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India’s Patents Ordinance 2004 – A License to Litigate?

India met its TRIPS deadline through the promulgation of the Patents Ordinance 2004 on December 26, 2004. The Ordinance came into force on January 1, 2005. This measure, albeit temporary, reflects the Government’s resolve to meet its WTO obligations. The Indian Constitution provides that an Ordinance expires six weeks after Parliament reconvenes, giving it an effective life span of 6 months. The Government now has the unenviable task of facing opposition parties in its efforts to substitute the Ordinance with an Act.

The Ordinance repealed the controversial Section 5 of the Indian Patents Act 1970. For over three decades, only processes were patentable in respect of food, drug, medicines and substances produced by chemical processes, meaning that even if the process for manufacturing has been patented, a person could make that product by means of an alternative method. Still further, the products themselves could be imported into India. From January 1, 2005, both products and processes will be patentable in India.

The amended law has also broadened the grounds upon which a compulsory license may be sought. Compulsory licenses have never been invoked in the entire history of the Indian patent regime. This is primarily because of the limited term process patent protection available for food, drug, and medicines. Thus, the local generic drug manufacturing industry flourished and prices were accordingly low. The local working of inventions to the fullest extent and on commercial scales and preventing the patentee from creating import monopolies were the two fundamental principles recognized in the Patent (Amendment) Act 2002. The law also provides the use of compulsory licenses in circumstances of ‘national emergency’, ‘extreme urgency’ or ‘public non-commercial use’ including certain national health crises. In such cases, the Controller is not required to afford an opportunity of opposition to the patentee. Indian generic companies may invoke these compulsory license provisions in order to obtain licenses. In doing so, the broadly worded legislation will come under judicial scrutiny. It is, therefore, critical for international pharmaceutical companies to implement a well-defined patent enforcement strategy to secure its interests during this transitional phase in India’s patent legislation.