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No logic in extending length of patents

LiveMint logoLiveMint 27-07-2017 Feroz Ali

A proposal to further extend the already 20-year-long patent term for pharmaceuticals is on the negotiation table of the Regional Comprehensive Economic Partnership (RCEP). As India negotiates the RCEP, a free trade agreement that can change the intellectual property (IP) landscape of its member countries, this week, we need to look closely at the proposal in the broader context of how the term of protection for IP rights has increased steadily over the years. More so for the generic pharmaceutical companies in India that manufacture patented drugs after the expiry of the patent term. Any extension of the patent term will adversely affect access to the cheaper medicines that they manufacture.

A patent is an exclusive right granted for an invention which is new, useful, and non-obvious. In developed countries, IP protections incentivise individuals for their creativity and public disclosure of technical information, which aid the promotion of new knowledge and increased innovation. In several developing countries, IP protection was either introduced through colonial-era laws or when they joined the World Trade Organisation (WTO), of which the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is a part. Patents are now granted for inventions across technologies—from kitchenware to biologics—each having the same term of protection. The protection grants the applicant a right to exclude others for a 20-year period—the length of a patent. After this period, it enters the public domain and can then be accessed and used by anyone.

Term of exclusivity

The term of a patent is a maximum time period during which it is valid and can be enforced. The longer the patent term, the greater the exclusivity for the invention and the greater the time taken for the technology covered by the patent to enter the public domain, thereby creating a technological lock-in. A patent could have a shorter term than the specified 20-year period for a variety of reasons: A challenge to a patent may result in its early invalidation, and non-payment of renewal fees could result in its lapse.

Historically, the Crown in the UK granted patent-like privileges for a 14-year period, as it usually took seven years each to train two apprentices in a new technology that came from continental Europe through migrants. Thus, the UK capped the term of a patent at 14 years. Despite the influence of Common Law, many erstwhile colonies legislated shorter terms of protection after independence. For instance, India had a five- to seven-year patent term for pharmaceuticals before becoming a member of the WTO.

The present 20-year patent term was mandated by the TRIPS agreement. Though there was some logic in English Law as to how it arrived at the 14-year patent term, the present patent term that countries agreed to during the TRIPS negotiations did not have any sound logic other than protecting the interests of particular industries.

Technology-agnostic term

The common term of protection that applies to all technologies regardless of the pace of technological development came from a provision of the TRIPS agreement. However, in some sectors like information technology and electronics, where technology is ever-changing, granting 20-year protection does not make sense. In industries where prices gradually decrease within the first few years of the introduction of the new technology, such an extensive period of protection without an economic basis is unwarranted. Moreover, having a technology-agnostic patent term creates an unnecessary deadweight loss where a shorter protection is required for an invention. Thus, considering the evolving nature of technology, it is imperative to have a technology-specific patent term—differential period of protection across different industries, so as to foster knowledge and innovation in the market.

Copyright, the other form of IP right that protects artistic and literary works, went through a similar phase in the US, where the term was extended just to prolong market exclusivity. Lobbying by the entertainment industry to keep Mickey Mouse, an artistic work, from falling into the public domain resulted in the extension of copyright term for corporate authorship to its present term of 95 years from first publication or 120 years from creation. In contrast, the term of a copyright in India for similar works is 60 years from publication.

Patent-term extension

Developed countries, on behalf of their pharmaceutical companies, seek a term extension arguing that it is necessary to recoup the research and development (R&D) costs. The proponents also argue that patent-term extension could make up for the loss of effective patent term—time lost in getting regulatory approval or owing to delays at the patent office. However, these arguments are untenable. Consistently, major pharmaceutical companies report profits that are many times more than the costs involved in R&D. Any further extension in the term of the patent will result in corporate welfare at the cost of social welfare. Given India’s strength as a world-class supplier of affordable generic medicines, granting a longer term for patents will result in delays in the entry of generic versions and could adversely affect access to medicines.

Feroz Ali and Roshan John are, respectively, the IPR chair professor at IIT, Madras and part of a Shuttleworth Foundation project on access to medicines, and research associate with the IPR Chair, IIT, Madras.

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