By Carlos M. Correa
GENEVA, Sep 29 2014 (IPS)

The steady increase in patent applications and grants that is taking place in developed and some developing countries (notably in China) is sometimes hailed as evidence of the strength of global innovation and of the role of the patent system in encouraging it. 

Carlos M. Correa

However, such an increase does not correspond to a genuine rise in innovation. It points instead to a major deviation of the patent system away from its intended objective: to reward those who contribute to technological progress by creating new and inventive products and processes.

The increase in the number of patents reflects, to a large extent, the low requirements of patentability applied by patent offices and courts. Patents granted despite the absence of a genuine invention detract knowledge from the public domain and can unduly restrain legitimate competition.

Low standards of patentability encourage a large number of applications that would not otherwise be made, leading to a world backlog estimated at over 10 million unexaminedpatents.

This problem affects various sectors. For instance, Nokia is reported to hold around 30,000 patents relating to mobile phones, a large part of which are likely to be invalid, while Samsung holds more than 31,000 patent families. A study covering various fields of clean energy technologies, including solar photovoltaic, geothermal, wind and carbon capture, found nearly 400,000 patent documents.“The steady increase in patent applications and grants … does not correspond to a genuine rise in innovation. It points instead to a major deviation of the patent system away from its intended objective: to reward those who contribute to technological progress by creating new and inventive products and processes”

The proliferation of patents is particularly high and problematic in the pharmaceutical sector, where large companies actively seek to acquire broad portfolios of patents in order to extend patent protection beyond the expiry of the original patents on new compounds. These ever-greening strategies allow them to keep generic producers out of the market and charge prices higher than those that would otherwise exist in a competitive scenario.

For example, the basic patent for paroxetine, an antidepressant, expired in the late 1990s, whereas ‘secondary’ patents will extend up to 2018.

Ever-greening strategies by one company often force others to follow the same pattern as a defensive approach.  The proliferation of ‘secondary’ or ‘spurious’ patents can impose significant costs on patients and public health systems.

Several measures can be applied at the national level to avoid the proliferation of patents on trivial developments in full consistency with the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS), because they fall within the policy space that World Trade Organisation (WTO) members have retained to design and apply their patent laws.

The most important policy that governments may implement is the rigorous application of the requirements of patentability, based on a thorough examination of patent applications. The TRIPS agreement neither defines the concept of ‘invention’ nor how such requirements need to be interpreted.

Thus, national laws may differentiate inventions and discoveries, and require that the former result from an inventive activity, thereby excluding pre-existing subject matter that is merely found, such as natural substances.

While some patent offices grant patents on the basis of legal fictions on novelty, there is no reason to follow such practices in other jurisdictions.

An example of this practice by some patent offices is to admit what are known as ‘selection patents’, whereby one of more items that were previously disclosed are independently claimed. This type of patents provide an effective means of ever-greening, because protection can be extended for the full length of a new patent, i.e. normally twenty additional years, despite the fact that novelty was actually lost when such items were first disclosed.

While some large patent offices, such as the U.S. Patent and Trademark Office, the European Patent Office and the Chinese Patent Office, seem to apply a lax inventive step standard thereby allowing for the granting of a large number of ‘low quality’ patents, there are strong public interest arguments to follow a different approach, particularly in developing countries.

A strict application of the industrial applicability/usefulness requirement, when provided for by the national law, may also contribute to prevent the grant of unwarranted patent rights.

This is the case, in particular, for claims on new medical uses, which are equivalent to claims over methods of treatment that have no industrial application or technical effect. The lack of industrial applicability may be a sufficient ground to reject such claims.

Given the policy space left by the TRIPS agreement to adopt their own definitions of the patentability standards, and to do so consistently with their legal systems and practices, governments can follow different methods to ensure that patents are granted only when there are sufficient merits under the applicable law.

Governments may introduce specific standards in the patent laws themselves. A notable case is the Indian Patent Act, as amended in 2005, which incorporated in section 3(d) specific standards to assess patent applications in the field of chemicals and pharmaceuticals.

In a case brought by Novartis (a Swiss pharmaceutical company) against the rejection of its patent application relating to a beta crystalline form of imatinib mesylate, the Indian Supreme Court held that the claimed invention failed in both the tests of invention and patentability.

The definition of the standards of patentability can also be made through regulations, including patent offices’ guidelines. A good example is provided by the guidelines on the patentability of pharmaceutical products and processes adopted by the Argentine government in 2012 to limit the ever-greening of pharmaceutical patents.

Finally, it is worth noting that in applying patentability standards, patent offices can differentiate, in line with the TRIPS agreement, among fields of technology in order to take into account particular features of specific sectors and public policies objectives, for instance in relation to the promotion of generic drugs.

Measures to accommodate these differences constitute a necessary response to the diversity of technologies and, consequently, a condition sine qua non for an intrinsically balanced system of protection that remains neutral in its effects on competition. (END/IPS COLUMNIST SERVICE)

(Edited by Phil Harris)

This column is taken from the author’s research paper on ‘Tackling the Proliferation of Patents: How to Avoid Undue Limitations to Competition and the Public Domain’, published by the South Centre (http://www.southcentre.int/research-paper-52-august-2014/).

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By Gustavo Capdevila
GENEVA, Apr 5 2013 (IPS)

India’s refusal to grant patent protection for the anti-cancer drug Glivec, developed by Swiss drugmaker Novartis, is a victory for the developing world, which depends on low-cost exports of generic medicines from the Asian giant, said public health specialist Germán Velásquez.

The triumph celebrated by the Colombian expert, who is a special adviser for health and development at the South Centre, was a landmark ruling against Novartis handed down Monday Apr. 1 by India’s Supreme Court.

The Geneva-based South Centre is an intergovernmental organisation of more than 50 developing countries that functions as an independent policy think tank.

Velásquez, who worked for over 20 years in the World Health Organization, explains in this interview with IPS his point of view on the legal battle in the courts in New Delhi and its consequences for developing countries.

Q: How do you interpret the ruling by the Supreme Court of India?

A: There are problems with the information that is being reported. Nearly everyone says that India rejected the patent for Glivec. That’s true, but it’s not all the verdict says.

Q: Could you explain?

A: At the heart of the verdict is the ratification of the criteria set by the Indian law for the approval of drug patents. That is, whether or not it meets the requisite of containing a genuine innovation.

Q: Could you describe the legal battle?

A: It all starts with the adoption of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), one of the treaties established at the same time the WHO was born, in 1995.

India was the only developing country to use the (entire 10-year) transition period to enforce TRIPS, in 2005, when it passed the patent act.

Q: What happened to the patent applications presented during that decade-long transition?

A: They accumulated, until there were around 10,000 applications, and it was not until 2005 that the patent office began to examine them. They included the application for the Glivec patent.

But the new standards turned out to be stricter, such as the one that indicates that the innovation can’t be just a small change to a molecule, but has to be something substantial. In short, the patent for local sales of Glivec was denied in 2006.

Q: How does the story continue from there?

A: Novartis challenged that decision and brought a lawsuit in a court in the city of Madras (the capital of the southern state of Tamil Nadu; the city was renamed Chennai in 1996.) But the High Court of that city, three years later, also rejected the application. That year, 2009, the company appealed the decision – and lost again.

Q: What options are left to the company?

A: This is the aspect that hasn’t been sufficiently reported. In a cynical, perverse and very serious move, Novartis says (prior to the ruling): “If they didn’t give me the patent, I’ll go to the Supreme Court, but to ask this time for the elimination of the strict criterion established in article 3 of the patent act.”

“If more flexible, lower standards are set, then my medicine will be in,” was its reasoning.

Q: So the dispute took on this other face?

A: Yes, because with the intention of introducing its drug by force, the transnational corporation was trying to modify the law of a country – and of a country like India. I think that its executives were being short-sighted when they made that decision. This has been very costly for them in terms of their image.

Q: How do you reach that conclusion?

A: It is clear that it was a misstep to denounce India’s patent law, with the risk of losing. The transnational industry in general had suffered a blunder in South Africa, when it was forced in 2001 to back down from legal action against a law that authorised the patenting of lower-price imported medicines in order to address the AIDS epidemic.

You could suppose that “Big Pharma”, as the major pharmaceutical companies are called, had learned the lesson. Especially knowing that Glivec was patented in 40 countries, including the United States, China and Russia.

Q: Are you insinuating that there may be a domino effect?

A: If Novartis loses in India, as it did on Monday, any of the governments of the 40 countries could ask themselves: “Why don’t I review that patent and revoke it?” That authority is granted by the legislation of all of those countries.

Q: What standing do those 40 countries that recognise the Glivec patent have?

A: Most of them are industrialised states, large markets. But they also include some that are currently experiencing severe economic difficulties, like Greece or Spain, whose authorities could ask themselves why they should pay 2,500 dollars a month per person for a treatment against cancer. They could say: “Why don’t I just have it produced as a generic drug, and invalidate this patent.”

I think the Novartis executives did not take that into account when they launched this legal battle. Obviously, after the first impetus, they continued on to the end, and today they’re going to see repercussions.

Q: What could those consequences be?

A: It should be a lesson for the rest of the countries of the developing South. They should try to follow India’s example and introduce in their legislation clauses like the ones contained in article 3d, which restricts and sets criteria with respect to what amounts to innovation, which is necessary in order to grant a patent. That there can’t just be a small change, which is sometimes merely cosmetic, to a molecule in the medication.

Q: What prospect is there for the spread of that criterion?

A: In India, the Philippines and Argentina, that prohibition already exists, while others are introducing it through alternative routes.

Q: And other consequences?

A: India will be able to continue to make generic versions of all new medicines that are not truly original, and it will continue exporting them without any problem. It’s necessary to take into account the fact that 95 percent of the antiretrovirals consumed in Africa come from that Asian country.

So that means the Indian Court’s ruling is extremely important, with very concrete repercussions for that medicine and some 10,000 others that are on the waiting list in the patent office in New Delhi.

Q: What percentage of those could get patents?

A: In 2010, Argentina approved 2,000 pharmaceutical patents, and China 4,000. But actually, just 40 or 50 products a year are true innovations.

Q: Why that enormous difference between patents that are granted and truly innovative products?

A: The pharmaceutical industry is facing huge difficulties in coming up with innovations.

So it clings to a very short-sighted way of thinking, very short-term, but enormously profitable. This consists of launching incremental innovations, as they are called – in other words, a small product with just a gradual change, but accompanied by a major marketing campaign.

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