SCHOOL OF LAW

Academic Session
2023-2024

BBA.LLB (Hons.) Sem- 8th

SEMINAR PAPER
On

Patent Laws in Pharmaceutical Industry

Subject – IPR IN PHARMA INDUSTRY

Submitted by Submitted to
Alisha Ali Usmani Ms. Akansha Vashisht
Admn. No. 20GSOL1030011
OBJECTIVES
To outline the Patent Laws and Pharma Industry
To outline the Understanding of the Patent Laws in Pharma Industry
To elaborate on the concept of the usefulness of Patent Laws in the Pharma Industry
To outline the TRIPS and WTO concepts into Patent Laws

RESEARCH METHODOLOGY
This research work is mainly a legal analysis. This study is mainly based on analysis of the
primary data (The Patent Act,1970) and secondary data (Which consist of various websites,
journals, articles, magazines, and books related to Intellectual Property Laws). A descriptive
method of research is used to gather information about the present existing conditions.

LITERATURE REVIEW

International Patent Law and the Pharmaceutical Industry: The global patent system,
from the Paris Convention to the TRIPS Agreement, has been significantly bolstered. The
creation of TRIPS in 1995 expanded patentability to medicines, adding fuel to discussions
about the patent system. The international patent system pre- and post-TRIPS, the key
characteristics of the pharmaceutical industry, and the benefits and disbenefits associated
with patent innovation are critically evaluated.

Strategic Patenting by Pharmaceutical Companies: Strategic patenting employed by

pharmaceutical companies often leads to high drug prices. This practice, while currently
considered lawful, is argued to require intervention by competition authorities due to its
harmful effects on drug prices and pharmaceutical innovation.

Patenting in the Pharmaceutical Industry: A review of the literature is provided in three

key areas: the international patenting system; how pharmaceutical patenting and R&D differ
from those of other industries; and results from previous studies on innovation relating R&D
to patents.
ABSTRACT

The pharmaceutical industry is a sector that discovers, develops, produces, and markets

pharmaceutical drugs for use as medications. The aim is to cure and prevent diseases or

alleviate symptoms. It is one of the fastest-growing economic sectors with worldwide sales of

more than $1.48 trillion in 20221. Meanwhile, Patent law plays a crucial role in the

pharmaceutical industry providing a balance between incentivizing companies to continue

developing new treatments by providing sufficient exclusivity time on the market and the needs

of the public to have access to affordable treatment by allowing market competition to lower

the cost of drugs. In India, the pharmaceutical sector is regulated by the law of patents.

Introduction of the Patent Act 1970, allowing pharmaceutical companies to allowed to patent

their process of manufacturing drugs validating patents up to 20 years2. Identifying new drug

targets, attaining regulatory approval from government agencies, and refining techniques in

drug discovery and development are among the challenges that face the pharmaceutical

industry today. IPRs provide a period of market exclusivity for new drugs, which allows

companies to recoup the significant costs associated with drug discovery and development.

This paper talks about the benefits and challenges associated with Patent law in the

pharmaceutical industry while giving a brief review of The Indian Patent Law,1970 and various

international agreements including the General Agreement on Tariffs and Trade (GATT) in

1944, Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement and World

Trade Organization.

1
Matej Mikulic, 'Global pharmaceutical industry - statistics & facts' (10 January 2024)
https://www.statista.com/markets/412/topic/456/pharmaceutical-products-market/.
2
Pramit Bhattacharya, 'Patent Law in India and the Pharmaceutical Industry' (IPL Blog,
https://blog.ipleaders.in/category/general/).
 INTRODUCTION

India is consistently marking an increasing number of the pharmaceutical industry

which is successful and high in technology witnessing growth. The Indian pharmaceutical

industry was valued at approximately US$42 Billion in 2021 and is projected to reach $130

Billion by 2030. Being the largest provider of generic medicines globally by volume,

accounting for a total value of 20% of total global pharmaceutical exports, and also the largest

vaccine supplier, manufacturing over 60% of all vaccines worldwide. However, Patent

law is crucial for pharmaceutical companies in India as it safeguards their inventions,

preventing unauthorized replication of their drugs and designs. This protection is a significant

deterrent against intellectual property theft, ensuring that the fruits of their labor are not

unjustly exploited.

The assurance of patent protection encourages these companies to invest in expensive research

and development (R&D) activities. This investment leads to the creation of new drugs and

treatments, fostering innovation within the industry. Without the security provided by patents,

companies might be reluctant to invest in R&D due to the risk of their inventions being copied.

Patents can provide pharmaceutical companies with a temporary monopoly over the production

and sale of their drugs. This monopoly allows them to recoup their investment in R&D and

earn profits. These economic benefits are a significant incentive for companies to innovate and

develop new drugs.

India’s adherence to the TRIPS agreement necessitates compliance with international patent

standards. This compliance allows Indian pharmaceutical companies to compete on a global

scale. It ensures that they are not disadvantaged in international markets due to differences in

patent laws. Patents also aid in the preservation of drugs, drug compositions, synergistic
combinations, and even methods used to develop medicines. This preservation is important for

the continuity of the pharmaceutical industry and the advancement of medical science.

PATENT LAWS IN IPR

A patent right is a crucial component of Intellectual Property Rights (IPR). It is an

exclusive monopoly right granted to the inventor of an invention 3. This right is awarded as a

recognition of the inventor’s hard work, investment, and innovative contribution to the creation

of the invention.

When an invention satisfies the requirements of general novelty, non-obviousness, and

industrial or commercial application, a patent is granted 4. Both products and processes are

eligible for patent protection. A patent gives the owner the authority to decide whether or how

others may use an invention.

The patent right is a property right that provides the right to exclude others from making, using,

selling, offering for sale, or importing the claimed invention. It has a limited term and is

territorial, meaning the protection is only in the territory that granted the patent 5.

The government grants the property right in exchange for the disclosure of the invention. This

system encourages inventions, promotes the commercialization and application of the

invention, and accelerates the commercialization of the invention to society.

3
Lawctopus, Patent in Intellectual Property Right, LAWCTOPUS,
https://www.lawctopus.com/clatalogue/clat-pg/patent-in-intellectual-property-right/
4
Vajiram & Ravi, Intellectual Property Rights, VAJIRAM & RAVI,
https://vajiramandravi.com/quest-upsc-notes/intellectual-property-rights/
5
U.S. Patent and Trademark Office, Intellectual Property Basics: Resources, U.S. PATENT
& TRADEMARK OFFICE (June 19, 2020),
https://www.uspto.gov/sites/default/files/documents/USPTO-IPBasics-Resources-06192020-
508Compliant.pdf.
In essence, a patent right is a legal instrument that fosters innovation by providing inventors

exclusive rights to their inventions, thereby incentivizing research and development. It strikes

a balance between rewarding innovation and promoting public access to technological

advancement.

PATENT AND PHARMA PRODUCTS

Patent laws play a crucial role in the development and distribution of pharmaceutical

products. As below mentioned,

 Encouraging Innovation: Patents encourage innovation by granting inventors exclusive

rights to their inventions for a set period, typically 20 years6. This exclusivity allows

pharmaceutical manufacturers to recoup the substantial costs involved in research,

development, and obtaining regulatory approval from bodies like the U.S. Food and Drug

Administration (FDA).

 Protecting Inventions: Patents protect a drug manufacturer’s invention, such as a new

drug or a new use for a drug, and prevent other manufacturers from marketing products

covered by the patent 7.

 Balancing Innovation and Competition: By making the inventor’s market power

temporary, patent policies ensure access to affordable generic medicines and healthcare

6
Library of Cong., Cong. Rsch. Serv., R46679, Social Security: Benefit Calculation,
Financing, and Policy Options (2023),
https://crsreports.congress.gov/product/pdf/R/R46679.
7
U.S. Food & Drug Administration, CDER Conversation: Patents and Exclusivities for
Generic Drug Products, FDA, https://www.fda.gov/drugs/news-events-human-drugs/cder-
conversation-patents-and-exclusivities-generic-drug-products
 after patents expire8. This balance between innovation and competition is at the core of

patent policies.

 Regulatory Exclusivities: In addition to patent protection, certain pharmaceuticals, such

as innovative products or those that serve particular needs, may qualify for periods of

regulatory exclusivity when they are approved or licensed by the FDA. Regulatory

exclusivities vary in length from six months to 12 years, depending on the basis for the

exclusivity9.

Meanwhile, patent laws provide a framework that promotes the development of new

pharmaceutical products while ensuring that these products eventually become accessible to

the public. They strike a balance between fostering innovation and promoting competition in

the pharmaceutical industry10.

Other than that patent law protects pharma products in various manners as

 Exclusive Rights: Patent law grants inventors the exclusive right to make, use, sell,

and import their patented invention for a limited period, typically 20 years from the

filing date of the patent application11.

 Monetary Compensation: Patent holders can license their patents to others for use,

which can generate revenue through royalties or other licensing fees.

8
Thomas Philippon & Federico Huneeus, Optimal Patent Policy for Pharmaceuticals:
Balancing Innovation and Access to New Drugs, CEPR,
https://cepr.org/voxeu/columns/optimal-patent-policy-pharmaceuticals-balancing-innovation-
and-access-new-drugs
9
PhRMA, Intellectual Property, PHRMA, https://phrma.org/policy-issues/Intellectual-
Property
10
Congressional Research Service, In Focus: Supreme Court Decision in Mahanoy Area
School District v. B.L. (2021) (R46679), 1,
https://crsreports.congress.gov/product/pdf/R/R46679.
11
^ "Patent Protection," UpCounsel, (last visited May 13, 2024),
https://www.upcounsel.com/patent-protection.
  Legal Recourse: Patent owners have legal recourse against anyone who infringes on

their patent rights, allowing them to seek damages and injunctions against unauthorized

use of their invention12.

 Incentive: By providing a period of exclusivity, patent law incentivizes innovation by

allowing inventors to profit from their inventions, which encourages investment in

research and development.

 Disclosure Requirement: In exchange for patent protection, inventors must disclose

their invention in detail in the patent application, contributing to the pool of public

knowledge and fostering further innovation.

 Patent Portfolio: Accumulating patents can create a portfolio that strengthens a

company's position in the market and provides leverage in negotiations with

competitors13.

 Market Exclusivity: Patented products can enjoy a period of market exclusivity,

allowing the patent holder to establish themselves in the marketplace without

direct competition.

INDIA, PHARMACEUTICAL INDUSTRY AND PATENT LAW

The relationship between Indian patent law and the pharmaceutical industry is a significant

issue in terms of law, business, and public health. The balance between encouraging innovation

12
European Patent Office, "What are patents and what do they protect?," FAQ, last modified
[insert date], https://www.epo.org/en/service-support/faq/patents-and-ip/what-are-patents-
and-what-do-they-protect.
13
PatentRebel.com, What Does a Patent Protect? (last visited May 13,2024]).
through patent protection and ensuring universal access to affordable pharmaceuticals has

become more important in this ever-changing climate14.

Significant changes to India’s patent system occurred after India signed the Trade Related

Aspects of Intellectual Property Rights (TRIPS) agreement in 1995. India, being a signatory of

the TRIPS agreement, was under a contractual obligation to amend its Patent law to make it

compliant with the provisions of the agreement 15.

The first amendment in this series was in the form of the Patents (Amendment) Act, of 1999,

which laid down the provisions for filing of applications for product patents in the field of

drugs and agrochemicals. The second set of TRIPS obligations led to the Patents (Amendment)

Act, of 2002, which introduced a uniform term of 20 years for all categories of invention. The

third set of amendments in the patent law was introduced as the Patents (Amendment) Act,

2005.

Indian patent law provides for a stricter bar and an additional test of patentability for

pharmaceuticals. Besides novelty and inventive steps, pharmaceutical patents must undergo a

test under section 3 (d) of the Patents Act16. This amendment only provided patentability of

pharmaceutical substances to the extent that patents would apply to new chemical entities.

India’s experience in legislation and judicial practice, such as using TRIPS’s flexibility to

facilitate access to medicines, implementing compulsory licensing to create more chances for

voluntary licensing negotiation, and updating the guidelines for examining pharmaceutical

14
CliffsNotes Study Guides, Study Notes, CliffsNotes, https://www.cliffsnotes.com/study-
notes/4863898.
15
The Global Significance of India's Pharmaceutical Patent Laws, AIPLA (May 8, 2023),
https://www.aipla.org/list/innovate-articles/the-global-significance-of-india-s-pharmaceutical-
patent-laws.
16
Namrata Chadha, Indian patent law on pharmaceuticals: challenges and opportunities,
Lexology (Date of Publication), https://www.lexology.com/library/detail.aspx?g=6a117884-
0840-4cfc-b698-12131a965722.
applications to prevent the evergreening of pharmaceutical patents, deserves serious

attention17.

India for instance did not provide product patents for pharmaceutical drugs. It only

provided for process patents. The laws in India gave rise to a thriving generic drug industry

wherein practically every foreign drug was reverse-engineered without fear of any sanction.

The pharmaceutical industry was greatly affected by this practice and reversing this trend

among developing countries was a top priority for the US as TRIPS negotiations were being

conducted. However, developing countries rebelled against the strict imposition of this norm

without having the requisite infrastructure to implement it. They sought some compromise

whereby Article 27:1 states as follows: “Subject to the provisions of paragraphs 2 and 3, patents

shall be available for any inventions, whether products or processes, in all fields of technology,

provided that they are new, involve an inventive step and are capable of industrial application.

Subject to paragraph 4 of Article 65, paragraph 8 of Article 70, and paragraph 3 of this Article,

patents shall be available and patent rights enjoyable without discrimination as to the place of

invention, the field of technology, and whether products are imported or locally produced”18.

Under the TRIPS Agreement, governments can make limited exceptions to patent rights,

provided certain conditions are met. For example, the exceptions must not “unreasonably”

conflict with the “normal” exploitation of the patent.

17
Juan He, Indian Patent Law and Its Impact on the Pharmaceutical Industry: What Can
China Learn from India?, in ARCIALA Series on Intellectual Assets and Law in Asia
((ARCIALA) pp 251–269 (Uday S. Racherla, Kung-Chung Liu, 2019),
https://link.springer.com/chapter/10.1007/978-981-13-8102-7_11.
18
International Journal of Pharmaceutical Sciences Review and Research, Volume 3, Issue 2,
July – August 2010; Article 008, www.globalresearchonline.net
 WTO, TRIPS, AND PHARMACEUTICAL PATENTS

The establishment of the World Trade Organization (WTO) has led to a tremendous

paradigm shift in world trade. The agreement on Trade-Related (Aspects of) Intellectual

Property Rights (TRIPS) was negotiated during the Uruguay round trade negotiations of the

General Agreement on Tariffs and Trade (GATT) and “one of the primary reasons for

incorporating intellectual property issues into the GATT framework was the pharmaceutical

industry”.4 India signed the GATT on 15 April 1994, thereby making it mandatory to comply

with the requirements of GATT, including the agreement on TRIPS.

India is required to align its patent laws with the TRIPS Agreement, ensuring patents

for pharmaceutical products and processes with a minimum term of 20 years. Compulsory

licenses will be restricted and granted based on merit after hearing from the patent holder. Non-

discrimination between imported and domestic products will be maintained, with the burden

of proof on the infringer. India has until January 1, 2005, to implement these changes. The

Patents (Amendment) Act 1999 introduced exclusive marketing rights (EMRs) and a mailbox

system for pending patent applications. Legislative measures to meet TRIPS obligations,

including the Patents (Second Amendment) Bill 1999, are being finalized 19. Compulsory

license provisions under Indian law will be required to be limited and conditional to comply

with the TRIPS Agreement, and the government will grant such licenses only on the merit of

each case after allowing the patent holder to be heard. In addition, there will be no

discrimination between imported and domestic products in the case of process patents, and the

burden of proof will rest with the party that infringes.

19
Patents and the Indian Pharmaceutical Industry, Author, Legal Issues in Biotechnology and Associate and
Strategic Initiatives Team Leader, Nishith Desai Associates (NDA)
 CONCLUSION

Patent law significantly impacts the pharmaceutical industry by balancing the need for

innovation with public access to affordable medicines. In India, the introduction of the Patents

Act of 1970, aligned with international agreements like TRIPS, has modernized the country's

patent system, fostering growth and technological advancements in the pharmaceutical sector.

The amendments in 1999, 2002, and 2005 have streamlined patent protection, encouraging

R&D while complying with global standards. India's commitment to TRIPS ensures its

pharmaceutical products compete internationally, supporting both innovation and access. The

country's experience with compulsory licensing and prevention of patent "evergreening"

demonstrates a pragmatic approach to intellectual property, aligning economic growth with

public health needs. These legislative measures have positioned India as a key player in the

global pharmaceutical market, balancing innovation incentives with the imperative of making

essential medicines accessible to all. The ongoing evolution of India's patent laws underscores

the dynamic interplay between legal frameworks and industry practices, highlighting the

critical role of patents in fostering a robust pharmaceutical industry while meeting international

obligations and public health objectives. These legislative measures have positioned India as a

key player in the global pharmaceutical market, balancing innovation incentives with the

imperative of making essential medicines accessible to all. The ongoing evolution of India's

patent laws underscores the dynamic interplay between legal frameworks and industry

practices, highlighting the critical role of patents in fostering a robust pharmaceutical industry

while meeting international obligations and public health objectives.