Unilateral trade measure could lead to retaliatory action or WTO dispute

India has said its patent laws cannot be successfully challenged by the US either in a bilateral or multilateral forum as they strictly comply with the intellectual property agreement of the World Trade Organization (WTO).

Any US unilateral trade measure against India on the ground of inappropriate intellectual property protection in the country would be in violation of WTO rules and can be challenged there, an official in the Commerce and Industry Ministry told Business Line. There could also be retaliatory action by India.

US business chambers and advocacy organisations on Monday asked the Obama Administration to designate India as a Priority Foreign Country, which is a status imposed on countries that are most serious violators of intellectual property rights (IPRs). The US imposes trade sanctions against countries included in the list.

The campaign against India is being led by the US pharma industry that has been lobbying for a more favourable IPR regime in India so that it could get patents for upgraded versions of their drugs whose patents have expired. Revenues of pharmaceutical companies worth over $40 billion will be hit in 2014 because of patent expirations while in the following year it is likely to cross $50 billion.

The Ministry is not too worried about the developments, as India amended its patents legislation in 2005 to bring it in line with the WTO’s Trade Related Intellectual Property Rights .

The US has revoked many more patents, granted more compulsory licences allowing copies of patented products and taken action in a greater number of cases favouring the public over the patent holder than India, the official added.

“We are not concerned about the noise that the US is making about our IP laws. The laws have been framed to protect our industry, safeguard the health needs of our poor and comply with international rules,” the official said.

The US pharmaceuticals industry intensified its protests against Indian IP laws after India granted a compulsory licence to Indian company Natco to manufacture an anti-cancer drug produced by patent-holder Bayer on grounds of prohibitive pricing and unavailability.

Bitter pill

US drug-makers are particularly upset about rejection of a patent application made by Swiss company Novartis for an upgraded version of its cancer medicine by the Indian Patent Appellate Board.

The US Government now wants India to drop a particular section (Section 3d) in the Indian Patent Act that allows rejection of patents on grounds that the product for which patent is sought is not significantly different from an existing product.

Between 2007 and 2011, 283 cases were identified in US Federal District Courts where patent validity was determined of which patents were held to be invalid in 253 cases.

More recently, the US Trade Representative overturned the decision of the US International Trade Commission to favour Apple Inc in the Apple versus Samsung case where action had been initiated by Samsung for infringement of their US patent. The executive order allowed Apple to continue selling cheaper versions of iPhone4 and iPad2.

(This article was published on February 25, 2014)
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