People's Democracy

Patent Wars And The Indian Scenario

Prabir Purkayastha

THE past few months have been quite important for developments in the patents front. Most of the action has come from the US, with the US Supreme Court giving two important judgements on the scope and reach of patents. On the software front, Microsoft has started what was on the cards for quite some time –– a threat of patents war. It has claimed that the Free and Open Source Software (FOSS) community has breached 235 of its patents, a claim that Fortune magazine called as Microsoft’s declaration of war against the Free World! All in all, it shows that the patents regime is changing even in the US, which had hitherto considered almost everything as patentable, even Yoga asanas. Obviously, the crisis of the patents system, which we have been talking about for some time, is now beginning to catch up even in the homeland of global capital.

This brings us to the second issue we need to address. The now discredited Mashelkar Committee’s report talked about incremental versus breakthrough innovations and also on what is not TRIPS compliant in terms of patentability. In this, they provided little argument or evidence to substantiate their belief that making only New Chemical Entities patentable would not be TRIPS compliant. The recent US Supreme Court judgement focuses its attention on when does incremental innovation becomes patentable and shows that Masheklar Committee did not apply its mind on the issue.

US SUPREME COURT VERDICTS

Let us take the US Supreme Court judgements first. One was on the global reach of US patents. The US Supreme Court has rightly held that US patent regime does not extend beyond the US. This was the Microsoft Vs AT&T case, in which AT&T had sued Microsoft for violating its US patents while shipping software to other countries. The second is KSR vs Teleflex case and involved whether combining two elements – in this case a gas pedal and an electronic sensor – passes the test of non-obviousness. The Supreme Court ruled that combining two elements, which are independent innovations, if obvious to a skilled practitioner of the art, couldn’t be patented. In this, they overturned the judgement of the Court of Appeals for the Federal Circuit (CAFC), the specialised Federal Court Bench that oversees all patent case appeals in the US. The CFAC had set up some tests of non-obviousness, in which it was not enough to show that the patent claim was obvious, but it had also to be shown in writing that people had suggested or taught about it earlier. The US Supreme Court held that this test should not be followed rigidly, but should be flexible enough to take into account common sense.

This brings us to an important issue. The US system of patents did not change over the years by changing its patents law. The three major changes that came about in the patenting system in the US – patenting life forms, software and business methods – all came from the way either the law was interpreted by courts or the way law was administered by the US patents office. This also shows that in India too, the threat of patenting everything could come not from the law in which we have now introduced various limitations, but the patents office and from courts interpreting the law. And lest we think that this is not an immediate threat, let me share what a project done by some of our colleagues has accidentally uncovered. The Indian Patents Office has granted a patent for “a broom” or the lowly jhadoo! From the claims, it does nothing more than any other jhadoo does. It appears that if we are not careful, the Indian Patents Office, now being trained by experts from the European Patents office and elsewhere, will give us a “world class patents system” in which we will have the same problems that now exist in the developed world.

In the developed countries, the belief that having lost their manufacturing base, they need to protect their economic interests by strengthening Intellectual Property Rights has made the patents system there dysfunctional. The scope of patenting was increased by allowing software and life form patents; even methods of doing business are now patentable. This has resulted in a rush to patent any and everything under the sun, and a spate of law suits. For bigger companies, the threat has been less. Each have a patent pool and this can be used to negotiate a mutual truce of not suing each other. These are called cross-licensing agreements. The smaller companies, threatened by big companies quite often pay up even if they know the claim is bogus. The cost of going to war with big guys with deep pockets effectively allows an extortion racket to be played by those with large patent holdings.

SOFTWARE PATENTS

The software patents in the US started when a patent, in which software was used in conjunction with hardware to vulcanise rubber. This 1982 decision of the US Supreme Court was broadened in the 90s to allow stand-alone software also to be patented and subsequently included business method patenting also.

Unlike other areas, software patents not only has the problem of creating a monopoly, but also the completely uncertain nature of the monopoly. The patent system arose from allowing inventors a limited time monopoly in lieu of public disclosure. The invention was supposed to be an artefact and the patent offices initially required models of the invention to be submitted along with the written description. Patents were therefore for ideas converted to tangible form. Software patents, unlike other areas, are patents for ideas without a tangible form. The code is not what is patented but the idea behind the code. Going though any software patents makes clear the difficulty in understanding what is being claimed – neither the nature nor the extent of the claim can be defined concretely when it comes to ideas.

The key argument against software patents has been that it is equivalent to patenting algorithms. A computer program is nothing but a sequence of instructions to a machine. This sequence of instructions is therefore an algorithm for solving specific problems. As laws of nature and algorithms cannot be patented, therefore software – unless it is specifically embodied in hardware and is only a component of a larger invention – cannot be patented. This is the position in law in most countries including the US. Unfortunately, the US Federal Court effectively de-railed the patent regime by allowing software patents, even without any hardware.

Initially, the software companies were quite happy with the changed patents regime. The older players like IBM had a large body of patents that it could and did exploit. The system of big players living ever happily after in an oligopoly, the rule of the few, could have continued in this way. There were many reasons why this scenario changed. The most significant was the birth of the Free Software Movement, which showed that good quality software could emerge by people working together in a collaborative way without claiming special proprietary rights. In fact, the GPL license was explicitly designed in a way that nobody could privatise what the software community was jointly creating. With the power of Microsoft growing, increasingly other software companies found the answer to Microsoft’s portfolio not in products within their fold but in the Gnu/Linux community. It was no longer possible to fight the Microsoft behemoth without taking the support of the Free and Open Source Software (FOSS) community. Today, all the major companies in the world have Gnu/Linux powering their business in some way, either in their Internet servers or in the data centres. Even if the desktop market has remained largely with Microsoft, the server market has been largely taken over by Gnu/Linux. This meant that if Microsoft declares war on Gnu/Linux, they also would need to attack the most powerful companies in the world. This is why their declaration of war claiming that 235 of their patents are being violated by the FOSS community has not gone down well in the business world. It is no longer a war against just the FOSS community. The collateral damage will engulf the rest of the world too. That is why Fortune, generally a mouthpiece of big business, was so unsympathetic to Microsoft’s claims. The bigger gain from all this is the general realisation in software companies that they need to move away from software patents and their willingness to work together with the free software community for these objectives.

INDIAN SITUATION

Let us get back to India. As far as software patents are concerned, we are as well protected in law as much as currently TRIPS allows. Software per se cannot be patented and we have explicit provisions against patenting of algorithms and business methods. Certainly, we have a strong position in law for preventing software patents. However, the patent office has also to accept that this is the position in law and not grant such patents. There was a small window of time, in which software patents could have been considered valid – that between the Patent Amendment Ordinance allowing some forms of software patents and passing of the amendments in parliament, when this clause was modified. A number of software patents were filed before and during this window. The patents office should now reject all such applications. A number of companies have continued to file business method and software patents in spite of an adverse position in law. The patent office must reject all such patents. We should also keep an oversight of all such cases so that software patenting does not arrive from the backdoor, particularly when it is fading out elsewhere!

The other issue is Mashelkar’s claim regarding incremental innovation versus breakthrough innovation, and how it is in India’s national interest to have incremental innovation to be patentable, not only breakthrough innovations. It is in this light the argument of not restricting patentability to just New Chemical Entities but also to others was presented. We have already argued that Mashelkar’s brief was to only examine whether restricting patents in pharmaceuticals to New Chemical Entities would violate TRIPs. Instead of examining this question, he took up the question of what is in India’s national interest, which was not within his scope.

However, let us take up the Mashelkar’s argument regarding incremental innovation versus breakthrough innovation. The Patents Act defines what is innovation that is patentable. In this, any incremental innovation that meets the criteria of non-obviousness, novelty and usefulness can be patented. Whether this makes the innovation ‘breakthrough innovation’ or an ‘incremental innovation’ is not a matter of law but of its significance in the field. If we take Mashelkar’s argument seriously, what Mashelkar seems to be saying is that Indian companies are incapable of making major innovations and therefore the bar of what is patentable should be lowered. Whether his judgement on Indian companies is right or not is not the point at issue. The consequence of lowering the bar of patenting would mean a virtual floodgate of trivial patents and considerably strengthen the monopoly position of capital against the consumers.

The argument for not allowing chemical entities that are not new does not flow from the non-obviousness provision of the Patents Act. The Patents Act defines the degree of innovation that would be required to qualify to be a patent. The US Supreme Court now agrees that giving patent protection to ordinary progress – incremental innovation in Meshelkar’s words – retards progress. However, in the chemical world, we could limit patentability to only New Chemical Entities (NCE’s) on the basis not of obviousness but of novelty. Patent laws world over make specific provisions for specific areas. The biotechnology area has seen internationally such provisions. It is therefore permissible for India to declare that only NCE’s would pass the test of novelty.

REVIEW TRIPS

Would this be TRIP compatible? TRIPS allows different countries to set up different patentability criteria. It also allows differences such as whether the patent should be considered on ‘first to file’ basis or ‘first to discover’ basis. TRIPs is not a “harmonisation” of Patents Laws. It only prescribes certain elements that must be incorporated in all patent laws. This pertains to granting of product patents, no discrimination between domestic and foreign companies, no discrimination between different sectors and a common duration of the patents. As chemicals entities are specific only to pharmaceuticals and agro-chemicals, etc., it is possible to introduce area specific criteria such as New Chemical Entity for defining patentability. This would not violate discrimination between sector clause of TRIPs.

Of course, the global MNCs would cry foul and so would their parent governments. This would also help in taking up the matter of TRIPs review. It is now obvious that AIDS, malaria, TB are major killers in the developing countries. The economic consequence of a patent regime that helps drug MNCs at the expense of the people cannot be allowed to continue. The developed countries today give as aid and charity, money which ultimately subsidises the global pharma companies. Billions of dollars given for AIDS treatment sources medicines from global pharma companies at 50-100 times the price of its actual cost of production. This is a rip-off not only of the poor in developing countries but also of the tax payers in the rich countries.

This is what the government needs to put in its agenda. The current patent regime has yet not caught up with us as we have the window that if the drugs were discovered before 1995, they cannot be patented here. This position is going to change soon, as newer pharma entities would now be patented as they were discovered after 1995. What are we going to do when diseases resistant to non-patented drugs make their appearance? If we want to protect the health of the people, we need to take up on a multiple front the challenge of TRIPs and the patent regime. One is to seek review of TRIPS, specifically on public heath issues. The second is to tighten up the patent provision in pharmaceuticals, agro-chemicals and food even further. The third is to prepare for compulsory licensing in those areas where the disease load is significant, posing a public health danger. It is time that the Indian government views the world from the lens of the people and not through those provided by pharmaceutical companies.