Overcoming Biotech Intellectual Property Rights ... - Radix Global


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Overcoming Biotech
Intellectual Property
Rights Issues in China
and India

February 19, 2008


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Overcoming Biotech Intellectual Property Rights Issues in China and India


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


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.


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

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


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.


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.


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.


Novartis Patent Case

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

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

In 2006 Novartis appealed the Madras patent office decision.

Novartis’ bold move was to challenge:

Whether the Indian patent law was compatible to TRIPS;

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


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.




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.


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.


Contrast Roche to Novartis

In 2007, Swiss drug maker Roche received India’s
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.


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

Usually under a fixed government royalty rate.



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.”


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


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.


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.


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.


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.


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.


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


Indian Trademark


Kingfisher airlines vs. Jet Airways

Jet Airways started an advertizing
campaign with the phrase

Kingfisher replied with
“We made them

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


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

Patent Infringement


Viagra Lawsuit

China Doha

China and Counterfeiting

China Trademark and Branding


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

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.



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


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

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

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


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.


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

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

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


China Invention Patents

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

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.


China Patent

What is patentable and what is not


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


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).


China Utility Model Patent

Chint v. Scheider Electric

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


China’s Bayh

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
Dole style IP regime.


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



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

Cornerstone decision

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


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

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.


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

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.


China Trademarks

China employs a first
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

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 Branding


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


China Branding


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

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


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”

Cola uses “Flying Snow” for its
English brand BonAqua


China Additional Source Materials

Protecting IP in Chinese Courts


Global IP Protection by Jon Dudas

Amended PRC Patent Law

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


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

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


Who and What is RADIX ?

Sanjay Agrawal

is the Intellectual Property Counsel for Radix Global

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

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

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


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


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and does not constitute legal advice. Attendance at the presentation
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