Patent Post

IPR—the backbone of the Biotech industry

The Indian Biotechnology sector is poised for a tremendous growth and IP protection is necesary for India to make it to the top as a global competitor. Neesha Patel finds out

In India, the pharma industry is one of the first to reap the benefits of biotechnology. Human health biotechnology products account for about 60 percent of the domestic market, while bio-drugs, vaccines and diagnostics have significant market shares as well. Consequently, Indian pharma is beginning to benefit from enhanced IP protection of their products. An example is Ranbaxy's NDDS for ciprofloxacin that it licensed to Bayer for $65 million plus royalties. Other Indian research-based companies have earned about $70 million from R&D milestone payments.

IPR and the Biotech industry

Intellectual Property (IP) is central to the biotechnology industry, and brings with it a dimension, facilitating collaborative activity, whether it is a drug discovery or clinical or market-related trials. Essentially, collaborative activity is the synergy between India's ability to provide conditions for research, clinical trials and development, technological lead and capital availability in developed nations. The successful translation of these synergies into commercially viable applications and marketable products critically depends on the compatibility of regulations that deal with the registration and protection of intellectual property, originating from the collaborative process. Affordability and accessibility to the products of biotechnology are also the two key factors central to the advancement of this sector. Policies that foster a balance between sustaining innovation and facilitating technology diffusion has been addressed with substantial progress in terms of support for R&D, human resource generation and infrastructure development.

Over the past decade, India has shown excellence in scientific performance as evidenced by number and quality of publications made each year in international journals. However, its technological and commercial performance is low as indexed by the number of patents issued per unit of investment made in R&D. Realising the potential and relevance to the needs of society, the Department of Biotechnology (DBT) has emphasised the development of all facets of IPR with relation to biotechnology.

Importance of IP protection

A streamlined and efficient patent protection, in addition to the industry's maturing relationship with capital markets are the hallmarks of America's global leadership in biotechnology. In contrast, most developing countries do not have strong IPR regimes and suffer negative effects of "brain drain". The reason being, lack of effective copyright laws, which force scientists and technicians to immigrate to countries, where their research is protected from unfair exploitation by competitors.

Both Japan and Mexico saw a tripling of US pharmaceutical investments and R&D after they improved patent laws. In fact, over the past years, the stumbling block for global investors, looking for tie-ups with Indian firms has been the perception that India's IPR norms are too lenient. "The prime reason Singapore is chosen over India is because they protect Intellectual Property Rights. Companies take their R&D and clinical trial operations to Singapore because they see clarity in regulation, besides other financial benefits," notes the CEO of a prominent pharmaceutical company, based in Singapore.

Global IP regulations

Even though, the WTO TRIPS agreement provides a foundation for IPR protection, enforcement is lacking in many parts of the world. The basic obligation in the area of patents is that inventions in all fields of technology, whether products or processes, shall be patentable if they meet three criteria - being novel, involving an inventive step and being capable of industrial application.

Additionally, a patent can be granted for any invention that meets the patentability conditions in all fields of technology, irrespective of the place of invention. Over and above, in the general security exception, which applies to the entire TRIPS Agreement, only specific exclusions are permissible from the scope of patentability. Such exclusions span research areas, whose commercial exploitation should be prevented to protect public order, human, animal and plant welfare, and to avoid environmental damage.

Biotechnology patent applications experience numerous restrictions, primarily, due to the undefined scope and complex nature of the technology. Deciding the scope of patent protection for inventions is a difficult task, as it raises a number of technical and ethical issues. To begin with, biotechnology is an intimidating amalgamation of biology and chemistry and claim interpretations. They force a judge or patent examiner to grapple with rather fundamental issues, such as the significance of the term 'human' when describing a protein. Next, it raises important policy questions, such as, the degree to which a legal monopoly should be granted to an innovator, whose significant contribution could be diminished by the consequent development of a competitor product or technique.

Article 27 of TRIPS agreement concerns the availability, scope and use of IPR in making distinctions between material produced by biological processes and by non-biological routes; only the latter is considered patentable. Natural material of any kind is not patentable and article 27(3) (b) makes it clear that member states are entitled to exclude plants and animals but not micro-organisms from the scope of patentability. However, it is unclear whether TRIPS permits member states to exclude biological substances like genes and cells. Currently, two schools of thought exist. The first school states that there is no scientific basis to support the patenting of genes and genomes, which are discoveries at best, while the second school states that characterisation of genes is not straightforward, so it does constitute an inventive step and therefore should be patentable. However, despite the apparent controversy, British Prime Minister Tony Blair initiated an Anglo-American agreement with President Bill Clinton to protect the 100,000 genes of the human genome, to ensure non-patentability. The agreement aimed at preventing entrepreneurs profiting from gene patents and so the benefits of research were freely available worldwide to combat disease.

While US companies far outpace their competitors the world over, US patent applicants experience tremendous problems with the inability or unwillingness of the US Patent and Trademark Office (USPTO) to examine biotechnology or pharmaceutical inventions in a single patent application. Using an administrative process called "restriction practice," the USPTO forces applicants to divide the claimed technology into several different inventions, only one of which can be pursued in the original application.

Few companies can devote such funds to a single technology. Small companies and start-ups, in particular, cannot afford the number of applications necessary to obtain complete coverage for their inventions. As investors and industrial collaborators refuse to invest in unprotected concepts, intermittent patent protection can delay or halt the development of a promising therapeutic or diagnostic product. Along with this, multiple patent applications often create uncertainty in the market, as aspects of a single discovery, obtain protection over a period of years, rather than simultaneously.

Currently, The United States Patent and Trademark Office is struggling to interpret biotechnology patent claims, and efforts are being made to reform the restriction practice that, in turn, would improve patent quality, efficiency and will be necessary for international harmonisation of rules.

IP scenario in India

India needs to implement strong patent legislation, data exclusivity, and improve IPR infrastructure and enforcement in order to achieve its potential as an R&D powerhouse. The much-delayed second amendment to India's 1970 patent law was passed in May 2002, welcoming the extension of pharmaceutical patent protection from seven to twenty years. With this change, India fulfilled part of its commitment to the international community by protecting intellectual property. The Bill, however, makes broad ambiguous allowance for compulsory licensing, and is unclear about patent protection for imports.

Data exclusivity is a prerequisite to the protection of research efforts, decisions on where to conduct clinical trials and amount of foreign investment in the pharmaceutical and biotech sectors. In 1984, the US enacted the Hatch-Waxman Act, which provides a five-year data exclusivity for new molecular entities (NMEs). According to the US National Institutes of Health (NIH), lack of data exclusivity is the primary reason why India ranks ninth, (as compared to China which ranks second), in funding given to countries outside the US by the NIH. In 2002, China adopted data exclusivity provisions as part of its WTO ascension, which provides six years of protection commencing from the date of marketing approval in China.

Indian pharmaceutical companies and researchers, especially in the biotechnological sector, would benefit from increased diffusion of knowledge that results from international partnerships and increased integration. Fortunately, data exclusivity is an administrative protection, which can be easily implemented without passage of legislation. Requiring the government to treat test data as the exclusive property of the firm that generated it, (for a fixed period of time), is an effective method of providing protection, while legislators draft laws to complete the legal IP framework. The National Biotech Policy provides a framework and strategic direction to different sectors in order to accelerate the pace of development of biotechnology in India over the next ten years. For the sector of IPR, the key strategic actions include:

Scientific Manpower, which encourages science graduates to pursue law for a better understanding of IPR related issues and inclusion of the same in the curriculum of law colleges to facilitate filing of international patents, license negotiation and dispute resolutions.

Budget allowances of Rs 50 crore as Innovative Development Fund to enable research scientists at academic laboratories to develop scientific innovations from a concept to a form that is licensable. This fund should be under the administration of the DBT and the grants may be capped at Rs 50 lakhs per project.

Given the stress under which the Indian judicial system operates and taking into account the backlog of cases, experts feel that the existing system is not efficient enough to handle IPR related disputes.

Judges might not be well-versed with the technical know-how of IPR related issues, thus fuelling a need for an arbitration council to redress IPR disputes and showcase India as the next hub for contract research, clinical trials and contract manufacturing.

In 2005, India's Minister for Commerce and Industry, formed a Technical Expert Committee to investigate the patentability of new chemical entities and micro-organisms, which the Parliament did not consider when it passed the Patents (Amendment) Act.

Several ambiguous provisions in the patent laws have widened the scope of opposition in India and one such nebulous provision is Section 3(d). This states that new forms, properties or use of a known substance or discovery renders it un-patentable. Furthermore, salts, esters, ethers, polymorphs, metabolites, isomers, mixtures of isomers, complexes, combinations and other derivatives are considered the same substance unless their properties and efficacy differ significantly.

Although India has many of the core ingredients for a successful innovation system, to maintain development of the biotechnology sector, progress is warranted in the areas mentioned. Early implementation of a strong pharmaceutical patent regime would strengthen India's R&D sector, attract more foreign investment, and provide a basis for Indian firms to begin tackling diseases that have a serious effect on the country.