Intellectual property rights

Also called: IPR, Intellectual property · Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT

Meaning

Intellectual property rights (IPRs) are legal rights that give the owner of an intangible creation (something you cannot touch, such as an invention, a brand, a creative work or a design) the exclusive right to use it, or to let others use it, for a limited period. When that period ends, anyone may use the creation.

IPRs matter because they set a balance between two goals. The first is incentive: rewarding the people who spend crores on research. The second is access: keeping medicines, seeds and technology affordable for poor people. Since 1995, IPRs have also been part of trade law under the WTO.

Explanation

How IPRs work: the incentive vs access trade-off

• Exclusive: only the owner may use the creation, or give permission to others.
• Time-limited: when the term ends, the creation enters free public use.
• Incentive to innovate:
• A firm spends crores on research.
• A monopoly (sole right to sell) for a fixed period lets it charge more.

• It earns back its research cost, so firms keep inventing.

• Access problem:

• While the monopoly lasts, prices stay high.

• Poor patients or farmers may not be able to buy the product.

• Every IPR rule picks a point on this balance. It decides three things:

• how long the monopoly lasts;
• what can be protected (for example, whether a new salt of an old drug counts as new);
• when the state can override the right (for example, through a compulsory licence).

Main types of IPR

• Patent: protects an invention.
• Trademark: protects a brand, meaning a name or logo that tells buyers who made the product.
• Copyright: protects creative works such as books, music and films.
• Industrial design: protects how a product looks.
• Geographical indication (GI): marks a product that comes from a particular place.
• Trade secret: protects confidential business information, such as a formula.

Patents: the most tested IPR

• Patent: a right granted by the government. Only the holder may make, use, sell or import the invention, for 20 years from the filing date.
• The bargain: the inventor must disclose (publish) how the invention works. Society learns the technology, and after 20 years anyone can use it.
• Three tests of patentability:
• Novelty: it is new and not already known anywhere.
• Inventive step: an expert in the field would not find it obvious.

• Industrial application: it can be made or used in industry.

• Product patent vs process patent:

• A product patent protects the thing itself, for example a molecule. No one else can make it by any method.

• A process patent protects only one method. Others can make the same product by a different method.

• Worked example: the term runs from filing, not grant

• A patent is filed on 1 January 2010 and granted in 2014.
• It expires on 31 December 2029, which is 20 years from filing.
• The real monopoly, from grant to expiry, is only about 16 years. The years spent examining the application count against the term.

TRIPS: the WTO's rulebook for IPRs

• TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights) was negotiated in the Uruguay Round. It came into force with the WTO in 1995.
• Minimum standards: every WTO member must give at least this level of protection. A member may give more, but not less.
• MFN (most-favoured-nation): an IP benefit given to one member's nationals must be given to all members' nationals.
• National treatment: foreigners' IP must be treated no worse than the IP of a country's own citizens.
• Dispute settlement:
• IP disputes can go to the WTO.
• So a member that breaks the rules can face trade retaliation (other members may raise barriers against its exports).

• Older WIPO treaties had no such enforcement.

• Transition periods:

• Developing countries had until 1 January 2005 to bring in product patents for medicines and agrochemicals.

• For least developed countries (LDCs), the TRIPS Council decided in November 2015 that they need not protect pharma patents until 1 January 2033, or until they stop being an LDC, if that is earlier [5].

• Flexibilities:

• The Doha Declaration (November 2001) says TRIPS "does not and should not prevent" members from protecting public health [1].
• It confirmed that members may grant compulsory licences and may decide for themselves the grounds for one [2].
• A compulsory licence is state permission for a third party to make a patented product without the holder's consent, in return for a royalty (a fee per sale).

In India

• Patents Act 1970 (process patents only):
• For food, drugs and chemicals, only process patents were allowed.
• Indian firms legally reverse-engineered foreign drugs (worked out the chemistry, then made the drug by a new process).
• This built the generics industry. A generic is a copy of a drug, sold under its chemical name, that works the same as the brand.

• Indian generics make up about 20% of global generic exports by volume [8]. This is why India is called the "pharmacy of the world".

• Amendments to meet TRIPS:

• 1999: a mailbox that stored pharma product-patent applications to be examined from 2005, plus exclusive marketing rights.
• 2002: the 20-year term.

• 2005: product patents for drugs, food and chemicals, along with the safeguards below.

• Section 3(d), the anti-evergreening rule:

• Evergreening means making a small change to an old drug, such as a new salt or crystal form, to get a fresh patent without any real medical gain.
• Under s. 3(d), such forms count as the same substance unless they differ significantly in properties with regard to efficacy [6].

• Novartis v Union of India (Supreme Court, 1 April 2013) refused a patent for Glivec (imatinib mesylate). The new form showed no better therapeutic efficacy.

• Compulsory licensing:

• s. 84: available 3 years after grant.
• s. 92: for a national emergency, extreme urgency or public non-commercial use.

• s. 92A: for export to countries that cannot make medicines themselves [7].

• Natco v Bayer (March 2012), India's first compulsory licence: it covered Nexavar (sorafenib tosylate), with a 6% royalty [7].

• Bayer charged about ₹2,80,000 a month. Natco charged about ₹8,800 a month.
• That is a price cut of about 96.9%.

• Bayer still receives about ₹6,336 per patient per year (6% of ₹1,05,600).

• Other rules:

• Pre-grant opposition (s. 25(1)): any person can challenge an application before it is granted.
• International exhaustion (s. 107A(b)): once the holder has sold a product anywhere in the world, it loses control over resale. So parallel imports are allowed.

• No utility models: India has no "petty patents" (short-term, easy-to-get patents for small improvements).

• External pressure: India is on the USTR Special 301 "Priority Watch List" (a yearly US review of other countries' IP laws). The 2014 report flagged s. 3(d) [6]. India's reply is that its law is TRIPS-compliant and that disputes belong in the WTO.

Don't confuse with

• Product patent vs process patent: a product patent blocks the product made by any method. A process patent blocks only one method. India allowed only process patents for drugs from 1970 to 2005.
• Compulsory licence vs parallel import: a compulsory licence lets a third party make the patented product without consent, in return for a royalty. A parallel import brings in the holder's own genuine product from a cheaper foreign market.
• Data exclusivity vs patent: data exclusivity bars the drug regulator from using the originator's trial data to approve generics, even where there is no patent. TRIPS Art. 39.3 requires only protection against "unfair commercial use", so India rejects data exclusivity.
• TRIPS vs WIPO treaties: both set IP rules. Only TRIPS can be enforced through WTO dispute settlement and trade retaliation.

Prelims Hooks

• A patent lasts 20 years from the filing date, not from grant. Its three tests are novelty, inventive step and industrial application.
• TRIPS came into force with the WTO in 1995 and sets minimum standards. It includes MFN, national treatment and WTO dispute settlement.
• Product patents for drugs came in India with the 2005 amendment. The deadline for developing countries was 1 January 2005. The LDC pharma transition runs to 1 January 2033 [5].
• s. 3(d) stops evergreening. It was upheld in Novartis (SC, 2013). India's first compulsory licence was Natco v Bayer (2012), under s. 84, with a 6% royalty [7].
• Art. 31bis (compulsory licences for export) came into force on 23 January 2017. It was the first amendment to any WTO agreement [1].
• Trap: the MC12 TRIPS Decision (17 June 2022) covered only COVID-19 vaccine patents, for five years. It did not cover diagnostics or therapeutics [3][9].

Mains Points

• Innovation vs access is a balance, not a choice.
• TRIPS sets minimum standards, but the Doha Declaration confirms that flexibilities are legitimate [1][2].
• India uses these flexibilities: s. 3(d), compulsory licensing and international exhaustion.

• Novartis (2013) and Natco (2012) show that India can follow TRIPS and still protect public health.

• Generics are a strategic asset.

• The process-patent era made India the source of about 20% of global generic exports by volume [8].
• TRIPS-plus demands in FTAs (rules that go beyond TRIPS) would threaten this. Examples are data exclusivity, patent-term extension and weakening s. 3(d).

• India must protect its policy space in the EFTA, UK and EU deals.

• The global fixes have limits.

• Art. 31bis took 14 years to come into force, from the 2003 waiver to 2017.
• The MC12 decision covered vaccines only, and talks on extending it to diagnostics and therapeutics stalled with no consensus [3][4].
• Unilateral pressure such as Special 301 [6] shows the North-South split. This strengthens the case for voluntary tools like the Medicines Patent Pool, and it is a useful GS-II link to global health governance.

Related concepts

• TRIPS
• Patent
• Evergreening of patents
• Pre-grant opposition
• Compulsory licensing
• Parallel import
• Data exclusivity
• TRIPS-plus provisions
• Patent pool
• Patent thicket

Read more

• TRIPS and patents: innovation vs access to medicines