The essence of “invention” and its importance for human civilization has been summarized by William James in the following words – Invention, using the term most broadly, and imitation, are the two legs, so to call them, on which the human race historically has walked.
Inventions and innovations are the drivers of human society as they take us forward in the desired direction making us and our lives better than they were previously. But as the scale of inventions and innovations has progressed with time, there is a growing need for protecting those. Someone’s brainchild may be exploited by someone else who can steal away the credit from the real inventor. Thus, such complex times call for strict protection. We have found this protection in the concept of “patents”. In the simplest words, the patent refers to a right granted to the inventor to make exclusive use of his/her invention. That means an inventor gets a monopoly right over his invention and no one else can exploit his/her invention in any way without permission.
But it is not as simple as it sounds. Patent laws are about striking a balance between the inventor’s right on the invention and the general public’s interest to enjoy the benefits of that invention. Sometimes, this balance is disrupted. The laws governing this area tend to shift this balance in different directions. At other times, the competition among the inventors is affected in some unwanted ways by the patent laws. Here, we would examine how patent laws have been exerting influence on competition and other aspects of inventions, the scope of improvement, and the challenges to be tackled.
Patent Laws in India – A Brief
The history of patent laws in India dates back to the British colonial era. Most of our legal system has been inherited from English Law. The earliest framework to regulate patents in India came in 1856. Then we also had the Indian Patent and Designs Act, 1911. It was amended quite a few times before it was finally repealed by the Indian Patents Act, 1970. The Act of 1970 was modeled on the British Patents Act, 1949. Thus we see that the real work on forging a systematic web of laws to govern the patents began in India only after the Independence in 1947. There were two major committees formed to make suggestions and improvements in patent laws.
They were the Patent Enquiry Committee (1948-50) and the Ayyangar Committee (1957-59). While the first committee pointed out how the Indian patent system was weak and had failed to trigger inventions and innovation among the Indians, the Ayyangar Committee highlighted the fact that foreign players in this field were taking undue advantage of the Indian market, and hence, there was a need to protect indigenous players from this unfair competition. Based on these recommendations, the Indian Patents Act, 1970 took birth. The Indian Patents Act, 1970 was again amended by the Patents (Amendment) Act, 2005, which was done to align it with the TRIPS agreement signed by India by the virtue of being a member of the World Trade Organization (WTO).
The Patents Act outlines the procedure to be followed to obtain a patent for one’s invention which begins with an application in the Indian Patent Office. There are also provisions for pre and post-grant opposition. It means that a person is allowed to file an opposition against an inventor’s application for a patent either before it is granted or afterward, with the procedures varying under both circumstances. There is a wide-ranging list of grounds provided based on which a person can file an opposition. The term of a particular patent extends up to 20 years. There is also an option for restoration of a patent after its date of expiration. As per the Act, a case for infringement of a patent can be filed in a civil court. However, the problem here is that there are no separate judicial institutions to deal exclusively with patent-related issues.
One of the most important things in the Act is the criteria for an invention to be termed as “patentable”. The first requirement is “novelty”, i.e. the invention must be new and not something already in public knowledge or use. The second is “obviousness”, which means that the invention should not be an obvious one. There should be a technique developed that is outside the realm of common general knowledge and something different from already existing ones. The third one is “industrial use”. The invention must be fit for industrial or economic exploitation. The Act also mentions a list of non-patentable inventions that run along similar lines.
By the virtue of the 1970 Patents Act, the patentee, i.e. the holder of a patent over an invention gets access to a variety of rights. The patentee has the right to exploit, i.e. use, exercise, sell, or distribute the patented invention. A patentee can also grant a license and even surrender the patent over the invention. The patentee also holds the right to sue someone for infringement of the patent. Thus, the Indian Patents Act has been the keeper of patents in India guarding unique and useful inventions and the rights of their inventors.
TRIPS and Concern of Patent Laws
The objective of the patents law has been to encourage creativity and innovation. When the right that an inventor can exercise over the invention is secured and allows obtaining the maximum benefits from selling, using, or exploiting that invention, it provides an incentive for people to invent. It gives a push for corporations and companies to invest in research and development to bring out innovative and original inventions for the development of the entire society.
The Indian Patents Act, 1970 was a bone of contention in the international community. It declared pharmaceutical product innovations and those of food and agrochemicals as unpatentable. This made the task of copying these innovations in India a cakewalk. By the means of reverse engineering, Indians were successful in making cheaper copies of these products and flooding the Indian market with them. However, this repelled many foreign players from investing in these sectors in India as there was no concrete patent protection in place for them.
Hence in the 1980s, we saw a surge in the international community of the demand from the developing nations to raise the standard patent protection by the developed nations. Finally, Intellectual Property Rights found a place in the Uruguay Round of Negotiations under GATT. Hence, IPR formally became a part of the WTO. This led to the emergence of Trade-Related Aspects of Intellectual Property Rights (TRIPS) and legislations in member nations being re-modeled on its basis.
TRIPS was a significant departure from many things that Patent Act, 1970 stood for. Under the Act of 1970, only processes could be patented. However, TRIPS opened the doors of the patent for the products in all the areas of technology as well. The term of a patent was also enhanced from 14 to 20 years. 1970 Act allowed the government to use the patented invention to prevent scarcity. But TRIPS made this use by the government very limited. Patents Act, 1970 has been a bit lenient in terms of the patent. It was, to some extent, successful in protecting indigenous businesses and consumers from foreign competition.
However, TRIPS made it open and vulnerable to foreign elements. This is a major point of divergence between the ambitions of developing and developed countries. Developed nations have industrialized economies with greater access to resources and technologies. Hence, they are ahead in terms of inventions. That is why they see “Patent” as a fundamental right, similar to the right to property. However, developing nations do not have that many resources at their disposal to throw themselves completely into R&D. Their economies are not yet that developed. That is the reason developing nations see it as an “economic policy” question. They want to opt for it to the extent it benefits their indigenous businesses and protects them from unequal competition presented by developed nations filing for the maximum number of patents in developing countries.
There have been major policy changes in Patents Law in India after TRIPS came into existence. Since these changes, there has been a steep rise in the number of patents been filed in India. Data reveals that a major chunk of these is filed by foreign companies. Moreover, from the rest of the portion of the patent field by indigenous companies, the majority of them are filed by large-scale corporations. This means low-level businesses remain unprotected from the tough competition presented by the foreign players. After TRIPS, Indian Patent Laws have been stricter, but larger corporations in India have been successful in investing in R&D to secure their fair share of patents. But looking at the conditions of smaller-scale businesses, capacity building for them is going to take time. This makes them vulnerable to competition for which they are not prepared yet.
The conflict between Competition Law and Patent Law
Fairly from one perspective, Patent Laws are pro-competition. They promote healthy competition when competing parties are fighting fairly, investing in R&D, and promoting new inventions. The protection given by patent laws gives one competitor an edge over the other with the monopoly right over that particular invention. However, this can be very easily transformed into an anti-competition environment with the patent holder using exploitative or exclusionary measures to bolster his/her position in the market. The abusive conduct of the patentee can have a negative impact on the competition in the market. That means patents can be used as a weapon to eliminate other players from the competition by using unfair means.
Competition law is manifested in India’s legal system as Competition Act, 2002. It is aimed at promoting free and fair competition in the market. This leads us to conclude that Patent Laws and Competition laws must act complementarily and strengthen each other. But in practice, it has been observed that the two of them have been at odds lately.
A study was conducted by IIT Kharagpur in 2015 to dive deeper into the intersection of IP Laws and competition law policy. It concluded – here is likely to be a trend to restrict production by exclusive license since the number of exclusive licenses granted by the patent holders has increased in the course of last two years. This also hurts the price and ‘affordability’. It is suggested that a comprehensive policy on ‘compulsory license’ may be framed taking into view the gross abuse of dominant position by the ‘patent holder’ and ‘the licensee’.
Therefore, all of this can be condensed into the finding that patent holders have been engaging in anti-competitive activities, flouting the rules, and taking undue advantage of the monopoly granted by law. But this certainly needs to be checked and some provisions within the Patents Act serve this function. Section 140 and Section 150 of the Patents Act try to curb these illegal practices that patent-holders might engage in. Both of these sections mention the categories of contracts or other activities that may be practiced by a patentee concerning the patent that might be anti-competitive. These acts can be very well challenged in any civil court. Moreover, Section 83 also mentions that the right ought not to be abused by a patentee and that he/she should not be involved in unreasonable trade restrictions. Section 90(ix) also makes a mention of dealing with certain “anti-competitive” practices.
These provisions apparently seem sufficient to check the patent holders from engaging in anti-competitive practices. But on closer scrutiny, the cracks become highly visible. Patents Act is completely silent over what is meant by “unreasonable trade restrictions”. Section 83 also does not clarify the responsible authority to be reached out in case of a patent holder abuses the authority to exercise unreasonable restraint on trade. Section 90(ix) does talk about anti-competitive practices but it does not reveal which concerned administrative body would determine what could be categorized as “anti-competitive”.
These lacunas often lead to a dilemma over which authority to be approached and clearly which acts could be deemed as “anti-competitive”. This encourages people to resort to Competition Commission and seek remedy under Competition Law, rather than under Patents Act. Though both of these ought to be complementing each other, sometimes there arise certain conflicts. That calls for greater attention towards this arena. Patent Laws have been considered as self-sufficient and as the umbrella legislation to cover all the aspects related to patents but the analysis above clearly points out that it misses some key areas related to competition. Some clarity in the terms used and the judicial authority to be approached would make things lucid and helpful in governing a free and fair market with healthy competition.
Concluding the Discussion
Patents are important for any country on the path of development. It has become all the more significant as the world is growing more and more competitive. Firms and companies have been investing a lot in R&D to gain more patents as patents are accompanied by the monopoly right that gives them an edge over others in the market. But the disparities have created problems. There has been a constant conflict between developed and developing nations over this as talked above.
Moreover, this exclusive right to deal in the market granted by patents places certain entities as superior to others. This further exacerbates the problems of unfair competition in the market triggered by patents. India has a well-developed Patents Act but we find it in conflict with the Competition laws at times and little insufficient to deal with anti-competition practices relating to the patent. Thus, there is a need to reconcile both these laws and set their clear jurisdictions. This will make the market truly free and fair, eliminating practices that are not healthy for competition; and make the applicability of patent laws actually fruitful.