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Options to Traditional Patents
by James Love (US)

The West, too, is Seriously Experimenting with Alternatives

The recent changes in Indian patent law are a cause to reflect. Will India embrace the most closed and proprietary models for controlling access to knowledge, or will it find a way to reconcile its obligations under the World Trade Organisation (WTO) with the need to protect human rights? Will India have the vision to explore the promise of new models for supporting creativity and innovation? Or will it follow the worst impulses of increasingly discredited systems for restricting access to knowledge?

The Patent Act, as amended by Parliament in March, presents opportunities to move in very different directions. The amendments to the Ordinance obtained by the left were substantive, and when combined with other provisions of the Act, give the government considerable flexibility to protect consumers. The legal mechanisms are there.

In 2004, Novartis told the World Bank it considers India to be a market of 50 million persons. In other words, if it has a monopoly, Novartis plans to price its new medicines so that they are too expensive for more than 95% of the population. Giant corporations and governments in North America and Europe have lobbied India to adopt high levels of patented protection for medicines, seeds, software and other technologies. The basic argument they advance is that India will remain poor, unless it can provide the legal protection that will support lucrative knowledge-based industries. It is a seductive message, that has clearly resonated with some of the elite policymakers. It has flaws, however.

First, the United States and Europe are now engaged in a growing debate over the best ways to promote innovation. The idea that high levels of intellectual property protection are best is now under attack. Regardless of what is said in Delhi, back home wealthy countries are backing open standards for the Internet, open-source software, open-access archives for publicly-funded scientific research, public domain databases like the Human Genome Project or the HapMap Project and similar open initiatives. Big successful companies like Cisco are alarmed at patent thickets on software and computing technologies and IBM is undergoing a profound shift in the way it thinks about intellectual property resources, which it now seeks to share.

The US Congress is debating whether or not to weaken patent protections on medicines. In key areas, such as parallel trade, the French government recently amended its patent law to extend compulsory licensing to certain medical diagnostic technologies. The UK government recently implemented the European Unionís directive to create mandatory compulsory licensing of genetically modified corps. And the European Union is debating whether or not its directive on database protection was a mistake and if it should be scaled back or repealed.

Recently, a bill (HR 417) was introduced in the US Congress. The proposal would radically change the way medical R&D is financed in the US. It would eliminate all market exclusivity on prescription medicines, in return for remuneration from a $60 billion per year Medical Innovation Prize Fund that would be distributed to companies that develop new medicines on the basis of the incremental healthcare benefits the medicines deliver. The new US proposal shows one can separate the markets for innovation from that for products providing hefty financial incentives for companies investing in R&D, without harming consumers.

India now has many options. It can protect its own consumers through liberal compulsory licensing, but still allow Indian inventors to seek the higher levels of intellectual property protection in the North American or European markets. It can even experiment with new ideas for collective management of patent rights, such as the Medical Innovation Prize Fund, or the proposals for an essential medicines patent pool. Fortunately for India, it has the legal tools it needs. Soon a large number of compulsory licenses will be issued for products now manufactured in India, which are subject to the mailbox patents. This will increase the familiarity with compulsory licensing and provide needed expertise in setting reasonable remuneration to patent owners.

There is also Article 92 of the new Act, which gives the government the right to issue compulsory licenses to address public health emergencies. This covers all medicines, without any prior negotiation with patent owners. In a country with such serious medical needs, it promises to be a living provision.

James Love is director, Consumer Project on Technology, an NGO focusing on IP policy, especially related to healthcare.

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