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

2. 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!

3. 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”

4. 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

5. 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!

6. 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.

7. 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

8. 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

9. 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

10. 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?

11. 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?

12. 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

13. 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”

14. 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

15. 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”

16. 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.comwww.spicyip.com For queries etc, email me at