Protecting intellectual property or monopoly profits?

The Global Intellectual Property Centre of the US Chamber of Commerce has come out with an International Index of Intellectual Property. It shows India third from the bottom. The report has noted: “India’s score is unchanged as patent protection remains outside of international best practices...”; “All countries should look at the index and incorporate the infinite possibilities to improve their IP environment and encourage that the next greatest innovation takes place on their soil”; “The Indian government’s rhetoric to improve IP environment was yet to translate into action.”

Is this cause for worry, as the report and the newspapers seem to imply? When an index for ranking is constructed, it is always for a purpose. This was exemplified by the United Nations Development Programme’s (UNDP) Index of Human Development, which highlighted the fact that growth did not necessarily correlate with positive changes in wellbeing represented by education, health and income. It did not ‘trickle down’. The rankings that came out were counter intuitive, and led both to interesting debate and in many cases, changes in policy. So, the purpose for which an index is developed and used is very important.

This index has been created, not by a government or an international agency, but by the US Chamber of Commerce, which has set up the Global Intellectual Property Centre as it sees IP protection as an issue of major concern to the US multinational companies.

“The index was created so that countries like India can hear directly from the business community on the IP-related issues important to them when considering investing in new markets,” said GIPC Vice President Mark Elliot.

These companies and the GIPC work to promote their own interest, even if the language is designed to sound universal. The GIPC writes as if the interest they promote is also the interest of those they are addressing, like the Indian government.

This is never stated but is assumed and the prescriptions proceed on that basis. For example, “India remains outside of international best practices.” The implication is that this is bad, and we should change. How? By doing what they want: “the Indian government's rhetoric to improve IP environment was yet to translate into action.”

If we examine the index, it is on indicators that are good for protecting monopoly, which economic theory says is bad for welfare. There is no indicator, for example, for access to life saving drugs: this is important to patients (or consumers). In a patient friendly index, such an indicator would be important. There is a bias here, made worse by being unstated.

Patents give a product monopoly for as long as 20 years. Patents are given for products that are ‘novel’. Novelty is the only criterion for a claim of exclusive patenting. These claims are based on international agreements under the World Trade Organisation and national laws.

India stated its position clearly in the negotiations, but could not withstand the pressure brought on by the United States. India finally accepted the WTO treaty, and amen­ded its domestic law despite much opposition from Indian companies and citizens.

The strong citizen and innovation-friendly Indian Patents Act 1970 was replaced by a new law in 2005. This law is WTO compliant. The US Chamber of Commerce talks of international best practices — which are the practices of its members — as unquestioningly desirable for everyone.

But there are many interests, not only those of US company’s profits. There are, for example, public health concerns, which are recognised by many groups in the US as well, but about which this report is deafeningly silent. The US multinationals practice what is called ‘evergreening’.

They make minor changes in the existing patented drugs, like shape or colour or form for the same chemical composition and the same treatment regimen, and claim new patents. Patents are granted for demonstrated novelty—not for claimed novelty. This distinction is absent in what this report calls international best practices.

These practices have been questioned under our laws, and they have lost cases in the Supreme Court of India after long and protracted litigation. Novatis lost a claim for a patent for a cancer drug called ‘Glivec’ because the court found no novelty, as the law requires. The interests of public health and patients prevailed over monopoly profit.

Photocopying case
There was another case where major international publishers lost a case in the Delhi High Court. In 2012, various publishers like Oxford University Press filed a case for infringement against Rameshwari Photocopy Services which, under licence from Delhi University, prepared course packs for students.

The High Court found that this was legitimate; it was not commercial, but educational. The needs of learning of students prevailed over the rights of publishers to make profits.

Indian law—compliant with WTO—has provisions for protecting patients. This is resented by those this Chamber represents. And that is because its interests are not universal interests. A trade-off has to be made between the profits from monopoly and the needs of those suffering from cancer or of students studying in the university.

What they want is a rollback of the Indian law which is already consistent with the international law—and hence international best practice. They want India to disregard the interests of its citizens and give priority to the profits of multinationals.

The Indian government is recent years has made some comments about addressing their concerns under the rubric of ‘Ease of Doing Business’, and this has emboldened them to lobby for the changes they want. But these changes are not good for Indian citizens. This of course does not matter to them.

(The writer is with the Jindal School of Government and Policy, Sonepat, Haryana)
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