced with a situation in which its allies have to vote for the Bill to save the Government?

What are the other issues which arise from the promulgation of the ordinance?

Only one amendment — out of 77 — was required for TRIPS compliance. The removal of the bar of Section 5 for product patents for drugs effective from January 1 this year was the only amendment required for TRIPS compliance. This could have been achieved by amending Section 5 (as in Section 4 of the ordinance). It could have been passed during the winter session of Parliament without any problem.

The issues that arise in this context are: Why did the government insist on the remaining 76 sections being included in the text? Was TRIPS compliance only a pretence to bypass Parliament and to avoid discussion and a possible rejection of such amendments, in view of the opposition of the Left parties to some of the changes? Was the inclusion in the ordinance of the other 76 Sections involving drastic changes not required for TRIPS compliance — and which were, therefore, not urgent — a bona fide exercise of Article 123 powers? Does Article 123 allow the Government to undo what Parliament had done only recently after detailed study, deliberations and a unanimous JPC report?

Can the powers under Article 123 be exercised by the government to appropriate to itself the powers to decide and frame Rules in substitution of specific provisions made in the Act by Parliament?

It bears noting that the ordinance amends many provisions of the Act by providing, (`as may be prescribed') in several sections to transfer the powers to decide and make changes from time to time, in respect of many substantive and procedural matters specified in the Act. The Government has further amended Section 159 (3) to assume powers to issue final notification for amending Patent Rules without prior publication. This will empower the Government to make final Rules and enforce them without prior publication as draft Rules.

In fact, in exercise of these assumed powers, the Government has issued the final notification on December 28, 2004, drastically changing the Rules. This will deprive the interested parties of an opportunity to make any suggestion or changes in framing of the Rules.

The question now is: Who in the government will exercise these powers?

This is indeed a matter of serious concern because the rule-making powers have been abused in the past to make Rules contrary to the specific provisions of the Act and in favour of applicants/grantees of patent/EMR, and against public interest by making vast changes not justified by the Act provisions.

For instance, Parliament, by Section 24 D, specifically empowered the government to use EMR without the holder's permission, in `public interest' without restricting its wide scope. However, the 1999 Amendment Rules, disregarding this mandate, defined `public interest' to mean only `national emergency' or `extreme urgency' — both rare — thereby denying the benefit of Section 24 D to the public.

How is the Department of Industrial Policy and Promotion (the department in the Commerce Ministry attending to patent matters) better equipped than Parliament to exercise such wide and uncontrolled powers?

Is there any assurance that such an exercise will not be influenced by other considerations or external pressures?

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