Lethal hypocrisy of US Special 301 Report

Patent protection in the US is a convoluted and expensive business and yet it pulls up other countries that have robust systems

By Latha Jishnu
Published: Thursday 25 May 2023
Lethal hypocrisy of US Special 301 Report
Illustration: Yogendra Anand / CSE Illustration: Yogendra Anand / CSE

For intimidiation, unabashed hypocrisy and disregard of inconvenient facts, the latest “Special 301 Report” brought out by the office of the US Trade Representative (USTR) continues to take the honours.

The 2023 report is all of a piece with those of the previous years; its content, language and analysis not differing much for well over a decade. And India continues to be on its “Priority Watch” list, as it has been since at least 2007.

The “Special 301 Report” looks at the laws on intellectual property (IP) rights in over 100 countries that the US trades with, and assesses the “adequacy and effectiveness” of these regulations in protecting and enforcing IP rights.

The yardstick USTR uses is its own—not any globally mandated agreement such as the World Trade Organization (WTO)’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) but Washington’s perception of how systems in different countries affect its trade interests.

The “Priority Watch” list is USTR’s category for those countries that present the most serious concerns in this regard.

What does the 2023 report say about India? That it “remains one of the world’s most challenging major economies with respect to protection and enforcement of IP”, with patent issues continuing to be of particular concern.

Why so? Because of “the potential threat of patent revocations, lack of presumption of patent validity, and the narrow patentability criteria which impacts US companies across different sectors.” It also complains that patent applicants continue to confront costly and time-consuming pre-grant and post-grant oppositions, long waiting periods to be granted patents and excessive reporting requirements.

It’s possible these whines are genuine; after all the US is the originator and hub of the patent system. But if one were to go by what is happening in the US, it makes much of the report’s allegations laughable.

The US pharma industry is notorious for patent litigation that costs millions of dollars and for cases that take years to be adjudicated, sometimes almost a decade.

An IP services advisory company says it takes up to three years for a patent case to reach trial and puts the cost of patent awsuits between $2.3 million and $4 million on average. Every year 5,000-6,000 patent cases are filed in the US.

Neither the costs nor the number of such cases are even halfway as high in other developed countries. As for India, very few patent cases take that long to be settled or cost even a tenth of the US figures.

Let us take the “lack of presumption of patent validity, and the narrow patentability criteria” that appears to be a major source of concern for US companies. This is a reference to Section 3d of the Indian Patents Act which clearly lays down what is eligible for patenting.

It is aimed at preventing the practice of evergreening, the practice of filing for new patents on secondary features of a particular product as earlier patents expire, thereby extending patent exclusivity well past the original 20-year term and to continue its predatory pricing.

While our lawmakers were clear on what can or cannot be patented, it turns out the US is still confused over how much a single patent claim can encompass.

Can a patent claim a broad genus of monoclonal antibodies solely by reference to their function of binding to a broadly defined target and the resulting effect of such binding, and not by any structural terms or amino acid sequence?

The dispute, which has split the pharma industry and the judiciary, centres on the interpretation of the enablement requirement laid down in Section 112 of the US Patent Act. It is intended to be a safeguard against any overly broad functional claims by inventors.

The genesis of this high-stakes case that is roiling the US is a patent infringement lawsuit on a cholesterol drug that was filed by Amgen against a competitive product from Sanofi and Regeneron.

Over the years, a couple of Amgen patents were invalidated by a district court and also by a federal appeals court. Most of the pharma giants have weighed in on one or the other side in petitions filed in the courts.

The nub of the issue is this: are broad patent claims necessary to ward-off me-too drugs that could come into the market without investing in further research, as Amgen claims, or would it threaten innovation and preempt future development of novel therapeutics, as Sanofi and its supporters like Pfizer, Eli Lilly and AstraZeneca contend?

If such a fundamentally critical question has not been settled after almost a decade, what is ustr’s gripe with the patent regime in India and in other major non-western economies?

The answer is simple. The US’ position on most issues is self-serving and not based on international rules. But why not, if bullying can get Washington what it wants? Underlying the Special 301 exercise is the implied threat of action against the “defaulting” countries.

Unlike India's previous United Progressive Alliance (UPA) government, the present regime has hastened to rectify some of the lapses cited by the Special 301 reports in recent years.

The most significant is abolition of the Intellectual Property Appellate Board (IPAB) and the handing over of its functions to the commercial courts and High Courts. The Patent Office has also announced fixed timelines for disposing of pre-grant and post-grant oppositions.

There is also the dilution of Form 27, a critical component of the patent law which required companies to furnish details of how their patented inventions were being worked in India.

It was targeted by USTR as a burdensome reporting requirement. This column has been arguing for long that New Delhi should stand up to Washington’s hectoring since it is well within its rights to enact an IP law of its choosing as long as it meets global norms (see ‘Standing up to the US’, Down To Earth 1-15 May, 2014).

The point is that reforms and procedural streamlining must be undertaken keeping our interests in mind and not at the behest of a powerful trading partner.

The latter will keep changing the goalposts. The 2023 report has flagged future areas of disagreement and conflict. One is the draft Digital Personal Data Protection Bill, which has been withdrawn after undergoing changes since being introduced in 2019.

The US says it is “closely following” the progress of this bill, and encourages India to undertake a transparent process. The tone and intent of the message is clear. Will the Narendra Modi government be paying heed again? 

This article is part of the June 1-15, 2023, issue of Down To Earth magazine

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