KEI Activists Try to Promote Anti-Patent Populism to Prod Politically-Motivated Patent Reforms Reminiscent of Prior Poor Policy Proposals

The following 1886 New York Times Op-Ed was disseminated by James Love of the George Soros-Funded Activist Organization, Knowledge Ecology International (KEI), in an Effort to Persuade US Policymakers & Congressional Representatives How the US Patent System is Broken and Needs to Be Replaced. Sadly, This Effort is Not Only Misguided But also Dangerous to Future U.S. Global Economic & Technological Competitiveness.


The article below is actually demonstrative of the historical ebbs and flows of U.S. patent policy during the late 19th and 20th centuries, as is reflected in additional information provided by the ITSSD following this article.


In the 19th Century, the New York Times on a number of occasions reported and editorialized on various proposals at radical reform of patent laws, including this automatic licensing [COMPULSORY LICENSING] proposal in 1886.


"PATENT LAW AMENDMENTS." The New York Times, February 11, 1886.


Representative Dunn, of Arkansas, introduced in the House on Monday a bill to prevent the establishment of monopolies under the patent laws of the United States. Section 4,884 of the Revised Statutes gives the inventor a complete monopoly of his invention. It provides that, in addition to a description of the invention, every patent shall contain "a grant to the patentee, his heirs or assigns, for the term of seventeen years, of the exclusive right to make, use and vend the invention or discovery throughout the United States and the Territories thereof." Mr. Dunn's bill amends this section by declaring that the grant to the inventor shall be, as now, for seventeen years, but instead of an exclusive and entire property in the invention, it shall cover "a royalty of 10 per centum of all gross sales of the right to make, use, and vend the same throughout the United States." Any person, it is further provided, shall have the right to make, use, and vend the patented article upon payment of the 10 per cent royalty to the patentee or his heirs or assigns.


The principle of Mr. Dunn's bill is sound and its purpose is commendable. It is obvious that some amendment of the bill would be necessary, for patented inventions vary so widely in respect to their cost of construction, the extent of the public demand for them, and the expense of putting them on the market, that a 10 per cent royalty would in many cases be a very insufficient return to the patentee for his expenditures of time, labor, money, and brains. The effect of such a law would be to discourage invention, and that would be a worse evil than the tendency to monopoly which the bill aims to check. The problem is too complicated to be solved in that simple way, but there is not the slightest doubt that a just and workable amendment to the patent laws can be drawn up which would prevent the use of the grants of the Patent Office as a foundation for greedy and oppressive monopolies.


It is high time that the interests of the people as against those of patentees received some consideration and protection. The spirit of the time is hostile to monopolies, and justly so. It is hard enough for the public to bear the exactions of corporate monopolies which have no other warrant than a charter granted under State laws and no protection save that accorded them by bribed legislators and lenient Judges. But that the great seal of the United States should be allowed to confer a license for unlimited extortion is a monstrous wrong. The doctrine that a corporation may demand "what the traffic will bear" is held to be outrageous and wicked. Yet letters patent of the United States at present grant to patentees an absolutely unrestricted right to apply this doctrine to the sale and use of their inventions. Surely there is somewhere a just limit to the profit which a patentee may be permitted to exact from the public under his grant from the Government, a limit which would yield him the due reward of his genius and insure him a full and generous return for his toil and outlay, and yet would protect the people to whom his devices were a necessity from that boundless avarice which experience has shown is often fostered in the favoring and secure shelter of a patent. Such a restriction would not discourage inventors, and it would have the salutary effect of making useful inventions more widely available.


There is one form of extortion under the patent laws, and it is the most common one which ought to be made impossible. The best example of this kind of legalized pillage is furnished by the Bell Telephone Company. That company, protected by a patent whose validity is strenuously disputed, exacts and annual rent of $14 from the local companies for telephone instruments which cost $3.42. That is the whole case in a nutshell of robbery by royalty. As a consequence of this 350 per cent profit and of its great revenues from the local companies, whose stock it holds to the face value of $22,000,000, the capital stock of the Bell Company, according to the statement of Boston newspapers, has been "watered" to seven times its original amount, and still the dividends are 17 per cent upon the enormously inflated capital. No such monopoly as that ought to exist by the sanction of the Government.


There should be most assuredly a well defined limit to extortion in the form of rent or royalty upon patented machines and devices. And the privilege of exacting royalties is one which should never be accorded save with reasonable safeguards. It ought not to be possible for a patentee to exact his own price with no alternative to the user. The latter should have the option of purchase outright in lieu of royalty or rent paid at stated periods; and the permissible royalty or rent would naturally become the basis of the purchase price. A patentee ought to be content to sell his machine or device at a fair price, and the user ought to have the right of absolute ownership in it if he chooses to remunerate the patentee in that way.


James Love, Knowledge Ecology International (KEI)


**********************************************************************************
It is no surprise that U.S. government treatment of patents, copyrights & trade secrets has long been influenced by concerns and fears about economic downturns.


“A Brief History of the Patent Law of the United States”


According to at least legal commentator,


“[D]ifferent attitudes...have prevailed at [] different times and...have had...effects on...the...development of [] patent law...In the last two decades of the nineteenth century there was a period of economic depression and increasing concern about the power of "big business" leading to the passage of the Sherman Antitrust Act in 1890. This climate was reflected in the patent field by an increasing tendency of the courts to hold patents invalid. By the late 1890's the depression had run its course and patents came back into favor with the reviving economy. In general the twentieth century has seen a dynamic interrelationship between the patent system and the application of antitrust laws. Although the first antitrust law, the Sherman Act, was enacted in 1890, the courts did not start to give it teeth until Theodore Roosevelt’s administration (1901-1909). It was not until the 1930's that the patent system started to come under attack, being viewed as assisting in the maintenance of monopolies that were seen as being at least a contributing factor to the economic misery of the thirties. This skepticism about the patent system survived World War II and blossomed again in the depressed economic conditions of the 1970's, a period of strong anti-trust enforcement...In the early 1980's, the thinking of the Chicago School of economists came to the fore and with the election of President Reagan enthusiasm for antitrust enforcement went out of fashion.” (Ladas & Perry, LLP – 2003)



Source: Rediscovering the Value of Intellectual Property Rights, Presented at The 20th Liberty Forum Of Instituto de Estudos Empresariais - iee “Property Rights and Development”, ‘IP in the 21st Century: Challenges & Concerns’, in Porto Alegre, Brazil
April 17, 2007, accessible at: http://www.itssd.org/ppt/IPinthe21stCentury.ppt .

Indian Pharmas Recognize Economic Value of Patents and Learn to 'Game' US Patent System to Gain Competitiveness

http://www.innovations-report.de/html/berichte/wirtschaft_finanzen/bericht-103324.html


Are Indian Pharma Players Ready for New Strategy?


nächste Meldung 14.02.2008


The article discusses issues of patents, role of WTO, issues in New Drug Approval and R&D strategies adopted by Indian pharmaceutical companies and provides the basic understanding of the key success factors vital in the pharma industry.


Written by Dr Anand Agrawal


April 11, 2001, when people saw a short, bespectacled figure waving from the balcony of the New York Stock Exchange, after his company became the first Indian - in fact, first Asia Pacific (non-Japanese) pharmaceutical company to list on NYSE, is unforgettable for fifty-nine years old, Kallam Anji Reddy.


That figure founded Dr. Reddy’s Laboratories (DRL) in 1984 and had worked hard enough to develop competencies for his company covering an entire pharmaceutical chain – basic research, finished dosages, generics,* bulk actives, biotechnology and diagnostics in less than 20 years.


The result - DRL once ranked 2nd as most successful company in Pharma industry in India, just one rank behind Ranbaxy Laboratories (that was founded in 1961 -twenty three years older than DRL) and was regarded as a major competitor against Chemical, Industrial & Pharmaceutical Laboratories, popularly known as CIPLA (established in 1935 - regarded as India’s 2nd largest drug maker by market share after Ranbaxy Laboratories). In fact DRL had even surpassed CIPLA - a company that was about 50 years older than it, once (in 2003) in terms of annual turnover (Refer table 1, Appendix 3).


Dr. Reddy, a padmashree and PhD. from National Chemical Laboratory, Pune, said while establishing the Research Foundation,


“Many feel this was a daunting task. Even today, I am often inundated by various "facts and figures": for every new drug that is launched, some 10,000 molecules fail; that the average cost of bringing an NCE to market is over US$ 800 million; and the time taken is anything between 10 and 12 years.”


Now, after more than 10 years of the research activities the company was publicizing its success in developing more than seven NCEs, of which five are at Phases II and two are at pre-clinical phase of trial. The company was also emphasizing its status of being the first company in India to out-license a molecule for clinical trials to Novo Nordisk – the world leader in diabetes. But, after seeing so much silver lining, when in 2003, Novo Nordisk discontinued the further clinical trials of DRL molecules, the shock was not easy to absorb for the company, especially for Dr. Reddy, who decided to rethink the company’s’ strategy along with his team, including his son, Satish Reddy, Managing Director & Chief Operating Officer, who was running the company with Reddy casting a paternal eye over research, for the future ahead 2005 when patent laws has been enforced in India according to the WTO agreement.


THE GLOBAL PHARMACEUTICAL MARKET


The World Pharmaceutical market is estimated at US$ 650 billion and is expected to grow to US$ 842 billion by 2010 . With inflation adjusted compound annual growth rate of 20 per cent over the last two decades, growth of this market has significantly outstripped global economic growth. Developed countries represent not only the largest, but in some cases, also the fastest growing market. The US is the largest single homogeneous market, currently generating around US$ 182 (1) billion in annual pharmaceutical sales. This is followed by Europe and Japan, each of which account for sales worth US$ 169.5 billion and US$ 60.3 billion respectively.


Fig 1. provides the region-wise share of the global pharmaceuticals market. Despite the huge, and growing, size of the global market, the industry continues to enjoy consistently high return on invested capital - even after capitalizing the huge R&D investments. Several factors have contributed to these high returns, but the chief among them are low levels of competition. This shows up at several levels. First, there are huge entry barriers, and over the last few years there has been a contraction in the number of international players owing to consolidation and concerted M&As. Second, in sharp contrast to other industries, any two given drug companies usually only narrowly compete with each other. There are more complementarities in product portfolios than direct substitutes. Third, patents create significant periods of product protection from generic products. Thus, in a particular therapeutic segment, the typical global scenario is one where only three or four products compete with each other in mass consumer markets with powerful underlying growth.


And, while generics constitute a very large and rapidly growing market throughout the world, it is occupied by distinctly different pharmaceutical players. There are hardly any international companies that are strong in both new drug discovery and in generics.


INDIAN PHARMACEUTICAL INDUSTRY


As presented in Fig. 1, despite having a very large number of players, India accounts for only 1.3 per cent of the global pharmaceutical market. Sales of the domestic industry are expected to exceed Rs. 260 billion in 2005-06. Bulk drugs (Active Pharmaceutical ingredients or APIs) business account for 21.42 per cent of this sales, while formulations account for the remaining 78.57 percent in Indian Pharmaceuticals market. For Details on what are pharmaceuticals, Bulk Drugs, etc


More than 60 per cent of India's APIs production is exported. The balance is sold locally to other formulators. Over 85 per cent of the formulations produced in the country are sold in the domestic market, which makes India largely self sufficient in formulations.


The pharmaceutical industry is a knowledge driven industry and is heavily dependent on Research and Development for new products and growth. However, basic research (discovering new molecules) is a time consuming and expensive process and is thus, dominated by large global multinationals. Indian companies have only recently entered the area.


The Indian pharmaceutical industry came into existence in 1901, when Bengal Chemical & Pharmaceutical Company started its maiden operation in Calcutta. The next few decades saw the pharmaceutical industry moving through several phases, largely in accordance with government policies. Commencing with repackaging and preparation of formulations from imported bulk drugs, the Indian industry has moved on to become a net foreign exchange earner, and has been able to underline its presence in the global pharmaceutical arena as one of the top 15 drug producers worldwide. Currently, there are more than 2,400 registered pharmaceutical producers in India. There are 24,000 licensed pharmaceutical companies. Of the 465 bulk drugs used in India, approximately 425 are manufactured here. India has more drug-manufacturing facilities that have been approved by the U.S. Food and Drug Administration than any country other than the US. Indian generics companies supply 84% of the AIDS drugs that Doctors without Borders uses to treat 60,000 patients in more than 30 countries.


Major issues concerning Pharmaceutical Industry


Patents


Patents are a vital aspect of the global pharma industry. Patent protection is essential to spur basic R&D and make it commercially viable. But, only the developed nations endorse product patents. Most third world countries have patent laws but enforcement is totally lax. Some developing nations like India, Egypt and Argentina allow only process patent registration.


As a result Pharma R&D is concentrated amongst the pharma MNCs in USA, Japan and Europe. A researcher undertakes patent registration once a molecule shows some promise of therapeutic effectiveness. Patent life counter starts running from the day the patent application is made. The patent office then starts the process of establishing that the molecule is unique. The steps involved are:


• Within 18 months of filing the application, a brief write up of the molecular structure and its therapeutic utility is published as a public document.

• Patent office thereby invites objections, if any, from third parties e.g. competitors.

• Objections received are conveyed to the applicant who has a chance to defend or modify his claim to originality.

• The modified claims are republished and once again objections are invited.

• Once the patent office is satisfied about the applicant’s claim, it grants the patent.


The whole process takes 4-5 years due to significant backlog in the patent registration office. Once a patent is granted in one of the developed nations, it is relatively easier to get it in other countries. Also, certain patent authorities have coverage over many nations e.g. European Patent Office covers a large part of the European sub-continent.


New Drug Approval (NDA)


Prior to launching its products in any country, a pharma company undertakes patent registration to protect its own interests. To protect the interests of the consumers, it is necessary that the product be approved by the drug authorities in that country. Mostly the process for seeking approval is initiated alongside the patent registration process. An NDA (New Drug Application) is filed with the drug authorities - such as FDA in US or Drug Controller in India, detailing the new molecules’ therapeutic properties. Then, clinical trials are carried out in 3 stages.


• Animal toxicity (Testing on animals).
• Trials on a few select volunteers.
• Trials on a larger scale in hospitals/ institutions.


Drug authorities’ approval has to be taken at each stage and only when all three trial stages are successfully completed can the product be launched. Once a new product has been launched in any of the developed countries like USA, Japan or Europe, it takes relatively lesser time to get approval from drug authorities in other countries.


WTO


Due to pressure from the developed countries, across the world uniformity in patent laws is being implemented under WTO (World Trade Organization - earlier GATT i.e. General Agreement on Tariffs & Trade). Presently, different countries have different patent types and life period. WTO has decided upon a product patent life of 20 years in all countries. However, to ensure a smooth transition and provide local players in the developing countries, ample time for gearing themselves, a moratorium up to the year 2005 AD was provided. So, new products i.e. drugs introduced after this date has to be accorded product patent protection even in countries like India or Argentina.


ENTERING INTO THE U.S. MARKET


Beginning in the early 1970s, the U.S. government encouraged manufacturers to make duplicates of big drugs and sell them cheaply in the country. In the mid-1990s, Indian companies searching for overseas revenue streams began pushing into the U.S., where chronically high prices for prescription drugs created a ready market for generics. Dr. Reddy's, for example, was one of the hundred companies in the United States that over the years knocked off everything from the antibiotics to the specialized drugs. DRL now generates one-third of its sales in the U.S. To speed up approvals for generic firms filing for approvals in the U.S. markets, the FDA formulated some statutory approval mechanisms like 505(b)(2) new drug application, which drug makers can use if a generic drug they are trying to sell is not a virtual duplicate of an original patented drug. It is the most preferred route for seeking approval because it allows the chemistry of the copycat drug to differ slightly while keeping the main ingredients the same, and it also doesn't mandate a proof of safety and effectiveness.


When Indian drug makers like Dr. Reddy's, Ranbaxy and Cipla etc. decide to crack the global markets they do not simply wait for the patent to expire, as many generic drug makers do. Instead, they turn to lawyers and ask them to exploit a loophole in an existing patent, and consequently, file legal challenges on a range of drugs that seemingly have years of exclusive sales left.


With their new strategy, Indian generic drug makers do not even challenge a patent directly, rather they argue that their product doesn't infringe on patent protection because it is made of different ingredients, even though it has the same effect as a branded drug.


Indian pharmaceutical companies are also leaving other countries behind in the race to grab a share of the huge U.S. market. Worldwide, 37 percent of the Drug Master Files submitted last year came from India, the largest share of any country . In the first six months of the current calendar year, Indian companies filed 58 Drug Master Files (DMFs) - nearly double the number of DMF filings in the corresponding period last year and more than the combined filings from the next five countries. This is in sharp contrast to the situation a few years back. In 2000, Indian companies had 40 DMF filings, second to 44 by Italian companies.


One reason Indian companies are doing so well in America is that they have learned to exploit U.S. patent laws that two decades ago were amended to allow for the sale of copycat [GENERIC] pharmaceutical products.


After the US, it is now destination Europe for Indian pharma companies. While domestic majors such as Ranbaxy, Dr Reddy's and Wockhardt have already set shops in Europe, Zydus Cadila has just made its entry by acquiring Alpharma France. Wockhardt also lapped up the UK-based CP Pharmaceuticals, which has helped it to get into the top 10 generic companies in that country.


RESEARCH & DEVELOPMENT (R & D)


The vision of DRL as stated in company documents after 1992 was "To be a discovery-led global pharmaceutical company." Though, when it was started in 1984, like some other players of that era in India, it concentrated on strengthening reverse engineering capabilities to produce high quality bulk drugs and formulations at low costs, and sell them in the domestic market. Dr. Reddy, who claims that his first love had been the research, knew the importance of these skills, for they created the technological foundations for the Company's successful foray into the international generics market. But, within next 8 years, he realized that the ultimate accolade for a pharmaceutical company comes from the strength of its drug discovery programme and the size of its new chemical entity (NCE) pipeline. And the results are company’s’ five R&D facilities in India and the US. Dr. Reddy’s Research Foundation (DRF- focusing lead optimization, lead profiling and pre-clinical trials) and the New Technology Development Centre (TDC- aims at reducing the chemical cost of producing NCEs) at Hyderabad, Dr. Reddy's US Therapeutics Inc. (RUSTI - a bio-pharmaceutical company for discovery and design of novel therapeutics focusing on diabetes, inflammation, lipid metabolism, oncology and cardio-vascular disease with molecular biology technology platforms) in Atlanta, USA, a specialized research laboratory set up by its subsidiary Aurigene Discovery Technologies (a post-genomic discovery services company focusing on building skills in automated medicinal chemistry, structural biology and structure based drug design) in Boston, USA, and Aurigene's Bangalore laboratories in Bangalore, India.


In 2006–07, Dr. Reddy’s filed 33 Abbreviated New Drug Applications (ANDAs) in the U.S., including 7 Para IV filings. With these, Company has joined the elite club of 100+ ANDA filers. Earlier in 2001-02 DRL got 180-days exclusivity grant in US to sell its Fluoxetine 40 mg capsules, due to which company saw a tremendous growth of 58% during that period. Howwever, after the shocking news of failure of their out-licensed molecule to Novo Nordisk, Dr. Reddy was reminding his team their earlier claims of pursuing a strategy of going up the value chain incrementally to manage risks intelligently by out licensing new molecules to larger pharmaceutical companies, which have the resources to take the molecule to the market faster.


They further devised their strategy plan of conducting target-based drug discovery in Atlanta complemented by the chemistry-based research approach in India. Further, they identified their core businesses of API, Branded Formulations and Generics whose businesses can offset the risks inherent in discovery and specialty, and provide a cushion against unforeseen events and risks by building critical mass for the organization.


Now, Dr. Reddy is keen to see the status of his company along with other Indian Pharmaceutical companies in terms of relative performance (annual turnovers) and R & D investments (Refer appendix 3). It is to be noted that DRL once managed to surpass CIPLA in terms of turnover in 2003. But, that achievement was short lived. DRL has been lagging behind CIPLA and Ranbaxy since last three years. However, till now, the research and development is directed toward supporting the business to focus on marketing of process development and manufacturing services to emerging and established pharmaceutical companies. The company claims of pursuing an integrated research with their laboratories in the U.S. focusing on discovery of new molecular targets and designing of screening assays to screen for promising lead molecules.


THE COMPETITION


The aspect in the figures of the R & D investment by Ranbaxy Laboratories Ltd, the biggest competitor of DRL and currently India’s largest pharmaceutical company, which Dr Reddy had noticed was an inconsistent investment. In 2006, Ranbaxy invested more than eleven percent of its sales in R & D (as compared to less than 11% by DRL), but in absolute figures Ranbaxy had been investing much more in R & D. However, it was not just the amount of the investment but the main issue, which was disturbing Dr. Reddy but the direction of the research.


Ranbaxy is primarily involved in the manufacture and marketing of anti-infectives, cardiovasculars, Gastro-Intestinal tract, and sedatives. Though was incorporated in 1961, only in 1993, it decided to go full throttle with R & D by setting up a Research Centre at Gurgaon, (near Delhi). The CEO of the company said,


“Our coordinated efforts in R&D, international operations, marketing and global networking would see Ranbaxy evolve into a research oriented specialty/branded pharmaceutical Company”


Ranbaxy claims having 550 scientists with well-defined research programs in the areas of Chemical Research (Synthetic Chemistry, APIs), Pharmaceutical Research (Dosage forms), Novel Drug Delivery System (NDDS), New Drug Discovery Research (NDDR), and, Fermentation Research (APIs). Ranbaxy had already made significant progress in its NDDS programmes, which was its main R & D focus. Within a span of five years of full throttle research, they successfully developed four products in the area of Oral Controlled Release Systems, using its patented technologies, which were launched in India setting the base for roll out in various markets. But the company feels that the development of a unique once a day formulation of Ciprofloxacin, which has been licensed to Bayer AG - originator of this molecule has been a breakthrough success for the company. Bayer, thus, obtained exclusive development and worldwide marketing rights to an oral once daily formulation of Ciprofloxacin. But Dr. Reddy had a different view, who was now trying to analyze:


Whether it would be more advantageous for a company to commercialize its newly discovered molecule than out-licensing its marketing rights to some other companies having more developed R&D facilities?


And the impressive record of Ranbaxy had shown that it was capable of doing both of these things, with many NCEs in pipeline, more than 40 products launched in India, 6 products launched in foreign market along with India, including South Africa, Poland, Hungary, Singapore, Malaysia, USA and Myanmar.


Now what made Dr. Reddy impatient was the announcement of a 10-year vision (till 2012) by Ranbaxy, for sustaining significant growth consistent with its Mission “to be an International Research-based Pharmaceutical Company”, under the rubric 'Vision GARUDA', with increasing emphasis on Novel Drug Delivery Systems Research (NDDS) and Drug Discovery Research (DDR). Now there is the belief that if the company develops state of the art R & D facilities for all stages of drug discovery, then it would not have to out-license any of its new molecules and it could reach market with its own molecule.


The competition was not just from a single giant for Dr. Reddy but also from other “Pharma Biggies’ like Wockhardt who claimed to possess 350 scientists in 2002 and having invested over Rs. 300 Crores in research and development during last five years. Till 1999 Wockhardt and DRL had about equal turnover. But DRL, in 2001, left Wockhardt a way behind and, in 2006, DRL had more than twice the turnover of that of Wockhardt. But. it was well known that a single exclusive marketing grant- like one obtained by DRL for Fluoxetine- or a new successful molecule can instantly change these comparative figures in Pharmaceutical Industry. Therefore, he seemed more concerned about the R & D activities of its competitors. And, therefore, he was aware by the fact that this company had a record of being one of the highest investor in R&D activities. But Dr. Reddy was not comfortable by the statement in the company’s web site:


In the longer-term, Wockhardt's R&D strategy is to discover a series of new drugs, especially in the field of anti-infectives, antibiotics and anti-bacterials.


It means, for him, that he would have to face a head on competition in the research field with Wockhardt too. The most ambitious R&D for Wockhardt was the New Drug Discovery Program, which it embarked upon four years ago. Another focus was on developing products based their patented Novel Drug Delivery Systems-like that of Ranbaxy. Like Ciprofloxacin of Ranbaxy, Kaizem CD, a unique once-daily cardiac drug used in treatment of Angina, was already seemed to be a success for the company. Moreover, it had already developed and launched two biotechnology and was claiming to launch Recombinant Human Insulin (RHI), that would make it the first in India and among the very few in the world to manufacture and market RHI. On the new drug discovery front, Cipla, another competitor for DRL was comparatively quieter. In fact, Cipla and Ranbaxy, in fact have been competing for being the number one company in the domestic retail market. CIPLA’s research is mainly focused on NDDS such as sustained and modified dosage forms, transdermal, inhalation, nasal, rectal and topical delivery forms, and CFC-free metered dose inhalers. On NCE front, the company was working on antifungals, antihistamines and anti-HIV.


However, Dr. Reddy seemed to be more interesting on having a comparative view on the major achievements by his competitors vis a vis DRL in the area of R& D to chalk out his companies’ future plans. He had realized after going through the reports that DRL needs a strategic change in the area of R & D when he said,


''The bigger challenge is to take a molecule from our pipeline all the way to the market place cost-effectively and also make it available at affordable price to the people. ''


However, even Dr. Reddy knows that bringing a molecule from research to commercialization has been the most challenging task for Indian Pharmaceutical players.


Acknowledgments


The author wants to extend acknowledgment to three students of ICFAI Business School, Hyderabad (2008 batch). Mr. Janpriya, Mr. Alok Agarwal and Mr. Saurabh Kumar for providing help in getting the data for this article.

Brookings Analyst Criticizes USG For Ensuring That Foreign Governments Protect US Constitutionally Recognized Private IP Rights Abroad

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/02/17/EDR1V0LCD.DTL


U.S. expanding the law - domestic and foreign - to benefit corporations


By Ben Klemens


Sunday, February 17, 2008


As a U.S. taxpayer, you may be contributing to fewer cheap drugs on international shelves. Public dollars support the Office of the U.S. Trade Representative, the trade agency with authority to pressure foreign governments to change their domestic intellectual property laws. As such, the agency actively presses for laws that would keep generic drugs out of markets worldwide.


[IS THIS COMMENTATOR SUGGESTING THAT THE US TRADE REPRESENTATIVE INSIST THAT FOREIGN GOVERNMENTS WEAKEN THEIR DOMESTIC INTELLECTUAL PROPERTY LAWS SO THAT THEY ARE ABLE TO ‘TAKE’ U.S. HELD PATENTS, COPYRIGHTS AND TRADE SECRETS WITHOUT PAYING ADEQUATE AND FULL COMPENSATION FOR THEM, CONTRARY TO THE FIFTH AMENDMENT OF THE BILL OF RIGHTS TO THE U.S. CONSTITUTION?? IS THIS COMMENTATOR ADVOCATING THE GIVE-AWAY OF U.S.-OWNED INTELLECTUAL PROPERTY RIGHTS AS A FORM OF TECHNOLOGY TRANSFER IN ORDER TO IMPROVE AMERICA’S IMAGE ABROAD??]


Congress is considering legislation to create a separate executive branch office dedicated to using government resources for lobbying other countries to change their laws, sometimes exclusively to benefit certain U.S. companies.


That's a bad idea for patients here and abroad, because it would give the U.S. government more power in an area where it should instead have less.


[DOES THIS COMMENTATOR FAVOR THE EXERCISE OF MORE GOVERNMENT POWER TO DETERMINE HOW DRUGS SHOULD BE MADE, HOW THEY SHOULD BE PRICED, HOW MUCH PROFITS DRUG COMPANIES SHOULD MAKE, JUST AS THEY DO IT IN EUROPE, CANADA, BRAZIL AND OTHER SOCIALIST COUNTRIES??? DOES THIS COMMENTATOR ADVOCATE IN FAVOR OF SOCIALIZED MEDICINE AND UNIVERSAL HEALTHCARE FOR ALL AT THE EXPENSE OF NEW HEALTHCARE RESEARCH & DISCOVERIES AND PRODUCT INNOVATIONS??]


The international intellectual property system is based on an ingenious 1994 international treaty: Rather than establishing an unwieldy international copyright and patent office, the agreement merely stipulates that every signatory country must have domestic copyright and patent systems that meet certain basic requirements.


[THIS COMMENTATOR IS OBVIOUSLY UNAWARE OF THE CONSTITUTIONAL OBLIGATION OF BOTH THE U.S. CONGRESS AND THE PRESIDENT TO PROTECT THE PRIVATE PROPERTY RIGHTS OF U.S. CITIZENS, WHETHER TANGIBLE OR INTANGIBLE, NO MATTER WHERE THEY ARE LOCATED. HE ALSO IS UNAWARE THAT THE WTO TRIPS AGREEMENT INCORPORATES AND FURTHER ENHANCES THE PROTECTION OF INTELLECTUAL PROPERTY (PATENTS & COPYRIGHTS) ALREADY RECOGNIZED AND PROTECTED UNDER THE TERMS OF TWO WORLD INTELLECTUAL PROPERTY ORGANIZATION (WIPO) AGREEMENTS, SO THAT SUCH PROTECTIONS ARE MORE CLOSELY ALIGNED WITH THOSE PROVIDED FOR UNDER U.S. DOMESTIC LAW. THE DECISION NOT TO ESTABLISH A SUPRANATIONAL WORLD INTERNATIONAL COPYRIGHT AND PATENT OFFICE, WHICH THIS COMMENTATOR FAVORS, WAS CERTAINLY A PRUDENT ONE, IN ORDER TO MAINTAIN U.S. SOVEREIGNTY.]


The trade agency's interpretation of what other countries' domestic laws need to cover expands beyond the broadest definitions within U.S. law. To give one example, data gathered during clinical trials of new drugs are not protected by copyright, patent or trademark in the United States. But as a rule of bureaucratic procedure, the Food and Drug Administration restricts use of test results finding that a brand-name drug is safe when considering the safety of identical generic drugs. Even though it is hard to argue that this FDA rule is an intellectual property law, the trade representative is using its authority to press for comparable rules restricting the approval process for generic drugs in other countries.


[THIS COMMENTATOR OBVIOUSLY IS UNAWARE OF THE COMMON LAW NOTION OF TRADE SECRETS WHICH CONSTITUTE A RECOGNIZED AND ENFORCEABLE PRIVATE PROPERTY RIGHT UNDER THE LAWS OF MANY U.S. STATES. THUS, THE USTR AND FDA ARE MERELY PROTECTING THESE SAME INTANGIBLE PROPERTY RIGHTS HELD BY U.S. CITIZENS FROM UNJUSTIFIED FOREIGN GOVERNMENTAL INTRUSION AND EXPLOITATION AND ‘TAKINGS’, CONSISTENT WITH THE PROVISIONS OF THE WTO TRIPS AGREEMENT, IN MUCH THE SAME WAY THAT SUCH RIGHTS WOULD BE PROTECTED AGAINST U.S. GOVERNMENTAL ACTION UNDER U.S. CIVIL AND CONSTITUTIONAL LAW. INDEED, THE FDA RULES PROSCRIBE THE TAKING OF TRADE SECRETS AND ACTUALLY IMPOSE CIVIL AND CRIMINAL PENALTIES ON GOVERNMENT EMPLOYEES FOR VIOLATING TRADE SECRETS. THUS, THE USTR AND FDA ARE NOT ACTING BEYOND THEIR LEGAL AUTHORITY BY ENSURING THAT FOREIGN GOVERNMENTS DO NOT VIOLATE U.S. CONSTITUTIONALLY PROTECTED PRIVATE PROPERTY RIGHTS.]


It doesn't take much sleuthing to follow the money back to the U.S. pharmaceutical manufacturers on the trade agency's advisory panel, who can maintain monopolist profits while a generic drug is blocked from the market in Guatemala, Malaysia or any of the dozen other countries that the trade agency is pressuring to adopt U.S.-style restrictions on generic drug approval.


[THIS COMMENTATOR IS ALSO ABLE TO TRACE NEW DRUG AND MEDICAL DEVICE DISCOVERIES AND INNOVATIONS BACK TO THE LIFE SCIENCES COMPANIES THAT INVESTED THE $$ AND EFFORT TO INVENT THEM AND SEE THAT THEY RECEIVE THE NECESSARY FEDERAL REGULATORY APPROVALS TO MAKE IT TO MARKET. PATENTS AND TRADE SECRETS ARE BY DEFINITION EXCLUSIVE PRIVATE PROPERTY RIGHTS OF TEMPORARY DURATION].


Proselytizing U.S. intellectual property law would be easier if we knew exactly what U.S. intellectual property law is, but many debates still rage in the courts and in the law journals. Is software patentable? Justice Breyer, Justice Stevens and the U.S. Patent and Trademark Office's semi-judicial board of appeals have clearly expressed that it is not. Yet the trade representative thinks it is, which is why a 2000 agreement with Jordan required that country to change its domestic laws to better accommodate the patenting of software, and its nonbinding reports find fault with countries whose patent systems do not allow software patents.


[THIS COMMENTATOR OBVIOUSLY WISHES TO PORTRAY THE U.S. AND GLOBAL INTELLECTUAL PROPERTY SYSTEM AS UNCERTAIN, UNCLEAR AND BROKEN INORDER TO RECOMMEND AN ALTERNATIVE TO THE PRESENT MARKET-BASED SYSTEM. THAT ALTERNATIVE WOULD ENTAIL CENTRALIZED GOVERNMENT SANCTIONED TOP-DOWN ESTABLISHMENT OF A HEALTH CARE MARKET SYSTEM THAT DETERMINES FOR INDUSTRY AND PATIENTS ALIKE WHAT IS NEEDED, HOW IT IS TO BE DEVELOPED, HOW IT IS TO BE ADMINISTERED AND HOW MUCH THEY SHOULD CHARGE/PAY FOR IT. THIS SOUNDS AN AWFUL LOT LIKE THE SOCIALIZED MEDICAL SYSTEMS CURRENTLY OPERATING IN EUROPE AND CANADA AND IN BRAZIL.]


The U.S. Trade Representative's treaties bind all parties to rewrite their domestic laws accordingly. That is, the agency can dictate how Congress is to write domestic law, and how federal courts interpret it, via its international treaties. We all want intellectual property law to evolve with the times, but every new treaty by the trade agency makes evolution a little more difficult.


[THIS COMMENTATOR OBVIOUSLY IS UNAWARE OF THE RELATIVE ROLES (BALANCE OF CONSTITUTIONAL POWERS AND OBLIGATIONS) BETWEEN THE LEGISLATIVE AND EXECUTIVE BRANCHES AS CONCERNS INTERNATIONAL TREATY NEGOTIATION, RATIFICATION AND ENFORCEMENT. IF THE U.S. CONSTITUTION RECOGNIZES AND PROTECTS U.S. DEVELOPED AND HELD PRIVATE INTELLECTUAL PROPERTY RIGHTS, BOTH WITHIN AND WITHOUT THE TERRITORIAL U.S., THEN EVERY NEW TREATY ENTERED INTO BY THE UNITED STATES MUST CONTINUE TO ENSURE THAT THESE CONSTITUTIONALLY PROTECTED PRIVATE PROPERTY RIGHTS ARE UPHELD ABROAD. ACTUALLY, THE INTERNATIONAL LAW OF INTELLECTUAL PROPERTY RIGHTS IS EVOLVING FOR THE BETTER UNDER SUCH PRINCIPLES, AND NOT FOR WORSE.]


HR4279, now pending in the House Judiciary Committee, would establish an Office of the U.S. Intellectual Property Enforcement Representative, spinning off intellectual property from the trade representative's portfolio into its own office, without repealing the agency's authority to negotiate other countries' intellectual property laws. The new office would have authority to define the scope of intellectual property as it sees fit, and it would have expanded ability to use the resources of other departments (the Department of Justice, the State Department, Homeland Security, state and local governments, and many others) in pressuring other countries to change their domestic laws accordingly.


[H.R. 4279, ENTITLED, THE “PRIORITIZING RESOURCES AND ORGANIZATION FOR INTELLECTUAL PROPERTY ACT OF 2007 – ‘THE PRO-IP ACT’”, IS INTENDED TO STRENGHTEN COPYRIGHT AND TRADEMARK PROTECTION AGAINST FOREIGN & DOMESTIC PIRACY. HOWEVER, IT MAY ACTUALLY GO BEYOND THE TENOR AND SCOPE OF CURRENT IP LAW TO PENALIZE NOT ONLY COMMERCIAL INFRINGERS BUT ALSO ORDINARY CONSUMERS WHO MERELY COPY ALREADY PURCHASED MUSIC CDS AND MOVIE DVDS FOR THEIR OWN PERSONAL USE, AT NO ECONOMIC LOSS TO THE COMPANIES.]


SEE, e.g.,: Paul Devinsky and Rita Siamas, “United States: House Proposes Creation Of An IP Enforcement Czar, Seeks Stronger Trademark And Copyright Enforcement”, McDermott, Will & Emery (Jan. 15, 2008) at: http://www.mondaq.com/article.asp?articleid=55962


The 1994 treaty on trade-related international property defines a simple base for copyright, patent and trademark, and it makes sense for the trade agency to hold countries to the basic framework. But our trade representative has gone well beyond that, to simply interpreting intellectual property as its corporate advisory boards wish, and then using the muscle of the U.S. government and the resources of U.S. taxpayers to press other countries into changing their laws to suit that interpretation. Congress needs to restrict the trade representative's expansive tendencies, instead of releasing what little rein is left.


[H.R. 4279 ARGUABLY REFLECTS THE CONCERNS OF THE MUSIC & ENTERTAINMENT INDUSTRY AND ITS FAILURE TO DEVELOP A NEW BUSINESS MODEL THAT CAN RESPOND AND HARNESS THE EVOLVING DOMESTIC MARKETPLACE. FOREIGN COPYRIGHT & TRADEMARK PIRACY, HOWEVER, POSES A SIGNIFICANT PROBLEM AND CERTAINLY RISKS FUTURE INDUSTRY REVENUES. BUT DOES THIS BILL PROVIDE THE BEST SOLUTION?]


Ben Klemens is a guest scholar in Economic Studies at the Brookings Institution. Brookings is a private nonprofit organization devoted to independent research and innovative policy solutions.


[WHILE AT BROOKINGS, MR. KLEMENS HAS ADVOCATED IN FAVOR OF OPEN SOURCE SOFTWARE, AMONG OTHER THINGS]


http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/02/17/EDR1V0LCD.DTL

This article appeared on page E - 5 of the San Francisco Chronicle

Silly Apologist-Analyst Recommends That America Give Away its Future IP-Based Economy to the World

http://www.brookings.edu/opinions/2006/0825trade_klemens.aspx


U.S. Patent Imperialism Hurts American Interests


August 25, 2006 —


The Patent Reform Act of 2006 (S.3818), introduced to the Senate floor on August 8, will entirely fail to reform patents. The bill makes important modifications to rules on filing and review of paperwork, but the Senate has chosen to overlook many serious problems with patents that cost consumers billions of dollars and embarrass the U.S. internationally.


Much of this excess cost and embarrassment comes as a result of a double standard between imports and domestic goods. All patent disputes may be tried in U.S. District Courts, but disputes over imports may also be tried at the International Trade Commission (ITC), a branch of the Department of Commerce. The ITC uses a broader definition of patent infringement than the district courts, meaning that an import may be found to infringe on a patent that it would not infringe upon if it were produced in the U.S. Such a double standard affects U.S. taxpayers and consumers, who have fewer choices and more monopolies with which to contend.


[THIS COMMENTATOR IS OBVIOUSLY REFERRING TO SECTION 337 OF THE TARIFF ACT OF 1930, WHICH PERMITS THE U.S. INTERNATIONAL TRADE COMMISSION (ITC) TO INVESTIGATE COMPLAINTS BROUGHT BY PARTIES IN ORDER TO DETERMINE WHETHER ALLEGEDLY 'PIRATED' IMPORTED ARTICLES SHOULD BE BARRED FROM ENTERING THE U.S. UNDER SECTION 337 THE ITC POSSESSES THE AUTHORITY TO EXCLUDE IMPORTS BECAUSE OF 'UNFAIR ACTS', 'UNFAIR METHODS OF COMPETITION' OR 'ACTS OF INTELLECTUAL PROPERTY INFRINGEMENT' COMMITTED IN CONNECTION WITH IMPORTATION. AS CONCERNS THE PROCEDURAL LIGITATION METHODS REFERENCED, THE COMMENTATOR IS OBVIOUSLY REFERRING TO A 1989 GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT) PANEL DECISION WHICH FOUND THAT CERTAIN ASPECTS OF SECTION 337 HAD VIOLATED THE NATIONAL TREATMENT PROVISIONS OF THE GATT INTERNATIONAL TRADE LAW. THE URUGUAY ROUND OF TRADE NEGOTIATIONS PURSUANT TO WHICH THE WORLD TRADE ORGANIZATION WAS CREATED, ADDRESSED THESE VIOLATIONS. AS A RESULT, FOLLOWING U.S. ACCESSION TO THE WTO AGREEMENTS, CONGRESS IN 1995 ENACTED IMPLEMENTING LEGISLATION TO AMEND SECTION 337, CONSISTENT WITH THE NEW WTO REQUIREMENTS].


[THIS COMMENTATOR'S ARGUMENT APPEARS TO OBJECT TO SECTION 337 AS AMENDED, MUCH AS THE EUROPEAN UNION DID DURING 2000. SEE: UNITED STATES SECTION 337 OF THE TARIFF ACT OF 1930 AND AMENDMENTS THERETO Request for Consultations by the European Communities and their member States, WT/DS186/1 IP/D/21 18 (January 2000) AT: http://trade.ec.europa.eu/doclib/docs/2004/january/tradoc_114327.pdf ].


Over the past decade, there have been abundant examples of how patent law has been stretched too far to the detriment of U.S. consumers and manufacturers. The reader may recall the problems faced by the makers of the Blackberry, who faced a lengthy patent battle in domestic courts over software on its Canadian email servers. In hearing that case, the Court of Appeals for the Federal Circuit (CAFC) declared that if "control and beneficial use" of a device is in the U.S., then it is beholden to U.S. patent law. With this simple declaration, millions of web sites all around the world suddenly had liability exposure in U.S. courts.


In another example, Creative, Inc., claims that the iPod violates its patent on organizing songs by artist, album, and genre (U.S. patent #6,928,433). Since the iPod is made abroad, Creative sued Apple in domestic courts and petitioned the ITC to block their U.S. sale. On Wednesday, with the threat of an iPod ban looming, Apple paid Creative $100 million to withdraw its complaints.


And the dueling standards collide at a cost to the government, too. For example, Amgen, Inc., has a patent on Epogen, a drug that treats anemia in patients who are on dialysis for end-stage renal disease. Thanks to its patent, Amgen is the monopolist vendor of a life-saving drug—and it sets its price accordingly. Every year, Medicare pays over $1 billion for this drug alone.


[THIS COMMENTATOR TAKES THE IDEOLOGICAL POSITION THAT ALL INTELLECTUAL PROPERTY RIGHTS, ESPECIALLY PATENTS ON HEALTH CARE PRODUCTS AND DEVICES AND INFORMATION TECHNOLOGIES, CONSTITUTE ILLEGAL MONOPOLIES. THIS POSITION IS AKIN TO THAT ADVANCED BY SOME EMERGING ECONOMIES SUCH AS BRAZIL AND BY DEVELOPING COUNTRIES SUCH AS THAILAND.]


A Swiss pharmaceutical company, Roche, has a drug that would compete head-to-head with Epogen, and thus force down Epogen's price and possibly improve patient outcomes—except the drug is produced abroad. Roche's product is likely to be found to be a valid, non-infringing competitor to Amgen's patents and products in U.S. District Courts, but will have a harder time getting past the ITC's broader definition of patent infringement. As a result, Amgen may continue to bill Medicare at the full monopoly price.


Maintaining a separate definition of patentability for imports directly violates WTO treaties mandating non-discrimination. Other court-invented innovations in patent law also create a growing rift between the U.S. and the rest of the world that will be a liability for the U.S. in negotiations over trade and tariffs.


[THE U.S. CONGRESS AMENDED SECTION 337 TO COMPLY WITH THE WTO AGREEMENTS].


All of the rulings that have shaped patent law in the last few decades have come from the CAFC, a court founded in the early 1980s to resolve patent and trade disputes. It is heavily stocked with former prominent patent attorneys, so it no surprise that the CAFC has actively expanded the powers of patents well beyond pre-1980 limits.


[THIS COMMENTATOR TAKES ISSUE WITH THE FACT THAT A UNIQUE COURT (THE FEDERAL CIRCUIT COURT OF APPEALS WAS ESTABLISHED TO IMPROVE JUDICIAL EFFICIENCY AND ADJUDICATION OF PATENT DISPUTES) POSSESSING SPECIALIZED KNOWLEDGE IN INTELLECTUAL PROPERTY. OTHER IMPORTANT PIECES OF FEDERAL LEGISLATION AFFECTING PATENT RIGHTS WAS ENACTED TO IMPROVE, AND REMARKABLY IMPROVED, U.S. GLOBAL COMPETITIVENESS - NAMELY THE BAYH-DOLE ACT. ALSO THE HATCH-WAXMAN ACT WAS ENACTED DURING SUCH TIME. IT IMPROVED CONSUMER ACCESS TO GENERIC DRUGS].


Rather than striving to maximize innovation and economic benefits, the CAFC tends to rule via tortuously close readings of statute. Its ruling that established the separate ITC standard for patent infringement is based almost entirely upon a reading of the boilerplate phrase "for purposes of this title." Its statement regarding "control and beneficial use" is nowhere to be found in statute, but did build upon a prior CAFC divination—that the Congress of 1952 intended that software would one day be patentable.


Patent law has been expanded and forcefully exported by a single court, without oversight by Congress. Internationally, the courts' favoring of domestic producers over importers, and the CAFC's self-declaration that it has jurisdiction over any Internet-enabled computer in the world, has put U.S. trade negotiators in a weaker position and will hurt Americans in the long run. Domestically, it has created the usual problems associated with unfettered monopolies: prices rise, choices diminish, and consumers suffer.


Congress needs to take real action to explicitly establish a single standard for patent infringement regardless of the manufacturer's address, and to restore the scope of patents to where it was before the CAFC's unilateral expansions. The Patent Reform Act of 2006 is not enough.