IP Enforcement as a Trade Barrier Shamnad Basheer Pharmexcil Conference Mumbai, 21 August, 2009.

IP Enforcement as a Trade Barrier

Shamnad BasheerPharmexcil Conference

Mumbai, 21 August, 2009

IP Enforcement and Barriers • A very simple narrative

– That IP enforcement itself is becoming a trade barrier– What kinds of strategies to counter this?

• First, global ratcheting up of IP protection standards: TRIPS• India has had an interesting history with TRIPS: From TRIPPING to

GRIPPING• Now, ratcheting up of IP Enforcement Standards• Paradoxically, TRIPS itself prohibits enhanced IP enforcement• And TRIPS may actually help India!

Direct Enforcement: The “Injunction” Machinery

• Patent Owner attempts to prevent generics through “Injunctions”• Copyright and trademarks: ex parte injunctions at the drop of a hat

– Stray instances with patents (Ramkumar case)• Pharma Patents: Pendulum swinging the other way• Roche vs Cipla: Tarceva (De facto Compulsory licensing)

– Pricing as a factor– When credible patent challenge: no injunction

• In effect, considerably difficult to get an injunction• Regular pharmaceutical enforcement may not prove much of a barrier in

India. – Roche appeal to Supreme Court: Not certain if the Supreme Court will

overturn on “pricing”

Indirect Enforcement: “Linkage”

• Drug Regulation• Bayer vs Cipla case (Nexavar)

– Writ petition by Bayer dismissed by Justice Bhat– No statutory “linkage” provision in the DCA– Institutional competence issue– Delays generic entry

• EU does not have such a provision• EU Commission report on innovator strategies to bar generic

entry• Proposal: To have an “orange book” mechanism and all other

regulatory information available on DCGI website

Linkage Based Enforcement: Customs

• EU transit seizures: 17?– Ind-Swift Laboratories Ltd (Clopidogrel Bilsulphate) for Columbia– Cipla (Olanzapine 10 mg Tabs): Destined for Peru – Dr Reddy’s Laboratories Ltd (Losartan - API): Destined for Brazil

• Dutch, German and Spanish authorities• Allegedly under EC Customs Regulation• If so, it violates TRIPS (Art 41) + Art 5 of GATT (free movement)• Turning TRIPS on its head: As it may help India • But does the EC Regulation mandate “transit seizure” at all?

– Not Clear

• Better EU than the US– Terrorism nexus!

The Nokia Decision and the “As Such” Claim

• Nokia Decision (cell phones from Hong Kong to Brazil)– Justice Kitchin: Can only be seized if “trademark infringement” within UK

• TM infringement: only when “used in the course of the trade”• Similarly, “import” has to include an intention to bring into

territory and trade• Brit Decision (on “warehousing”)• But compare to Sisvel: Dutch Decision

– A “Production Fiction”

• EU “as such” violation complaint may be weak• Collect Evidence and Build up a Case Against the Dutch, German

and Spanish.

Onslaught of New International Barriers

• ACTA: Enhanced IPR Enforcement Generally– No one really sure what this contains

• SECURE: Enhanced Customs Enforcement (WCO)• IMPACT (WHO): Enhanced protection against counterfeits and spurious

drugs– India blocked the initial definition (Valcyte vs Valcept)– But movement starting again

• Delink IP from drug safety issues• WHO should be focussed only on drug safety• The term ought to be used is “sub standard” drug• Or counterfeit as defined under TRIPS

The Burgeoning of FTA’s

• EU FTA:– Data exclusivity– Patent Term Extension (to compensate for drug regulatory approval)– Key Problem: FTA standard slowly becomes global standard

• Need to Introduce Further Provisions– To secure passage of legitimate generic drugs: the “Transit” seizure

issue– TRIPS: Article 41: that enforcement shall not prejudice legitimate

trade– EC 2003: same spirit as above– This should be part of FTA

Strategies to withstand the Enforcement Onslaught

• The law itself may be on your side• Fight it out in courts, without backing off• Why didn’t any of the Indian companies fight in the EU?

– Dr Reddy’s was the only one with a credible excuse

• Asymmetry of Resources: Collaborative Action (Pooling in Resources)

• Paradox: Another Indian generic company fights the case silently without any media publicity at all– Exhibition stall in Europe raided and passports etc confiscated– No sale/no import

• Strategy: A Combination of Legal Aggression + Pressure through Media and Health Groups

Leveraging the “Opposition” Mechanism

• Strategy: Ensure that only few meritorious patents are granted• Industry group complaint that many patents granted without section 3(d)

scrutiny• Quite likely: after all patent office skewed in favour of grant

– Lack subject matter expertise + reflects well in terms of their targets • Terribly backlogged office: no time to review• Must use the opposition mechanism effectively• But is the opposition mechanism working well?

Patent Oppositions: Show me the Numbers

• Study by NUJS IP Chair• 141 total opposition decisions (73+68)• 68 pharma opposition decision

– Pre grant ( 65) + Post grant (3):• 46 rejections (i.e. approximately 68% of the time). • 28/46 rejection (60%) were based on failure to comply with section 3(d)!• The power of section 3(d)• The wonders of an adversarial process• Leverage the opposition mechanism effectively• But all post grants were accepted (3): suggests intrinsic bias?

Charity (and Clarity) Begins at Home

• Challenging international norms, when domestic norms flawed• Our “Import” Definition

– Gramophone company vs Birendra case: pirated CD’s to Nepal– Held by Chinappa Reddy J: that “imports” include such transits

• Our Customs Regulations• Ramkumar case: where seizure of phones that were clearly outside the

patent– Enough losses caused in the interim– Dual SIM card technology

• Patent cases: Court order for seizure.• Again, institutional competence issue•

The “Spuriousness” of our Law• Bayer vs Cipla: that the generic version of Nexavar is a “spurious” drug• “Spurious” drug definition in the DCA• 17 (b): if it is an imitation of, or is a substitute for, another drug or

resembles another drug in a manner likely to deceive or bears upon it or upon its label or container the name of another drug unless it is plainly and conspicuously marked so as to reveal its true character and its lack of identity with such other drug; or

• DCA amendment 2008: definition of spurious retained. Only penalties increased

• Need to delink between “drug safety” and “IP enforcement”

From Linking to De-Linking

• Direct Enforcement: Patent Injunctions• Indirect “Linkage” Enforcement: 2 kinds– Customs– Drug Controller

• Ramkumar case: Excise authorities• What next? Electricity Board• India: Limited Resources

From Faith Based IP to Fact Based IP

• A lot of the global initiatives based on “Faith”• Need to move to Numbers• Even on Numbers, question them carefully• 2003: CII cited a WHO study that claimed that 35% of fake drugs from

India• And 20% of Indian drugs are fake (no active ingredient + or wrong

ingredients)• No such study! Only reported what some pharma companies stated• Now “Terrorism”

Conclusions

• Strategy of legal aggression + media sensitization• Advocacy: Pharmexcil to play a more active role in

policy• India to play strong role in international IP policy– Forge strategic alliances

• For more on Indian IP, visit www.spicyip.com• For queries etc, email me at <[email protected]>