Implication of Trips Agreement In India For Economic Growth and Development

In a democratic country, like India, it is not easy to shift the policy against public interest. India was in the difficult situation of protecting people’s interest on the one hand and fulfilling the WTO’s agreement of TRIPs at the other. A successful patent policy of any developing country is one that strikes a clear balance between protecting the rights of innovators & services at affordable prices to the population. India’s patent policy so long has been, in fact, protecting the interest of public more than that of the monopoly rights. The question is that whether the amendment to the Indian Patents Act, 1970 has taken advantage of the provisions available under the TRIPs agreement, and look at the exemption, exception and compulsory licensing provisions in Pharmaceuticals. Intellectual Property rights have generated strong impact on the modern day life. Therefore, the impact of IPR is enormous and on the modern day life. These IPRs were promoted in an ever seen manner by the TRIPs agreement. The TRIPs agreement has mandated its member’s states to implement the provisions of the agreement in order to promote and protect IPRs. Member’s states are asked to provide protection to different IPRs by making necessary adjustments in their existing laws or enacting new laws. India, being a member state to the TRIPs agreement brought changes in its IPRs laws. The preceding fifteen years have seen many new IPR enactments. With globalization, liberalization and privatization, the ambit of IPR has grown multifold and its importance has amplified, having a profound impact on commercial interests.

The agreement on TRIPs prescribes norms and standards in respect of copy rights, Trade Marks, Industrial Design, Geographical Indications, patents etc. It was the impact of the TRIPs on India that India brought changes in its IPRs laws. The preceding fifteen years have seen many new IPR enactments. With globalization, liberalization and privatization, the ambit of IPR has grown multifold and its importance has amplified, having a profound impact on commercial interests. IPR have generated strong impact on the modern day life. These IPRs were members’ states to implement the provisions of the agreement in order to promote and protect the IPRs. Members’ states have been asked to provide protection to different IPRs by making necessary adjustments in their existing laws or by enacting new laws. In order to fulfill such obligations, member’s states have amended their laws or have brought up new legislations. India being a member state to the TRIPs agreement brought changes in its IP Laws in fulfillment of its obligations under the agreement. The TRIPs agreement brought changes in the existing framework on the IPRs, which had impact on the entire world The TRIPs agreement uniforms and rationalizes all the existing international agreements on different areas of IPRs. It provides for the blue print for the protection of all the different forms of IPRs.

The Copyright Act, 1957 has been amended to include computer program as literary work as required by Article 10 of the TRIPs Agreement. The Trade and Merchandise marks Act was passed in the year 1958. Since then it has been amended several times. Moreover in view of developments in trading and commercial practices, need for simplification and harmonization of trade mark management system, it was necessary to bring out a comprehensive legislation on the subject. Accordingly the Trade marks Act 1999 was passed. The Trade and Merchandise Marks Act, 1958 has been replaced with the Trade Marks Act, 1999 which includes protection of well-known marks, certification marks and collective marks. It now provides for registration of trade mark for services as well. This is in compliance with Article 16 of the TRIPs Agreement.

Changes into the Indian patent laws have been necessitated by India’s accession to the world Trade Organization, as one of the founder members, in January 1995. The Agreement helps India to introduce the changes at three different stages. To satisfy the first set of obligations, the Patent (Amendment) Act, 1999 was enacted after India lost the dispute with USA in WTO. In pursuance of the TRIPs agreement negotiated during the Uruguay Round, the Patent Act ,1970 was first amended in March 1999 to introduce the transitional mailbox facility from 1January 1995 to receive and hold product patent applications in the field of pharmaceutical, agriculture and chemicals until 1 January 2005.The second amendment to the act was made in June 2002 to meet obligations under the TRIPs agreement relating to modifications in the provisions concerning among other issues, term of patent protection, rights of patentee and Compulsory licensing. This included changes in patentable inventions, grant of new rights, extension of the term of protection, provision for reversal of burden of proof in case of process patent infringement and conditions for The Patent (Amendment) Act, 2005 make the Indian patent Act fully compatible. Other recent legislations include the Geographical Indications of Goods (Registration and Protection) Act, 1999, The Designs Act20, 2000 and The Protection of Plant Varieties and Farmers' Rights Act, 2001.

The food sector in the country will also have to face new challenges in the new patent regime. Different processes and products will become patentable. Therefore, there is need to document all the traditional processes as well as products with a view to reduce the number of controversies over claims for patent rights. One of the serious implications of the treaty is that when the industrial countries could strengthen their control over global agriculture by keeping their food security intact, developing countries are called upon to dismantle their food security system.

INDIAN CONSUMERS

Fears have been raised in several quarters, including consumers and industry on the possible impact on them, particularly the pharmaceuticals. Consumer fear the product patent may lead to price hike, making medicines unaffordable to the poor. However, government has clarified that the law is prospective and covers an insignificant percentage of medicines. With the introduction of product patents, the inventor will try to maximize his profits and therefore price of drug higher than if there were no patents. Correspondingly, the consumption of the drug will be lower. This represents an indirect welfare loss to Indian consumers because of higher prices associated with introducing product patents. In addition to this are the direct costs of administrating the patent system and enforcing patentee rights through the courts in case there are infringing disputes24. Thus patented products would be sold at monopolistic prices devoid of any competition resulting in still high price for the consumers.

Many countries of the world, including India, The implementation of TRIPs worldwide represents a step in the opposite direction have achieved self-sufficiency in knowledge intensive sectors by allowing for a loosely defined intellectual property rights (IPR) regime and its impact on the production and innovative capacity of developing countries in knowledge intensive sectors is not at all clear. Taking India as representative of a technologically advanced developing country, and the biotech based segment of the pharmaceutical industry as an example of an emerging knowledge intensive sector, we examine the possible impact of TRIPs on the incentives and ability The strengthening of the IPR regime worldwide as part of the TRIPs agreement might adversely affect the technological activity in the developing countries by choking the spill overs of knowledge from industrialized countries to developing countries. The provision of product patent on many industrial products might affect adversely the process of innovative activities in the developing countries enterprises. It is true that the development of many products is beyond the capability of most developing countries in view of huge resources involved. The TRIPs agreement was born to protect the interests of the industry, trade and services. Whereas the higher standard of protection is relatively advantageous for the developed economies which are ahead of the developing countries in terms of innovations and research and development among developing countries it is less advantageous for those where the domestic industry is not very strong to invest in R and D to pursue new product development or process development skills. The increase in the period of the patent protection and a stricter enforcement of patenting rules and regulations would increase the cost of technology acquisition for Indian industry. Impact of TRIPs on Indian Pharmaceutical Sector The most adverse impact of the TRIPs Agreement is going to be on the health sector of the developing countries. The role of patent in maintaining monopoly and restrictive practices in Pharmaceutical industries was identified by the UN Agency like UNCTAD in the 70’s itself. It was this realisation which prompted the developed and developing countries to deny or limit Pharmaceutical patents till recently. India is a glaring example in this regard. After denying product patent under the 1970 Act, the Indian domestic Pharmaceutical industry became an export surplus industry. The 40000 crore domestic industry fears that increased competition, import surges and MNCs would lead to a non-level playing field. So far, the pharmaceutical industry was covered only by process patent, which allowed them to reverse engineer drugs and market them at very low prices. Now with a product patent in place this will no longer be possible. The post Patent Regime opens up vast opportunities for Indian pharmaceutical firms. India will emerge as a leading country in the world pharmaceutical market. Presently, many Indian companies have begun international operations as well as acquisitions which will make a significant contribution to their turn over. Export will be the major thrust of the industry, in the post Product Patent regime.

IMPLICATIONS FOR DRUGS PRICES

A strong Patent system under TRIPs will establish a sort of monopoly. Drugs prices in India are very low when compared to A product patent of 20 years in medicines under the TRIPs Agreement will give rise to

consumers in developing countries like India, the countries where product patent is recognized. The fear that prices of medicines will spiral is unfounded.97% of all drugs manufactured in India are off patent, and so will remain unaffected these cover all the life savings drugs, as well as medicines of daily use for common ailments. In the patented drug also, in most cases there always alternatives available

In addition to high prices, the lack of availability of essential drugs will be affected. The TRIPs Agreement does not require a patentee lo manufacture an invention in India. Under TRIPs, patents be shall available and patents rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced. Before enactment of the Patents Act, 1970, the Colonial patents and Designs Act, 1911 permitted foreign countries to block India’s access to the latest antibiotics and to critical therapeutic discoveries. Between 1947-1957, 90% of drugs and pharmaceutical patents in India were held by foreign citizen and les then 1% were commercially exploited in India. The three amendments to the Indian Patents Act were made alongside intense debates which emphasized that with the rights of the patent holders strengthened under TRIPs, there is an urgent need to balance this situation with more effective instruments so as to ensure that the public interest issues, as for example, access to medicines at affordable prices are also addressed. The global community took a major step towards bringing about a balance through the 2001 Doha Declaration on TRIPs Agreement and Public Health. While the third amendment of the Indian Patents Act takes steps to address some of the more difficult issues in TRIPs, there remains a need to revisit the key provisions of the Patents Act keeping in view the imperatives of access to medicines.

In the field of R&D, with no Indian pharmaceutical company being equipped to take a potential drug from the investigational stage to the stage of final market launch, collaboration with multinational corporations is the norm, resulting in biases in the choice of therapeutic areas towards lifestyle-related diseases34, like malaria or TB etc. These diseases kill millions of people each year in developing countries like India. The medicines used today were invented about 30 years ago. The change in patent laws may encourage many firms in India to undertake more research for inventing more drugs rather than continuing to those drugs once invented by developed countries in the past. Indian industry has never seriously considered in provide technologies for new products and processes. However in the changed environment, the benefits that would accrue to companies that invest in R& D capabilities would be quite substantial. Strong patent protection would enable Indian firms to exploit not just but global market as well. The development of new drugs is an extremely expensive exercise since the entire cost of developing a new drug and bringing it into the market has to be borne by the firm developing it. It is estimated that it takes twelve years and about 200 to 300 million dollars for a US firm to develop a new drug and introduce it into the market. Process research would be severely affected as there would be no immediate use of process technologies for the new drugs in the product patent regime. Research and development expenditure as percentage of pharmaceutical sales is as low as 1.8% in India when compared to USA where it is 16%. India companies neither have adequate funds nor infrastructure to conduct basic research. The majority of patent filing is from residents of industrialized countries and there is strong relationship between the volume of patent filings and level of GDP and investment in research and development. China, Japan and U.S.A. are the top three ranked countries in terms of GDP and R& D. In 2007, aboub 59.2% of world patent filing are filed in these three countries38. Indian Pharmaceutical sector has moved into post-product patent regime, putting end to the long era of launching and manufacturing re-engineered generic drugs in India. The transitional period to reintroduce product patent regime has elapsed but the transitional period for transformation of domestic Pharmaceutical industry to face the challenges in post-product patent regime is still underway, it fails to protect the public from the aggressive monopolies that patents confer on the right holders. Thus the implication of the TRIPs Agreement for the Indian Pharmaceutical industry is going to be enormous. The TRIPs Agreement will affect drug prices, their availability, and competition. Research and Development are very existence of the Pharmaceutical industry in India. The ultimate result would be higher prices for the consumers in India. Drugs and medicines are essential products which should be made available at affordable prices, especially in a poor and developing country like India, where as it is, decent health care is out of reach of majority of population. A uniform patent protection in vital sector like Pharmaceuticals as applied in developed and industrialized countries with a very high level of economic development will have enormous economic and social costs in countries like India and will further aggravate the suffering of the people. Once the country accepts patenting products, administering prices through the existing government long clinical trials cannot be effectively countered.

• Aini Swati India & WTO-II ,Civil Services Chronicle, September. 2005 P.26

• Myneni, S. R., World Trade Organization,, Asia Law House,p.71

• Indian Patent Act, 1970 was amended in 1999,2002 and 2005.

• Cherunilam Francis , International Business-Text and Cases, Prentice Hall India p.207

• Chaudhuri Sudip, TRIPS Agreement and Amendment of Patents Act in India, EPW VOL 37 No. 32 Aug 10-16, 2002

• Lahoti R.C., Justice , Role of Judiciary in Intellectual property development and adjudication, (2004) 8 SCC (J)

• Sreenivasulu N.S., Impact of TRIPs on Intellectual property laws In India: A post TRIPs scenario, regal Publication,p.237

 Bhatnagar M.P., Country report: TRIPs implementation in India, Intellectual property Rights, ILI publication