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India – Patents (Amendment) Act 2008

Introduced in Parliament on 21 July 2008, the Patents (Amendment) Bill mainly sought to implement certain measures under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) as amended by the protocol thereto concluded in Geneva on 6 December 2005 (the Protocol), and to give effect to the decision adopted by the General Council of the World Trade Organization on 30th August 2003 on the implementation of paragraph 6 of the Declaration on the TRIPS Agreement and Public Health adopted in Doha on 13 November 2001 (the Doha Declaration).

One of the greatest criticisms leveled at the TRIPS Agreement was its negative impact on public health, particularly in industrially developing and less developed countries, where the enforcement of pharmaceutical patents have led to spiraling costs of essential drugs, putting them beyond the means of many in need.

In recognition of this, the Doha Declaration was made, seeking to strike a balance by recognizing the flexibility allowed in interpreting the TRIPS Agreement while continuing to recognize the important role intellectual property protection plays in stimulating research and development in the field of pharmaceutical drugs. This included reaffirming the rights of WTO members to grant compulsory licenses in national emergencies. However, it was noted that it could be of little use to countries lacking the capability to manufacture these drugs. This was acknowledged in paragraph 6 of the Doha Declaration, which sought to find a solution to the above problem:

“We recognize that WTO members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement. We instruct the Council for TRIPS to find an expeditious solution to this problem and to report to the General Council before the end of 2002.”

A proposal on the Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and public health was therefore adopted by the General Council in 2003, noting that there existed exceptional circumstances in which Article 31(f) and (h) could be waived. This was effected in the Protocol with the inclusion of Article 31bis to the TRIPS Agreement, which allowed a pharmaceutical product produced by means of a grant of a compulsory license to be exported from an exporting member to an eligible importing member with steps taken to ensure that remuneration is paid only once to the patentee. The deadline for acceptance has now been extended to 31 December 2009, and will take effect in all consenting countries once a two-thirds majority has been attained, while the waiver of 2003 will continue to apply in the remaining countries.

This will now be ratified in Singapore with the passing of the Patents (Amendment) Act 2008 which will come into effect on 1 December 2008 carrying the following:

An amendment to section 56 allowing the government to import any “relevant health products” produced by means of compulsory licensing in times of urgency, provided relevant notification is given to the Council for TRIPS

An amendment to section 60 forbidding a further exportation of these imported health products in order to prevent unfair exploitation of the amendments

A repeal and re-enactment of section 62 explicitly dispensing with remuneration to the patentee if any other remuneration has or will be received

An amendment to section 66 excluding the parallel import defense from the import, sale or offer to sell any “relevant health products” intended for export to any other country other than Singapore which is also an eligible importing member of the WTO

A new section 50A was also added limiting any anti-competitive measures of a contract or license related to the exploitation of a patent to within the exclusive ambit of the Competition Act

A “relevant health product” being statutorily defined as a patented invention, which is a product referred to in —

(a) paragraph 1(a) of the Doha Declaration Implementation Decision; or

(b) paragraph 1(a) of the Annex to the TRIPS Agreement”

With the passing of the above amendments, fresh concerns have arisen over whether the compulsory licensing scheme may be abused so as to ultimately discourage innovation, particularly in Singapore’s fledging pharmaceutical and biotech industry.

Singapore’s Southeast Asian neighbors have been embroiled in controversy in recent years over this matter. Thailand, in particular, has been involved in a particularly bitter dispute with a number of pharmaceutical firms over its decision more than a year ago to issue compulsory licenses on three patented drugs – Merck’s AIDS drug Efavirenz, Abbott’s Laboratories’ AIDS drug Lopinavir/ritonavir and Sanofi-Aventis’ Clopidogrel, which is used in the treatment for heart diseases. This dispute has been further exacerbated in recent months with Thailand’s passing of a second set of compulsory licenses on an additional 3 drugs, all of which relate to the treatment of cancer. This culminated in a request submitted by Sanofi-Aventis demanding a review of the validity of the issuance of such licenses, for which the Thailand Council of State will issue a decision on the legality of a compulsory license for docetaxel as well as the import of its generic version.

With these amendments, it appears as if Singapore will be able to adopt a similar tack in tackling public health issues by reducing drug costs in the same manner. Singapore, which continues to be heavily dependant on medical imports despite its status as a pharmaceutical research and manufacturing center in the region, will now be able to import generic copies of the original drug through compulsory licensing in times of emergency, provided part (ii) of the Appendix to the Annex to the TRIPS Agreement is fulfilled:

(ii) where the Member has some manufacturing capacity in this sector, it has examined this capacity and found that, excluding any capacity owned or controlled by the patent owner, it is currently insufficient for the purposes of meeting its needs. When it is established that such capacity has become sufficient to meet the Member’s needs, the system shall no longer apply.

It is to be noted that the amended section 56 only requires that “the Government has given the Council for TRIPS a relevant notification in relation to the relevant health product” and not expressed permission, as long as the notification is made that it will use the system in whole or in a limited way, for example only in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use. Moreover, as the issuance of compulsory licenses by Thailand suggests, the state of emergency can be defined entirely by the country’s own will. In fact, Article 5(c) explicitly states:

(c) Each Member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency.

However, recent developments in India have indicated that the use of “Doha style” compulsory licenses may not be as straightforward as originally thought. Natco, an Indian pharmaceutical company, had filed for a compulsory license to be granted in order to allow them to export generic versions of Sutent and Tarceva, patented anti cancer drugs made by Pfizer and Roche respectively. The application was then abandoned following a decision by the Assistant Controller of Patents to allow Pfizer to be heard. While acknowledging that the hearing had no bearing on the merits on the case, it is to be noted one of the reasons that hearing was granted was that the application contained no notification by Nepalese government to the TRIPS Council declaring a state of emergency. The application was then withdrawn shortly after. This can be interpreted as a stand by the Indian courts against any abuse of compulsory licenses, though the reasons behind Nepal’s failure to notify, political or otherwise, is still open to speculation.

With the United States Trade Representative playing an active role in lobbying against the abuse of compulsory licenses, and in view of Singapore’s strong trade links with the United States as well as her pro-IP stance, it appears that these provisions will have little effect on Singapore’s stand towards this matter for now. How Singapore may react in times of adversity, however, remains to be seen.