Overcoming Biotech Intellectual Property Rights ... - Radix Global

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Overcoming Biotech
Intellectual Property
Rights Issues in China
and India


February 19, 2008

2

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2/19/08
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Overcoming Biotech Intellectual Property Rights Issues in China and India




3

India IP Climate for biotech and
Pharmaceutical industries


Is India TRIPS compliant?


Section 3(d) of Indian Patents Act


Novartis Patent Case


Roche v. Natco: India’s First “Doha”
Compulsory License


India & Doha


Trademark example


4

Is India TRIPS compliant?



Trade Related Aspects of IP Rights (TRIPS) is an
international IP treaty.



TRIPS Article 27 states that member states are to grant
patents to all inventions that are new, non
-
obvious, or
inventive and have industrial utility.



Indian government believes it is acceptable for India to
have a high level of inventiveness for
pharmaceutical/chemical substances as promulgated in
Section 3(d) of the Indian Patent Act.



The issue is whether Section 3(d) of the Indian Patent Act
is TRIPS compliant.

5

Section 3(d) of Indian Patents Act


Section 3(d) requires that new forms of
existing pharmaceutical substances should
demonstrate increased “efficacy.”



So, derivatives that are structurally similar to
known pharmaceutical substances (e.g., salt
forms, polymorphs, etc.) are functionally
equivalent.



If the new form of the drug works better than
the old form, the patent applicant must
demonstrate an increased efficacy to be
patentable.

6

Section 3(d) of Indian Patents Act


Comparable to US patent law, which requires
that a gene sequence has to demonstrate
“substantial”, “specific”, and “credible” utility.



The US requirement was put forth to stop the
multitude of frivolous gene patent applications
which were mere probes, and thus obvious.



Thus, it can be argued that India’s Section
3(d) is no different than US law, and it is a
legitimate exercise of national discretion by a
TRIPS member state.


7

Section 3(d) of Indian Patents Act


However, if the Indian Courts interpret
Section 3(d) very restrictively and
exclude incremental pharmaceutical
inventions, this will contravene TRIPS.


8

Novartis Patent Case


Swiss drug company Novartis AG filed a patent
application in 2004 in the Madras patent office, for a
crystalline form or polymorphic form of its anticancer
drug imatinib mesylate (Glivec) showing the new form
had a 30% bioavailability.



Note: Glivec’s base compound, Imatinib mesylate, was
patented in 1993 and was not eligible for an Indian
Patent because India joined the WTO in 1995.



A pre
-
grant opposition was filed by Okasa Ltd., a
Mumbai based small pharmaceuticals company. Other
parties opposing the patent include Cipla Ltd., Ranbaxy
Laboratories Ltd., and Natco Pharma Ltd.



9

Novartis Patent Case



In January 2006, the Madras Patent office rejected Novartis’
patent application for Glivec under section 3(d) as not being an
innovation.



Note: Phillipines, Maldives, Pakistan, Sri Lanka, Vietnam,
Indonesia, Malaysia and Bangladesh may similarly reject the
patent.



In 2006 Novartis appealed the Madras patent office decision.



Novartis’ bold move was to challenge:


Whether the Indian patent law was compatible to TRIPS;
and


Challenged the constitutionality of Section 3(d) of the
Patent Act



10

Novartis Patent Case


The Madras High Court ruled:



It did not have jurisdiction to rule whether section 3(d)
was compliant with TRIPS;


Section 3(d) of the Indian Patents Act was
constitutional; and


Disagreed that an increased bio
-
availability was a
“therapeutic” efficiency. Court stated that an increase
in the potency of the drug does not amount to an
increased efficacy.



The Indian Intellectual Property Appellate Board (IPAB), a
specialized IP tribunal, has still to decide whether
Novartis’ claimed invention merits a patent.



On January 28, 2008, the Indian Supreme Court stayed
the Madras High Court order.


11

Novartis
-

Learnings


Because of the High Court Judgment, Novartis has threatened to
move its investments to China.



Novartis has made this dispute political, causing a steady stream
of anti
-
Novartis headlines in the leading newspapers; thus
alienating themselves from the government and the public.



Novartis has stated that they will not set up an R&D center in
India because of India’s lack of respect for international IP laws.



Recommendation: Novartis should have focused on trying to get
guidelines established to remove the errors/inconsistencies in
section 3(d).


For instance: What amounts to “efficacy?”



Alternatively, they could propose an amendment by an Act of
Parliament, which would probably not be politically feasible.


12

Novartis Learnings


Contrast, the Pharmaceutical Research and Manufacturers
of America (PhRMA) statement that India’s record of
protecting IPR is far better than China.



According to McKinsey, the Indian pharmaceutical market
will treble to $20 billion in the next 10 years.



Clearly by moving to China, Novartis will lose out.



IF Novartis received a patent on Gleevec


Doesn’t stop generic supplies from Natco and Ranbaxy
from continuing to produce the drug as long as they pay
Novartis a reasonable royalty.


Reason, both Natco an Ranbaxy were manufacturing the
drug before the introduction of the patent products in
India in 2005.



Further, generic manufacturers would be also free to use
other polymorphic forms that were not patented.


13

Contrast Roche to Novartis


In 2007, Swiss drug maker Roche received India’s
first
product patent

for its hepatitis treatment drug Pegasys.



In the last month, Roche has been granted 4 more
product patents:



Micera an organ transplant drug Erythropeotin


Tarceva a treatment for lung cancer


Valgancyclovir an anti
-
viral drug


Herceptin a breast cancer drug



Roche has increased its chances of having its patent
applications decided on a more objective manner by
not having any patent issues publicized in the press.

14

Roche v. Natco: India’s First “Doha”
Compulsory License



What is Doha?



Doha Declaration of the TRIPS Agreement and Public Health.



In 2001, WTO conference occurred in Doha to promote access to
affordable medicines in the interest of public health.



TRIPS does not limit the grounds for “compulsory” licensing, e.g., a
member state has the freedom to determine the grounds under
which licenses are granted.



Allows a compulsory license to manufacture cheaper versions of
patented drugs to a third party, (cheaper than the cost of a patented
drug).



Usually under a fixed government royalty rate.


15

Doha


A legal issue with Doha is what is the proper ambit of
“public health.”



Doha limits the import/export of “pharmaceutical
products”, which is defined as “any patented product, or
product manufactured through a patented process, of
the pharmaceutical sector….”



Paragraph 1 of the Doha Declaration states: “We
recognize the gravity of the public health problems
afflicting many developing and least developed
countries, especially those resulting from HIV/AIDS,
tuberculosis, malaria and other epidemics.”

16

India and Doha


India has some of the widest compulsory
licensing provisions in the world.



India law allows Compulsory licenses can be
issued if:


The drug is not available in adequate
quantities in India


The drug is not reasonably priced


The drug is not manufactured in India


The drug was manufactured prior to 2005 by
a generic company

17

India and Doha


The target of most compulsory license requests are
largely new cancer drugs launched by multinational
firms under patent protection.



Patent rules allow a lead time of
three years

for the
multinational firms to reduce the price of the drug to
a level that does not inhibit patient access.



After three years, if the government believes the use
of the drug is limited because it is not affordably
priced, a compulsory license to another drug maker
can be issued.

18

India/Doha Examples


Hyderabad based cancer specialty company
Natco Pharma, Ltd requested the Indian
government to grant compulsory licenses for the
following drugs:



Tarceva a lung cancer medication made by
Swiss drug maker F. Hoffman
-
a Roche Ltd.


Sutent, a renal cancer drug produced by
Pfizer, Inc.



Not without Litigation: Cipla Ltd., one of India’s
top three drug makers, is justifying in Delhi’s
High Court its plan to a launch Tarceva at 1/3
the drugs current market cost.


19

Doha and Developing Nations


Compulsory licenses to export to least developed nations
have been made TRIPS compatible.



The Importing country must notify the WTO’s council for
TRIPS of the name and expected quantity of the product,
verify that the country has insufficient or no manufacturing
capacity for the product, and confirm that it has granted or
intends to grant a compulsory license.



E.g., Natco Pharma exporting Roche’s Tarceva from India
to Nepal where Natco offered Roche a 5% royalty.

20

Arguments to Revoke A

Patented Drug



Step 1A. Argue that the patent should be revoked because it suffers
from invalidity as the drug is not new and was obvious and did not
involve any inventive step because it was a tweaked version of a pre
-
1995 drug, which is not eligible for a product patent in India.



Step 1B. Argue the specification in the patent application does not
sufficiently describe the invention or its claim to improved efficacy.



Step 1C. Argue the patent should be revoked under Section 3(d) as the
drug is a mere derivative, a tweaked version of an older drug or
applicant did not disclose the drug was a mixture of two polymorphs or
drug derivatives.



Step 2. Argue for public health and access to affordable drugs in face of
a patent protected drug.

21

Counter Arguments to the Generic
Drug Manufacturer

The Multinational’s counter argument may run as follows:



Patent is new and does comply with Section 3(d) having
greater bioavailability and a greater therapeutic efficacy.


One could also argue that a compound that has some
amount of structural similarity with a prior compound
cannot always be treated as its derivative. (E.g., are all
pharma compunds “carbon” derivatives and subject to
section 3(d)?).


Competition among drug makers will bring prices lower.


22

Indian Trademark

Comparative Advertising


Indian Umibic launched a biscuit called “Great Day”
with the following tagline: “Why have a good day, when
you can have a great day!”



This was a direct assault of competitor Britannia’s
“Good Day” biscuits.



The court placed an injunction on Umibic



Based on Section 36 of the MRTP Act that there may
be no disparagement of a competitor’s product.



left to the Court’s discretion and a three formula test:


examining intent


manner of commercial, story line


message sought to be conveyed



23

Indian Trademark


Comparative
Advertising


Kingfisher airlines vs. Jet Airways


Jet Airways started an advertizing
campaign with the phrase
“We’ve
Changed!”


Kingfisher replied with
“We made them
change!”


Jet could not sue Kingfisher because
there was no disparaging of the brand or
use of Jet’s trademark

24

China IP Climate for Biotech and
Pharmaceutical Industries


China Issues


China Patents


What is Patentable and What is Not


Utility Models


Chint v. Scheider Electric


China’s Bayh
-
Dole


Patent Infringement


Pfizer


Viagra Lawsuit


China Doha


China and Counterfeiting


China Trademark and Branding



25

China Issues


In exploring opportunities in China, biotech companies need to
be conscious of:



protecting their own technology


transferring technology to Chinese entities that the need to
utilize


Perfecting the ownership of IP developed in China



Though China’s legal system has improved in the last 5 years, it
still does not provide adequate protection of IP rights when high
technology is being transferred or developed.



In April 2007, US has moved forward on its WTO action against
China, alleging that the Chinese IPR machinery falls short of
TRIPS. WTO accepted in September 2007.


http://afp.google.com/article/ALeqM5hASBbePC8gtbmtfzExt
mfkdNDvKQ

26

China Issues


Chinese Civil Procedure Laws make it very
difficult to protect high technology patents
and trade secrets


Strong burden on plaintiff to prove its case


No general rules on the burden of proof


No discovery in civil proceedings


Parties only required to submit evidence that
assists their case


Oral evidence is very rarely accepted


Thus, all transactions must be clearly and
properly documented


27

China Issues


Recommend: Using specific contracts to protect IP and
trade secrets that are to be executed when the transferring
party has leverage (e.g., renewal of a supply agreement,
promotion, or pay raise).


clearly identify any specific trade secret


Place a provision for audit rights to ensure IP rights are being
protected


All rights should be assigned in writing back to the outsourcer or
employer


The Chinese business partner should obtain assignments in
writing from all its suppliers and employees


Blackbox key technology or limit access to technology and do
not place it on a network but use standalone computers


Hire investigators to collect evidence to present to the Court
before filing suit.


Make sure the evidence is collected legally;
otherwise it will be inadmissible and expose you to
sanctions


28

China Patents


Chinese patent law provides for invention patents, utility
model patents and design patents



Invention Patents


If a new invention is made by a Chinese employee, the
employee needs to be paid a fee, which is not defined, in the
Patent Law.



Recommend: Negotiate such fee arrangement upfront!!!


Note: Japanese Mulit
-
nationals paid inventors millions.



Patents are to be filed in the name of a Chinese Entity.



If have Chinese inventors, China requires filing patent in China
first before filing overseas.



File a PCT application in English with the Chinese patent office.


29

China Patents


China is a first to file country, unlike the US.


Absolute novelty required
-

If you do something
publicly prior to filing a patent, you lose your patent
rights in China.


So file patent application
before

begin clinical trials.


Grace Period: 6 months, but only for Chinese
inventor to show the invention at an international
exhibition sponsored or recognized by Chinese
government.


No Best Mode Requirement


No Continuation in Chinese Patent Practice


No Re
-
issue process in China


IMPORTANT: Include sufficient embodiments,
as well as pharmacological data obtained from
experiment or clinical application should be
enumerated.



30

China Invention Patents


Chinese patent law does not grant patents
to methods of diagnosing or treating
diseases


A diagnostic method is one that is applied to
human beings or animals and used for the
determination and understanding of disease or
health status


Methods of Treatment of disease include physical
operations, immunizations, and administration of
medicine, includes anesthetic delivery.


However the equipment and materials in the
diagnosis and treatment are patentable.


31

China Patent


What is patentable and what is not


Patentable


A newly found usage that is substantially different
from the known usage


The new usage MUST affect the manufacturing
process of the existing drug



Not Patentable


Target gene fragments


New usage alone


No known industrial usage

32

China Utility Model Patents



Utility Model Patents


Offer protection for 10 years.


No substantive evaluation compared to invention patents.


Can be used similarly to a provisional application in the US
from an operational perspective.


Provides limited protection for improvements relating to
shape or structure of a product.


Can be registered in less than 6 months


Once registered, immediate enforcement



Recommend: File both invention and utility model patent. After
utility model issues use against infringers. Continue pursuing
invention patent application. When invention patent is issued,
surrender the utility model patent. (NOTE: only one can be
issued per Chinese Patent Law).



33

China Utility Model Patent


Chint v. Scheider Electric

(Wenzhou
Intermediate People’s Court, ZL97248479.5)
Sept 2007


French electric company Schneider Electric was
ordered to stop the manufacture of a range of
miniature circuit breakers and ordered to pay $45
million to Chint Group for infringement of a
Chinese utility model patent based on profits
Schneider made from sales between 2004 and
2006.

34

China’s Bayh
-
Dole


December 2007, National People’s
Congress amended China’s science and
technology laws


New rules allows scientists, institutions and
universities to own any patents resulting
from their publicly
-
funded research.


China is the latest country to introduce a
Bayh
-
Dole style IP regime.

35

China Patents


Patent Infringement


Typically, judges and administrative
officials tend to be reluctant to find
infringement unless they can literally
compare the protected device to the
accused device


The more complex the IP, the more risky
the proposition of enforcement


36

Pfizer


Viagra protected till 2014


Nov 1, 2007. The Beijing People’s High
Court upheld a decision by the Beijing
Intermediate Court to overturn a SIPO
decision that disallowed the Viagra
patent on the basis of insufficient
disclosure.


Cornerstone decision


involved asking
a Chinese court to overrule a decision
reached by an official state body.

37

China and Doha


State Intellectual Property Office (SIPO) issued
compulsory license of patents on November 29, 2005
that went into effect on January 1, 2006.



China’s Patent Law permits compulsory license of
patents for very limited purposes (unlike India) such as:


Public interest (prevention and control of infection
disease)


State emergencies (infectious diseases causing public
health crisis)



The Law requires the licensees (e.g., drug
manufacturers) to pay a reasonable compensation to
the patent rights holders.

38

China and Counterfeiting


Recognize that counterfeiting is a demand problem not a
supply problem.


Factories make the fakes because someone
placed an order (If to US, someone here placed
the order).



Use Trademarks to cover all the goods and services for
branding.


File Trademarks in English and Chinese.


Grab as many URLs as appropriate.



Having a Chinese partner manufacturing the product that
is also a victim of the counterfeiting goes a long way with
law enforcement.

39

China Trademarks


China employs a first
-
to
-
file system.


China does not require a showing of “use” of the mark.


Having trademarked goods made in China and
shipping them for sale elsewhere constitutes “use.”


Manufacturing or packaging goods bearing the mark
and then exporting them out of China constitutes
“use.”


Registration allows you to stop a Chinese Manufacturer
from making or packing trademarked goods for a third
-
party US company and stop the goods from leaving
China.

40

China Branding



Transliteration


Common method used by foreign companies to develop
Chinese language trademarks and trade names


Generally used for invented words or surnames that do not
have another meaning


Typically, attempt to select characters with good meanings to
transliterate the name.


McDonalds transliterate in Cantonese is “MakDonNo” and
in Mandarin “Maidanglao”


Pizza Hut uses a transliteration that means “the customer
must win”


Pfizer uses the brand “Wei Ge” that means “mighty brother”
to market Viagra


Note: But Pfizer lost a trademark infringement case with
a domestic maker of sildenafil over the usage of the
brand “Wei Ge” or “Mighty Brother.” Pfizer filed an
appeal.


41

China Branding


Translation


Companies that translate their trademarks
usually are those that use generic or
descriptive names.


Danger is that the translation may not
accurately reflect the English meaning of the
trademark.


American Express uses a translation that means
“American Transportation”, which does not
express the meaning of “express.”

42

China Branding


Distinct Chinese Marks


Some companies have adopted new
trademarks that have no relation with
their English trademarks.


Usually Asia based companies,
specially Hong Kong companies


Hong Kong Bank uses “Hei Feng Bank”


Coca
-
Cola uses “Flying Snow” for its
English brand BonAqua

43

China Additional Source Materials



Protecting IP in Chinese Courts
http://www.carnegieendowment.org/publications/index.cfm?f
a=view&id=18984&prog=zch


Doha
http://www.carnegieendowment.org/publications/index.cfm?f
a=view&id=18083&prog=zgp&proj=zted


Global IP Protection by Jon Dudas
http://www.uspto.gov/web/offices/com/speeches/2007mar27.
htm


Amended PRC Patent Law
http://www.chinabusinessreview.com/public/0107/chen2.html



A Comparative Study of the Chinese Patent Law Practice,
Part II: Patent Litigation and Case Studies
” by Yalei Sun,
PERSPECTIVES Vol. 7, No. 1 (March, 2006): 5
-
20



44

Who and What is RADIX ?


Radix is a global consulting company that partners with
innovators, businesses, universities, incubators, and
research institutes to provide intellectual property
protection and to commercialize their inventions.





We have offices in St. Louis, Washington, DC, London,
India, and China.



We also assist companies with market entry and
market access projects in both China and India, as well
as foreign companies seeing to enter the United
States.





Our Washington, DC presence and our contacts in the
government allow us to assist our clients with domestic
and international regulatory hurdles.



45

Who and What is RADIX ?



Sanjay Agrawal

is the Intellectual Property Counsel for Radix Global
Solutions.

As an attorney with a technical background in electrical
engineering and biomedical engineering, Sanjay’s experience includes
advising multi
-
national companies on how to develop their patent
portfolios as well as developing strategies for protecting their
inventions.

Sanjay previously was in
-
house counsel for Nestle Purina,
where he was globally responsible for all patent matters for Nestlé's
PetCare business, including developing and protecting the patent
portfolio, analyzing competitor’s patents, and defining a global patent
strategy.

Sanjay is registered to practice before the U.S. Patent and
Trademark Office and is admitted to practice law in Missouri.




RADIX GLOBAL SOLUTIONS


970 East Airline Drive, Suite B


East Alton, IL 62024 USA


Phone: 618.259.9701 | Fax: 618.259.9702


Cell: 618.219.0715


Email: sagrawal@radixglobal.com

46

This presentation is intended solely to provide general information
and does not constitute legal advice. Attendance at the presentation
or later review of these printed materials does not create an
attorney
-
client relationship with the presenter(s). You should not
take any action based upon any information in this presentation
without first consulting legal counsel familiar with your particular
circumstances.




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