Man spraying vegetables with pesticides (Image from here)
Around 15-20% of India’s crop produce every year is lost to factors such as pests and diseases. Pesticides, thus, play an important role in the Indian agriculture sector. While there is a high prevalence of generic alternatives, the agrochemicals industry in India is observing an increase in the number of patent applications filed. Even outside of patents, the players in the pesticide industry have consistently been pushing for TRIPS+ protections such as extended data exclusivity (see here, here, and here). Notably, several pesticides manufactured by European companies are going off patent in recent times. In this context, a White Paper was recently released by the Crop Care Federation of India (‘CCFI’), a prominent association of several major agrochemical companies of India. The main finding of the paper was the insufficient working of these patents during and even after the patent period. In this post, I shall discuss the impact of non-working, the possible remedies in revocation and compulsory licensing, the issues surrounding disclosure of working and possible reforms in the system.
Brief Findings of the Study
The White Paper analysed the ‘working’ of patented pesticides in India for patents expiring between 2015 and 2022. This comes in the backdrop of Section 83 of the Patents Act, 1970 which provides the general principles applicable to the working of patented inventions. They include, inter alia, “that patents are granted to encourage inventions and to secure that the inventions are worked in India on a commercial scale and to the fullest extent that is reasonably practicable without undue delay”. Despite this guiding principle, the study found that a majority of these patented pesticides were not commercially launched in India until a little while before the end of their patent protection. It discussed the specific case of Saflufenacil which is used to control “a variety of weeds in tea plantations”. Despite India being the second largest tea producer in the world, the product was “registered in India for commercial introduction only in November 2020”, mere two months before patent expiry, even though it had been launched in China, the leading tea producer of the world, back in 2012.. Moreover, a third of these pesticides were not launched even till the expiry of the patent! It also took the example of Isotianil, a chemical used to control blast disease, a “major disease affecting rice production” in India, the second largest rice producer of the world. The product was, however, not introduced in India until its expiry in 2018 despite being launched “in a small rice producing country like South Korea” back in 2010. Additionally, it highlighted that despite the patentees having manufacturing facilities in India, these patented pesticides are invariably imported from high-cost economies, leading to high costs to the farmers.
Impact of Non-Working
The patent bargain is a delicate balance struck between access to the invention and incentive to the patentee. This balance, however, is vitiated when the patentee fails to work the patent in the country where the patent has been granted. Practically speaking, this leaves the public at large with only two alternatives. First, the public loses out on new and advanced technology which could have potential benefits since it is unavailable due to patentee’s non-working and the prohibition on manufacturing the same by competitors due to the possibility of patent infringement. Second, in the absence of domestic manufacturing, those who wish to access the patented products will need to import it from jurisdictions where the concerned product is available, with the patentee’s permission. Admittedly, there might be instances where due to economies of scale, importation might be a superior and cheaper alternative than domestic production in which case it might even be considered sufficiently worked if importing is available on a reasonable basis (see here and here). However, if it is not indeed the case, the option of importing the product would entail the user paying an excessively unreasonable amount for the product which could have been accessed at much cheaper rates if it was worked in the domestic jurisdiction. Moreover, as the study notes, “the annual import of patented pesticides exceeds Rs. 5,000 crore” considerably impacting the foreign exchange outflow. Non-working of patents, thus, mostly goes against the essence behind providing patent protections.
This is particularly relevant in case of pesticide patents. Non-availability of advanced and modern pesticide technologies at accessible prices lead to loss of crop produce which could be prevented with reasonable availability of patented pesticides. Notably, the availability of patented products during the period of patent protection is specifically important for pesticides despite the possibility of manufacturing generic alternatives once they go off-patent. This is because the utility of pesticides in the post-patent period gets reduced due to two prominent reasons. First, their effectiveness decreases due to the development of resistance against them. Second, with the constant advances in technology, the calls for banning these chemicals increase given their higher potential bio-hazard than their relatively new patented counterparts (see here and here). Absence of patented pesticides at reasonable rates, thus, not only affects incomes of farmers who either lose out on produce or pay exorbitant prices for pesticides, but also affects the supply of food to public at large. As Section 83(d) notes, it is an important consideration “that patents granted do not impede protection of public health and nutrition” which cannot be possible unless granted patents are commercially worked.
Revocation and Compulsory Licensing
There are two principle remedies available when a patentee fails to work the patent in the country. First, an application for a compulsory license under Section 84 of the Act can be filed by any person 3 years after the grant of patent, on three grounds. These are the non-satisfaction of reasonable requirements of the public, non-availability of the invention at reasonably affordable prices, or the non-working of the patent in India. In a scenario where a patented pesticide is either not available in India or is only being imported at an exorbitant price, all three grounds are potentially applicable. It is surprising that despite large scale non-working of patented pesticides, no such compulsory licensing claim has come to the fore, at least per my knowledge.
The second remedy is to resort to powers of revocation provided in Sections 66 and 85. The former is the broad revocation power under which the government can revoke a patent that is “generally prejudicial to the public”. The latter is a specific revocation power on the grounds of non-working. Under this provision any interested person or the Central Government can apply for revocation of the patent two years after a compulsory license has been granted with respect to the same. Given the absence of compulsory licensing applications to begin with, this provision has also not been subject matter of any dispute.
Disclosure of Working
Both the remedies highlighted above are predicated on the knowledge of non-working of a patent by the applicant before approaching the relevant authorities. It, thus, makes it important to look at the disclosures that are required to be made by patentees regarding the working of their patents. Section 146 of the Act read with Rule 131 of the Patent Rules, 2003, obligates patentees to disclose the extent to which the patent is being worked at regular intervals. While such disclosure requirements have been met with opposition from multinationals, particularly big pharma, their importance and need for reform have been effectively highlighted on the blog (see here, here, and here).
Interestingly, as per Section 146(3) and Rule 131(3), the Controller is not mandated to publish the information received by it regarding working by patentees on its website. This is the reason why on its database of information provided under Section 146, the information for a large number of patents is unavailable. When I tried to look for the information provided by some of the patentees mentioned in the CCFI study, such as Dow AgroSciences, Bayer Crop Science, and Syngenta, I either did not find their disclosures or for the patents for which disclosures for the past few years were available, the patentee has consistently been stating that the patent is not being worked in India. These include patents which are close to expiration or have been granted more than a decade ago.
For the patents for which disclosures were not available, there is also a possibility that some of them might not have even been submitted to the Controller in the first place. As found by Prof. Basheer’s investigation in context of pharma patents many firms fail to submit their mandatory Form 27 disclosures and the government fails to strictly invoke the penalties prescribed under the Act for non-disclosure. A PIL was also filed by Prof. Basheer with respect to this disregard of working requirements, which was disposed of by the Delhi High Court directing the government to make necessary amendments to patent working norms within strict timelines. This, too, saw the government severely delaying compliance.
Possible Reforms
The existing legislative framework is largely dependent on initiative on the part of interested parties to apply for compulsory licenses. This, in turn, is a difficult process which has mostly been discussed in context of pharma patents in India, that too in a limited manner. But even for any entity to apply for compulsory licensing, there is a need for them to have access to sufficient information regarding the working of the concerned patent (unless they shoot a shot in the dark hoping the concerned patent is not being worked). For this, it is essential that all information disclosed under Section 146 is made easily accessible by the Controller. Admittedly, the manner in which this information is required to be disclosed by patentees is in itself fraught with inefficiencies which itself requires its own reforms (see here, here, and here).
In addition to the above, it must be noted that there is no particular incentive for a patentee to work the patent. If no one comes up to claim for a compulsory license, the patentee might as well get away without ever working the patent which as noted earlier is a reality for a lot of patents. A possible solution towards this problem could be the institution of penalty on part of the government in case of non-working of a patent for a prescribed period of time, say 4-5 years, while allowing for the patentee to provide sufficient explanation as to the non-feasibility of the working of the patent in this period. This would deploy an adequate balance between the interests of the public at large and the patentee in that the fear of possible sanctions in case of non-working could serve as an incentive to work the patent, benefitting the public, while the possibility of reasonable exceptions based on non-feasibility accommodates the patentee’s interests. It remains to be seen whether this study and the pertinent issues that it has raised would draw adequate regulatory attention or will it just die down and be buried in obscurity similar to previous calls at working requirement reforms.