Bayer's Nexavar Found Too Expensive in the UK

Even as Bayer has challenged a Delhi High Court decision refusing to import the problematic concept of "patent linkage" to India (hearings at the appellate court have concluded and we now await a decision), Gauri Kamath, a reputed pharma journalist, has a very interesting post on the high price of this important cancer drug.

She also reflects on a strangely paradoxical drug pricing issue in her recently unveiled blog that has some of the most interesting articles that I have seen written on the Indian pharma sector.

In her post, she states that the UK’s National Institute for Health and Clinical Excellence (NICE), the drug rationing body has decided that Nexavar’s price does not justify the benefits that it provides. The net implication of this is that this valuable drug is not likely to form part of the NIH's kitty to be doled out for free to deserving patients. I reproduce some portions of her post as below:

"There has been some strong media and patient outrage in the UK over a decision to not make available Bayer’s Nexavar, a drug for terminally-ill liver cancer patients, through the National Health Service. UK’s National Institute for Health and Clinical Excellence – referred to as the NHS’ drug rationing body by the UK media – says the drug’s price does not justify the benefits that it provides. Nexavar costs 36,000 pounds a year (Rs 27 lakh). It extends survival by an average of about 3 months, and is the first to do so for liver cancer.

NHS could end up paying as much 9 million pounds on treating 600-700 patients a year who qualify. Bayer has offered to give every fourth packet of the drug free but that would reduce the cost to 7.7mn pounds which is still pricey the NHS feels. Bayer plans to appeal the decision. The decision has health activists and patients up in arms. (See here and here). NICE has been roundly-roasted for putting a value on human life, so to speak.

Note that neither of the articles that’s linked to above has a single talking head asking Bayer to bring down the price of the product.

Now consider what happens in India. First of all, none except those whom the government employs expect it to pay for drugs – whether for common cold or cancer. 80 per cent of our healthcare spend is out-of-pocket, among the highest rates in the world. However, companies receive plenty of flak from the media for price increases (not that it stops many of them). Indeed, over the decades the government has conveniently shifted the onus of providing affordable drugs onto the drug industry. How has it done this?

One, in the early seventies it liberalised the patents regime so that generics of globally under-patent drugs could be freely launched in India. Two, it did little to raise the bar on quality. Indeed, once a drug was on the market for five years a new manufacturer did not even have to approach the central regulator for a quality approval – it simply got a manufacturing licence from the state. As a result, India has multitudinous copycats of a good number of drugs giving it the distinction of having among the lowest drug prices in the world. But quality is still a problem especially outside the metros.

In fact, it is this inability of the government to guarantee quality that has allowed companies to charge an artificial premium for ‘brands’ – even though in a patents-free market there were hundreds of copycats of each drug. Brands are after all associated with quality. So a strange duality exists in the country. Yes, it has some of the lowest drug prices in the world but to be sure of what they are getting, especially in life-and-death situations, consumers – rich or poor – still pay a fat premium. Besides, when the markets are not large enough – such as for rare diseases – generics will not be found."

Reviewing the Indian Patent Regime After 5 Years

Jyothi Datta of the Hindu Business Line has an interesting write up, documenting reactions after 5 years of the introduction of the pharmaceutical product patent regime in India. She also has a separate write up documenting an interview with the IPO Controller General, PH Kurian where he states some of the latest figures pertaining to patent applications/grants from India.

Here is what she writes in the five year review piece:

"It was on the eve of January 2005 that an Ordinance was issued to amend the Patent Act 1970 and bring in a regime that would honour product patents.

Five years on, if there is an agreement among stake-holders of the pharmaceutical industry - a sector covered by the Act - it is their unhappiness with the implementation of the Patents (Amendment) Act, 2005.

But the agreement ends there, as criticism of the Act goes along the expected divide of the domestic drug industry's outlook, as opposed to that of the multinationals.

Though the amended law has been implemented on the ground, it has not used flexibilities provided by world trade norms to the optimum level, says an IP expert. While Section 3 (d) of the Act has been used to block frivolous patent applications, there still is room for interpretation, he observes. Besides, there are too few patent examiners to clear the manifold increase in patent applications, he adds.

Over 35,000 patent applications were filed in 2007-08, of which over 15,000 were granted, says the Indian Patent Office. This is an increase from 12,000-odd patent applications in 2003-04, of which about 2,400 were granted. And by its own admission, there are only about 160 patent examiners – and even this is dwindling, says a patent expert familiar with the development.

Bringing in the product patent law is one thing, but there still is no domestic eco-system available to implement it on the ground, observes Mr Ranjit Shahani, President, Organisation of Pharmaceutical Producers of India, and head of Novartis in India.

Glivec case

Novartis' patent application on its blood cancer drug Glivec has become a bench-mark case under the amended regime. Glivec was the first pharmaceutical product to get a green signal from the Indian Patent Office in the run-up to the amended regime in 2005. Subsequently, the Patent Office rejected Glivec's patent application in 2006, and ever since it has seen a long and litigious journey. The case awaits legal proceedings, now in the Supreme Court.

IP expert Dr Prabuddha Ganguli says five years is too long to set right anomalies in the amended law, on compulsory licensing and disclosures on geographical origin of biological material, to mention a few.

“We are losing time,” he says, with the debate taking an emotive tone, rather than a rational one.

But IP expert Mr Shamnad Basheer feels it is too early to judge the Act. However, the mechanism to oppose patent applications seems to have worked, he observes. Of 9,719 pharma applications filed between 2005 and 2008, he says, only 34 were challenged. And 25 of these resulted in rejections, with the patent applicant winning in only 9 cases, he adds. Why the oppositions were few remains unclear, he says, despite India's vibrant generic sector and active non-government organisation community that oppose frivolous pharma patents.

But what is clear, say industry stakeholders, that the there is the need for a better equipped patent and judicial infrastructure to handle the increasing number of patent applications and possible challenges.

Does there lie an Appeal from S.21 of the Patents Act?

First things first, SpicyIP wishes its readers (and others too) a Merry Christmas!

Is abandonment of an application under Section 21 of the Patents Act an appealable decision under Section 117A of the Act? This was the question that arose before the IPAB in Accenture Global Services GmBH and BT Group Inc v. Controller General of Patents. The facts of the case are as follows:

1. An application for a patent was filed at the Patent Office in Delhi claiming priority for a 2002 US application. Under Rule 24B of the Act, a request for examination (RFE) is to be filed within 48 months from the date of the priority or date of filing, whichever is earlier. Since the application in question claimed priority from a 2002 US application, the 48 month period is to be calculated from the 2002 US filing.

2. The applicant in this case duly filed an RFE within the stipulated period pursuant to which a First Examination Report (FER) was issued on 20.03.2006 under Rule 24B(3).

3. Sub-rule 4 of Rule 24B requires the applicant to set the application in order for grant within 12 months from the date of issue of the first FER, failing which, under Section 21, the application would be deemed to have been abandoned.

4. In the instant case, this means the applicant had a window of 12 months from 20.03.2006 to the set the application in order for grant i.e. on or before 20.03.2007.

5. A response to the FER was filed by the applicant on 16.03.2007. A second report was issued on 20.03.2007 and a response to the same was filed on the same day by the applicant. But since this was deemed to be beyond the 12 month period, the Controller communicated to the applicant vide communication dated 30.03.2007 that the application was deemed to have been abandoned under Section 21(1) of the Act.

6. The applicant filed an appeal under Section 117A of the Act claiming that the communication of the Controller would amount to a refusal to grant of a patent under Section 15 of the Act.

Maintainability of the appeal was the primary issue before the IPAB. The contention of the applicant/appellant was that the order of the Controller dated 30.03.2007 was passed without application of the mind and so the application ought to be remanded to the Controller to be decided afresh. Further, according to the appellant, the order of the Controller would amount to refusal under Section 15 and was hence appealable under Section 117A.

The IPAB held that Section 21 dealt with a situation where abandonment would be an automatic consequence of the applicant’s delay in putting the application in order for grant and therefore was not in the nature of a refusal as envisaged under Section 15.

On these grounds, the appeal under Section 117A was held as not maintainable. However, a few practitioners feel that a writ may lie before the High Court from the order communicating abandonment of the application.

The rest of this post has been added thanks to the comments which required one to play the devil's advocate.

On one hand, one could argue that an order under Section 21 does not fall within the ambit of Section 15 since there is no discretion vested in or role to play by the Controller under section 21(1) in so far as the refusal or acceptance of the application is concerned. Stated otherwise, section 21(1) appears to speak of a mechanical abandonment in case of a delay and allows for extension of the 12 month period only under situations spelt out in sub-section 2 and 3. Therefore, an abandonment of the application under Section 21(1) may not be termed as an order issued under Section 15 of the Act.

However, before we foreclose the possibility of a counterview, let us read Section 15 which states thus:

"Where the Controller is satisfied that the application or any specification or any other document filed in pursuance thereof does not comply with the requirements of this Act or of any rules made thereunder, the Controller may refuse the application or may require the application, specification or the other documents, as the case may be, to be amended to his satisfaction before he proceeds with the application and refuse the application on failure to do so"

To understand the scope of orders falling within Section 15 better, it helps to take a look at Section 117A(2) as well since orders issued under Section 15 are appealable under Section 117A(2). Barring Section 15, every other provision, an order from which is appealable under Section 117A(2), speaks of specific situations.

For instance, the order of the Controller issued under Section 18 refers to cases where the invention claimed in an application is anticipated under Section 13. Similarly, Section 19 talks about the power of the Controller in case of a potential infringement. Compared to such provisions, Section 15 does not restrict itself to any specific situation, which could mean that other than the specific grounds for refusal covered by other provisions mentioned in Section 117A(2), every other ground for refusal would broadly fall under Section 15.

Does Section 15 support such a conclusion? The relevant portion of Section 15 states "Where the Controller is satisfied that the application or any specification or any other document filed in pursuance thereof does not comply with the requirements of this Act or of any rules made thereunder". Therefore, can one say that non-compliance of the time period prescribed under Section 21 (read with Rule 24B) and the consequent deemed abandonment could be considered as an order of refusal under Section 15? On the face of it, this doesn't hold water because Section 15 requires the Controller to be satisfied of the compliance, which means room for use of discretion is necessary.

But, there could be two possibilities here; let's take the instant case to understand the two situations. In the first situation, if the applicant's response to the second report has not overcome the objections of the patent office and if the patent office is not satisfied with the response of the applicant within the 12 month period, then the time bar under Section 21 comes into play and neither the patent office nor the applicant can do anything about it, except may be file a writ.

However, the second hypothetical situation is when the Controller issues an order dated 18.03.2007 i.e. before the 12 month period, which wrongly states that the applicant is time barred under Section 21 (this is a remote possibility and pretty much academic). In such a situation, the Controller's order would be defective on account of its misplaced conclusion of non-compliance of the Act. It seems probable that such an order may be in the nature of a refusal under Section 15 and hence appealable before the IPAB under Section 117A(2).

That said, in the instant case, since the applicant had filed the response to the second report within the time period, would it mean that he has put the application in order for grant? I don't think so, because only when the response has been accepted by the patent office as having overcome its objections, it would be deemed as an application that has been put in order for grant of a patent.

We welcome the opinion of practitioners on this matter or the issues it raises.

Indian Copyright Amendments Procure Cabinet Approval

The government issued a press release announcing that the much awaited and controversial copyright amendment bill has now cleared "cabinet", a group of senior ministers that represent the highest decision making body of the government. Unfortunately, since the winter session of Parliament is over and done with, the Bill is only likely to be introduced in the budget session of Parliament in February 2010.

As many of you may know, the amendment process began around the year 2005 and the present Bill draft is one that has come about after what the government claims is a fairly elaborate consultative process. This is true in some particulars, though not quite true in others. Notably, the present version of the Bill includes substantive copyright provisions that were introduced for the first time in 2009 (pertaining to the music and film industry) and did not form part of the earlier 2005 draft that was subject to public consultations.

We'll bring you a detailed review of the Bill once we have access to it. Unfortunately, the Bill will only be made "public", only after it has been introduced in Parliament. We have access to two versions of the Bill; one version that was introduced in 2005 and made available to the public and the other that was doing the rounds as late as September 2009. The bill that has been introduced in Parliament however, as we understand it, is different from the September 2009 version.

In particular, this blog has been tracking the provision relating enabling access to the disabled and we'll bring you a detailed note on this soon. In particular, the very first proposal in our newly introduced collaborative law making platform (CLAM) revolves around what an optimal provision to enable access to the disabled might look like.

We'll also review the problematic proposal to penalise anti circumvention measures for the first time.

Here is the detailed government press release:

"The Union Cabinet today approved the proposal to introduce a Bill to amend the Copyright Act, 1957. The Ministry of Human Resource Development has proposed the amendments in order to gain clarity, remove operational difficulties and to address the newer issues that have emerged in the context of digital technology and the internet.

Amendments are being made to bring the Act in conformity with the World Intellectual Property Organisation (WIPO) Internet Treaties, namely WIPO Copyright Treaty (WCT) and WIPO Performances and Phonograms Treaty (WPPT) which have set the international standards in these spheres. The WCT deals with the protection for the authors of literary and artistic works such as writings, computer programmes, original databases, musical works, audiovisual works, works of fine art and photographs. The WPPT protects certain “related rights” which are the rights of the performers and producers of phonograms. While India has not yet signed the above two treaties it is necessary to amend domestic legislation to extend the copyright protection in the digital environment.

Amendments related to bring the Act in conformity with WCT and WPPT:

i) Through a new section in the Act, it is proposed to ensure protection to the Right holders against circumvention of effective technological measures applied for purpose of protection of his rights like breaking of passwords etc. while maintaining an appropriate balance between the interests of the right holders on the one hand and of Technology innovators, Researchers and Educational Institutions on the other.

ii) The existing Performers’ Rights are proposed to be further enhanced by introducing a new section to provide exclusive rights compatible with WPPT.

iii) “The Moral Rights of Performers” are proposed to be introduced in a new section.

iv) Amendments have been proposed to protect the interests of researchers, students and educational institutions so as to ensure that Technological Measures do not act as a barrier for further development of the technology. These amendments also address the issue of access to information in the digital context and the liability of Internet service providers.

v) The period of copyright for photographers is proposed to be enhanced to “Life plus sixty years” instead of only sixty years as at present.


Amendment to protect the Music and Film Industry and address its concerns :

i) Statutory licence for version recordings and authorship to ensure that while making a sound recording of any literary, dramatic or musical work the interest of the copyright holder is duly protected.

ii) Term of copyright for cinematograph films has been extended by making the Producers and Principal director as joint authors.

iii) A copyright term of 70 years to Principal Director which automatically extends the copyright term for the Producers for another 10 years provided he enters into an agreement with the Director;

Amendments to address the concerns of the physically challenged:

The physically challenged need access to copyright material in specialized formats, e.g. Braille text, talking text, electronic text, large print etc. for the visually challenged and sign language for the aurally challenged. Currently the cost of production of material in such formats is very high. With additional requirement of royalty payments the price of such material to the target groups would be even higher.

i) A clause is proposed to be introduced as a fair deal clause to allow the production of copies of copyright material in formats specially designed for the physically challenged.

ii) A separate compulsory licensing provision has been proposed to allow for publication of copyright works in formats other than specifically suited for the physically challenged.

Amendments for rights to authors:

i) Amendment is proposed to give independent rights to authors of literary and musical works in cinematograph films, which were hitherto denied and wrongfully exploited, by the producers and music companies.

ii) An amendment is proposed to ensure that the authors retain their right to receive royalties and the benefits enjoyed through the copyright societies.

iii) Another amendment ensures that the authors of the works, particularly songs included in the cinematograph film or sound recordings, receive royalty for the commercial exploitation of such work.

iv) It has been proposed to introduce a system of statutory licensing to ensure that the public has access to musical works over the FM Radio and Television networks and at the same time the owners of copyright works are also not subject to any disadvantages.

v) It is proposed to amend existing provisions to provide compulsory license through Copyright Board to publish or communicate to the public such work or translation where the author is dead or unknown or cannot be traced or the owner of the copyright work in such work cannot be found.

Other amendments

i) Amendments are being made for incidental changes, which are required in the context of digital technology to cover “storing of copyrights material by electronic means’.

ii) Amendments in relation to operational facilities, such as registration of Copyright Societies by providing that only authors can register and procedure for tariff schemes of copyright societies and commercial distinction between assignment and licence; and

iii) Enforcement of rights such as border measures, disposal of infringing copies and presumption of authorship under civil remedies.

Background :

In order to formulate the proposed amendments and to carry out wide-ranging consultations with all stakeholders, the Ministry of Human Resource Development had constituted a 30-member Core Group in the year 2005 under the Chairmanship of the Education Secretary with representatives of the other Ministries/Departments concerned with the subject and other key stakeholders like copyright-industry organizations, stakeholders, subject experts and Institutions of repute in related fields. The Core Group had deliberations at length in five sessions to cover all the provisions of the existing statute and made recommendations with regard to the proposed amendments. The Core Group then created a Drafting Committee to draw up the text of the proposed amendments and to fine-tune the recommendations of the Core Group."

SS.105 and 106 of the Patents Act

The Ram Kumar dual SIM case has been discussed extensively on SpicyIP; a judgment was delivered by the Punjab and Haryana High Court this August involving Ram Kumar’s patent in which a declaratory judgment was sought by Micromax Informatics Ltd. under Section 105 of the Patents Act, 1970.

The brief background leading to the case is as follows:
1. Ram Kumar has a patent (214388) on a dual SIM technology which allows the user to use both the SIM cards simultaneously

2. He made a representation to the Chief Commissioner of Customs, Chennai and Chairperson of the Central Board of Excise and Customs to seize dual SIM phones which infringe his patent. This application was made under the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007. Consequently, the mobile phones of Samsung and Spice were seized; however, they were released due to Ram Kumar’s inability to furnish bank guarantee.

3. Apprehending future seizures of similar nature, a suit for declaratory judgment under Sections 105 and 106 of the Patents Act, 1970 was filed by Micromax mobiles at the District Court of Gurgaon, along with an application under Order 39, rules 1 and 2 of the Code of Civil Procedure to restrain Ram Kumar or anyone acting on his behalf from adopting any measure to prevent or hinder the import, sale and use of the dual SIM card phones models or from threatening Micromax by circulars, advertisements or by other means of communications.

4. The District Judge ruled in favour of Micromax (Plaintiff/Respondent) stating that their mobiles phones did not infringe Ram Kumar’s patent, also allowing their application under Order 39.

5. Ram Kumar (Appellant/Defendant) filed an appeal before the P&H High Court against the ruling of the District Judge.

In the appeal, the appellant contended that the District Judge’s observations on the validity of the patent were unwarranted since such analysis is beyond the scope of a suit for declaration sought under Section 105 of the Patents Act.

Let’s read relevant portions of Section 105 and 106 of the Act together to understand the limitations on the scope of the Court’s enquiry under the said provisions. Sub-section 3 of Section 105, which deals with power of a Court to make declaration as to non-infringement of the Act reads thus:

“The validity of a claim of the specification of a patent shall not be called in question in a suit for a declaration brought by virtue of this section, and accordingly the making or refusal of such a declaration in the case of a patent shall not be deemed to imply that the patent is valid or invalid.”

Section 106 reads thus:
Power of court to grant relief in cases of groundless threats of infringement proceedings.-(1) Where any person (whether entitled to or interested in a patent or an application for patent or not) threatens any other person by circulars or advertisements or by communications, oral or in writing addressed to that or any other person, with proceedings for infringement of a patent, any person aggrieved thereby may bring a suit against him praying for the following relief’s, that is to say:
a. a declaration to the effect that the threats are unjustifiable;
b. an injunction against the continuance of the threats; and
c. such damages, if any, as he has sustained thereby.

(2) Unless in such suit the defendant proves that the acts in respect of which the proceedings were threatened constitute or, if done, would constitute, an infringement of a patent or of rights arising from the publication of a complete specification in respect of a claim of the specification not shown by the plaintiff to be invalid, the court may grant to the plaintiff all or any of the reliefs prayed for.

Upon a combined reading of the two sections, what is borne out is:

1. The Court under Section 105 shall not comment on the validity of a patent. Further, the provision clarifies that a ruling under Section 105 is not meant to suggest anything about the validity or otherwise of the patent.
2. Under Section 106 where the Plaintiff (in a suit under s.106) may seek restraint on a patentee from issuing groundless threats to the Plaintiff, the burden is on the defendant in the proceeding i.e. patentee, to show that a claim which the Plaintiff has not alleged as invalid, has been or would be infringed by an act of the Plaintiff. If this requirement is not fulfilled by the patentee/defendant, then the Plaintiff is entitled to all the reliefs claimed under the Section.

Therefore, putting Sections 105 and 106 together, one may say that the non-patentee may allege invalidity of the patent to support his claims of non-infringement; however, the Court may consider such observations only in so far as they help the Court decide on non-infringement of the patent. Be that as it may, this does not, rather, should not have the effect of questioning the validity of the patent.

Coming back to the Appellant’s contentions that the District Judge’s ruling is defective on account of its observations on the patent’s validity, the Court countered that since S.106 allows the non-patentee to question the validity of the patent, it was inevitable for the District Judge to discuss the same. Further, since Section 105 states that a ruling under the section does not imply about the validity of the patent, even if the district Judge did make observations on validity, it would not have effect.

The Appellant’s second contention was that the Respondent Micromax was not a person aggrieved under Section 106 since it hadn’t received threats from the Appellant. To this, the Court pointed out that since the Appellant had made an application to the Customs Commissioner to seize all phones which violated his patent, it was natural for the Respondent to seek relief under Sections 105 and 106. Also, the Court reproduced the text of the reply sent by the Appellant’s counsel in response to a communication from the Respondent. The relevant portion of the reply reads thus:

...to refrain from importing any mobiles phones having plurality of sim sockets (including those specified in your notice) without his consent, failing which you qualify yourself as an infringer of our Client's Registered Patent technology. Such import cannot be considered as a lawful business activity carried on by you. Our client states that if you still insist to proceed further with your unlawful acts, our Client has no other option but to initiate appropriate legal action against you for infringement at your cost and you will be solely liable for all consequence arising there from, ...

The Court was of the opinion that the above reproduced reply was sufficient cause for the Respondent to seek remedy under Section 106. Also, since the Appellant had not clarified that he had no intentions of proceeding against the Respondent, it only bolstered the Respondent’s case.

The Court then compared the specification of the Appellant’s patent with the features of the imported products of the Respondent. The Court observed that the Respondent’s product did not have a provision for two bluetooth devices nor did it provide for two active voice paths, both of which are essential elements of the Appellant's patent. The only common feature was the presence of a socket for the extra SIM card, which was not sufficient to establish infringement of the Appellant’s patent.

On these grounds, the appeal was dismissed.

While India Copies, the Chinese Invent...the traditional way

As we celebrate the efficacy of section 3(d) and our stringent patent opposition mechanism that inter alia, led to the invalidation of a key patent underlying Tamiflu, the Chinese have taken an alternative route, albeit a healthier one. Don't get me wrong; the term "healthy" does not reflect a comparative value judgment of any sort..it simply highlights the fact that, as with most things allopathic, Tamiflu comes with its fair share of side effects.

A report states as below:

"Jin Hua Qing Gan Fang, a Chinese herbal remedy, is found effective in A/H1N1 swine flu patients, according to a leading Chinese daily.

Jin Hua Qing Gan Fang, also called “Jin Hua” is being hailed as the world’s first traditional Chinese medicine to treat the A/H1N1 swine flu by the Chinese news papers.

Clinical studies spanning seven months have come out with adequate scientific evidence that the Chinese herbal remedy Jin Hua Qing Gan Fangan can shorten patients’ fever period and improve their respiratory systems, reports said quoting medical experts from China.

Jin Hua Qing Gan Fangan has no adverse side-effects.

Above all, Jin Hua Qing Gan Fangan is also very cheap. The medication cost only about a quarter of the cost of Tamiflu - the widely used anti-flu drug of Swiss drugmaker Roche Holding recommended by the World Health Organization (WHO) for the treatment of the A/H1N1 swine flu.

The municipal government in Beijing has gathered the most outstanding medical experts in the Chinese capital to develop the new medication, stated Zhao Jing, director of the Beijing Municipal Administration of Traditional Chinese Medicine, which had earmarked 10 million yuan (1.47 million U.S. dollars) for the project.

More than 120 medical specialists, led by academicians Wang Yongyan and Li Lianda from the Chinese Academy of Engineering, had participated in the research over the past seven months."

India and TK Incentives?

All this leads one to wonder: has India been successful at leveraging its traditional medicinal wisdom in a manner similar to the Chinese? Some reports claim the efficacy of an ancient Indian medicinal plant, the "Tulsi" in taking on the flu. But have any of our local herbal companies tried "innovating" from traditional Tulsi leaves to reach an optimal cure--in much the same way that the Chinese did. Have they, at the very least, conducted some trials to establish the efficacy of Tulsi in this regard?

One may remember the controversial Satwant Committee (data exclusivity) report, a controversy enlivened more recently by the commissioning of a WHO/government of India sponsored report on this theme. Perhaps the one proposal (by the Satwant Committee) that met with the least resistance was to have a fixed exclusivity period for protecting data generated from clinical trials involving traditional medicines. AYUSH, the governmental department responsible for traditional medicines, was firmly behind this proposal--the idea being that such exclusivity might incentivise herbal players to do more testing on traditional medication and make it more palatable for Western export markets. Perhaps its time to revisit this proposal again.

Unfortunately, as we've often lamented in the past, the key obstacle to having any sort of healthy discussion on innovation policy in India is that we've framed our entire debate around pharmaceutical patents, an area characterised more by shrill emotions than cold logic. If we have to move forward, it is imperative that we delink our innovation policy debates from pharmaceuticals and adopt a more sector based approach.

Our patent regime (section 3(p) of the Indian patents Act) currently prevents the patenting of any invention based on traditional knowledge. The critical question is: how much work does one need to do on traditional knowledge before it becomes patentable? Much like section 3(d), would we peg the standards high?

These and other issues need careful deliberation and it is critical that we align our incentive structures in an optimal manner to achieve what I'd earlier called the "Neem Revolution". We cannot afford to remain content with a "defensive" approach, where we block patents that free ride on our ancient wisdom. Rather we have to pro-actively leverage our traditional knowledge to bring in more wealth for the nation and health for the world. The TKDL initiative is a pioneering one, that many other countries appear to be copying. However, it needs to move beyond its "defensive" confines and find ways to actively leverage the wealth of wisdom trapped inside.

But before I sign off, I want to pick your brains on an issue that continues to puzzle me:

Does India's excessive focus on generics come at the cost of it's progress on traditional medicine? Or are the two mutually exclusive? Most of us are well aware that, notwithstanding the intense hostility between innovators and generics, "price controls" are one area where both these waring factions come together... both oppose it vehemently! Are "traditional medicines" the other area that provokes sentiments sharp enough to bring these two strange bedfellows together?

SpicyIP Tidbit: Lok Sabha passes the Trade Mark (Amendment) Bill, 2009 - finally!

The ET reports that the Lok Sabha, which is the lower house of Parliament, has finally passed the Trademark (Amendment) Bill 2009, on Friday the 18th of December, 2009. Keeping in line with the parliamentary practice of the last few years, the Lok Sabha passed this bill along with 5 other bills in a period of 5 minutes without any debate or discussion, after which it was adjourned sine die.

Image from here.

The bill will now be sent to the upper house of Parliament - the Rajya Sabha - which should hopefully have a more insightful debate on the proposed amendments. Once it is passed by the Rajya Sabha the bill become an Act of Parliament which will come into force only when the Central Government notifies the same.

The Trademark (Amendment) Bill, 2009 was originally introduced into Parliament as the Trademark (Amendment) Bill, 2007. The 2007 bill lapsed because of which it had to be re-introduced in July this year. As already discussed in the insightful guest post by Ankit Prakash the Amendment Bill aims to simplify the trademark registeration process by enforcing the Madrid Protocol.

SpicyIP Tidbit: The Obama Administration does a U-Turn - Supports the WIPO Treaty for the Blind

In a surprising turn of events it has been reported, by Wired.com, that the Obama administration has whole heartedly supported the WIPO Treaty for Sharing Accessible Formats of Copyrighted Works for Persons Who are Blind or Have other Reading Disabilities. (image from here)

In a Statement before the WIPO SCCR the U.S. noted that “some in the international copyright community believe that any international consensus on substantive limitations and exceptions to copyright law would weaken international copyright law. The United States does not share that point of view. The United States is committed to both better exceptions in copyright law and better enforcement of copyright law.”

This is a 'surprising' turn of events because earlier this year we had reported that the U.S. was planning to block the Treaty. What caught my eye on reading the statement was the express reference to the fact that India was engaged in a 'thoughtful deliberation' over a statutory exception for the print disabled in its own national laws. This is a clear recognition of the efforts put in by the good people heading the 'Right to Read' & 'Book Bole' campaigns in India, especially those at Inclusive Planet and the Centre for Internet and Society. Not to be forgotten are the bureaucrats and politicians at the Ministry of Human Resources and Development without whom none of this would have been possible.

The main aim of the treaty in question is to facilitate the cross-border sharing of special format materials made for persons with print disabilities regardless of whether these formats are made under the national law or under licensing agreements. U.S. support for the treaty will dramatically increase the amount of special format material accessible to the people of the world.

In the meanwhile we urge our readers to take part in Shamnad's brilliant new initiative – CLAM Collaborative Law Making – to engage in drafting and improving upon the proposed amendment of the Copyright Act.

SpicyIP Tidbit: Copyright Board: Need for Speed

According to a news report, the Copyright Board has closed hearings for this year and the next date is scheduled sometime next March. For the last 18 months, the Copyright Board has been dealing with the issue of royalties to be fixed for the radio industry, and no decision has been arrived at as yet. Apparently, in the last two day session, only 3 witnesses from the radio industry were cross examined leaving the industry dismayed at the pace with which the Board has been going about the matter.

In all 13 more witnesses are yet to be examined, 5 and 8 from the radio industry and music industry respectively and the next hearing’s schedule only for March 2010. An expeditious disposal is necessary since the radio industry has informed the Ministry of Information and Broadcasting of its non-participation in Phase III bidding unless the royalty issue is resolved.

Liberalization of Foreign Technology Agreement Policy

There is good news for the Indian technological industry. The Government of India yesterday (17th Dec), issued a Press Release stating that it has reviewed its foreign technology agreement policy to no longer require government approval, with immediate effect. The prior policy freely allowed payments and remittances up to a lumpsum fee of $2million and royalty payments of 5% on domestic sales and 8% on exports. Payments above this required regulatory approval.
 The new policy removes any such restrictions on payments for royalty, lumpsum fee for transfer of technology and payments for use of trademark/brand name and puts it on the automatic route i.e. without any approval of the Government of India

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The relaxation of the decades old policy is part of liberalization and deregulation of Indian foreign investment regime, which is working well for India considering that even in 2008, with the world in an economic slump, India attracted over $25billion in foreign investment. Unrestricted foreign collaboration agreements in the field of technology, provides easier access to the latest technology from around the world and thus are greatly beneficial for the development of India's own technology industries. The deregulation notification has also come just in time for any developments from Copenhagen, clearing the way for any 'green' company collaborations.

See-sawing at Copenhagen

With hardly any time remaining for discussions at 'Hopenhagen', the position of IP in the treaty text continues to remain ambiguous, see-sawing between a number of IP references being mentioned (1st draft), to IP not being mentioned explicitly at all (2nd draft) , and back to IP being mentioned again in the 3rd draft text (provided by IP-Watch here) on the development and transfer of technology at the 7-18th December United Nations Climate Change Conference (COP15) being held at Copenhagen. This third draft, like the previous two, has been prepared by officials but is being referred to the ministers to negotiate/discuss in the 'high-level' meeting due to the clashing of interests (and therefore positions) on Intellectual Property Rights in the text. While developing countries are happy with this re-introduction of IP, developed countries are unhappy with this, as they would prefer not having to discuss IP issues at this stage. The 2nd draft of the treaty created a disturbance, with developing countries of the opinion that by not mentioning it, developed nations were using IP as a bargaining chip to try to force developing countries to raise their levels of commitment. Countries such as Japan and USA have expressed concerns that negotiations over IP issues at the climate change meeting would bring all discussions to a standstill, as it would take too long to come to a consensus about it. However, the 3rd draft treaty, once again included it. [Original image taken from here]

Currently, two tracks are being followed, with one focusing on the UN Convention under the Ad Hoc Working Group on Long Term Cooperative Action under the Convention (LCA) and the other track discussing the Kyoto Protocol. Earlier, on December 8th, developing countries showed great concern when a leak of a draft agreement (provided by the Guardian here ) by the Danish hosts which implied that transfers would be linked to specific actions that developing countries were to take. This was quickly brushed aside by embarrassed officials as merely being one of several unofficial papers, however the G77 countries haven't been so quick to forget it. The leaked document suggested that $10 billion was to be given as a 'quick start' fund. Considering the amount of money that countries have given to bail out their financial institutions, and the enormity and urgent nature of the global warming situation, responses included "paltry amount" and "it won't even pay for the all the coffins".

According to IP Watch, "Bernarditas de Castro-Muller, one of the lead negotiators of G77 developing countries, said that developed countries had committed to the transfer of technology to developing countries under the UN Convention, especially Article 4.1.c. “It is a commitment already in the Convention,” she said."

However, it is quite alarming to look at USA's internal discussion on the matter. To quote a member of the House of Representatives, as well as a member of the USA delegation to Kyoto in 1997, on the issue of compulsory licensing under the UNFCCC, "The American people need to know that those were code words, like ‘compulsory licensing’ and ‘technology transfer’, that really mean allowing other countries to steal the American patents, copyrights and trademarks for anything related to climate change, efficiency or energy under the draft climate change treaty." To read more, check here.

On December 16th, WIPO Director General Francis Gurry, speaking at some side events at Copenhagen, took a more pro-developed country viewpoint on the issue. As per the WIPO Press Release, "Two major policy objectives need to be prioritized: Encouraging investment in the creation of environment-friendly technologies, and the rapid dissemination of those technologies. In both cases, the IP system, and in particular patents, are fundamental in that they provide a stimulus for investment in green innovation and contribute to a rapid – and global – diffusion of new technologies and knowledge.

Green innovation requires significant private sector investment, which is incentivized through an effective patent system. The IP system makes an invention a tradable good, which can be licensed or assigned, thus facilitating technology partnerships.

Effective patent protection in recipient countries can spur international technology transfer from the private sector. Moreover, since all patents are published, the patent system also provides the most comprehensive public repository of information on latest technologies. It reveals knowledge that already exists, which helps to develop new technologies, and it helps identify technologies that are not protected and thus freely available."

With the huge spotlight being placed on Copenhagen, many of the bigger nations are conscious that steps taken are being viewed on the global political stage as well. While developing countries such as India, China, Brazil are essentially crying out that it is only reasonable for richer countries which have historically contributed more to global pollution be more responsible for their actions, and developed nations are stating that everyone should have an equal burden - each wanting the other to take on more of the burden, the island nations just want anyone to take it on, before they are drowned out. The smaller island nations however, being in the most urgent need of action, since they are in danger of being washed out by rising waters, are desperate to get any or all of the international community to start taking immediate action.

Although its complicated enough on its own, one would hope that in addition to transfer of technology, the negotiations also include collaboration of efforts at innovating and creating new technology, since that would mean more relevant technology as well as more efficient deployment. As it currently stands, such collaborations are extremely difficult due to various barriers including IPRs.

Update: At COP 15, US Secretary of State, Hillary Clinton, just announced that by 2020 the United States will work towards providing poor countries $100billion annually for climate change, contingent on all major economies contributing and helping to seal a deal, transparent to all parties.

To see the non-working papers prepared by the LCA, check here.
IP watch has good coverage of the 1st and 2nd drafts here and here respectively.
For more general reading on IP and climate change, click here

SpicyIP Tidbit: IP matters lead the way in India's first e-court

Earlier this week, a small corner of the Delhi High Court became India's first e-court, embracing technology in a way it is hoped will encourage the judiciary to spread the bug!

What is of particular interest to the SpicyIP team and its readers is that the pilot e-court project was ushered in in the courtroom of Justice S Ravindra Bhat, a judge who has been at the forefront of several key IP decisions in the recent past. Cries for "speedier" justice may well have been heard at last, and both litigants and practitioners should be excited about this development. IP stakeholders, of course, are being treated as guinea pigs, but heck, it is all for the greater common good!

This post involved inputs from Kruttika and Prashant of the SpicyIP team, making this a true "team" post! Both have already seen how the court works at first hand, and had some positive things to say.

The key feature of the e-court is the ability of lawyers to make paperless digitised submissions, including submissions where references can be hyperlinked to help the judge (or any other reader) instantly access further information on a given matter. Kruttika gives us a live update on the judge using such submissions -- it was quicker to understand a slightly technical matter during the course of the matter with realtime access to the internet.

The courtroom now sports a screen, which as yet only passively displays the causelist. But perhaps as time goes by, one may be able to see what exactly the judge can see as well, in order to have the lawyers and the judge - literally - on the same page.

Prashant adds that things are generally a lot smoother and less messier than they used to be. According to the Times of India, 18 matters were heard in a matter of just two hours with no paper or files being exchanged. Timing it for Copenhagen?

One thing to be careful about is the discomfort caused by staring at the computer screen constantly - the judges may need some extra tips on how to avoid that crick in the neck!

Of more general interest is the fact that the High Court's computer committee, headed by Justice BD Ahmed, has already digitised around 5.5 crore papers relating to cases up to 2007. The process has involved scanning documents and storing them on a central server such that the documents can be accessed by all computers in the intranet. There is a slight backlog to catch up on in the digitisation, but hopefully this will be overcome soon. For those of you who want to read more, take a look at the e-court presentation that the High Court has put up on its website here.

Petitions and submissions can be made in PDF format, according to the Indian Express, and the court also intends to send summons and notices through emails. Where no email IDs are available, summons may be emailed to the nearest post-office. The vagaries of the neighbourhood postman will have to be accounted for, but in any case, the process will cut down timelines like nothing before.

The committee is also considering the possibility of setting up a web portal for broadcasting proceedings of cases that may involve larger public interest. If this is the case, I can already foresee a case being made for IP cases under this category. Now, when shall we put up our next petition?

SpicyIP Guest Post: Copyright, Arbitration and a Feted Film

We have for you a guest post on the Tandav Films vs Four Frames case, decided by Justice Murlidhar of the Delhi High Court recently. The case, a complex mesh of copyright and arbitration law involving a film that has crept into my all-time favourites list - Khosla ka Ghosla, has been carefully dissected and analysed by our guest post-er, Anirudh Wadhwa.

Anirudh is a lawyer with a London based law firm and is an editor of Justice Bachawat’s Law of Arbitration and Conciliation (5th edn, LexisNexis, 2010 forthcoming). He is a graduate of the National Law School of India University, Bangalore, and can be reached at anirudh.wadhwaATgmail.com

Introduction

The recent Delhi High Court judgment of Dr. Justice Muralidhar in Tandav Films [downloadable file] makes for an interesting study. It involves disputes relating to the Hindi film “Khosla ka Ghosla”, and raises important issues in copyright law and arbitration law. The judgment seems a bit sketchy in parts, and it is difficult to fully flesh out the facts. Perhaps, this may be a result of it being an order arising out of an interim application to refer the parties to arbitration under S. 8 of the Arbitration and Conciliation Act, 1996. However, given the importance of the issues raised in this case for both copyright law and arbitration law, Tandav Films merits a detailed analysis.

Facts

It is important to note the following facts relevant to the judgment in the case –

a. The Plaintiff (in collaboration with another company) were the Producers of the movie “Khosla ka Ghosla” and held all the underlying intellectual property rights (to start off with) in the movie.

b. The Plaintiff/Producer entered into an agreement to licence exclusive rights in the “musical works and accompanying lyrics as well as the sound recordings embodied in the sound track [of the said] film” to Living Media (one of the defendants) for five years. (“Agreement 1”)

c. The Plaintiff/Producer later entered into another agreement to licence “exclusive rights, excluding music rights in the film” to UTV (another defendant) for fifteen years. (“Agreement 2”) This contained an arbitration clause.

d. Upon the success of “Khosla ka Ghosla”, UTV soon released its remake in Tamil, titled “Poi Solla Porom”. This was objected to by the Plaintiff/Producer on what appears (from the judgment at least) on three main grounds –

i. Infringement of music of the film “Khosla ka Ghosla”.

ii. Infringement of copyright in the literature and dramatic works created for the Plaintiff/Producer underlying the film “Khosla ka Ghosla”.

iii. Infringement of the Plaintiff/Producer’s special rights as author of the film “Khosla ka Ghosla”.

Potential legal issues

The case had a lot of potential for clarifying technicalities in copyright law. In relation to the argument on moral rights (to my mind, atleast) the set of facts gave enough scope to entertain a discussion on the following questions: the scope and extent of moral rights; whether and under what circumstances are moral rights available to a “first owner”, as opposed to an author; and, who can be said to be a “legal representative” of the author. Similarly, in relation to scope and nature of rights in “musical works” and “dramatic works” the following issues were implicated and these questions could have been addressed – to what extent do rights in “musical works” and “dramatic works” subsist independently of the rights in the underlying cinematographic film; how do rights in the “musical works” and “sound recordings” differ from each other and from the rights in the underlying “synchronized music” to a “cinematograph film” (as arising out of Agreement 1 above); what is the effect of assignment of “music rights” (as used in Agreement 2 above), and how far does this impact other related rights in relation to the cinematographic film.

As will be seen later, Muralidhar J in Tandav Films did not direct his enquiry into these issues at all, instead preferring to refer the disputes for determination by way of arbitration.

Decision of the Court

Copyright issues

The Court did not go much into the above identified issues, other than laying down (albeit, on a prima facie basis) that the disputes revolve around an interpretation of the terms “musical rights” and “musical works” as used in Agreement 2 between the Plaintiff/Producer and UTV. Prima facie, the court ruled that to the extent there was an assignment of the “musical works” under Agreement 2, this also covered any “musical work” as defined under S. 2(p) of the Copyright Act. However, since this agreement contained an arbitration clause, the disputes relating to the scope and interpretation of the underlying intellectual property rights were left for determination by the arbitrator.

It may be noted, that in so holding, the court did not address the moral rights issues at all. Also, to the extent it did rule on an interpretation of the phrase “musical rights” and “musical works”, the analysis by the Court is only on a prima facie assessment. On this basis, it appears doubtful whether the decision in Tandav Films can be said to lay down any authority for a proposition of copyright law.

Reference to Arbitration

The Supreme Court has held in the famous Sukanya Holdings case reported in (2003) 5 SCC 531 [Also available here], that the entire subject-matter of the suit should be subject to the arbitration agreement for the Court to refer the disputes to arbitration. The underlying reasoning behind this rule is based on the consensual nature of arbitration. Only those ex post disputes can legitimately be referred to arbitration, in relation to which parties ex ante agreed to do so.

Using this authority, it was contended by the Plaintiff/Producer that the disputes in this case related to issues that went beyond Agreement 2 between the Plaintiff/Producer and UTV. There were other defendants to the suit that were not signatories to Agreement 2. For instance, claims were made against Four Frames Pictures, the producers of the Tamil remake and Big Music, which had released the music of the Tamil remake.

The Court, and it appears rightly so, had no hesitation in rejecting this argument. The case of Sukanya Holdings was distinguished on the ground that the other defendants in Tandav Films, unlike Sukanya Holdings, were either pro forma parties, against whom no claims were made (for instance, the author of the script and some songs, or Living Media which had been earlier assigned some rights by the Plaintiff/Producers through Agreement 1), or were those who derived their rights from UTV (for instance, Four Frames Pictures and Big Music). In essence, it appears that the Court recognised that one must look at the “substance” of the claims, and not merely the form in which the Plaintiff has cast the disputes. To this extent, Tandav Films follows a long line of decisions that have recognised this principle and adds a needed degree of sophistication to the plain vanilla Sukanya Holdings rule.

Clarifications

It seems to me that the following questions could potentially arise upon a reading of the judgment to persons not familiar with arbitrations. Some of these questions were posed to me when I was discussing the effect of this judgment with some lawyers. These therefore deserve further clarification –

First, what is the effect on the underlying Suit of the order to refer the parties to arbitration? Can the court dismiss the suit?

The order of the court to refer parties to arbitration under S. 8, it seems, has the effect of dismissing the underlying suit, as opposed to a mere "stay of proceedings", which was the position under the earlier 1940 Arbitration Act. There is however authority to suggest that the suit continues to be in suspended animation, and institution of a fresh suit at a later date (if required) will not be necessary. In Tandav Films, Muralidhar J followed the first approach and dismissed the suits as not maintainable. Of course, a suit for copyright infringement can still be maintained (as discussed in the answers to the fourth and fifth question below), but this will be dependent upon the decision of the arbitral tribunal.

Second, how can the third parties, who are not even party to Agreement 2, be referred to arbitration?

It is necessary to clarify here that the effect of such a decision is not to force the other Defendants to arbitration. Rather, to the extent their rights are derived from Agreement 2 (with the Plaintiff/Producer), these Defendants will be bound by the consequent arbitral award.

Third, even assuming that the Plaintiff/Producer wins at arbitration how does it enforce its award against the other defendants?

If the Plaintiff/Producer wins at arbitration, it can, as per the terms of the award, enforce it against UTV. Also, the award is deemed a decree of the court and to the extent that it sets out the entitlement of the Plaintiff/Producer to the copyrighted works, an action for infringement can be instituted before the District Court under S. 62 of the Copyright Act, 1957 on the basis of the award/decree obtained at arbitration.

Fourth, regardless of the nature of relationship between UTV and the other defendants, don't the Plaintiff/Producers still have a right to institute an action against them under the Copyright Act?

It would appear to me that this will indeed be the case. However, since the dispute before the District Court that hears the infringement action will revolve around whether the Plaintiff/Producers actually own the copyright that they claim is being infringed, the Court will defer its judgment pending decision of the arbitral tribunal.

Fifth, while a licensing dispute over copyrights may constitute an arbitral subject matter, can a pure copyright infringement suit be the subject of arbitration?

It seems a pure copyright infringement dispute cannot form an arbitral subject matter especially given the mandate of S. 62 of the Copyright Act, 1957 that gives this power only to the District Court. However, in this case, the copyright licensing dispute lies at the heart of the Plaintiff/Producer's entitlement to the copyrighted works themselves. Thus, theoretically, even though the Plaintiff/Producer is at liberty to pursue a claim for copyright infringement, since this will be contingent upon a decision on whether the Plaintiff/Producer is entitled to those copyrights in the first place, the District Court will look to the decision of the arbitral tribunal before reaching any conclusion.

Conclusion

Although the court was not bound to satisfy itself to a degree greater than that it arrived at in the judgment (i.e. on a prima facie basis), it leaves the underlying copyright law issues tantalizingly open. Perhaps a decision with greater judicial analysis would have gone a long way to resolving these issues. Although the court cannot be faulted for honouring the agreement of the parties to resolve disputes extra judicially, perhaps, clarity on the underlying intellectual property law issues would have been appreciated by practitioners.

However, to the extent that Tandav Films is an endorsement of the agreement of parties to refer their disputes to arbitration; and to the extent it recognizes that in deciding whether to refer parties to arbitration, the court must look at the substance and not the form in which the Plaintiff casts the disputes, it is, in my opinion, a welcome addition to existing jurisprudence.