After Years of Waiting, Your or Your Competitor’s Patent Application May Quickly Issue in Brazil. Are You Ready?

The Instituto Nacional da Propriedade Industrial (INPI), also known as the Brazilian Patent and Trademark Office (BRPTO), may soon automatically grant approximately 231,000 currently pending patent applications in an effort to reduce the backlog of unexamined patent applications that have plagued the office for years.  As many of our readers know, the backlog of unexamined applications has resulted in pendency periods on average of at least ten (10) years.  Although expedited examination is available for green technologies, oil and gas technologies (under the patent prosecution highway (PPH), limited pharmaceutical applications, and when an Applicant can demonstrate clear infringement, these measures have failed to put a significant dent in the existing backlog.

In July 2017, the Brazilian government stated that it was considering an emergency measure authorizing INPI to automatically grant approximately 231,000 pending patent applications by 2020.  More information on this measure can be found at the following links:  here, here and here.  Although the announcement of this “automatic” grant has been highly controversial, INPI has implied that it has few, if any other options for dealing with the current backlog. Interestingly, some examiners are threatening to go on strike against the measure.

The emergency measure involves a simplified examination procedure in which INPI would automatically grant any unexamined applications that do not have any outstanding annuity payments due and do not have pre-grant submissions filed by parties against the granting of the patent.  Pharmaceutical applications or divisional applications where the parent application has not yet been examined, are excluded from the measure.

Proposed rules for implementing the new measure were available for public comment until August 31, 2017.  Interestingly, during recent meetings, INPI has suggested that proposals made by local associations that add complexity to the process, such as the possibility of amending claims prior to grant or requesting substantive examination after grant, will likely be disregarded.

While the exact details and the timing of implementation of the measure are unknown, now is the time for Applicants with pending non-pharmaceutical or (certain) divisional applications to be developing a strategy to take advantage of the measure while minimizing any potential risks.  For example, Applicants with products having a short product life span should consider taking full advantage of this emergency measure.

The measure as currently drafted contains an “opt-out” clause in which an Applicant may, within 90 days, request that an application not be automatically granted but instead be subject to regular, substantive examination.  Applicants should strongly consider using the “opt-out” option for applications covering very important inventions and/or if the claims as originally filed do not provide the desired coverage (especially since INPI is likely to disregard any amendments made after the application was filed).  Moreover, Applicants should examine applications of competitors since the measure provides the opportunity for third parties to prevent the automatic granting of an application by the submission of pre-grant submissions with briefs and accompanying prior art.  These pre-grant submissions must be filed before the emergency measure comes into effect.  Moreover, there is no cost for filing the brief before INPI.  .

Please continue to watch the BRIC Wall Blog for updates on the emergency measure for eliminating the backlog of patent applications in INPI.

This post was written by Lisa Mueller and Roberto Rodrigues of Licks Attorneys

Updates to the Brazilian Food and Drug Administration OTC Drug Guidelines

It has been 13 years since the Brazilian Food and Drug Administration (ANVISA) updated the guidelines regulating which drugs can receive over-the-counter (OTC) status. The much-anticipated guidelines, which issued on August 3, 2016 as Rule #98, revoke the previous Rule #138, which was established in 2003. Rule #138 established which drugs could be sold as OTC medications, according to their therapeutic indications. Drugs currently recognized as safe for over-the-counter use under Rule #138 will continue to be categorized as such until a reassessment can be completed and compliance with Rule #98 evaluated; however the new guidelines allow ANVISA to simultaneously reassess the status of currently available OTC drugs while expanding the number of new products available to consumers.

Rule #98 was previously submitted to Public Inquiry #27 on April 8, 2015. According to ANVISA’s report on the public inquiry, the general feedback was that the new rule will have a positive impact on the market, especially with regards to increasing patient’s access to drugs and the recognition of pharmacists’ roles in healthcare. It is expected that Rule #98 will expand the number of OTC drugs in the Brazilian market, which will increase price competition and marketing efforts towards consumers, rather than physicians.

In order to be compliant with Rule #98, drugs must comply with the following seven criteria:

  1. The drug must have been commercially available for a minimum of 10 years (five years in Brazil), as a prescription drug, or five years, as an OTC drug, in countries where regulations are similar to ANVISA.
  2. The drug must exhibit a high level of safety: the causes of the adverse reactions must be well known and easily reversed, the drug must have a low level of toxicity, a safe therapeutic window, and a low level of interactions with other drugs and food.
  3. The clinical condition treated by the drug cannot evolve rapidly, and its symptoms must be easily identifiable by the consumer.
  4. The drug must pose a low risk when used off label or in overdose scenarios.
  5. The drug cannot be indicated for continuous use; rather, it can only be used for a short period of time or a fixed period of time, which must be identified in the drug’s label (except for drugs labeled for prevention).
  6. The consumer must be capable of using the drug without any physical assistance from a healthcare professional.
  7. The drug cannot cause chemical dependency in consumers.

Companies looking to obtain OTC status for a particular drug can do so at any time; status can be applied for with the Marketing Approval Application, or after the drug has already been approved. The OTC status request must be supported by the required documents listed in Rule #98, ensuring compliance with the above-identified criteria. The company must also support its request with a risk reduction plan, which will inform the ANVISA how it will monitor occasional risks arising from the commercialization of the drug as an OTC product. Once the OTC status is approved, the decision will be published by ANVISA in the Official Gazette and be made available online. The publication will include the active pharmaceutical ingredients (API) in the drug. Once published, companies will have 180 days to make appropriate amendments to the drug packaging and label, as well as have the product sales status changed to OTC.

Importantly, Rule #98 defines which products are not entitled to receive OTC status, which includes drugs that require parenteral administration, or drugs that are commercially packaged, as the quantity of the API per package exceeds the maximum limits established by ANVISA.

The enforcement of Rule #98 will begin 30 days after its publication on September 3, 2016.  Please continue to check the BRIC Wall Blog for additional updates on the enforcement of these new guidelines in Brazil.

This blog post was written by Lisa L. Mueller, Caitlin E. Mac Nair of Michael Best, Ricardo Campello and Roberto Rodrigues of Licks Attorneys.

Update on Patentability of Diagnostic Claims: Australia (Part 1 of an 8-part Series)

This is an update to our 2014 10-part series “The Thorny Problem of Patentable Eligible Subject Matter.” Since that series, the U.S Patent and Trademark Office (USPTO) issued further guidance on December 16, 2014, updated in July 2015 and May 2016 (May 2016 Update), for evaluating subject matter eligibility under Section 101 (Guidance). The new Guidance superseded the March 4, 2014 Guidance.

On July 16, 2016, the USPTO issued a memo commenting on recent decisions by the U.S. Supreme Court (Supreme Court) and the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) in two subject matter eligibility cases directed to life sciences method claims: Sequenom v. Ariosa and Rapid Litigation Management v. CellzDirect, (Rapid Litigation Management) respectively. The memo concludes that neither decision changes the subject matter eligibility framework and that the existing Guidance and training examples are consistent with these cases; however, the memo also notes that the Rapid Litigation Management decision further clarifies the inquiry involved in determining whether a claim is directed to a judicial exception. In particular, the Federal Circuit stated that the “directed to” analysis of a process claim requires more than “merely identify[ing] a patent-ineligible concept underlying the claim” and instead requires an analysis of whether “the end result of the process, the essence of the whole, was a patent-ineligible concept.”

The May 2016 Update provided more detailed instructions for Examiners regarding the formulation of a rejection under Section 101 and evaluation of an Applicants response thereto. Specifically, Examiner’s must identify the exception to patentable subject matter, referred to as a “judicial exception,” that is being claimed, explain what is recited  in the claim and why it is an exception, and identify any additional elements that define claim features/limitations/steps that are beyond the exception. The Examiner must then explain why the additional elements individually AND in combination do not result in the claim as a whole amounting to “significantly more” than the exception.

The May 2016 Update also provided additional examples for application of the Guidance to specific types of life science claims, which were not well represented in the December 2014 Guidance.

As discussed in our 2014 series, the basic requirements for patentability in Australia are found in section 18(1) of the Patents Act (1990) (Act) which states that a claimed invention is patentable if  it (a) is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies; and (b) when compared with the prior art base as it existed before the priority date of that claim: (i) is novel; and (ii) involves an inventive step; and (c) is useful; and (d) was not secretly used in the patent area before the priority date of that claim by, or on behalf of, or with the authority of, the patentee or nominated person or the patentee’s or nominated person’s predecessor in title to the invention.

In Australia, the general test for patentable subject matter is that an invention is patentable (i.e. a manner of new manufacture) if it provides something that is industrially useful or provides an “artificially-created state of affairs” in a field of economic significance (National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252). Patentable subject matter in Australia, however, has largely been defined by case law. For example, methods of medical treatment of human beings, including surgery and the administration of therapeutic drugs were deemed patentable inventions under section 18 of the Act in Apotex Pty Ltd v. Sanofi-Aventis Australia Pty Ltd., [2013] HCA 50 (4 December 2013). Recently, however, the High Court of Australia (HCA) ruled in Yvonne D’Arcy v Myriad Genetics Inc., that claims covering isolated DNA are not patent eligible, finding that the creation of this category of important rights is best left to “legislative determination.”  D’Arcy v Myriad Genetics Inc (S28-2015) [2015] HCA 35.

Regarding diagnostic method claims, unlike the U.S., there is no recent Australian decision that negatively impacts the patentability of diagnostic claims. In general, diagnostic claims are considered to be directed to an “artificially-created state of affairs,” as they are man-made processes that produce useful and concrete results.

We at the BRIC Wall thought it would be insightful to update our analysis of subject matter eligibility under Australian patent law for diagnostic method claims based on the May 2016 updated Guidance and Life Science examples.

Analysis of Life Sciences Examples from May 2016 Update to USPTO Guidance

Example 29 – Diagnosing and Treating Juliti

Background: Example 29 of the May 2016 Update relates to a hypothetical situation relating to an autoimmune disease called “Julitis.” An Applicant for a patent discovered that Julitis could be diagnosed by detecting the presence of the hypothetical “JUL-1” protein in patients’ plasma, skin, hair and nails. Applicant has disclosed detecting JUL-1 using anti-JUL-1 antibodies that may be naturally occurring (e.g., a human anti-JUL-1 antibody isolated from a patient known to have julitis), or non-naturally occurring (e.g., a porcine anti-JUL-1 antibody created by injecting pigs with JUL-1, or a specific monoclonal antibody named “mAb-D33”).

Two representative claims from this Example are analyzed below.

Claim 1. A method of detecting JUL-1 in a patient, said method comprising:

  1. obtaining a plasma sample from a human patient; and
  2. detecting whether JUL-1 is present in the plasma sample by contacting the plasma sample with an anti-JUL-1 antibody and detecting binding between JUL-1 and the antibody.

Claim 2. A method of diagnosing julitis in a patient, said method comprising:

  1. obtaining a plasma sample from a human patient;
  2. detecting whether JUL-1 is present in the plasma sample by contacting the plasma sample with an anti-JUL-1 antibody and detecting binding between JUL-1 and the antibody; and
  3. diagnosing the patient with julitis when the presence of JUL-1 in the plasma sample is detected.

Analysis of claims 1 and 2: Both claims would constitute patent eligible subject matter in Australia. In the U.S., claim 1 constitutes patent eligible subject matter, while claim 2 constitutes patent ineligible subject matter, as the May 2016 Update indicates that the claim is directed to a judicial exception (i.e., the correlation between the presence of JUL-1 and the presence of julitis in the patient) and as a whole does not amount to significantly more than the exception itself.

Example 31 – Screening for Gene Alterations

Background: Applicant discovered the “wild-type” sequence of the human BRCA1 gene (i.e., the typical sequence of the gene in humans), and has also discovered naturally occurring alterations from the wild-type sequence that are correlated with an increased likelihood of developing breast or ovarian cancer. Applicant’s disclosure provides methods of screening patients for alterations in the BRCA1 gene by comparing a patient’s BRCA1 sequence with the wild-type BRCA1 sequence. The compared sequences can be germline (genomic) DNA sequences, RNA sequences, or cDNA sequences.

At the time the invention was made and the application was filed, scientists routinely compared DNA sequences using two-data generating techniques: (1) hybridizing two different DNA molecules (e.g., a probe and DNA isolated from a patient sample), and detecting whether the molecules bind to each other and form a hybridization product and (2) amplifying (making copies of) at least part of a DNA molecule such as DNA isolated from a patient sample, by using a set of primers to produce amplified nucleic acids, and then sequencing the amplified nucleic acids. The probes and primers used in these techniques are short single-stranded DNA molecules that typically have a naturally occurring nucleotide sequence.

In one embodiment, Applicant discloses using a computer-implemented micromechanical method known as Scanning Near-field Optical Microscopy (SNOM) to detect hybridization of a single probe to its target. At the time the invention was made and the application was filed, the use of SNOM to study DNA hybridization had been discussed in several articles in widely-read scientific journals. However, scientists were not commonly or routinely using SNOM to study DNA hybridization at the time the invention was made and the application was filed. Instead, scientists at the time typically used autoradiography to detect hybridization products.

In another embodiment, Applicant discloses using Cool-Melt polymerase chain reaction (Cool-Melt PCR) to amplify BRCA1 DNA from the patient sample. Cool-Melt PCR uses lower melting and annealing temperatures than conventional PCR, which results in Cool-Melt PCR having a 20-fold higher sensitivity of mutation detection than conventional PCR. At the time the invention was made and the application was filed, Cool-Melt PCR was known and used by a few scientists in the field. Several years after filing the application, Cool-Melt PCR became a standard laboratory technique that appeared in virtually every laboratory manual and was conventionally used by most scientists in the field to amplify mutant nucleic acids.

Three representative claims from this Example are analyzed below.

Claim 1. A method for screening germline of a human subject for an alteration of a BRCA1 gene which comprises comparing germline sequence of a BRCA1 gene or BRCA1 RNA from a tissue sample from said subject or a sequence of BRCA1 cDNA made from mRNA from said sample with germline sequences of wild-type BRCA1 gene, wild-type BRCA1 RNA or wild-type BRCA1 cDNA, wherein a difference in the sequence of the BRCA1 gene, BRCA1 RNA or BRCA1 cDNA of the subject from wild-type indicates an alteration in the BRCA1 gene in said subject.

Claim 70. The method of claim 1, wherein said comparing BRCA1 sequences further comprises:

  1. hybridizing a wild-type probe to a BRCA1 gene isolated from said sample; and
  2. detecting the presence of a hybridization product by measuring conformational changes in the probe that are indicative of hybridization to the BRCA1 gene with scanning near-field optical microscopy.

Claim 80. The method of claim 1, wherein said comparing BRCA1 sequences further comprises:

  1. amplifying by Cool-Melt PCR all or part of a BRCA1 gene from said sample using a set of primers to produce amplified nucleic acids; and
  2. sequencing the amplified nucleic acids.

Analysis of claims 1, 70, and 80: Claims 1, 70, and 80 would constitute patent eligible subject matter in Australia. In the U.S., claim 1 constitutes patent ineligible subject matter, as the May 2016 Update indicates that the “comparing” amounts to an abstract idea, which is a judicial exception, and the claim as a whole does not amount to significantly more than the exception itself.  In contrast, claims 70 and 80 are patent eligible in the U.S., as each claim recites additional elements that distinguishes the claim from well-understood, routine, or conventional techniques in the field (i.e., SNOM and Cool-Melt PCR, respectively), and, therefore, each of claims 70 and 80 as a whole amounts to significantly more than the exception itself.

In view of the above, it is clear that Australian patent law is considerably less restrictive to the patentability of diagnostic method claims as compared to U.S. patent law, at least for the foreseeable future.

This post was written by Lisa L. Mueller and Melissa E. Kolom of Michael Best and John Moore and Tony Davis of Griffith Hack.

An Overview of the USTR’s 2016 Special 301 Report on the State of IPR in Argentina

In this post, the BRIC Wall Blog continues to examine the Office of the United States Trade Representative (USTR) 2016 Special 301 Report (Report) released on April 12, 2016.  Following extensive research and analysis, the Report placed eleven (11) countries on the priority watch list and twenty-three (23) on the watch list. Argentina remains on the Priority Watch List in 2016.

The Report indicates that a major challenge in Argentina is the lack of effective IPR enforcement by the national government. Argentine police do not take ex officio actions, prosecutions frequently stall, and cases may languish in excessive formalities. Furthermore, even if criminal investigations reach final judgment, sentences are not sufficient to deter future infringement.

Argentina also continues to struggle with rampant counterfeiting and piracy. The notorious La Salada market in Buenos Aires is one of the biggest open-air markets in Latin America offering counterfeit and pirated goods. The city of Buenos Aires attempted to combat increasing lawlessness in the market in 2014, but received little assistance from the national government and as such the efforts were unsuccessful. In addition, optical disc copyright piracy is widespread and internet piracy is a growing concern in the country. In several content areas internet piracy rates are approaching 100%. For example, the Argentine-run market Cuevana, which offers pirated movies and TV shows, expanded in 2015 to include a mobile streaming application. The Report also indicates a problem with widespread use of unlicensed software by both private enterprises and the Argentine government. In spite of these issues, criminal enforcement for online piracy is nearly nonexistent.

Argentina also faces a number of ongoing challenges to innovation in the agricultural, chemical, biotechnology, and pharmaceutical industries. Argentina fails to provide adequate protection against the unfair commercial use and unauthorized disclosure of undisclosed test data generated to obtain marketing approval for pharmaceutical or agricultural products. Furthermore, Argentina only provides patent protection from the date of grant of the patent and offers no provisional protection for pending patents. There is a substantial backlog of patent applications, which causes long delays in registering rights. In addition, Argentina requires that the process for the manufacture of active compounds must be reproducible and applicable on an industrial scale in order to be patentable. Resolution 283/2015, introduced in September 2015, limits the ability to patent biotechnological innovations based on living matter and natural substances, including biologics. These measures limit the ability of companies investing in Argentina to protect their IPR and appear inconsistent with international practice.

In spite of these issues, the report states that the United States is hopeful that the recently elected government of President Mauricio Macri will engage more productively to improve the protection and enforcement of IPR in Argentina, thereby creating a more attractive environment for investment and innovation.

 

Written by Lisa L. Mueller and Rikki A. Hullinger.

An Overview of the USTR’s 2016 Special 301 Report on the State of IPR in Thailand

In this post, the BRIC Wall Blog continues to examine the Office of the United States Trade Representative (USTR) 2016 Special 301 Report (Report) released on April 12, 2016.  Following extensive research and analysis, the Report placed eleven (11) countries on the priority watch list and twenty-three (23) on the watch list. Thailand remains on the Priority Watch List in 2016.

The Report indicates that although steps have been taken to improve IPR protection and enforcement in Thailand, including the launch of the National Intellectual IP Center of Enforcement in 2013 and several legislative measures passed since 2014, these attempts have proven ineffective and unsuccessful.  For example, in 2014 the Thai government introduced several amendments to the Customs Act and Copyright Act in an attempt to decrease the volume of illegal goods transiting through the country and to diminish unauthorized cam-cording in Thai theaters.  Unfortunately, the government failed to consider concerns expressed by foreign governments on prior drafts of the amendments.  As a result, the amendments omitted a much-needed landlord liability provision, failed to provide proper enforcement against unauthorized camcording, and did not set forth adequate protections against the circumvention of technological protection measures (TPMs).

In addition to the above issues, another Copyright Act amendment designed to introduce an option for right holders to obtain a court order to force online service providers to take down infringing content has resulted in a lack of clarity in the operation of the notice-and-takedown procedures. Right holders also express concerns regarding pending legislation imposing content quota restrictions and are concerned about potential unintended effects of pending data and cyber security laws.  The Report indicates that it will be critical for Thai authorities to engage closely with foreign governments and industry to ensure that these and future legislative measures effectively improve IPR protection and enforcement in the country.

Other concerns include a backlog in pending patent applications, widespread use of unlicensed software in both the public and private sectors, growing Internet-based copyright piracy, rampant trademark counterfeiting, lengthy civil IPR proceedings and low civil damages, and extensive cable and satellite signal theft.  Furthermore, Thailand continues to struggle to provide an effective system for protecting against the unfair commercial use and unauthorized disclosure of data generated to obtain marketing approval for pharmaceutical and agricultural chemical products.

In conclusion, the Report urges Thailand to do more to prioritize IPR enforcement and to address longstanding organizational challenges in the country.

This post was written by Lisa L. Mueller and Rikki A. Hullinger, Ph.D.

India’s Stringent and Shifting Policy on Genetically Modified Cotton Seeds

India’s Cotton Industry & Monsanto

India is the world’s second largest producer and exporter of cotton. While India produced cotton before the introduction of genetically modified seeds, Monsanto Company’s (Monsanto) Bacillus thuringiensis (Bt.) cotton technology has helped the country achieve astronomical gains in cotton production as illustrated below in Figure 1.

Figure 1: Average cotton yields in India, 1950-2010

chart 1

Monsanto’s presence in India is as Mahyco Monsanto Biotech (MMB), a 50:50 joint venture between Maharashtra Hybrid Seeds Company Private Limited (Mahyco) and Monsanto. MMB licenses two types of Bt. cotton seeds in India known as Bollard I and Bollard II, respectively. A description of these varieties is as follows:

  1. Bollgard I:
    1. Introduced in 2002, Bollgard Bt. I cotton was India’s first biotech crop technology approved for commercialization. It has built-in protection against infestations by the destructive American Bollworm, Heliothis Armigera, and contains an insecticidal protein from a naturally occurring soil organism. Use of this variety does not require the payment of a royalty fee as bollworms have developed resistance against this variety.
  2. Bollgard II:
    1. Bollgard Bt. II was approved in mid-2006. It provides protection against bollworms and Spodoptera caterpillar, which leads to better boll retention, maximum yield, lower pesticide costs, and protection against insect resistance. Use of this variety requires the payment of a royalty fee.

MMB currently licenses the Bollgard I and Bollgard II technologies to approximately 50 Indian seed companies. These seed companies have introduced the Bollgard technology into their own germplasm and manufacture over 300 different Bt. cotton hybrid seeds. As a result, MMB is the only supplier of genetically modified (GM) cotton seeds in India and more than 90% of the cotton grown employs Monsanto’s technology.

Cotton Farmers in India

Unfortunately, the rise of cotton production in India has not translated to prosperity for the country’s cotton farmers. Instead, high numbers of Indian farmers have committed suicide since 1995, with heavy indebtedness accrued from their cotton business believed to have played a role. The factors contributing to this heavy indebtedness are discussed in more detail below.

Cost of seeds

Bt. seeds can cost up to four times more than traditional varieties of seeds. Farmers purchase fresh seeds annually because the resulting hybrid cultivars contain “terminator” technology, thereby preventing farmers from replanting the seeds the following year.

Need for irrigation/wate

Bt. seeds require irrigation. Sixty-five percent of India’s cotton crop comes from farmers who rely on rain and who do not have access to irrigation. Therefore, unfavorable weather conditions acutely hurt their crops and pockets.

Need for insecticides

The bollworm was not a major pest in Indian cotton in the 1970’s but higher yielding plants produced from GM seeds have drawn more pests.  In 2010, Monsanto admitted that insects developed resistance to its Bt. I cotton seeds and that the Bt. I hybrid crops were no longer effective against the bollworms. In view of this, Monsanto has advocated that Indian farmers switch to Bt. II cotton seed technology because these varieties have a greater ability to delay insect resistance.

Critics have pointed out that insects will eventually develop resistance to the insecticide produced by  Bt. II cotton seeds. They have also noted that the toxin produced by the Bt. II cotton seed is active only for 90 days and that the bollworm is a late season pest (cotton season can last as long as 160 days). Therefore, bollworms have become problematic for cotton farmers. With the rise of industrial agriculture in India and the use of new hybrid and GM seeds, farmers have become increasingly reliant on insecticides. Unfortunately, the bollworms have evolved to become resistant to these insecticides and their natural predator populations have also declined. As a result, farmers must purchase large quantities of insecticides to harvest cotton.

Low pay for cotton farmers

Cotton farming is a low paying profession.  Not surprisingly, a dip in the global price of cotton can spell disaster for farmers. As a result, many farmers have turned to loan sharks to pay for fertilizers, insecticides, and hybrid and GM seeds. Cycles such as this have driven farmers deeper into debt and tragically to suicide.

Many of the materials needed for farming and agriculture in India are heavily subsidized or offered without cost to the farmers by the Indian government. Therefore, the purchase of insecticides and high priced GM seeds as well as the reliance on irrigation and sporadic rains ultimately drain farmers’ finances. Figure 2 below shows that over time, increased adoption of Bt. cotton correlates with an increase in number of suicides by farmers.

Figure 2: Farmer suicides in India, 1997-2006

chart 2.png

India’s Cotton Seed Regulations

The farmer suicide epidemic has resulted in the Indian government regulating prices for Bt. cotton seeds. The aim is to help decrease the financial burden of India’s cotton farmers and break MMB’s monopoly on the GM seed market.

On December 7, 2015, the Ministry of Agriculture and Farmers Welfare (“Ministry”) issued a price control order, entitled the “Cotton Seed Price (Control) Order, 2015”, to bring uniformity in GM Bt. cotton seed prices across the states in India where previously none existed. This Order was created under the section 3 of the Essential Commodities Act, 1955.

On March 8, 2016, the Ministry issued a Notification, under the Cotton Seed Price (Control) Order, 2015 which capped  GM cotton seed prices at Rs. 800 (11.90 USD) for a packet of 450 g of seeds for the financial year 2016-2017. It also reduced the royalty fees (referred to as “trait value” in the Notification) to Rs. 49 (0.73 USD) per 450 g of seeds.

Serial No.

Components Bollgard I version of Bt. cotton hybrid

Bollgard II version of Bt. cotton hybrid

1

Seed value (in rupees) 635 751

2

Trait value including taxes (in rupees)

0

49

3 Max. Sale price (in rupees) 635

800

Before the Notification, Bt. cotton seeds were sold at prices ranging from Rs. 830-1000 (12.30-14.80 USD). The royalty fee received by companies such as MMB was cut by 74% (excluding taxes) from the previous royalty fee of Rs. 163 to Rs. 43. The Ministry said that this Notification was prompted because Bt. Cotton’s ability to resist bollworm pest attacks had weakened.

On May 18, 2016, another Notification, entitled Licensing and Formats for GM Technology Agreement Guidelines, was issued under the Cotton Seed Price (Control) Order, 2015. This Notification provided tighter restrictions on GM technology providers, such as MMB. The main restrictions are:

  • GM technology providers cannot deny a license to any qualifying domestic seed company wanting to incorporate the approved GM technology into its own hybrids and varieties.
  • GM technology providers must award license for the GM technology within 30 days of receipt of a request from an eligible seed company. In the event this obligation is not met, the licensee (domestic seed company) is deemed to have obtained the license.
  • GM technology providers cannot charge royalty fees exceeding 10% of the maximum sale price, which is fixed at Rs. 800, for the first five years from the date of commercialization of the technology. After first five year period, the royalty fees are reduced by 10% of initial value every year.
  • If GM technology loses its efficacy, the GM technology provider is not eligible for any royalty fees.

Critiques of the Regulations

The Indian biotechnology industry opposed the regulations on GM technology providers. The Association of Biotechnology Led Enterprises-Agriculture Focus Group, a pro-GM advocacy group (which represents crop research companies such as Monsanto, Mahyco, Syngenta, DuPont, Pioneer, Bayer BioScience, BASF, Advanta) stated the decision would discourage companies from investing in research. Critics from the agriculture industry have called the new regulations arbitrary and innovation stifling. Opponents have criticized the regulations saying that they do not offer methodology on how the Indian government arrived at the final royalty fees, GM technology providers have little to no say on whom to give licenses, and that the aim of these regulations is to benefit one stakeholder: the domestic seed companies.

Monsanto representatives voiced that it would be difficult to justify bringing new technologies into India given the new regulations. The company also threatened to shut down its business in India.

Rescindment of the May 18, 2016 Notification

On May 24, 2016, the Central Government rescinded the notification of May 18, 2016 based on the advice of the Controller and after consulting with the Committee under the Chairmanship of Joint Secretary (Seed) and Controller, Department of Agriculture, Cooperation and Farmers Welfare which was involved in developing regulations.

After the rescindment, the Indian government laid out the May 18, 2016 Notification for 90 days  for comments and suggestions by the public before taking a final call. The decision to seek input by the public  was taken at the highest level of the Indian government because had the May 18, 2016 Notification been final, the move may have hurt foreign investment in agriculture research and discouraged the introduction of new technology in India.

This post was written by Lisa L. Mueller and Himani Nadgauda of Michael Best.

An Overview of the USTR’s 2016 Special 301 Report on the State of IPR in India

In this week’s post, the BRIC Wall Blog continues to examine the Office of the United States Trade Representative (USTR) 2016 Special 301 Report (Report) released on April 12, 2016. The Report reviewed the state of intellectual property rights (IPR) protection and enforcement in U.S. trading partners around the world, and following extensive research and analysis, placed eleven (11) countries on the priority watch list and twenty-three (23) on the watch list. India is one of the 11 countries on the Priority Watch List in 2016. Although India has made efforts to improve its IPR, and the Indian courts retain their reputation for providing fair and deliberate treatment of both foreign and domestic litigants, long-standing and systemic deficiencies remain, in particular, in the pharmaceutical industry. Just yesterday, the Union Cabinet approved the National Intellectual Property Rights Policy, and a body of government-selected experts (the IPR Think Tank) is working closely with the United States to identify target issues for Indian policymakers. In particular, the Report expresses concerns regarding copyright infringement, patent system policies, trade secrets protection, and trademarks and counterfeiting.

With regards to copyright infringement, India has one of the highest rates of video piracy in the world, and according to a 2013 study, the number of incidents in India accounted for approximately half of all such piracy cases in the Asia-Pacific region that year. Despite the massive $4 billion dollar cost of pirated music and movies per year, India’s media and entertainment industry continue to grow and flourish; it is therefore even more imperative that India incorporate into its legal system more effective measures to counter piracy. To combat copyright infringement, the Report states that the United States has urged India to enact anti-camcording legislation, remodel its statutory license provisions, fully establish India’s Copyright Boards, and take steps to prevent public broadcasters from disseminating pirated content. The United States and India also announced important developments with respect to copyright through the 2015 Trade Policy Forum (TPF) Joint Statement, in which both countries agreed to strengthen copyright protection. The United States additionally held a workshop for a delegation of Indian government officials involved in copyright protection and enforcement, to discuss measures to curb piracy and promote content creation.

The patent system infrastructure in India also poses serious concerns for IPR protection. There is a significant backlog in the prosecution of pending patents, and Section 3(d) of the India Patents Act may limit the patentability of potentially beneficial innovations. The interpretation and application of Section 3(d) is unpredictable, and inventions that have successfully navigated prosecution in other countries can be denied patentability in India. This has been especially noticeable for inventions in software, biopharmaceuticals, agricultural chemicals, and green technologies. In 2015, India’s Ministry of Commerce and Industry issued The Patents (Amendment), Rules, 2015 (Patent Rule Amendments) in an effort to reduce delays in prosecution, however, the proposal incentivized the manufacture of products in India, going against international patent norms. The Indian government also needs to improve the conditions for which a compulsory license would be permitted, as only one compulsory license has been issued under Section 84 of India’s Patent Acts. The Report additionally urged India to provide an effective system for protection against unfair commercial use, without which companies are able to copy certain pharmaceutical products and seek immediate government approval for marketing based on the original developer’s data.

The Report also highlighted that India has not established reliable protection for trade secrets, and it is reportedly difficult to obtain compensation when these laws are violated. Additionally, India’s court system lacks sufficient procedural safeguards to protect trade secrets divulged through discovery, and there is a risk that such information may be publicly disclosed through the course of judicial proceedings. India is making efforts to improve laws that protect trade secret.

With regards to trademarks and counterfeiting, the Report noted that the level of production sale, distribution, importation, and exportation of counterfeit goods affecting India’s market remains concerning. Trademark holders face the risk of diminished profits and loss of reputation when consumers purchase fake products, and governments lose tax revenue since infringers generally pay no taxes or duties. The United States continues to express concerns about counterfeit and pirated goods produced in India and shipped to the United States.

Although India is taking steps to improve IPR protection and enforcement, the United States remains concerned about policies that appear to favor local manufacturing or Indian innovators in such a manner that damages the patent infrastructure not only in India but also around the world. Copyright and trademark infringement continue to pose a serious problem, and the unpredictable interpretation of the law provides modest legal coverage for inventors. It is encouraging that India is working to resolve these issues, however there are a number of important changes that need to be made and additional resources that need to be dedicated to strengthen IPR protection in India.

In the next post, the BRIC Wall Blog will examine in detail the Report’s findings on the state of IPR in China.

This post was written by Lisa Mueller and Caitlin MacNair.