Time to Break in India

There is no point in hitching our bandwagon to what will soon be an obsolete patent game. We must think through alternative innovation incentives such as prizes and open source formats

The U.S. Chamber of Commerce is at it again, admonishing us for lagging behind on the IP infobahn by refusing to bolster up our patent numbers, and ranking us close to the bottom on their insidious IP index, 43rd out of a total of 45 countries. India is even below Brunei, a nation known more for its rich royalty (not of the IP kind) than innovation/ technology, only because it signed up to the Trans-Pacific Partnership.

And therein lies the biggest problem with the index: it is rife with methodological flaws. It is a fraudulently formalistic method of shaming countries into thinking that they are children of a less creative god, a point made by some of us in previous years where they ranked Togo too above India. And yet the U.S. Chamber of Commerce and its IP wing, the ‘Global Intellectual Property Center’, continue to dole out such rankings with gay abandon.

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A seductive logic

What is most striking is that our indigenous innovation gurus have been quick to lap up the seductive logic of these rankings and warn us in dire tones that we need to catch up, or else be left behind. And that if we have to truly ‘Make in India’, we must ramp up our patent numbers.

But should we be ‘making’ IP in India? Or ‘breaking’ it? Our technological proficiency in pharmaceuticals came through the active breaking of multinational IP, yielding a world-class generic industry and affordable medications for our public. But that is an old script, and we need to move on.

The time is ripe for another kind of breaking. For the standard IP script has done its time, one that harks back to a 15th century Venetian model. Barring some tweaks here and there, we’re stuck with largely the same frame. It is a tad bit paradoxical that when IP rights are meant to further innovation, the legal regimes themselves have been shielded from innovative experimentation.

It is time therefore for India to break this ancient IP paradigm, for it rests on the assumption that IP and the technological information that it protects can be treated as real property. Centuries ago, a clever jurist by the name of Hugo Grotius theorised that water could never be appropriated in the same way as land, since it “flowed”. From there we got the notion of the high seas, exclusively appropriable by no single nation but available to all. With information, the flow properties are even greater. And yet our IP regime continues to equate it to land and real property. Read a patent document cover to cover, and you’ll understand why it’s impossible to know even where the “fence” that delimits this alleged property lies.

Quite apart from the fact that the patent grant itself is at best a lottery: a probabilistic right as some U.S. scholars are wont to label it. Here today, gone tomorrow! Some may say this is peculiar to India, which invalidates patents by the dozen. But if data are anything to go by, we’re not that different from our allegedly more advanced patent comrades, the U.S. and Germany, where the invalidity rate is as high as 50%. There is a reason for this. Patent offices often get it wrong, being resource starved and all that. But more importantly, the fine art of adjudicating the merits of a patent rests on the highly subjective test of whether or not an alleged invention is cognitively superior to what existed before (“prior art”), leading to highly differential results across the world on the very same patent application — as Pfizer found to its dismay in the famed Viagra case, where the Japanese and the Americans held the patent to be valid, but the British invalidated it on the ground that there was a thinly veiled reference to the allegedly inventive path in a science publication authored by a Nobel Prize winner.

The AI challenge

This uncertainty is bound to increase as patent offices get more circumspect about the grant of patents, and like India begin asserting their right to insist on stricter patent standards. But more problematically, the test of cognitive advancement that is central to patent law rests on the notion of the person skilled in that particular art/technology. Would it be obvious to him/her? Now that we’re in the age of artificial intelligence where machines can think as well as humans (well almost), and are inventing by the dozen (since its now possible to code them with creativity, at least of the combinational kind), the skilled person could soon be this artificially intelligent machine. Under its infinitely vast repertoire, almost nothing would count as inventive or non-obvious, given that every potential combination of prior art (which is what most patents are about) is known or at least knowable to these non-sentient sapiens.

In short, patents breed uncertainty of an order that is far more significant than most other legal instruments, and are terribly inefficient even on their own internal economic logic. Little wonder that that some of the finest minds in the technology space such as Elon Musk are now giving up on patents.

Given this scenario, there is no point hitching our bandwagon to what will soon be an obsolete patent game. We must therefore leapfrog and think through alternative innovation incentives such as prizes and open source formats. Much the same way that we did with smartphones, where we avoided the huge costs that might have come with investing significantly in landlines, laptops and the like.

Shamnad Basheer is the Honorary Research Chair Professor of IP Law at Nirma University and the Founder of SpicyIP.

Source: Hindustan Times, 16-02-2017

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Standing up to patent bullying

The Modi government must stop engaging U.S. bureaucrats as patent consultants and instead showcase the Indian patent statute as an exemplar for a balanced regime

Earlier this month, the media reported that India “privately” assured the United States that it will not issue any more compulsory licenses. This report was reminiscent of a theory propounded by psychologist Lenore E. Walker in 1979 on abusive patterns in relationships.

Four stages of abuse

Walker studied abuse in family situations and outlined an important model detailing four stages of abuse. Had the U.S. and India been human beings, this would have been a classic case of household abuse. The first stage documented by Dr. Walker is tension-building where there is strain in the relationship and one partner tries to dominate the situation. Indeed, the U.S. has successfully dominated the discussions simply by citing India every single year, most often unfairly, to take control of the situation. For years, the Pharmaceutical Research and Manufacturers of America (PhRMA) has pounded India using the Office of the United States Trade Representative (USTR), an administrative body, as its chosen mechanism to repeatedly criticise India and unfairly escalate issues on a yearly basis. The preaching from the PhRMA filtered through the USTR’s pressure tactic has been in complete disregard of the impact on India’s sovereignty and public health. The issuance of notices by USTR for submissions by industry followed by the dramatisation to convene public hearings expecting sovereign nations to justify their positions to the U.S. administrative body are all acts leading towards escalation of tensions. In fact, the USTR process is a documented attempt to dominate and direct other countries’ trade postures. The process allows the U.S. to unilaterally exert pressure indirectly to amend laws or cease fair implementation of local laws although the U.S. has agreed to multilaterally resolve all disputes. Importantly, the legality of such unilateral Special 301 process of the USTR is, at best, shaky under the World Trade Organisation’s (WTO) jurisprudence. Yet, it allows the U.S. to cite the USTR’s Special 301 process to take control of the dialogue — this forms Dr. Walker’s second stage of the abusive cycle (the incident itself).

The announcement from India, though, landed the country into the third stage. Dr. Walker terms this as the honeymoon stage wherein the abused feels confused and may mistakenly feel responsible. India is in classic third stage, with Prime Minister Narendra Modi attempting to pacify President Barack Obama by instituting a committee to create a National Intellectual Property Rights policy long after the statutes were amended to become compliant with the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Now, the “private” announcement to not implement an important flexibility — compulsory license — established as a safeguard to protect public health firmly posits India into the end of the third stage of abuse. The fourth stage, according to Dr. Walker, is a phase of relative calm and peace, which we hope India will enjoy.

If there is a cautionary note here, it is that reconciliation never ends the cycle of abuse. Assuredly, neither PhRMA nor the USTR will relent or retract from this pattern until India economically harms itself by instituting TRIPS and other measures leaving the Indian generic industry on a suicidal path. After all, abuse is a pattern of control that one party exercises over the other to force actions or inactions that cause some form of harm to the abused.

Compulsory license

Meanwhile, the Modi government needs to appreciate that compulsory license is an important flexibility that countries negotiated as part of their membership with the WTO. India has one of the most sophisticated compulsory licensing provisions which is fully compliant with the TRIPS agreement. Under the Indian law, compulsory licenses can be granted on several grounds including satisfying the reasonable requirements of the public with respect to the patented invention, ensuring availability to the public at reasonable price, meeting the demand for the patented product, and tackling national public health emergencies. The step India took when it compulsorily licensed the Bayer drug, Nexavar, which was originally priced approximately at $4,700 per month and beyond the reach of even the top 20 per cent of Indians, was bold. It showcased India’s confidence that its patent statute has been carefully engineered to accommodate India’s national objectives within the scope of the flexibilities accorded under the TRIPS agreement.

Patenting, a concern in the U.S.

Further, the Modi government will do well to appreciate that even in the U.S., patenting and its effect on unrealistic drug pricing has become a major concern. For example, in 2015, Senate Finance Committee Ranking Member Ron Wyden and senior committee member Chuck Grassley sought public comments on the high price of Sovaldi, a Gilead drug, and its impact on the U.S. health care system. In 2016, several Democratic members of the House reportedly urged government agencies to consider diluting or diminishing the exclusive rights of drug companies. Recently, a survey from the Kaiser Family Foundation reported that 77 per cent of the American public picked the increasing prices of drugs for HIV, hepatitis, mental illness and cancer as their foremost health concern. Given such realities, India needs to confidently showcase how it handled Bayer’s unrealistically high pricing of Nexavar using Section 84 of the patent statute (compulsory licenses).

Importantly, compulsory licensing forms a part of a larger package of flexibilities that India negotiated with the support of other G-77 and African countries in the Doha Development Round. These are valuable concessions that India cannot afford to forget or renege from. The burden is on this government to ensure that its work is not seen as resulting in losing the ground that previous governments had gained on the subject. In any event, it is best for the Modi government to stop engaging U.S. bureaucrats as patent consultants and instead showcase the Indian patent statute as an exemplar for a balanced patent regime to the rest of the developing world.

(Srividhya Ragavan is Professor of Law, Texas A&M University School of Law.)

Keywords: pharma sector, intellectual property, TRIPS agreement, WTO

Source: The Hindu, 22-03-2016