The US trade representative did not designate any countries a ‘priority foreign country,’ the worst label in its annual scorecard on how well countries protect the US patents, copyrights and other intellectual property rights, which can lead to action against a trading partner. Photo: Bloomberg
New Delhi: The US on Wednesday desisted from further downgrading India’s status in its records to protect intellectual property rights (IPR), citing its willingness to engage with a new government to resolve its differences on the matter.
The US, however, said it will conduct a review of the progress achieved regarding its engagement with a new Indian government in the fall of 2014.
In the Special 301 report released by the US trade representative on Wednesday, the US continued to keep India under its “priority watch list”. There were fears that the US may further downgrade India and categorize it as a “priority foreign country”, which could have invited trade sanctions.
“In the coming months, the United States will redouble its efforts to seek opportunities for meaningful, sustained, and effective engagement on IP-related matters with the new government, including at senior levels and through technical exchanges, that will both improve IP protection and enforcement in India, and support India’s efforts to achieve a ‘Decade of Innovation’ and advance its legitimate public policy goals,” the Special 301 report said.
A new government is expected to take charge by the end of May after the ongoing general election.
Trade relationship between the world’s two biggest democracies has been strained recently with Washington expressing its dissatisfaction with India’s IPR regime and both countries dragging each other to the World Trade Organization citing violation of international trade rules.
The US is specifically disturbed with the patent regime followed by India in granting drug licences. “The United States is concerned that section 3(d), as interpreted, may have the effect of limiting the patentability of potentially beneficial innovations. In practice, this standard has already been applied to deny patent protections to potentially beneficial innovations, some of which enjoy patent protection in multiple other jurisdictions,” the Special 301 report said.
The Indian Supreme Court in April 2013 rejected a patent application by Swiss company Novartis AG for its cancer drug Glivec citing section 3(d) of the Patent (Amendment) Act, which does not allow evergreening of drug patents with a minor tweaking of the formula.
The US also opposed India granting a compulsory licence to Hyderabad-based Natco Pharma Ltd in March 2012, allowing it to manufacture and sell a copy of Bayer AG’s liver and kidney cancer drug Nexavar.
That was the first time an Indian firm was granted a so-called compulsory licence, which permits a generic drug producer to make and sell its version of a patented drug without the consent of the patent holder in specific cases.
“The United States urges India to provide greater transparency about its ongoing inter-ministerial process that is considering over a dozen patented medicines as candidates for government-initiated compulsory licences, and urges India to allow opportunities for input by rights holders, as appropriate, with respect to decisions concerning compulsory licenses,” the report said.
The report said although India has issued only one compulsory licence, it has made clear that it views compulsory licensing as an important tool of industrial policy for green technologies, with the potential to be applied more regularly across economic sectors.
“Specifically, India has promoted compulsory licensing in its National Manufacturing Policy as a mechanism available for government entities to effectuate technology transfer in the clean energy sector. India similarly has sought to multilateralize this approach in ongoing negotiations under the UNFCCC (United Nations Framework Convention on Climate Change),” the report said.
Speaking at an event last week, industry department secretary Amitabh Kant defended India’s record in protecting IPR, saying India has an “extremely well-settled and stable intellectual property regime” that is based on comprehensive laws and rules with strong enforcement.
“The Indian Patents Act is the most comprehensive TRIPS (Trade Related Aspects of Intellectual Property Rights, an international agreement)-compliant and is rigidly enforced. And the awards of patent are a very transparent legal process with decisions and processes subject to legal scrutiny,” he said.
On compulsory licensing, Kant said, “No democratically elected government can ensure that you have medicines which are beyond the reach of the common man… Therefore, the right equilibrium, the right balance must be found between innovation and our ability to ensure the reach of medicine to the people of the country.”
The report also said India is the largest source of counterfeit pharmaceuticals shipped to the US. “Reports indicate that anywhere from 10-40% of drugs sold in Indian markets are counterfeit and could represent a serious threat to patient health and safety,” it added. In a statement, the US Chamber of Commerce said it is encouraged that the United States trade representative recognizes the growing concerns with India’s deteriorating IP environment, and support the decision to initiate an “out-of-cycle” review of India. “We hope that this step will generate much needed dialogue for the US and Indian governments to address the concerns identified in the report. We look forward to working with the next government of India to promote a robust IP climate,” it said.