“THE PHARMACEUTICAL INDUSTRY AND

PATENT SYSTEM”

Thesis submitted in partial fulfillment of the requirement for the Degree

of D.I.P.R

To
Prof Sapna Deo
D I P R.

By
ANUP.S.BALTE
D.I.P.R.

[2008-2009]

BHARATI VIDYAPEETH DEEMED UNIVERSITY PUNE

New Law College

PUNE
411038

CERTIFICATE
 This is to certify that the work incorporated in the thesis “The
pharmaceutical industry and the patent system” Submitted by
Mr. Anup S. Balte satisfactorily carried out under my guidance.

Principle Project Guide

Dr.Mukund Sarda. Mrs. Sapna Deo.

Date:

Pune

Acknowledgment

With profound sentiment of gratitude, I acknowledge the guidance,

suggestions & encouragement given by principal Dr.Mukund Sarda,
Project guide Mrs. Sapna Deo, which enabled me to complete my thesis
successfully.
I am thankful to all faculty members of New Law College for
guidance and imparting relevant knowledge with regards to the topic,
I am also thankful to my parents and friends for their constant
support & encouragement.

Anup S. Balte

Certificate
Acknowledgement
Contents
Preface
Index
1. what is patent
2. characteristics of Invention
3. Institutes for administering the patent system.
4. Salient features of The Patents Act.
5. Patenting in India.
 6. Invention which are patentable
7. Procedure For Patent Application.
8. Condition for patent application.
9. Specifications and cliams.
10.Patent works diffrentily in diffrent industries.
11.Patents and research and development in developing countries.
12. Problems of Pharmacutical patents.
13.Inadequate patent protection discourages the development.
14.Pharmaceutical sector.docx
15. R & D cost.
16.Trips and Indian Patents
17.Promising development.
Biblography

Preface
Patents are exclusive property rights in intangible creations of the
human mind. They exist only as provided in the laws of sovereign states, and
can be enforced only to the extent that application has been made and a patent
granted covering the territory of an individual state. Patent rights are limited
in duration, with the global standard being 20 years from the date of
application. The new product, article of manufacture or process described in
the patent application must be something that has never been previously
disclosed anywhere in the world and something that would not be obvious to
a person ordinarily skilled in the field involved. Determinations of whether
these requirements have been met are made by comparing the claims of the
patent applicant against the body of published literature in the field, including
previously issued patents. This process is called examination, and it assures
that no one is able to claim patent rights on anything that already is
existence.

Patents work differently indifferent industries. In the electronic

industry patents are often shared among competitors through pooling or cross
licensing. This sharing is necessary because a given product often contains
many patented technologies. However, in the pharmaceutical, chemical and
biotechnology industries the patent normally equals the product, and protects
the extensive investment in research and clinical testing required before
placing it on the market. Patent protection for chemical and pharmaceutical
products is especially important compared with other industries because the
actual manufacturing process is often easy to replicate and can be copied with a
fraction of the investment of that required for the research and clinical
testing.

The extensive cost required to produce a new pharmaceutical product

has meant that private sector investment in pharmaceutical innovation has
been disproportionately directed to products meeting the needs of patients in
developed countries, particularly in the United States, which combines strong
patent protection with a market free of price controls.

Until the TRIPS Agreement in 1994 many developing countries

provided no patent protection for pharmaceutical products. And, while
countries that have joined the WTO have obligated themselves to provide
such protection, least developed countries are not required to meet this
obligation until 2016. The continuing lack of patent protection for
pharmaceutical products makes it very difficult to establish research-based
industries in most developing countries. Most medical research in these
countries takes place in the public sector. The lack of any means of patenting
these inventions and the related lack of experience in licensing them to the
private sector, suppresses the development of commercial enterprises
focused on alleviating the disease burdens common to developing countries.

The controversy over availability of patented therapies for the

treatment of HIV disease has resulted renewed interest in the compulsory
licensing of pharmaceutical products. After two years of discussion, the WTO
Council recently affirmed that the TRIPS Agreement permits such
compulsory licenses in health emergencies, even in cases where the
compulsory license is for an imported product. However, to date, no
compulsory licenses actually have been issued, even though the threat of
compulsory licensing has been used as a means of seeking lower prices.

One danger in compulsory licensing is that it will discourage further

the commercial R & D necessary to new drugs to fight global epidemics.
Another danger is that compulsory licensing can be used to seek price levels
below what a given national market is capable of supporting, further
concentrating the burden of financing pharmaceutical innovation on
developed country consumers and discouraging development of drugs
targeted at the disease burdens of countries using compulsory licenses.
There are promising developments in countries such as India and
Brazil that are beginning to use patents to develop commercial
pharmaceutical industries that produce products directed at local diseases and
available at price that patients in those countries can afford. Foundations and
nonprofit organizations such as the One World Health, Inc. are supporting
such efforts. These efforts show that developing countries have the capacity
to build research-intensive pharmaceutical industries capable of operating
profitably in the conditions of the local market. However, for such local
industries to take root and grow, effective patent protection must be made
available, the commercialization of publicly funded research must be
encouraged, and compulsory licensing must be kept to a minimum.
Wealthy countries can assist this process by subsidizing local markets for
the purchase of drugs through the Global Fund. Consumers in all countries
can share the burden of drug development equitably by paying for medicine at
a price level consistent with their means, rather than attempting to shift the
costs of drug development to others.
What is a Patent?

A patent is a property right granted by a sovereign state to the inventor

of a novel, non-obvious and useful invention. Because the invention must be
novel (meaning that it has not been previously disclosed anywhere in the
world) and because it cannot be obvious to one ordinarily skilled in the art,
the grant of the property right cannot interfere with the public’s access to
what already exists.

The owner of a patent has the right to exclude others from making,
using, offering for sale, or selling his or her invention for a period of 20 years
from the filing of the patent application. An invention is any new or useful
process, machine, article of manufacture, or composition of matter. An
improvement on any of these items also can be an invention. Patent
rights are territorial in nature and exist only in the national jurisdictions in
which the patentee has applied for and received recognition of his property
rights.

Whether a claimed invention meets the tests of novelty and non-

obviousness is determined by comparing it to the body of previously disclosed
information in the same field. This information is usually called “prior art.”
The most commonly used prior art consists of published patents that have
already been issued or published by the world’s patent offices.
 While all countries require that the tests of novelty and non-
obviousness be met before patent rights can be enforced against infringers,
many countries do not determine whether these tests have been met though a
substantive examination as in the United States, Japan, the U.K. and
Germany. In counties, such as France, claims to patent rights are registered
with the state but not actually tested for their validity until or unless they are
asserted in a judicial proceeding. At that time the responsible judicial
authorities engage in the fact-finding process necessary to determine whether
the tests of patentability have been met.

The benefit of granting an inventor the exclusive property right of a

patent for the limited period of 20 years is that he or she is given a powerful
incentive to create. The inventor is assured that investors will be given the
incentive to commit the financial resources necessary to support the
inventor’s research and to develop it to the point where it can be manufactured
and made available to the market.
Any invention must have following characteristics

It should be novel

It should be a product of inventive activity

Should have utility

Should be related to a process or manufacturing method

It should not be contrary to the provisions of the law of the country

The Global Institutions Responsible for Administering

The Patent System

National Patent Offices

Every country with a patent system has a national patent office where
claims of inventors may be made a matter of public record. As mentioned
above, in many countries there is an examination before an inventor is
given any substantive rights. In other countries patent claims are registered
but detailed examination is delayed until a dispute over infringement arises.
However, even in these countries a search of the prior art is often conducted as
a part of the registration process, and the search results are published so that
members of the public can assess the claims made by the registrant.

The World Intellectual Property Organization (WIPO)

Headquartered in Geneva, WIPO is the specialized United Nations
Agency that serves as the secretariat for administration of most of the global
intellectual property treaties. It is the principal forum for negotiation of new
patent treaties and the leading provider of technical assistance to developing
countries in the field of intellectual property rights. WIPO was created in
1967 as the successor organization to the International Bureau for the
Protection of Intellectual Property, which had been in existence since the
19th Century. WIPO Currently has 179 member states.

The World Trade Organization (WTO)

The World Trade Organization was established in 1994 in Marrakech
following the successful conclusion of the Uruguay Round of Trade
Negotiations. The predecessor to the WTO was the General Agreement on
Tariffs and Trade (GATT). A key reform of the Uruguay Round was the
Agreement on Trade Related Aspects of Intellectual Property Rights, known
as TRIPS, codified as an annex to the treaty establishing the WTO.
It is important to recognize that the TRIPS Agreement was intended to create
a more equitable system of international trade. Wealthy countries agreed to
reduce barriers to imports of price competitive imports from abroad while
developing countries agreed to open their markets to the high value added
exports of the developed nations. These high value added exports
disproportionately consist of technology in which much of the value is
intangible and must be protected by strong intellectual property regimes to
be effectively exploited. Pharmaceutical products constitute one of the most
important categories of high technology products.

Among the major requirements of the TRIPS agreement are the following:
• WTO Member States must provide a level of rights equal to those
provided in the major global intellectual property treaties administered
by WIPO, including the Paris Convention on Industrial Property.

• WTO member states may not discriminate among technologies in

providing patent protection, meaning that exceptions to patent
protection in many countries for pharmaceutical products must be
eliminated.

• WTO member states must provide patent protection for at least 20 years
from the date of filing a patent application

• WTO Member States must provide effective judicial enforcement of

intellectual property rights.

• A TRIPS Council was created to coordinate WTO policy in the

area of intellectual property rights and to manage the resolution of
disputes among states on implementation of TRIPS obligations.
Salient features of The Patents Act – 1970

Elaborate and clear-cut definition of patentable and non patentable

inventions.
Provisions for filing provisional applications
The filling for application by inventor, assignee or even by the legal heirs.
Provision for patent of addition.
Opposition to the patent before the grant of the patent
Term of patent 14 years
a) Except in case of methods or processes of manufacture of a
substance
b) Intended or capable or being used as food, medicine or drug.
c) In such cases the term of patent is five years from the date of sealing
or seven years from the date of the patent whichever is shortever.
d) Subject to the payment of renewal fees.

Revocation of the patent allowed on certain grounds as mentioned in

section 64 of the act.
Compulsory licenses on the grounds of non-satisfactory of reasonable
requirement of public or the invention being unavailable to the public at
a reasonable price.
Certain categories of patents are endorsed with the words “ Licenses of
Rights” on the ground of reasonable requirement of public of non-
availbility of the invention at a reasonable price under section 86, and
also deemed endorsement of certain mehtos of their menufacture and the
methos of manufacture of chemical substances under section 87.
 Power of central Government in respect of compulsory licensing and
power to use/acquire patents for its own use under section 100 and 102
respectively.
Judicial review of powers of the controller and the use by Government.
Provisions to stop infringement of patents and provisions of appeals.
As regards the cinematography the right to make copies, exhibition in
public, make records and right to broadcast.

PATENTING IN INDIA

An Introduction
 The concept of intellectual property (IP) and the origin of intellectual
property were introduced. Perhaps the most important of intellectual
properties is the patents. Patents are most important for two reasons:
1. Patents are a way to make more money for those who obtain a patent
2. Patent policies can be tailored by a country based on its needs to
foster and promote industrial development
3. Patents enable research and development
4. Most importantly, patents provide the most fool proof form of
intellectual property rights.

Importance of Patent Policy

Patent policies have proved to be extremely important for several

countries to develop. Infact, the patent policy pursued by India enabled it to
becoming a big international player in the generic drug market. The patent
policies of Europe and the US enabled it to develop in research and
technology and gain global economic leadership position. The patent policy of
Japan enabled it to understand and catch up with the American system within
a short period of time. Infact western scholars always associate
development of a nation with patent policies. The roots of patent policies
of developed nations can be traced to the post World War II era. 1 this era
marks the shift in focus from war to trade. Countries expanded beyond
national boundaries seeking superior trade and economic positions to
flourish by investing and inventing. As early as in the 1800s nations
perceived that trade had a direct co-relation to the patent policy of the
country.

Patent policies are manifested and implemented as patent statues/

legislations.
Because of the many benefits and the importance of patents, the subject of
patents as such tends to be extremely interesting but very complicated.
Before the subject of patents is understood certain terms need to be
internalized by a prospective patent scholar to even attempt to understand
the law of patents.

The Patent Terms – General Terms

Several terms define the various aspects of patents. As far as possible

these terms are explained in the most logical manner for the reader to
understand this in perspective.

Patent policy details a country's policy for the patent system. The polices
are made by the legislature and based on this policy the patent statute is
drafted. For example, the patent policy of India in the 1950 was to ensure
that there was local production of drugs. Hence the patent legislation
catered to such a need by so drafting the legislation.

Patent legislation is what is called the Patent Act. The patent outlines the
gist of the patent system in the country. For example, the Indian Patent Act
details what can be patented and that patent applications need to be made in
order to get a patent. Now, those interested in obtaining a patent need to
understand what the application should contain, where the application has to
be submitted etc. All these procedural rules are covered in India by the
Patent Rules. Thus the patent rules supplement and compliment the patent
legislation. Sometimes the patent office issues rules that are within their
powers. These are called as patent notifications. In the US, such rules are
laid down in the form of patent guidelines. In Europe these same rules are
laid down in the form of guidelines or Directives.
A patent itself is nothing but a document issued by the government. This
document tells the holder of the document that a particular product is
protected by a patent. This means that the product is patent protected. This
means that the product is protected from duplication and copying. The
manner of protection is by patents. The person in whose name the document
is issued is the patent owner. Most often, the patent owner will also be the
inventor. Sometimes companies or other entities can also be a patent owner
by entering into an agreement with the patent owner. Such agreements are
called as license agreements. These agreements will essentially give the
companies and other entities (the licensee) the right to sell, produce, re-sell
etc the invention. In return the inventor will get monetary returns termed as
royalties.
Once a person becomes a patent owner, he gets exclusive rights to
sell, manufacture and market the product for a specified period of time. For
example, in the US this is 20 years, in India it is 14 years now. This period is
called patent term. This means that during the patent term no person other
than the patent owner can ever sell the product. Thus the patent owner is
vested with exclusive monopoly rights over that product. This right is the "the
right to exclude others from making, using, offering for sale, or selling" the
invention or "importing" the invention. What is granted is not merely the
right to make, use, offer for sale, sell or import, but the right to exclude
others from making, using, offering for sale, selling or importing the
invention. Thus there will be no other competing products during the patent
term. Hence the patent owner can meet the demand of the market by
supplying the entire market. Lack of competition also allows the patent
owner to set a higher price for the product since consumers can only access
the patented product.
This monopoly right is given so that research and development leading to
inventions are encouraged. This means that the government encourages
people to invent more and tells that that their incentive for inventing more is
the monopoly rights which enables the inventor to make more money during
the patent term. In return the government ensures that the patent owner
describes the invention, the making of the inventions and the working of the
invention in the application. It then ensures that after the patent term
expires, any person interested can gather the information and manufacture
similar or the same product. Thus the government on the one hand
promotes research and development and on the other hand ensures that the
public continues to get the benefit from inventions. The public make an
implied agreement to ensure that they get the benefit of research and
development for indefinite period by paying a little extra during the patented
term.

Patents affect trade internationally because of the above. That is, a lot of times
patent owners sell products at higher prices. Therefore copying patented
products (called as patent infringement) enable those who copy to sell the
same products at the cheaper price. This affects the right of the patent owner.
Most often, developed countries are the source of research and development.
In these countries, they protect the rights of the inventors by adequate
mechanisms. On the other hand, developing nations could survive only with a
little copying in specified industrial sectors like pharmaceuticals etc. Hence
developed nations wanted what is called as patent harmonization.
The term patent harmonization essentially means that patents laws and
patent protection becomes very similar across the world in all countries. This
will ensure that the rights of patent holders of any country are protected
internationally. Such harmonization is attempted through patent
conventions or patent treaties, (TRIPS is one such convention. Other
patent conventions are Paris Conventions, Patent Cooperation Treaty etc).
These treaties and conventions are enforced by international organizations.
The most important international organization for patent law is WIPO and
WTO. WIPO stands for World Intellectual Property Organization and WTO
for World Trade Organization. The WTO governs the trade related aspects
of intellectual property rights. WI PO is the main organization for the
governance of all the treaties other than TRIPS.
Patents are sought from the patent office by making a patent application.
In the US there is only one patent office located centrally at Washington DC.
The patent office is spread through several buildings in the US. There is one
central patent office in Calcutta and regional offices in India.

Invention which are patentable

The term invention has been defined in section 2(j) of patents Act-1970,
which means new and useful:
Art, process, method or manner of manufacture
Useful machine, apparatus or other article and
Substance produced by manufacture.

Inventions which are not patentable

The patent Act-1970 clearly defines the inventions, which are not patentable
under section 3, 4 and 5. The relevant provisions are as follows.
Section (3)
What are inventions – The following are not the inventions within the
meaning of the Patents Act-1970.
An invention which is frivolous which claims anything obviously contrary to
well established natural laws.
Inventions the primary or intended use of which would be contrary to the
laws of morality or injurious to public health
The mere discovery of a scientific principle of the formulation of an abstract
theory.
The mere discovery or any new property ore new use of a known substance
or the mere use of a known machine or apparatus unless known process
results in a new product of employs at least one new reactants.
A substance obtained by a mere admixture

Procedure for Patent Application

The 1970 Act in section 6 reflects the first to file system by placing
emphasis on date of application and not on the date of invention.
Applications for a patent can be made by the true and the first inventor, or
their assignees or legal representatives. The first importer of an invention or a
person to whom the invention is first communicated from outside India will
not be considered a first inventor.
Every patent application has two important aspects that will decide the
fate of the application. These are Specification and Claims. The specification
clause originates from Section 4 of the Patents Act, 1949 of United
Kingdom. The Patents Act provides that every application shall contain a
specification — the specification can either be a provisional or a complete
specification.
Provisional specification:
A provisional specification is a document drawn in a prescribed
format. It contains a description of the essential features of the invention. It
does not include claims and description of manner of performing the
invention. It is notable that in a first to file system like India the date of
application for the patent becomes important. If two inventors file patent
application for the same invention, then the one whose application has the
earlier date has the advantage of being awarded the patent. Therefore it is very
important to file the application as soon as possible. The provisional
specification facilitates this. The date of filing the provisional specification
becomes the date of the application. This date is called the priority date and
this date is accorded to the claims in the complete specification which can be
filed later based on the provisional specification.
A provisional specification should be drawn in Form 2 of the Rules. This
application will contain a description of the nature of the invention. The title
to the provisional specification should give a fair detail of area of science the
application will deal with. The object of the invention and a statement of the
actual invention need to set forth in the provisional specification. The most
important aspect is that when a complete specification is files, the provisional
specification should with reasonable certainty relate to the same invention.
However, it is advised that the provisional specification be couched in broad
terms. This is preventing a competing inventor to seek a broader patent based
on the provisional specification.

Complete Specification:
 After filing a provisional specification, the applicant should submit a
complete specification within 12 months of the date of filing of the
provisional application without which the application will be deemed to be
abandoned unless a request to file the same within 15 months is filed with the
controller. If the applicant is unable to file the complete specification within
the prescribed time, then the applicant can request for post dating of the
application for a six Month period. The advantage is that the applicant gets
another 6 months to file a complete specification. The disadvantage is that
the applicant will lose the priority dates. Thus a later filed application may
get priority because of this.

Every complete specification shall, a) fully and particularly describe

the invention and its operation or use and the method by which it is to be
performed, b) disclose the best method of performing the invention which is
known to the applicant, and c) end with claim or claims defining the scope
of the invention.

The courts have held that the construction of a specification is a matter of

law; therefore, it is within the courts' domain to properly construe the
specification. The Delhi High Court, in 1978, noted that
'Whether a patent sets out an invention is to be determined by a true and
fair construction of the specifications and the claims. In construing the
specifications it would be erroneous to rely too much on the title thereof
because the title cannot control the actual claim and a misleading title is of
no consequence. The words of the specifications should be given their
ordinary meaning but where necessary must be construed in the sense in
which they are used in a particular trade or sphere in which the invention
is sought to have been made and it is the pith and marrow of the invention
that has to be looked into...'
 This approach is similar to the American approach; however, in Indian law
there are no additional guidelines to supplement this rule of interpretation.
Therefore an Indian judge has unfettered power to construe the specification
depending upon his predilections and preconceived notions or depending on
which side of bed he or she gets up in the morning. Needless to say,
specification construction in India is therefore very subjective and unlimited.

Claims:

All complete specifications end with claims. Section 10 (5) notes that the
claims shall relate to a single invention. The requirement of a claim seems is
"fairly based on the matter disclosed in the specification." The object of
claims is to:
1. State with precision the detail of the invention
1. Define the exact scope of the invention. This will enable a narrow
invention to be patentable later – Example, a claim for a folding chair
should clearly so specify the features of a chair and limit the claim to
chairs that fold. This will enable inventor No 2 to patent a revolving
chair or may be a non-folding chair.
3. To clearly set the limits of the claim. This is interrelated to the above
concept. In the above example, if chairs already exist, and if inventor
No 1 is the first inventor if just the folding quality of the chair, then the
claims should set the limitation properly. This will keep all Chairs
other than the folding chairs within the public domain. That is, this
inventor does not have exclusive rights over that chair. At the same
time, it will encourage other inventors to find newer forms of chair
— say a cushion chair, revolving chair, floating chair and so on.
4. Claims can be narrow or broad based on the invention. A narrow claim
is one that sets the limitations clearly. In the above example, a claim
language is said to be narrow if it limits the patent to a folding chair
only. The claim will be a broad claim if it tries to cover all chairs.
Though on a plain reading a broad claim seems to cover everything and
seems like it is more desirable, in reality it is not. For example, inventor
a gets a patent on all chairs be drafting a broad claim and later inventor
B invents a new 'muscle massaging' chair. The inventor B will also get
a patent over the chair with a limitation that it should have a 'muscle
massaging' feature. Thus a later inventor narrows the scope of the claim
of the earlier inventor. Thus the first inventor will slowly see that other
narrow claims will result in him losing the exclusivity in his market.
Therefore narrow claims are preferred.

The Bombay High Court detailed that the claim and the specification
should be read together to understand the invention. The Delhi High Court
has held that the claim should specify the particular feature of the device and
the distinguishing feature from the earlier invention, if any and show the nature
of the invention. However, the Delhi high court in 1978 held that the title of
the invention claimed has little consequence in controlling the claim. Notably,
the Bombay High Court held that the duty of the patentee to ensure that the
nature and the limits of the claim are laid out with clarity of language. The
Supreme Court of India later clarified that 'by looking at the claim the
description of the invention in the specification should be read in order to
prepare the mind to understand what the inventor has claimed.'

A comparison to the American system reveals that claim construction is the

heart and the soul of the American patent system. Claims in the United
States reflect the "proprietary technological rights set forth by the patentee."
35 U.S.0 Section 112 provides the relevant statutory guidance. Apart from
Section 112, the USPTO has strict policies governing over proper claim
drafting. The American courts measure the scope of the patent protection
from a careful reading of the language of the claims. Sophistication in claim
draftsmanship is a mark of a sophisticated of the patent system, which is a
direct result of increased applications for patents.

Grant of patents:

After the complete specification has been filed, the application is allotted by
the controller to specific examiners to see whether a patent should issue. The
inventor gets a period of 15 months before filing the complete specification
to conduct further research and incorporate further advances into the
complete specification provided it does not change the Nature, characteristics
of the technology or the invention. The patent applicant will get the
advantage of the priority date of the provisional application in the complete
application so long as the nature of the invention remains the same. If the
nature of the invention is changed the inventor cannot get the advantage of
the provisional specification. This is called the 'Fairly Based' principle. The
examiner allotted by the controller determines the procedural validity and
compliances before proceeding to check the claims. This stage of the
application is termed the examination. Then a prior art search covering
publications in India and abroad is then conducted. Normally the patent office
takes anywhere between 18 months and two years to send the first
examination report the objections of the examiner will be communicated to
the applicant. Section 21 details that an application for a patent is deemed to
be abandoned unless the applicant is able to get back within a period of 15
months or 18 months (if the applicant has sought for an extension of
time). If the requirements are complied with, the applicant will be informed
that the claims are accepted for publication in the Gazette of the Patent Office.
Publication normally takes approximately 6 months. Section 25 of the Patent
Act, 1970 allows for an opposition by any member of the public in making
an application in Form 15, four months from the date of advertisement of the
acceptance of the complete specification. If the applicant overcomes the
opposition and the examiner accepts the submitted complete specifications,
the controller gives notice thereof to the applicant. The acceptance is
advertised in the Official Gazette. Then the application is open to the public
for inspection. The patent applicant has formed this date all the rights and
privileges of the inventor. But he cannot institute proceedings for infringement
until the patent is granted under the seal of the patent office and the date of
the grant of the patent is entered in the register.

Opposition:

In India, any person interested can oppose the grant of the patent within
four months from the date of notification of the acceptance of the complete
specification. A notice of opposition needs to be filed in the appropriate
office within four months. The Indian system envisages a pre-grant
opposition while the American patent system envisages a post grant
opposition called the re-issue and the re-examination. In the American
system the review is based on the error in the patent which can either be an
error in conduct or an error in patent. One the one hand, the post grant
opposition has its advantages because a pre-grant procedure can block the
applicant from getting a patent for many years. A post grant opposition, in a
country like India would facilitate acquisition of patent rights for inventions
that may not be patent eligible or patentable. Recently, China amended its
laws and replaced pre grant opposition with post grant revocation this change
allowed applicants to obtain their patent rights more quickly by speeding up
the examination procedure. India should consider adopting a post-grant
procedure.
 In India, there are several grounds for opposing a patent. Some of the most
important grounds are:
a. That the applicant has wrongfully obtained the patent from the
person opposing the application
b. The invention is already known to a person skilled in the art
(obviousness)
c. The invention has been in public use in India
d. The claims do not relate to an invention within the ambit of the Act
e. The best mode is not disclosed in the complete specification. Best
mode is a very important requirement in across the world. The term best
mode means that in the patent application the inventor should disclose
not only the invention but the best method of making the invention.
This is because after the expiry of the term of the patent (that is after
the inventor loses his exclusivity and monopoly rights), the public
should be able to work the patent. Therefore the inventor ought to
have disclosed the best method of making. This requirement is called
the enablement requirement in the US. That is unless the patent
application reveals the best mode of making; the application is not
enabled for the public. Therefore the application will fail. There are
several ways to determining the best mode of making in India as well
as in the US.
Application for an Exclusive Marketing Right:
Application for an exclusive marketing right can be made in Form 27
with a fee of Rs 25,000 payable to individuals and Rs 75,000 payable by
legal entities other than individuals. The controller will refer this application
to a patent examiner. Within 90 days the examiner is bound to make a report.
Based on the report the patent will either be accepted or denied. A record of
the EMR will be maintained in the head office as well as in the regional
offices. If the application relates to say pharmaceutical or food or other
substances in Section 5 of the Patent Act for which product patent is not
available as yet, such application is termed as mail-box application. Though
exclusive marketing rights will be provided for this, the right for a product
patent will b considered once the legislation in India is amended and product
patent is introduced. India has till 2005 to provide for product patents. See
rule.

Applications for Patents under the PCT: Any country that has signed the
PCT is termed as the convention country. India is one such convention
country for filing the PCT applications. The PCT application can be filed if at
least one of the applicants (need not be the inventor) resides or is a national of a
PCT convention country. PCT applications are complicated and merely
technical. It is purely an area for law practitioners to handle. Therefore the
following is a mere gist of the PCT.
However, for Indian scientists when they make a new invention that can be
ground breaking internationally, (even if it is a improvement over the old
invention), it is best to Make a PCT application covering India, Europe and
sometimes even the US if the cost is not too formidable. However, since US
will insist on following the national procedure (after the application reaches
the national stage), it is also best to designate countries like Singapore that
will accept the international search and immediately award a patent.
Several countries are members of the PCT. Therefore an applicant for an
international patent should clearly specify the countries where the applicant
wishes to obtain patent protection. This process is called 'designation'. An
applicant in India can designate some European countries along with India
or even without India for seeking patent protection. At the time of filing
the application has to contain at least one designation. The PCT does not
allow specific designations in the later stage. Therefore two options are
available. One is to designate all states in the beginning (precautionary
designations) and later specific designations can be chosen. This will involve
a payment of 50% surcharge for each specific designation. On the other hand,
all states can be specifically designated but this will also involve a payment
of 10 designation fees.
PCT applications are filed in India in the competent office. The competent
office for filing a PCT application In India is the Patent Office, Calcutta, and
its branch Offices at New Delhi, Bombay, and Madras. A PCT application
will contain the following:
1. A request under Art 4 of the PCT. In this request the applicant will have
to designate contracting states or state where he seeks patent protection.
These states are called the designated states. Where there are regional
conventions like the European Patent Convention, entire Europe can be
made as one designation. An application with such a designation will
be centrally processed under the European Patent Convention. This has
the advantage of avoiding the national stage in each of the European
countries. Also, when the applicant gets a patent, the patent will be
valid for all countries that are members of the European Convention.
1. description of the invention
2. claims
3. abstract of the invention
4. Drawings (where applicable)
5. Fees
7. Claiming priority. This means that the applicant can claim the priority
date (date of application for patent) in another PCT convention
country if that application has been made before the PCT application.
The PCT application may claim priority under the Paris Convention. This
means that if the inventor had made a national application earlier that
 date can be considered as the filing date for PCT. Since an earlier date
is likely to be considered this is called priority date. For Indians this
means that you can file a simple provisional application in India as
the inventor is reasonably ready. That gives the inventor another 15
months to continue with the invention before he can file PCT

Application. (This is because 15 months is the latest period to given to file the
complete specification. Otherwise the provisional specification will lose
the priority date in the Indian patent office). A PCT application thus filed
later 15 months can bear the priority date from the date of filing the
provisional application in India. This is a very important advantage. If no
such priority is claimed, then the date for the PCT application will begin with
the international filing date.

Normally 4 copies are required to be filed. But some of the regional offices
have sought only one copy so that they can make the required copies and
send it to the international bureau. India has announced its recognition of
Chinese Patent Office and US Patent Office as authorized international
search and examining authorities in addition to the Australian, Austrian and
European Patent Offices.

National Stage: The International preliminary examination has to be done

within 21 months if the applicant decides to proceed with the application for
obtaining patent in India based on the international search report, or (b) 31
months from the priority date, if the applicant opts for an international
preliminary examination. Then the application enters the national phase. This
means that the formal requirements of each state needs to be met and national
fees need to be paid. Different countries also have different levels of accepting
the PCT preliminary examination report. After this stage, the application
proceeds into domestic laws.

The most important issue in the PCT application is the fee. Fees become due
and payable at two stages. One is at the receiving office. That is, for India
these fees are payable at Calcutta or the regional offices at Madras, Bombay
or New Delhi. These offices collect the following fees:
1. Transmittal fee: This is retained by the office in India. This fee
totals to Rs 2,500 for individuals (s), and Rs 8,000 for legal
entities. These include the fee for preparing certified copy of
priority document and transmission of the same to the
international bureau.
2. Search Fee: This is transferred to the international searching authority.
Depending on the searching authority the fee varies from USD 100
to USD 800. But Indian nationals may be eligible for a reduction
of these fees by 75% provided a request for reduction of fee is filed
in a prescribed form.
3. International Fees: There are two kinds of international fees
collected by the receiving office in India. These are called the
Basic fees and Designation fees. Both these fees are transferred to
the international bureau. The basic fee is USD 382. However, in
case the patent application exceeds 30 pages, a fee of USD 9 is
levied for each additional page that needs to be processed. The
designation fee amounts to USD 82 per Designation. A maximum of 6
designations are allowed. Beyond that all the designations are free.
Note that this fee does not include the national fees that may be payable
at the national stage of the application. Therefore one should be very
careful in making the correct designation suitable to the needs of the
market of the inventor. However, the Basic fee, designation fee and
 handling fee is reduced by 75% where the applicant or, if there are two
or more applicants, each applicant is a natural person and is a national
of, and resides in India.

Other fees are payable if the inventor wants to seek a non-binding opinion
on whether the claimed invention appears to satisfy the novelty and involves
an inventive step. This is termed as a Demand and is optional. If such a
preliminary examination is sought by designating a country, the application
will enter the national phase in that country after 30 more months. The
advantage of this is that before the inventor starts paying the national fees the
inventor can know whether there are flaws in the application. That way there
are more chances of getting the patent in the country or designated state. For
example, if Europe as a whole is designated in the PCT-application, the
International Preliminary Examination Report that is already available
may favorably influence the granting procedure of the European patent
application. The fees for these can be anywhere between USD 100 to 1000
depending on several factors like which country is being designated. These
fees are known as handling fees and preliminary examination fee. These
fees are also reduced by 75% for Indian nationals residing in India.

The most important aspect to bear in a PCT application is the following:

1. A PCT-application as such will never mature into a patent, but it
provides some extra time for making a commercially sound decision as
to whether foreign patent protection should be sought.
1. PCT application has the advantage of extension of the priority year by 8
to 18 months, so providing more time for the inventor to decide as to
whether or not the inventor needs to file foreign patent applications.
2. The International Preliminary Examination Report (optional and can
be sought by filing a Demand), which may smoothen the granting
 procedure in most cases.

Conditions on Patent Applicants

The Article 29 of the TRIPS which mandates WTO members to

impose a disclosure requirement on patent applicants such that a person
skilled in the art will be enabled to carry out the invention has been
universally accepted. Also applicants may require disclosing the best mode
known to him to work the invention as on the date of filing or priority. Article
29.2 allows members to require patent applicants disclose their
corresponding foreign patent applications

It is contented that developing countries take advantage of these

provisions to get full disclosure and the best- known method to work the
inventions27. But everybody knows that patent applicants rarely disclose all the
know- how, but disclose only what is strictly required.

Pre-grant opposition following early publication of applications is one

way of ensuring that others get the opportunity to question various aspects of
the application. TRIPS Agreement is silent on this matter and hence countries
are free to adopt pre-grant or post-grant opposition method. Developed
countries are moving toward post-grant system,
Since this allows grant of patents without much delay, at the same time
provide for fair opportunity to invalidate wrongly granted patents. EPO
allows opposition only on grounds of patent eligibility, lack of novelty or
inventive step or inadequate disclosure and the opposition should be filed
within nine months' time. In the US, post-grant reexamination procedures
are more limited as these are ex parte and confined to novelty issues
arising out of documented prior art. But this system allows for a cheaper
alternative to patent infringement suits.

Eventually, world will have to move towards patent law harmonization

where there will be uniformity even in procedural details.

PRE-TRIPS DIVERGENCE IN PATENT LAWS OF

DEVELOPINGCOUNTRIES

There are a number of areas where developing countries diverged

from TRIPS Agreement originally. These represent the heart of controversy,
not just the provisions on patent protection, but the entire TRIPS Agreement.
This sections discusses such areas of patent laws of WTO countries which
needed fundamental changes to be in compliance with TRIPS

Other Exceptions to Patentability

Of all the areas of divergence, the most important and controversial

lie in the field of product patents for food, agricultural chemical and
pharmaceutical products. In some developing countries like Latin America
and South East Asia, product or even process Many developed countries
also excluded product patents on such products until recently. Avoiding
such exclusions were the most important goal and achievement of TRIPS.
Article 27 of TRIPS states that ' patent shall be available for any
inventions, whether products or processes, in all fields of technology,
provided they are new, involve an inventive step and are capable of
industrial application'. There can now be no discrimination, either in the
availability or enjoyment, between patentable inventions on the basis of
field of technology alone (Article 27.1 of TRIPS). The latest amendment to
Indian Patent Law also do not provide for product patents in the above
mentioned fields. To be in compliance with TRIPS in this highly
controversial field which could affect India's pharmaceutical and
agricultural industries, India has to enact another amendment before 2005.

Rights of Patentees Another important achievement of TRIPS is

Article 28 on the rights of patentees. The fundamental rights of a product
patentee to prevent third parties from making, using, and selling the patented
products have been added. These additions are already implicit in the right
of selling and are included in some pre-existing laws as the right of
distribution3°. These additional rights of importing and offering for sale
will have the effects of making the proof of infringement in patent
litigation.

Under TRIPS, the rights of a process a process patentee are extended

from merely the use of the patented process, recognized in all pre-TRIPS
national laws, to rights identical to that of a patented product, albeit
limited to the product directly obtained from the patented process. This
is clear advancement for the laws of most of the developing countries
where the process patentee's rights only covered only the right to
exclude others from the use of the process. This is also beyond the
rights conferred under the Paris Convention. Article 5 quarter of the Paris
Convention allows such rights to aProcess patentee with respect to an
imported product only if such rights are granted to him by the legislation
of the country of importation and not otherwise.
 PATENT SPECIFICATION AND CLAIMS

This chapter deals with the specification and claiming

requirements of patent applications. Patents are granted with a significant
involvement of the patent office. The stage where the patent office
processes the invention is called patent prosecution. This is the stage where
the patent application is filed.

This chapter deals with the requirements in the patent application. It is

notable that the statutory requirements for a patent application are
compounded by the patent office rules. As always, the American patent
system is the most complex in the world. This chapter looks at the basic
necessities of statutory requirements of the patent application.

The first area of discussion will be specification. Specification is

discussed in section 112. This section discusses specification, written
description, claims and other requirements of for patent prosecution.

SPECIFICATION
Section 112 (1) discusses patent specification.
(1) The specification shall contain a written description of the invention,
and of the manner and process of making and using it, in such full,
clear, concise, and exact terms as to enable any person skilled in the art
to which it pertains, or with which it is most nearly connected, to make
and use the same, and shall set forth the best mode contemplated by
the inventor of carrying out his invention.
 This section specifically states that the application shall contain the
following:
a) written description with a detail of the manner of making and the
process of making
b) To enable a person skilled in the art to make and to use
the invention c) setting for the best mode contemplated by the
inventor to carry out the invention. Each of these is very complex and
technical requirements.

WRITTEN DESCRIPTION

The purpose and function of the written description requirement have

changed over time. All United States patent statutes have required a
"description" of the applicant's invention. The Patent Act of 1790 required
the grantee of a patent to deliver to the Secretary of State:

a specification in writing, containing a description ... of the thing or things by

him ... invented or discovered ... which specification shall be so particular, ...
as not only to distinguish the invention or discovery from other things before
known and used, but also to enable a workman or other Person skilled in the
art ... to make, construct or use the same, to the end that the public may
have the full benefit thereof, after the expiration of the patent term....
During this time the written description provided notice to the
public of the scope of exclusive rights asserted by an inventor. Through
the written description, the public was to be "put in possession" of the
boundaries of a patentee's asserted monopoly.

Today, that role is played by claims, single-sentence

statements that must "particularly [point] out and distinctly [claim] the
subject matter which the applicant regards as his invention." The written
description requirement in its current form no longer focuses on putting the
public "in possession" of the claimed invention in the sense of fulfilling a
notice requirement. Rather, written description now asks whether the
inventor was "in possession" of the claimed invention as of a particular
date.

Now written description is a statutory descriptor for the general

concept of "support" for claims not filed in an original application. It
ensures that the inventor would be limited to claiming that which was
identified as within the scope of her invention at the time of filing the
original application.

Today, the written description, rather than notifying the public at the
time of patent issuance of the asserted scope of the patentee's property
right, serves as a manifestation of what was within the scope of the
patentee's inventive contribution as of his filing date. Thus, the written
description requirement takes a "snapshot" view of the inventors
contribution based on the disclosure in her specification as originally filed,
and asks whether that "snapshot" reasonably conveys to persons of ordinary
skill that any subsequently-claimed subject matter was truly and fairly part
of that contribution. The written description requirement can be satisfied in
any manner sufficient to convey possession by the inventor. It provides
whether the inventor had actually invented the claimed subject matter as of
the application filing date.

In gist, this requirement essentially states that the Specification shall have
a detailed written description that embodies all the elements of the
invention. There are instances (discussed below in the case) where
although the claims have been accepted, patents have been rejected
because of inadequate written description.
 Written descriptions are mechanisms to ensure that inventors do not
change the gist of the invention while filing claim amendments or while
filing complete specifications. The American system also allows filing of
provisional or complete specifications like in the Indian system under Section
111 of the patent statute. Now the written description provides an outline of the
invention when the application is first made. This ensures that inventors do
not claim a wider or a completely different invention either when filing the
complete specifications or when filing claim amendments. A written
description need not always be in writing. In some cases, even drawings have
been accepted as a sufficient requirement of written description.

This requirement was laid down in the case of Vas-Cath v.

Mahurkar (935 F 2d 1555). The issue in this case was whether mere
drawings could provide the "written description". The court stated that the
purpose of the "written description" requirement was broader than to merely
explain how to "make and use" the invention. The applicant had to also
convey with reasonable clarity to those skilled in the art that, as of the filing
date sought, he or she was in possession of the invention. The invention is,
for purposes of the "written description" inquiry, whatever is now claimed. A
fairly uniform standard for determining compliance with the written
description requirement is that although the applicant does not have to
describe exactly the subject matter claimed, the description must clearly
allow persons of ordinary skill in the art to recognize that he or she invented
what is claimed. The test for sufficiency of support in a parent application is
whether the disclosure of the application relied upon reasonably conveys to
the artisan that the inventor had possession at that time of the later claimed
subject matter. Drawings alone may provide a "written description" of an
invention as required by section 112. While the district court and the Federal
circuit agreed that drawings could provide the written description, the
district court did not believe that the drawings in the instant case sufficiently
described the invention. The court was concerned that though the drawing
showed the invention it did not detail out what was novel or important about
the invention. The Federal Circuit found the district court's concern with "what
the invention is" misplaced, and its requirement that the 'drawings "describe
what is novel or important" legal error. It stated that there is "no legally
recognizable or protected 'essential' element, 'gist' or 'heart' of the invention
in a combination patent." The invention in this case not only claims the
features of the invention but a combination of those features. That
combination invention is what the drawings show. The court held that in this
case what was eventually patented was exactly what the pictures show.

Similarly, with reference to biotechnology patents, the written

description requirement has a much higher standard. Here the court has
clarified that written description needs to be clear, detailed and discuss
specific aspects of the invention. This requirement is best discussed in the case
of Regents of the University of California v. Eli Lilly (119 F 3d 1559). The
Science:

The patents in suit relate to recombinant DNA technology and, more

specifically, to recombinant plasmids and microorganisms that produce human
insulin, a protein involved in the regulation of sugar metabolism. A person
unable to produce insulin is afflicted with diabetes. Prior to the development
of recombinant techniques for the production of human insulin, diabetic
patients were treated with injections of animal insulin, which often caused
allergic reactions. Human insulin produced by recombinant methods is less
likely to produce such reactions. It consists of two separate amino acid
chains, a 21-amino acid a chain and a 30-amino acid B chain, which are
linked only by disulfide bonds. Healthy people produce insulin in vivo via
the terminal enzymatic cleavage of preproinsulin (PPI) to yield proinsulin
(PI), a single amino acid chain consisting of the A and B chains, linked by a
sequence of additional amino acids that positions the A and B chains so that
the disulfide bonds are readily formed. The PI is then further cleaved to liberate
the linking sequence and yield insulin.

The Issue:

Plaintiffs in this case had two patents for the manufacture of insulin.
They claimed that Eli Lilly infringed on the patent by using the same
manufacturing process for insulin. Eli! Lily claimed that the patent was
unenforceable because of failure to adequately describe the invention. The
court held for the company. It stated that, to fulfill the written description
requirement, a patent specification must describe an invention and do so in
sufficient detail that one skilled in the art can clearly conclude that the
inventor invented the claimed invention. Thus, an applicant complies with the
written description requirement by describing the invention, with all its
claimed limitations, not that which makes it obvious, and by using such
descriptive means as words, structures, figures, diagrams, formulas, etc.,
that set forth the claimed invention. An adequate written description of a
DNA requires a precise definition, such as by structure, formula, chemical
name, or physical properties, not a mere wish or plan for obtaining the
claimed chemical invention. Accordingly, an adequate written description of
a DNA requires more than a mere statement that it is part of the invention and
reference to a potential method for isolating it; what is required is a description
of the DNA itself. The court looked at Claim 5 of the patent specification,
which described the cDNA encoding human insulin. Claim 5 is directed to a
recombinant prokaryotic microorganism modified so that it contains "a
nucleotide sequence having the structure of the reverse transcript of an
mRNA of a [human], which mRNA encodes insulin." Thus, the definition of
the claimed microorganism is one that requires human insulin-encoding
cDNA. The patent describes a method of obtaining this cDNA by means of a
constructive example. This example, however, provides only a general
method for obtaining the human cDNA (it incorporates by reference the
method used to obtain the rat cDNA) along with the amino acid sequences
of human insulin A and B chains. Whether or not it provides an enabling
disclosure, it does not
Provide a written description of the cDNA encoding human insulin, which is
necessary to provide a written description of the subject matter of claim 5.
The court held that the name cDNA is not itself a written description of that
DNA; it conveys no distinguishing information concerning its identity. While
there was an example in the specification that provided a process for
obtaining human insulin-encoding cDNA, there was no further information in
the patent pertaining to that cDNA's relevant structural or physical
characteristics; in other words, it thus did not describe human insulin
cDNA. Describing a method of preparing a cDNA or even describing the
protein that the cDNA encodes, as the example does, does not necessarily
describe the cDNA itself. No sequence information indicating which
nucleotides constitute human cDNA appears in the patent, as appears for rat
cDNA in an example of the patent. Accordingly, the specification does not
provide a written description of the invention of claim 5.

A claim to a specific DNA is not made obvious by mere

knowledge of a desired protein sequence and methods for generating the
DNA that encodes that protein. A prior art disclosure of the amino acid
sequence of a protein does not necessarily render particular DNA molecules
encoding the protein obvious because the redundancy of the genetic code
permits one to hypothesize an enormous number of DNA sequences coding for
the protein. Thus, a fortiori, a description that does not render a claimed
invention obvious does not sufficiently describe that invention for purposes
of § 112. Because the specification provided only a general method of
producing human insulin cDNA and a description of the human insulin A and
B chain amino acid
Sequences that cDNA encodes, it did not provide a written description of
human insulin cDNA.
OBJECTIVE DISCLOSURES

The second part of 112 (1) discusses that specification should 'enable'
one skilled in the art. Thus this requirement is called the 'enablement'
requirement. This essentially means that there needs to be specific details in
the invention that will enable other people in the future by looking at the
application to make and to use the invention.

Again, the ability of the 'enablement' aspect of the specification to

educate on the necessities of MAKING and USING the invention is the crux
of enablement. These two requirements are called as the 'objective
disclosure' requirements. They are so known because the details of how to
make and use should be done objectively so that in the future the public are
enabled to perform the invention. The rationale is that in return for the
monopoly rights, the patentee teaches the public to make and use the
invention after the monopoly period is over.

Each of the enablement requirements is discussed in the following

paragraphs.
 HOW TO MAKE:

This requirement is embodied in section 112 as "the specification

shall contain, ....the manner and process of making .... With clear, concise,
and exact terms to enable any person skilled in the art..... To make ....the
invention."

Genentech v. Nono Nordics (108 F 3d 1361) Genentech obtained an

injunction from the lower court against Novo Nordisk preventing Nono
Nordisk from selling or importing its brand of recombinant human growth
hormone (hGH). Genentech alleged that the hGH of Novo Nordisk infringed
its inventions. Novo Nordisk challenged this injunction calming that
Genentech's specification did not fulfill the enablement requirement of
section 112 and was itself not valid.

Regarding enablement, Novo argued that the patent was invalid

because it does not contain sufficient detail concerning the practice of the
claimed method. Novo argued that the mere generic statement of the
possibility of cleavable fusion expression was not an enabling disclosure
commensurate in scope with the claim. Genentech argued that those skilled
in the art of recombinant protein expression at the time of filing would
have been able to use cleavable fusion expression to produce hGH without
undue experimentation by using the specification along with methods and
tools well known in the art. Therefore Genentech argued that the teaching
in the specification enabled one skilled in the art to perform the invention and
was sufficient.
 The issue before the court was whether the specification would have
enabled a person having ordinary skill in the art at the time of filing to use
cleavable fusion expression to make hGH without undue experimentation.

There was no dispute that the portion of the specification chiefly

relied upon by Genentech did not describe in any detail whatsoever how to
make hGH using cleavable fusion expression. For example, no reaction
conditions for the steps needed to produce hGH were provided; nor was
there a description of any specific cleavable conjugate protein. The relevant
portion of the specification merely described three (or perhaps four)
applications for which cleavable fusion expression was generally well-
suited and then named an enzyme that might be used as a cleavage agent
(trypsin), along with sites at which it cleaves ("arg-arg or lys-lys, etc.").
Thus, the specification did not describe a specific material to be cleaved
or any reaction conditions under which cleavable fusion expression
would work. Genentech's argument was that the knowledge of
one skilled in the art was sufficient to provide all of the missing information
and, more specifically, that the disclosure of a DNA encoding hGH, when
combined with prior art cleavable fusion expression techniques applied to
non-human proteins, would enable the practice of the claimed method.

In response to these arguments, Novo asserted that no one had been

able to produce any human protein via cleavable fusion expression as of the
application date. At the time of filing, trypsin and other like enzymes were
used only to digest proteins, not to specifically and precisely cleave
conjugate proteins to yield intact, useful proteins. Novo further argued that
neither the specification nor the references cited by Genentech suggested a
single amino acid sequence, out of the virtually infinite range of
possibilities, that would yield hGH in a useful form when cleaved from the
conjugate protein.

The court observed that if as Genentech argued, one skilled in the

art, armed only with what the patent specification disclosed (a DNA
sequence encoding a human protein, in this case, hGH, and a single
example of an enzyme and its cleavage site), could have used cleavable
fusion expression to make a human protein without undue
experimentation, it was remarkable that this method was not used to make
any human protein for nearly a year or to make hGH for five years. DNAs
encoding desirable human proteins were known at the time of filing
(e.g., insulin, described in the British patent), and a great many researchers
were attempting to produce human proteins using recombinant DNA
technology. This failure of skilled scientists, who were supplied with the
teachings that Genentech asserted were sufficient and who were clearly
motivated to produce human proteins, indicates that producing hGH via
cleavable fusion expression was not then within the skill of the art.

The test for enablement:

To be enabling, the specification of a patent must teach those skilled in the

art how to make and use the full scope of the claimed invention without
undue experimentation. It stated that while every aspect of a generic claim
certainly need not have been carried out by an inventor, or exemplified in
the specification, reasonable detail must be provided in order to enable
members of the public to understand and carry out the invention. The
omission of minor details does not cause a specification to fail to meet the
enablement requirement. However, when there is no disclosure of any
specific starting material or of any of the conditions under which a process
can be carried out, undue experimentation is required; there is a failure to
meet the enablement requirement that cannot be rectified by asserting that
all the disclosure related to the process is within the skill of the art. The
court stressed that it was the specification, not the knowledge of one skilled
in the art, that must supply the novel aspects of an invention in order to
constitute
adequate enablement. In this case Genetech had failed to meet the enablement
requirement and thus its patent was held invalid.
HOW TO USE:

The how to use requirement is embodied in section 112 as "the

specification shall contain, ....the manner and process of using ....with clear,
concise, and exact terms to enable any person skilled in the art ..... to use
....the invention."

In many cases, the appropriate use of the invention is straight forward.

However, if the use of the invention is not provided properly, then there is a
likely hood that the patent will be rejected.

In Re Gardener, Roe and Willy (427 F 2d 786). Appellant filed

application for pharmaceutical compositions that acted as antidepressants
and for a method of producing antidepressant effects by internally
administering compounds. None of the claims mentioned to whom the
antidepressants were to be administered, and recommended dosages for
each compound ranged broadly. The patent office rejected all claims on the
grounds that the claims were not definite enough and that they did not
disclose enough information to enable one skilled in the art to use the
compounds, and so did not meet the requirements of section 112. The first
problem with the specification was that there is not one specific embodiment
of a contemplated host. While dosages were recited in the specification and
in the claims, they were (1) not related to any host nor (2) are the dosages
related to body weight of a host. The question was not one of obviousness, but a
failure to "set forth the best mode contemplated". The specification called for
dosage units of from about 10 mg. to about 150 mg., and from about 10 mg.
to about 100 mg. of the active ingredient, respectively. It then called for
administering "an effective amount". Appellants stated their invention was
in the discovery of the antidepressant activity in a group of compounds. They
were not claiming the compounds. In effect, by claiming pharmaceutical
compositions "having antidepressant activity" and methods "of producing
antidepressant activity" which consist in administering the compounds, they
were claiming in terms of use. The burden is therefore on the appellant to
disclose how to use, "in such full, clear, concise, and exact terms as to enable
any person skilled in the art to use" their invention. The Patent Office took
the position is that these generalizations were an insufficient disclosure of
how to use and did not comply with the law. Appellants claimed they were
sufficient because anyone skilled in the art would, first of all, assume the
host to be an average adult human (at the same time keeping open the
possibility of veterinary use). Moreover this was not the first antidepressant
drug, and that doctors were generally given sufficient information on how to
properly administer. The court nonetheless held that the disclosure of specific
dosage units, ranging all the way from 10 mg. to 150 mg., did not
teach anyone anything about proper dosage. The only significant dosage
disclosure was in the statement about daily dosage and even here this took
the form of from 10 mg. to 450 mg., a range of from 1
to 45 times.

The court felt that the dosage amount varied a lot and it seemed like the
dosage was to be administered as taught by the specification, until an
antidepressant effect was achieved especially within the broad daily dosage
range of from about 10 mg. to about 450 mg. Since the specification was too
broad and did not explain how the drug was to be used it, the patent office
was right in rejecting a patent for the same.

Another interesting case is that of the famous Rubick Cube - The

enablement requirement had a very interesting turn in the case of the popular
Rubik's cube Puzzle. Here the patent consisted of a toy. The toy was a cube
puzzle divided into smaller cubes. Rotation of the sides of the cubes allowed
to cube to be a pattern. The inventor claimed the a) cube puzzle, b) method
for restoring a predetermined pattern of smaller cubes but did not describe
the precise sequence of moves necessary to solve the puzzle. The court held
that the patent specification was nonetheless not invalid since the patent
provided a general approach for solving the puzzle in a way that the
enablement requirement was satisfied.
BEST MODE

This essentially means that the inventor should reveal the best method
of making the invention that is known to the inventor. The policy behind this
is provision is inventors are vested with monopoly rights. In return they need
to educated the public on the invention completely.

CLAIMS
NOTE: This section explains claims and their ambit for better understanding.
Under no circumstance does this section prepare the reader to draft a claim.
Claim drafting is a complex, technical and scientific exercise. It requires
special courses in science as well as law before either a lawyer or a scientist
can draft a claim. A course on claim drafting is a detailed, self-contained
course. No school in India provides this as such. In the United Stated lawyers
are not qualified to draft a claim under THEY ARE EQUIPPED WITH A
SCIENCE DEGREE. Claim drafting requires understanding of complex
science and the ability to appreciate the complexity and distinguish it from
prior art.
Claims represent the limitation of a patent. Claims are defined in the
Patent Act, 1952 (of the United States) in 112 (2) to (6). Section 112 (2) states
that the specification ends with one or more claims.
Section 112 (2) to (6) reads as follows:
(2) The specification shall conclude with one or more claims particularly
pointing out and distinctly claiming the subject matter which the
applicant regards as his invention.
(3) A claim may be written in independent or, if the nature of the case
admits, in dependent or multiple dependent form.
 (4) Subject to the following paragraph, a claim in dependent form shall
contain a reference to a claim previously set forth and then specify a
further limitation of the subject matter claimed. A claim in dependent
form shall be construed to incorporate by reference all the limitations of
the claim to which it refers.
(5) A claim in multiple dependent form shall contain a reference, in the
alternative only, to more than one claim previously set forth and then
specify a further limitation of the subject matter claimed. A multiple
dependent claim shall not serve as a basis for any other multiple
dependent claim. A multiple claim shall be construed to incorporate by
reference all the limitations of the particular claim in relation to
which it is being considered.
(6) An element in a claim for a combination may be expressed as a means
or step for performing a specified function without the recital of
structure, material, or acts in support thereof, and such claim shall be
construed to cover the corresponding structure, material, or acts
described in the specification and equivalents thereof."

The claims limit the extent of the patent. This means that claims ensure
that the inventor does not define his patent in very broad terms. For example,
let us assume that the invention is a simple box for storing a few items. If the
inventor simply describes his invention as a box, then nobody else will be
able to invent another box for storage or even other purposes. This first
description will prohibit a second inventor with a box that keeps food
items cool inside from patenting because it will also fall into the category of
a box. Therefore claims are used to avoid such broad and all encompassing
definitions. Thus claims are limitations of the patent. Claims can be
expressed in several ways — there are functional claims, structural claims,
means plus functional claims, product by process claims, dependent claims,
Jepson claims and so on. In reality the sophistication of the claim drafting
mechanism represents the sophistication of the patent system. Claims from
the main pith and substance of patenting. Patent prosecution depends on
claims drafting and interpretation.

The following attempts to describe in simple terms each of the types of

claims and the reason for including such claims.
Functional Claims: A functional claim defines the patent by its
function.
 For example, a box would be defined as "a mechanism used for the
purposes of storage".. and so on. This way, boxes useful for purposes other
than for storage will still be eligible for a patent.
Structural claims: These claims limit the patent by its structural
features.
For example, a box is defined as a "structure with four corners and flat
surface facilitating the closing ..' and so on.
This way other boxes that are probably not round in shape can still be
patented.
Means plus function claim: This mechanism describes the means
performing a particular function.

For example, in the case of the box in question, let us assume that the
box has a special lock that makes closing and opening easier. The top flap is
the means facilitating the locking of the box. This means performs of the
function of locking of the box.

Given the above, the means plus function claims are likely to read as
" a means to facilitate the sealing of the upper body .."

Note that in the above case, the inventor can patent the box (by
structural or functional language) and the lid with a means plus function
language separately. Also, if the box is already protected by a patent by
another inventor, the second inventor can merely patent the lock mechanism.
This way, different box manufacturers can seek to incorporate the lock and
thus the inventor gets his royalty.
 Again, this ensures that some one else with some olther new means
(even if it is to facilitate the same function) will still be eligible to patent the
new invention embodying a different means to carry on the same function.

Product by process claims: This mechanism describes the product by

the process of making the product. The patent vests on the product made from
that process. This way, the same product made by another process will be
eligible for a new patent.

For example, in the case of the box, assuming that the box is made
from using a process of combining X and Y to derive some kind of plastic
material. Another box made for the same purpose, for performing the same
function will be eligible for a patent if made by a differet process. (earlier the
court used to construe that product was patented and therefore even if the
process is changed, the same product cannot be patented. That has been
overruled in the case of Atlantic Thermoplastics. Although there are several
dissents to this case, it has not been overruled
 Jepson claims are essentially improvement patents. These claims are
used when the invention is an improvement over a previous patent. But these
claims are more closely surveyed by the patent office to ensure that they are
not merely frivolous claims.

Importantly, claims so drafted should adhere to the rule in section 12 (2).

Essentially, claims should "particularly point out and distinctly claim the
subject matter that the applicant regards as his invention". This is to ensure
that each inventor who wants to get patent protection has well marked
boundaries around the property of the invention. This enables other inventors
to know which information is already another inventor's property and which
is available for exploitation. This feature is called the claim definiteness.

Patents Work Differently in Different Industries

 Almost all inventions are patented prior to being made available to the
market, regardless of the technology involved. The means by which patent
rights are exercised, however, varies from technology to technology. For
example, in the field of consumer electronics patents are widely shared among
competitors through cross licenses. Patents on chemical compounds on the
other hand are normally not licensed to others and exclusivity is closely
guarded.
Whatever patent strategy is employed by the inventor, the aim is always
the same – to maximize the profit accruing to the inventor and those who have
supplied him or her with the capital necessary to develop and commercialize
the invention. For a patent to have any commercial value there must be a
market for the invention embodied in the patent, which will support the cost of
development of the invention and return a profit.

Markets are morally neutral. They operate on the principal of

scarcity. Scarce products cost more than widely available products. Thus,
expensive, high-end electronic gadgets, such as plasma television screens are
much more expensive to consumers than much bulkier cathode ray television
screens. The higher expense is a reflection of the market power given to
manufacturers of the plasma screens by virtue of the patents in the
technologies embodied in them, while the lower cost of the cathode ray
television screens is partly a function of the fact that patents have long ago
expired on the technologies embodied in them. The market exclusivity and
higher prices made possible by the patent rights function as a reward for the
risk undertaken by those who financed the research and development
leading to the new technologies. Thus, prices of plasma television screens
exceed the purchasing power of poor consumers and they must be satisfied
with older cathode ray screens or no television at all. This example illustrates a
very important point: A very high percentage of the world’s population exists
without purchasing any products embodying patents simply because they are
too poor to afford innovative technology.

It is a fact that the world’s poor live without making use of the vast
majority of inventions available in developed countries. While this has
significant implications for the economic gap between wealthy and poor
countries, in most cases the lack of access to the most innovative
technologies is not a necessity. However, to the extent the poor cannot
afford access to necessary inventions, governments normally bear the cost of
providing their citizens with such inventions. Thus, in most of the world,
governments bear the cost of purchasing inventions that relate directly to
sanitation, public health, national defense, public order and security, public
transportation and education. For these inventions, the market is primarily a
market of governments, not individuals.

Patents and Research and Development in Developing

Countries

Few developing countries have private sector industries characterized

by investment in research and development. Economies in these countries are
based on agricultural commodities, extraction of minerals or low-tech, low
wage manufacturing. And, in most developing countries the scientists and
engineers most likely to invent are employed in the public sector, either in
state-run laboratories or universities. These countries historically have
lacked the institutions and policies that encourage and make possible the
patenting and commercialization of inventions of public sector employees.
This is in contrast to developed countries, such as the United States, which
have sophisticated systems in place to commercialize publicly funded
research. This is shown in patent filing statistics published by WIPO. Over
95% of all patent filings in the world are by nationals of OECD member
countries.6

Yet the capacity to invent in exists in developing countries. Many poor

countries have universities and government-run laboratories where research
takes place, particularly in the fields of medicine and agriculture. However,
the patent incentive is not available to many developing country inventors in
these fields because there still is no effective patent protection for health
related technologies. The TRIPS Agreement gave to least developed
countries a long grace period before they were required to provide patent
protection for pharmaceutical products. And, in December 2001, the WTO
Council agreed to extend this grace period until 2016.

Since, medicine is the focus of much of the public sector research that
takes place in the developing world, this means a large proportion of
developing country inventors continue to be shut out of the patent system.

Further, the national patent offices of many developing countries are

under-funded and under-staffed, making it difficult for them to provide
services to local inventors.

And, the cumbersome and expensive formalities of global filing make it

difficult, if not impossible, for developing country inventors to obtain patent
protection in the world’s big markets, such as Europe, The United States,
and Japan.
The lack of Patent protection for pharmaceutical products in many
developing countries also is a product of import substitution policies that were
popular among development economists in the later half of the 20th Century.
These policies led to national pharmaceutical markets being dominated
entirely by local companies copying the drugs of developed country
inventors. In some countries, such as Argentina, these local companies have
formed a strong national lobby in opposition to the introduction of patents
for pharmaceuticals. While such lobbying may result in maintaining
market dominance for domestic copiers of foreign pharmaceuticals, it
precludes the development of a local research-based commercial
pharmaceutical industry. This kind of lobbying activity extends to
international providers of pharmaceuticals. Recently, non-patent
pharmaceutical industries in countries like Thailand and India have attempted
to capture the market for antiretroviral drugs for the treatment of AIDS
purchased under grants from the Global Fund for AIDS, Tuberculosis and
Malaria, by requesting the Fund’s Board of Directors to establish a preference
for the use of drugs supplied by such companies, and to guarantee a profit to
such companies as a part of the preference. Thus far the Global Fund has not
yet established such a preference.

Special Problems of Pharmaceutical Patents

The pharmaceutical industry is one of three technology-based

industries in which the patent virtually equals the product. The others are the
chemical industry (including agricultural chemicals) and the biotechnology
industry, whose innovations span the spectrum from engineered plant varieties
to human pharmaceutical therapies. These three industries are much different
than other patenting industries such as computers and electronics. While
responsible for many patent filings the computer and electronics industries are
characterized by extensive use of other techniques for managing inventions,
including the use of trade secrecy and the pooling of patents with those of
competitors to accommodate government and industry technical standards.
Most importantly, unlike industries which produce products requiring
expensive and complex manufacturing infrastructures, the patented products of
pharmaceutical companies can be easily and cheaply replicated by copiers
with little capital investment. Since capital investment in the pharmaceutical
industry disproportionately is directed to laboratory research and clinical
trials rather than the manufacture of the final product, patent exclusivity is
the only effective way to protect and receive a return on that investment.

The pharmaceutical industry has an important characteristic that sets it

apart from other industries that rely on patent protection. In many
technology-based industries it is possible to keep inventions a secret until the
moment they are marketed. This enables inventors to delay patent filings
until the last possible moment and, therefore, to maximize the effect of the
20 year patent term which runs from filing of the patent application. The
culture of medical research, however, emphasizes very early disclosure of
inventions, usually long before a resulting product can be placed on the market.
This is because scientists working in the field of human pathology have an
obligation to share their findings as soon as possible with their peers so that
those peers will be able to benefit from the new knowledge in their own
research. And, unlike industries such as computers and software, the
pharmaceutical industry is heavily regulated by government agencies to assure
the safety and efficacy of products which will be sold to consumers. In the
United States the Food and Drug Administration performs this function. Much
of the investment in new drugs is in the clinical trials which are necessary to
satisfy safety and efficacy regulators. The tolerance for a “buyer beware”
philosophy in the pharmaceutical industry is extremely low compared to other
industries.
The lengthy time period between patent filing and placing a product
on the market means that pharmaceutical manufacturers receive far shorter
periods of patent exclusivity than is the case for other patent dependent
industries. This problem has been addressed in legislation in the United
States and elsewhere which permits a patent applicant to apply for extensions
of patent term to compensate for the inability to market inventions due to
safety and efficacy regulation. However, the time periods permitted for such
extensions do not equal the time lost in ability to market. In the United
States patents can be extended only for half the time period consumed by the
regulatory approval process, and for a maximum effective patent term of
fourteen years.2 Further, the legislation restricts the exclusive right of use
which normally accompanies the patent grant by permitting generic
competitors to use the product for testing and developing the generic
alternative while the patent is still in effect. This permits a generic product to
be marketed virtually the moment the patent expires.

Nowhere has the patent incentive been more successful in attracting

investment in technology that in the commercial pharmaceutical industry in the
United States. A strong patent system – combined with a market without price
controls – caused a massive flow of investment into the American industry.
Expenditures on research increased from $1.7 billion in 1977 to $26.4 billion
in 2002.3 Much of this increase represented a shift investment from Europe,
where increasingly onerous price controls have threatened investors’ return on
capital. This shift is represented in the fact that in the year 2002, 82% of the
investment by global pharmaceutical companies was spent in the United
States, versus 18% elsewhere, including Europe. The result for the United
States economy is that since 1990 the patent-driven pharmaceutical industry
grew twice as fast as the economy at large. And, pharmaceutical companies
now employ over 223,000 workers in the United States.4

While the contribution of the patent-based pharmaceutical business to

job creation and the economy is impressive, the inventions of
pharmaceutical researchers have a dimension difficult to quantify in
economic terms – their impact in extending life and alleviating human
suffering. In 2001 the pharmaceutical industry pipeline contained 402 new
cancer medicines, 123 new treatments for heart disease and stroke, 83 new
AIDS treatments and 176 new medicines for neurological diseases.5 These
statistics are particularly sobering in light of the current debate over whether
patents covering HIV drugs should be respected. None of the new drugs in the
pipeline, much less the 74 medicines that already have caused deaths from
AIDS to plummet in the United States, would have come into existence
without the patent incentive and the prospect of a return on investment
provided by that incentive.
 This is not to dismiss the fact that many patients in the world cannot
pay for these drugs and do not have access to them. However, this is not the
result of the patent system. It is the result of lack of a source of funding for the
purchase of drugs for those currently too poor to buy them themselves. While
in the United States Medicaid provides a safety net for those without health
insurance or other means to pay for drugs, in many parts of the world there is
no similar source of public financing. However, the Bush Administration has
recognized this, and Congress currently is in the process of appropriating U.S.
tax money for the 2004 fiscal year to subsidize purchases of HIV medicines by
public health authorities in poor countries.

Inadequate Patent Protection Discourages the Development of a

Market for Pharmaceuticals Addressed to the Disease Burden of
Developing Countries

The global market for pharmaceutical products was estimated to have a

value in 2002 of $406 billion.9 The United States, the European Union and
Japan currently account for 80% of this market, while the rest of the world
combined, including Africa, Asia, Latin America and the Middle East,
represent only 20% of the market.10 Patents play an integral role in
pharmaceutical research and development occurring in these developed
countries. And, the presence of strong patent protection combined with the
concurrent ability to assure a profitable return on investment means that
commercial pharmaceutical research and development is being
overwhelmingly directed at producing drugs which will meet patient needs
in these developed countries, especially the needs of patients in the United
States of America. This is confirmed by economic research that has compared
the relationship between gross profit margins of pharmaceutical companies
with research and development outlays.11

The power of these economic forces to focus pharmaceutical research

and development on the disease burden of richer countries with strong
patent systems is seen in the fact that of the 308 essential drugs listed by
WHO in 2002 as essential to developing country public health systems, only
five percent were patented in any jurisdiction.12 And, by WHO estimates at
least a third of all patients globally lacked access even to these mainly off-
patent medications.13

Much of the research and development that occurs in developing

countries is financed by the public sector rather than private pharmaceutical
companies, which in these countries overwhelmingly manufacture generic
versions of drugs developed elsewhere.
An example of a country with significant public sector investments
in life sciences research is Brazil. The State of Sao Paulo directs 1% of its
annual tax collections to the support of public sector research and
development through a foundation established by the state. Sao Paulo state
generates 70% of the GDP in the 10th largest economy in the world. Yet, this
investment has not resulted in commercial pharmaceutical products. This
should not be surprising in that until very recently Brazil provided no
patent protection for the health related inventions flowing from these public
investments. And, few government and university laboratories in Brazil have
a mechanism in place for patenting and licensing to the commercial sector
the work of their scientists. Most patents on pharmaceuticals granted in
Brazil today are issued to foreign nationals and protect work done abroad, not
research results of Brazilian scientists.

Brazil’s experience is similar to many countries in the developing

world, such as India and Argentina. This means that countries with
ecosystems rich in the genetic starting material of possible new drugs – and
traditions of folk medicine providing clues to the potential of this starting
material – lack policies most likely to encourage commercialization of these
resources. Yet, this is the kind of pharmaceutical innovation most likely to
address local and regional disease burdens.

The Pharmaceutical sector:

The introduction of product patents in the country is expected to

shakeout the industry. The 10-year transition period was granted so that Indian
companies could put up R & D facilities to meet new challenges thrown up by
the product patent regime. The pharmaceutical industry at the time had 12
years to transform itself from a 're-engineering' industry to an industry of
'innovation'. Product patents are expected to produce wide-ranging effects on
industry and the common man:

i) Higher drug prices and the common people: A "national health

disaste has been anticipated by the Indian Drug Manufacturers
Association (IDMA) as a result of product patents in a country where
only 30% of the population can afford modern medicines in spite of the
 fact that drug prices in India are one of the lowest in the world.
Comparison of prices of drugs between India and countries where patent
protection exists indicate that in some cases they are upto 41 times
costlier in countries with patent
protection. Drug prices in developing countries are being
regulated using global reference pricing and naturally, the
patentee would like to maximize profits.
ii) The economic effects of product patents on industry: Due to
lack of protection for pharmaceutical products the Indian
pharmaceutical industry was able to develop commercial
production capabilities for on-patent drugs before patent
expiry and move rapidly into the world market with them on
the day that the patent lapsed. This means that the introduction
of patent protection in India will confer an additional benefit
on the patentee, by denying Indian firms their first mover
advantage. This will lower the profits earned by Indian
firms. Moreover, the pharmaceutical firms would have to bear
the expense of building up a research infrastructure suitable
for development of new drugs, as copying patented drugs will
no longer be feasible.
iii) Increase in Foreign investment: Introducing product patents may
speed up the process of availability of patented drugs to Indian
customers. Patent protection might make it profitable to
obtain marketing approval in India for a new drug by patent
holding companies. It may also add significantly to the
incentives to discover new drugs for diseases prevalent in this
part of the world; such as tuberculosis, leprosy, diarrhea
 diseases, pneumonia etc. (WHO, 1996)
iv) Only foreign inventors will benefit from product patents: Initial
black box applications to the Indian Patent Office suggest
that foreign inventors will be the main beneficiaries of
product patents. In a sample of the patent applications made
in the first six months of 1995, 50% of the applications for
process patents were Indian as compared to only 14% of the
applications for product patents. Initially at least, it appears that
foreign inventors will benefit from product patents.
v) India's balance of payments will be affected: With the introduction
of product patents, Indian firms will have to transfer their profits as
royalty payment to the patentee abroad. The Balance of Payments,
which is an accounting of a country's international transactions for
a particular time period, is expected to be affected as a result of
this". When India brings into effect product patents other
developing countries would have done so too, as signatories to the
TRIPs agreement. So India will no longer be able to export on-
patent drugs to these countries either, whereas earlier this was
possible since they also had weak lPRs.
vi) Building the infrastructure to cope with product patents is expensive
business: The introduction of product patents is certain to increase
the workload of the patent office. Improving existing facilities and
hiring skilled staff to deal with the coming expansion will certainly
be expensive. Since there is little experience with writing patent
specifications etc., it also means manpower will have to be trained
to cope with this process.
 vii) Adverse affect on employment in this sector: Introduction of
product patents will cause Indian firms to lose their first-mover
advantage, making the exercise less profitable, which may lead to a
decrease in employment.

R&D Costs for a New Drug Introduction

The explanation for why patents are more important to pharmaceutical

firms in appropriating the benefits from innovation follows directly from the

characteristics of the pharmaceutical R&D process. In essence it takes several

hundred million dollars to discover, develop and gain regulatory approval for

a new medicine. Absent patent protection, or some equivalent barrier, imitators

could free ride on the innovator’s FDA approval and duplicate the compound

for a small fraction of the originator’s costs. In essence, imitation costs in

pharmaceuticals are extremely low relative to the innovator’s costs for

discovering and developing a new compound.

One of the reasons R&D is so costly in pharmaceuticals is that most

new drug candidates fail to reach the market. Failure can result from toxicity,
carcinogenicity, manufacturing difficulties, inconvenient dosing

characteristics, inadequate efficacy, economic and competitive factors, and

various other problems. Typically, less than 1 percent of the compounds

examined in the pre-clinical period make it into human testing. Only 20

percent of the compounds entering clinical trials survive the development

process and gain FDA approval.9 Furthermore, the full R&D process from

synthesis to FDA approval involves undertaking successive trials of

increasing size and complexity.

The pre-clinical and clinical testing phases generally take more than a

decade to complete.

In a recently completed study, Joe DiMasi, Ron Hansen and I have

examined the average R&D cost for drugs introduced into the market in the

late 1990s. Data were collected on R&D costs for a randomly selected sample

of 68 investigational drugs from 10 multinational firms. We found the

representative new product approval incurred out of pocket costs of over $400

million. This includes money spent in the discovery, pre-clinical and

clinical phases as well as an allocation for the cost of failures.

R&D costs per approved drugs that are incurred during the pre-clinical

and clinical R&D phases. As shown in this figure, expenditures in the clinical

period account for roughly 70 percent of total out of pocket expenditures. This

reflects the fact that clinical trials are very expensive on a per patient basis,

many drugs must be tested for every one approved, and drugs that do make it to

the final testing phase and FDA submission typically require pre-market

testing on thousands of patients.

R&D costs capitalized to the date of marketing at a representative cost

of capital for the pharmaceutical industry of 11 percent. The average

capitalized R&D cost for a new drug introduction during this period is $802
million, or nearly double the out of pocket expenditure. Capital costs are

high in this situation because of the long time periods involved in

pharmaceutical R&D. More than a decade typically elapses from initial drug

synthesis to final FDA approval. Since pre-clinical expenditures occur several

years prior to FDA approval, these costs are subject to greater compounding at

the industry cost of capital of 11%. Therefore they account for a greater

proportion of total capitalized compared to total out of pocket costs (42 percent

versus 30 percent).

R&D costs per new drug approval were observed to have increased at

an annual rate of 7.4% above general inflation when compared to the costs of

1980s introductions. A major factor driving this increase is the size,

complexity and number of clinical trials, which have increased significantly

in the 1990s compared to the 1980s.12 One important factor underlying this

trend is the increasing focus of the pharmaceutical industry on

chronic and degenerative diseases. These conditions require larger trial sizes

to establish their efficacy and longer time periods for effects to be observed.

A number of factors could operate to alter the growth pattern for future

R&D costs. Emerging discovery and technologies may have profound

effects on R&D productivity in the next decade. The mapping of the

genome, and related advances in fields like proteomics and bioinformatics,

has led to an abundance of new disease targets. Nevertheless, some industry

analysts have hypothesized that these developments may actually cause R&D

costs to rise in the short run.13 The basic reason is that these new technologies

require substantial up front investments, and to date they have generated

many disease targets that are not yet well understood. Eventually this

expansion in the scientific knowledge base should lead to substantial

efficiencies in the R&D process for new pharmaceuticals.

Comparison of India's Patent Act and TRIPS

Indian Patent Act of 1970 TRIPS

Only process not product Process and product patents in
patents in food, medicines, almost all fields of technology
chemicals

Term of patents 14 years; 5-7 in Term of patents 20 years

chemicals, drugs

Compulsory licensing and license of Limited compulsory licensing, no

right license of right

Several areas excluded from Almost all fields of technology

patents (method of agriculture, any
process for medicinal surgical or
other treatment of humans, or
similar treatment of animals and
plants to render them free of disease
or increase economic value of
products)
patentable. Only area conclusively
excluded from patentability is
plant varieties; debate regarding
some areas in agriculture and
biotechnology

Government allowed to use

Very limited scope for governments
patented invention to prevent
to use patented inventions
scarcity
Promising Developments
There are signs of change in some developing countries. One example is
India. The Indian Council for Scientific and Industrial Research (CSIR) has
established an aggressive program to commercialize the research of the scientists
working in its laboratories. This program involves identifying useful inventions and
patenting them not only in India, but in big markets like the United States as well. In
1991 CISR received 6 patents from the United States Patent & Trademark Office. In
2002 the number of U.S. patents granted to CISR had risen to 145. Many of these
patents involve pharmaceutical products arising out of research based on
traditional knowledge and the local ecosystem of India. One of the most successful
examples is Asmon, a polyherbal medication for the relief of bronchial asthma,
which blocks the leukotriene and lymphokine pathways that cause asthma. The
product is now on the market in India and is available to asthma sufferers in that
country at a price they can afford.14 Similar commercialization activities involving
new therapies for leprosy, HIV and cancer are in development as a result of
partnerships between CISR and private Indian pharmaceutical companies such as
Cadila Pharmaceuticals, Ltd.

University research in Brazil is leading to spin-off biotechnology companies

specializing products based on the rich genetic resources of the Amazon region.
16
And, organizations such as the Gates Foundation and the Global Malaria
Initiative are funding efforts to viable create pharmaceutical industries in
developing countries that can address the disease burdens of those countries. The
innovative efforts of One World, Health, Inc. of San Francisco to transfer patent
rights and technology to such companies is an example of these efforts.
Many developing countries have the capacity to build research-intensive
pharmaceutical industries capable of operating profitably by providing products
directed to the diseases common to their own nationals that can be supported by the
economics of the local market. However, for such local industries to take root and
grow, effective patent protection must be made available, the commercialization of
publicly funded research must be encouraged, and compulsory licensing must be
kept to a minimum. Wealthy countries can assist this process by subsidizing local
markets for the purchase of drugs through the Global Fund, and by direct programs
of assistance such as that recently proposed by President Bush. Consumers in all
countries can share the burden of drug development equitably by paying for
medicine at a price level consistent with their means, rather than attempting to shift
the costs of drug development to others.

Biblography
1) The Pharmaceutical Industry and the Patent System
By Bruce Lehman
2) Patents and New Product Development in the Pharmaceutical and
Biotechnology Industries
 By Henry Grabowski
Duke University
3) The Introduction of Pharmaceutical product patents in India
By Jean O. Lanjouw
Yale University
4) The Pharmaceutical Industry
By Boldrin & Levine
5) A Medical Patent System for Global Welfare
By Jordan Wane