Emerging Trends in IP

Intellectual Property has seen numerous modifications. Different Intellectual Properties have come about to exist, which some would say is the impact of IP Maximalism and some would regard them as a matter of necessity of changing times, which reminds me of Victor Hugo, he spoke in a speech and I quote, “no power on earth can stop an idea whose time has come.” This is very well the era of IP evolution. Where software is expressly ousted from patent protection, CRIs come to their rescue. New types of intellectual property rights are on the rise, for example, Data Exclusivity, Orphan Drug Exclusivity, Standard Essential Patents, etc. India lags behind in several of these emerging trends, partly because of the lack of legislature in several issues and partly because of its mixed priorities. The legal framework needs to substantiate these issues more coherently while maintaining India’s pro-public-benefit approach towards IP.

Invention in software

While identifying what kind of protection is to be granted to an IP, one needs to identify what is the “intellectual” in that property, is it an invention or a literary work? Software i.e. computer programme has found its mode of protection in the Indian Copyright Act, 1957. S. 2(ffc) defines a computer programme as “a set of instructions expressed in words, codes, schemes or in any other form, including a machine-readable medium, capable of causing a computer to perform a particular task or achieve a particular result”. These areas such included in “literary work” defined in S.2 (o) of the Act, “literary work includes computer programmes, tables, and compilations including computer literary databases.”

On the other hand, the Indian Patents Act, 1970 expressly excludes computer programmes from the ambit of patentable subject- matter, vis-a-vis including it in Section 3 what are not inventions, S. 3 (k) a mathematical or business method or a computer programs per se or algorithms; and S.3 (m) a mere scheme or rule or method of performing mental act or method of playing the game; expressly excludes computer programs from the patentable subject matter.

However, the Patent Office prescribes guidelines to outline various regulations and explanations regarding the patentability of computer-related inventions (CRIs), last updated on 30 June 2017.

The legislative intent to attach the suffix per se to a computer programme is evident by the following view expressed by the Joint Parliamentary Committee while introducing the Patents (Amendment) Act, 2002:

“In the new proposed clause (k) the words “per se” have been inserted. This change has been proposed because sometimes the computer programme may include certain other things, ancillary thereto or development thereon. The intention herein not to reject them for the grant of the patent if they are inventions. However, computer programmes as such are not intended to be granted patent. This amendment has been proposed to clarify the purpose”.

Example:

1. In re Accenture Global Service GMBH Vs. The Assistant Controller Of Patents & Designs relates to Indian patent application number 1398/DELNP/2003, which is now a granted patent as patent number 256171, whose present legal status at the patent office database is, “Enforce with Due date of next renewal as 21/02/2017”. This patent application was initially refused for patent registration by the patent office under the provisions of Section 3(k) of the Indian patents act.

However, the patent applicant appealed before the IPAB and as per the Controller’s decision, it was held that the instant invention as claimed is not software per se but, a system is claimed which is having the improvement in web services and software. Accordingly, it was held that the invention since not falling in the category of section 3(k), viz software per se, the corresponding objection was waived and the patent was granted.

2. Nissan Motor filed a series of patent applications in 2017 with respect to the computer software inter alia a travel control device and method for a vehicle comprising: a target acquisition means for acquiring target information which includes the location of an avoidance target that exists near a vehicle, a vehicle information acquisition function for acquiring information which includes the location of a vehicle, and drive assist device which is a driving assistance device for assisting driving when a host vehicle is changing lanes wherein the device is provided with; a position measurement means for measuring the position of the host vehicle; a detection means provided to the host vehicle the detection means detecting the conditions around the host vehicle; a database for recording map information.

The aforementioned claims of Nissan Motor are claims concerning Computer Related Inventions (CRIs) which means to perform the function as mentioned above and hence are termed as means + functions defined in the Guidelines for Examination of Computer Related Inventions.

In light of the guidelines published by the Indian patent office for the examination of software patents or computer-related inventions (CRIs), software patents can be applied in India by way of a combination of hardware and software features, which are novel, inventive, and possess industrial applications. It may be categorized as Hardware-based inventions: apparatus/ system/ device, Method/process-based, Computer program product/ computer-readable medium. Unless the software is a computer program per se, it may be granted a patent in India, and hence Nissan stands a fair chance to be granted the aforementioned patents. However, in the case of any conflict between The Indian patents Act and the said Guidelines, the Act is to prevail and for such instances, it is essential to have rules with the effect of laws incorporating CRIs in the patentable subject matter.

On the same lines, the European Patent Convention expressly excludes computer programs, per se, from the purview of the patentable subject matter.

Whereas in the USA, there is no specific exclusion of software or business methods from the patentable subject matter. The law states that the subject matter, to be patentable, must be a useful process, machine, manufacture, or composition of matter. According to the US Supreme Court, Congress intended the statutory patentable subject matter to include “anything under the sun made by man,” but the laws of nature, natural phenomena, and abstract ideas are three specific areas that are not patentable.

Emerging new IPs

SEPs and FRAND Licensing

A patent that protects technology essential to a standard is called a standard-essential patent. A standard is a document that sets out requirements for a specific item, material, component, system or service, or describes in detail a particular method or procedure. For example, a modern laptop computer implements around 251 interoperability standards.

The concept of SEPs evolved in India when Ericson in 2011 objected to the importation of handsets by Kingtech Electronics (India), claiming that the handsets infringed several of their SEPs in AMR Codec (Adaptive Multi-Rate) technology. The Indian Patents Act, 1970 does not contain any special provisions for SEPs. Although the same has been recognized by the jurisprudence, SEP is defined as “…for a technology that forms a part of a standard, the patent is regarded as an essential patent for such standard. An essential patent can be said to be a patent that corresponds to an industry standard. The same standard is mutually agreed by various service providers, equipment manufacturers, etc to be mandatorily implemented for a particular technology (such standards are recognized and implemented by the concerned government authority as well). It is meant to ensure that complete compatibility is achieved. It is impossible to claim compatibility with technology (as defined by the concerned standards) without actually infringing the specific patent (and hence the requirement to obtain a license).

Following cases in India,

1. Ericsson and Micromax case,
2. Ericsson and Intex case
3. Ericsson and Best It World (India)
4. Ericsson and Xiaomi Technology
5. Ericsson and Lava International Private Limited
6. Telefonaktiebolaget lm Ericsson (publ) v.Competition Commission of India and another,

have established clearly that the necessary steps to be taken by any company/ legal entity, intending to incorporate any technology in its product that is standardized by any SSO (Standard Setting Organisation). It has to,

1.Incorporate the patent which is essential to obtain that standard.

2. To enable themselves of the use of the aforesaid patent, without infringing it, they require obtaining a license from the holder of the aforesaid patent.
However, such a situation can have an obvious monopolistic outcome in the hands of the patent holder, and to curb such a situation before-hand, the patent holder has its commitments as a member of the SSOs, these commitments are known as FRAND commitments. Whereas the question remains as to what are the clear boundaries of fair, reasonable, and non-discriminatory license terms, is to be determined by the consensus reached by the parties, and if the parties are unable to reach such consensus, they may appoint a mediator for the purpose, and yet if the party seeking the license considers the license terms to be abusive of the dominant powers of the patentee, the CCI holds proper jurisdiction to inquire and investigate into the same.

Data Exclusivity

Data Exclusivity is a TRIPs Plus element that is much debated in India. It arises from the interpretation of Article 39 of the TRIPs agreement, “Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. In addition, Members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use, wherein the big Pharmaceuticals and countries like the USA interpret, “protection against unfair commercial use” to obviously mean, “protection of clinical data required to be submitted to a regulatory agency to prove safety and efficacy of a new drug, and prevention of generic drug manufacturers from relying on this data in their own applications.” USTR (United States Trade Representative) has been negotiating bilateral agreements enforcing the said interpretation of TRIPs, which is beyond the actual agreement and is thus referred to as a TRIPs Plus clause, with India. The Drugs and Cosmetics Act, 1940 provides for data exclusivity for a “new drug” under section122E for a total period of 4 years from the date of approval. There were considerations in November 2016 that this period of four years to be increased to ten years. Such exclusivity is itself protection and does not depend upon the validity of the patent associated with the same drug, so even if the patent associated with the drug stands invalidated, the exclusivity stands unaffected and the drug remains out of the reach of the generic producers. There is no evidence that the four years of protection, already provided, was insufficient, and neither is there any protocol necessitating India to increase the said period. Such provision would delay market access of drugs at reasonable prices to the common people. Although, the USA itself provides for 7 years of data exclusivity the economic and developmental status of India, would suffer from such an amendment to the section.

Orphan Drug Exclusivity

An orphan drug is a pharmaceutical agent that has been developed specifically to treat a rare medical condition. India currently has no regulations for orphan drug manufacturing or selling. Treating rare or orphan diseases is important to India but very costly, which increases the patient burden. In India, 72,611,605 people are suffering from rare diseases, and 6,000–8,000 rare diseases can be found, including Leishmaniasis, Norrie disease, Arthrogryposis, Cystic Fibrosis, Wilson Disease, etc., many of which still do not have any cure and are mostly genetic in nature.

Many countries have different definitions and regulations of orphan drugs,

USA under its The Orphan Drugs Act (ODA) is a federal law concerning rare diseases that affect fewer than 200,000 people or are of low prevalence, or affects more than 200,000 in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for such disease or condition will be recovered from sales in the United States of such drug. Determinations under the preceding sentence with respect to any drug shall be made on the basis of the facts and circumstances as of the date the request for designation of the drug under this subsection is made.

According to the Orphan Drug Regulation in Europe, an orphan disease is a disease or disorder that affects fewer than 5 in 10,000 citizens.

In Australia, rare diseases are defined as a condition, syndrome, or disorder that affects 1 in 10,000 people or less (The Australian Therapeutic Goods Authority).

The lack of regulation in India increases the burden on the patients but also negatively impacts the economic success of India’s pharmaceutical industry. Orphan drugs may help pharmaceutical companies reduce the impact of revenue loss by patent expiration of blockbuster drugs. Although there may still be challenges ahead for the industry, orphan drugs seem to offer the key to recovery and stability within the market. Governments of various countries have proactively implemented special incentives for the manufacturers of orphan drugs. For example, regulations include accelerated marketing procedures, marketing exclusivity, tax credit grants for research, reconsideration of applications for orphan designation, and technical assistance for the elaboration of the application file.

Intellectual Property Rights came into existence with the primary objective of promoting the progress of science. Patents are the rights that grant exclusivity to the patent holders, where they can exclude others from exploiting their invention which they have spent their R&D upon. This creates a monopoly in the hand of the right holder; this monopoly was intended to serve as an incentive for creation.
What we can observe with the emerging trend of IP is that the protection is shifting its focus from promoting innovation in every field to reserving exclusivity. Pharmaceuticals have been trying to evergreen their patents on blockbuster drugs by merely changing the form of the drug, which when restricted by the Indian Courts by the mandate of S.3(d) of the Indian Patents Act, the validity of which section was found to be challenged in the Supreme Court. The Supreme Court held the section to be constitutionally valid, thereby striking down Bayer’s contentions, leading to many disappointed Pharmaceutical Companies. Data exclusivity is yet another tool aiming at the same monopolistic outcome, protecting the clinical data of any “new drug” for an absurd period of time. A “new drug” is not defined as a patented drug but simply a drug that has not been used in the country to any significant extent under the Drugs and the Cosmetics Act.

In re Ericsson v. CCI, it was alleged that Ericsson had added a covenant subjecting all disputes relating to matters under their FRAND license to the jurisdiction of Swedish Courts, thereby causing unnecessary costs for Indian mobile phone companies. There are no specific guidelines as to what is fair, reasonable, and non- discriminatory, due to which big fishes in the market construe the terms in their own brackets of convenience. Considering the economic condition of the Indian market, such licensing terms can lead to the winding up of small and medium enterprises which are to be further evaluated by the Competition Commission of India.

This prevailing trend is untimely exclusivity masked in the disguise of evolution. However, exclusivity is an innate part of evolution, provided, used in the solution of overlooked issues such as orphan care drugs. Exclusivity is indeed very appealing for pharmaceutical companies to invest their R&D in the production of orphan drugs. It curbs their fear of negative commerce which appears to be an obvious result of producing any product with low commercial demand. With regulations such as a fixed exclusivity period over their drug and royalty standards, a profit margin can be achieved in addition to the recovery of production costs in the aforesaid duration. The shifting trend towards exclusivity can positively shape the Indian IP regime if given the right direction.

About the Author: Namisha Jain, ILS law college, Intern at Khurana and Khurana Advocates and IP Attorneys and can be reached at [email protected]