This Article is written by Shravya Mohan, a Second-Year Law Student of The National University of Advanced Legal Studies, Kochi

The acquisition of multiple patents that cover various aspects of the same product, often through the pursuit of patents for enhanced iterations of existing products, is commonly referred to as "patent evergreening," a term that may bear negative connotations. While improvement patents can be obtained across various industries due to the nature of the patent system, the pharmaceutical sector is notably associated with a higher prevalence of evergreening practices.

Evergreening opponents claim that getting many patents for a product over a long period of time essentially extends the patent holder's period of exclusivity. They go on to say that this practice is abusive, that it hinders the introduction of generic drugs, and that it is bad for public health. [1]

According to some commentators, the term "evergreening" is incorrect in and of itself. They contend that patents for improvements in innovations are granted to innovators using strong intellectual property laws. They note that most technology advancements happen gradually and that many patents for improvements encompass developments that have significant real-world applications for patients and other users. Furthermore, competitors may not be prevented from marketing goods previously protected by patents on original innovations that have expired by patents on enhancements. Lastly, the person who created the "original" product is not always the same person who creates the "improvement" technology.
Competitiveness is believed to be boosted by an innovator's capacity to secure a patent for an improved idea.[2]

PATENTS: FUNDAMENTALS:

Innovation undoubtedly has a major impact on how a nation directs its economic growth. It is essential for being competitive, and the pharmaceutical sector is one that unquestionably depends on this idea.
Within this field, innovation is one of the most distinctive features that is propelled by and influences advancements in medicine. The goal of the pharmaceutical projects is to transform basic research into novel therapies that are broadly available to patients across the globe. Research and Development (R&D) expenditures in this industry are exceptionally large, which raises the possibility of introducing novel goods or procedures. However, innovation yields substantial returns on investment in and of itself. Intellectual property (IP) rights, which include patents and are commonly regarded as the lifeblood of innovation, are used to measure this. The right to forbid others from creating, utilizing, importing, or selling a patentable innovation is conferred by patents.[3]. The laws of sovereign governments grant these exclusive property rights for revealing the creative works of the human mind. A patent can be enforced only to the extent that an application has been submitted.

Protecting patents is essential to protecting pharmaceutical companies' creative, novel, and practical strategies. These rights encourage innovation from inventors and can account for up to 80% of pharma firms’ total revenue. During the exclusivity period, the patent holder becomes a monopolist for a set amount of time, allowing them to charge higher prices than those of their competitors.[4] This serves as a means of partially recovering the expenses of research and development and encouraging inventors to develop new technological innovations. Nonetheless, the connection between patents and innovation is far more nuanced than is currently acknowledged in innovation policy discourse.

Firstly, the pharmaceutical sector is one of the three technology-based industries where the product, which can be produced at a reasonable cost, is essentially identical to the patent. Therefore, patent protection is the only means of gaining market exclusivity and realizing the profits from R&D. With patent protection, the rate of return on successful pharmaceuticals can be far higher than the expenses associated with bringing the treatment to market, even though developing and selling a new drug includes enormous costs.

However, it is also critical to recognize that the patent system has always been seen as a trade-off between market competition, technological dissemination, and incentives for innovation. Every intellectual property right lead to a monopoly, and monopolies invariably result in deadweight losses. The patent holder wants to drive the market price above the marginal cost to maintain their monopoly. This restricts access for users who are prepared to pay more than the marginal cost of accessing the intellectual property, which is less than the holder's profit-maximizing price. Thus, a loss occurs, leading to a static inefficiency.
This inefficiency creates a conundrum that necessitates constant negotiation between competition policy and IP Law.

THE COMPREHENSIVE WTO AGREEMENT ON TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS (TRIPS):

The most extensive international agreement on intellectual property is the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights, which was signed in 1994.[5] Its objectives are to facilitate the exchange of ideas and knowledge across borders, facilitate the resolution of intellectual property trade disputes, and ensure that all WTO members have the freedom to pursue their domestic policy objectives. The intellectual property system, as outlined in the Agreement, prioritizes public welfare, innovation, and the transfer of technology.

The TRIPS Agreement[6], in particular, specifies minimal rights for the pharmaceutical industry that a patent must grant. These rights are comparable to those found in the majority of patent laws. Preventing unauthorized parties from using the patented process to make, use, offer for sale, import, or otherwise deal with the patented product or a product obtained directly from the process is the most fundamental right granted to the patent owner. The 20-year patent protection period from the date of application was also set by TRIPS.

WTO Members had several grace periods to adjust their laws and policies to comply with their TRIPS requirements. For instance, developing nations were given until January 2000 to implement the TRIPS rules. Moreover, developing nations that failed to offer pharmaceutical product protection before the initial deadline were granted an extension until January 2005. However, due to the pursuit of the guidelines in the Doha Declaration on the TRIPS Agreement and Public Health, the deadline for the least-developed nations to fulfil their TRIPS responsibilities was extended until January 2016. The Doha Declaration (2001)[7] acknowledged the seriousness of the public health issues caused by HIV/AIDS, TB, malaria, and other epidemics that plague many developing nations, particularly the least developed ones. In light of this, its Paragraph 4 introduced certain flexibilities for these nations to safeguard their public health. The Doha Declaration on the TRIPS Agreement and Public Health, as well as the Waiver Decision of August 2003[8] and the Amendment Decision of December 2005[9], which facilitate mandatory licenses for export to those countries in need, have subsequently clarified and reinforced the flexibilities in the TRIPS Agreement. Every member of the WTO is adamant that strong and dynamic multilateral trade is necessary to foster economic growth and offer the means of producing all the resources needed to address health issues.

THE EVOLUTION OF PATENT LAW IN INDIA:

The pharmaceutical sector in India has grown steadily over the past few decades, making it one of the most prosperous high-tech sectors in the country. Indian industry has seen a significant transformation as a result of the liberalization of the country's economy, emerging from home markets, and aiming for global competition. The Indian pharmaceutical sector is now ranked ninth in terms of value and third in terms of volume worldwide. India, which is regarded as the pharmacy of the world, has particular healthcare needs, rules, and regulations about health as a result, and fierce competition with the largest markets, like the US and EU.[10]

India views the Doha Declaration on the TRIPS Agreement and Public Health as a win since it upheld the obligation to address public health requirements before safeguarding pharmaceutical corporations' private intellectual property (IP) claims. With the passage of the Patent Act in 1970[11], all earlier laws were repealed. Nevertheless, agricultural and pharmaceutical items were not allowed to receive patents under the recently passed Patents Act. The goal of this exclusion was to enable the creation of an independent pharmaceutical sector in India and end that country's reliance on the importation of medications and formulations. The Indian pharmaceutical business was greatly impacted by this lack of protection, which led to the development of enormous skill in the reverse engineering of pharmaceuticals that were patentable as products throughout the industrial world but not protectable in India.

Because of this, the Indian pharmaceutical industry quickly started creating more affordable versions of a wider range of patented medications for the home market. After the international patents expired, they moved into the global market. The General Agreement on Tariffs and Trade (GATT)[12] Uruguay Round trade discussions resulted in the TRIPS agreement, and the pharmaceutical industry was a major driving force behind the inclusion of intellectual property rights in the GATT framework. India was required to abide with the GATT's regulations, including the TRIPS agreement, after signing the GATT on April 15, 1994.

As a result, the nation has to adhere to the minimal requirements set forth by TRIPS about patents and the pharmaceutical sector. Therefore, provisions for the availability of patents for both pharmaceutical items and process inventions required to be included in India's patent legislation.
A new law was introduced in India in 1982 that amended the Drugs and Cosmetics Act of 1940[13]. The new law also gave the Central Government the authority to establish regulations, including the cancellation or suspension of a license for violating the Act's provisions pertaining to the import, manufacture, sale, and distribution of drugs, as well as for failing to comply with the terms under which the license was granted.

The authority to create regulations now includes prescribing the use of packaging materials that come into direct touch with the medication. Reducing out-of-pocket spending for medications and healthcare has been the main goal of the Indian government since there isn't a substantial system of compensation in place.
Since generics dominate the market, national rules and regulations about intellectual property, medication pricing, prescriptions, drug regulatory affairs, and other topics are primarily focused on managing and bolstering the generic market.[14]

INDIA AGAINST EVERGREENING OF PHARMACEUTICALS

India was the first nation to voice concerns about the abuse of market monopolies by numerous international drug companies in the midst of a devastating humanitarian crisis. Only India could have made the antiretroviral revolution conceivable, which has helped millions of AIDS sufferers worldwide. HIV medications were able to reach millions of patients in developing nations due to low production costs from India, which brought down the annual cost from $10,000 to about $350. Due to its considerable experience in process chemistry, reverse engineering, and design, as well as the benefits of cheaper capital and operational costs for plants, the nation was able to enter the global generic market.

Prior to the TRIPS Agreement, several nations had different patent rules. India was among those where pharmaceutical medication patent protection was prohibited. The worldwide pharmaceutical industry started working to create a global patent law, primarily in response to India's public health-focused patent law reform. As a result, the TRIPS Agreement set down minimal requirements that all member countries had to follow. Each nation that wants to join the WTO must ratify several agreements, such as the TRIPS Agreement, which sets baseline requirements for safeguarding and upholding intellectual property rights for all WTO members. These fundamental requirements include the requirement that inventions be "new," "involve an inventive step," and "capable of industrial application" in order for patents to be granted. Furthermore, patents grant the only authority to stop others from creating, using, or commercializing the innovation for twenty years.[15]

India signed the TRIPS agreement in 1995, bringing product patents for pharmaceuticals. As part of its commitments to the WTO and TRIPS, India modified its Patent Act in three stages, with a final deadline of 2005. The flexibility that WTO countries have in defining what constitutes an "invention" for patent law is one of the fundamental features of the TRIPS Agreement. TRIPS do not define an innovation, just like the majority of patent regimes around the world. The policy area that allows national laws to differentiate between patentable and non-patentable ideas.

India enacted new patentability requirements in 2005, and Section 3(d)[16], a special clause, further limiting what may be patentable. This new clause prohibited the patenting of novel versions of known substances unless it could be demonstrated that the novel form had increased the known substance's efficacy. Not only did it introduce product patents for pharmaceuticals, but it also brought in a structured compulsory license mechanism, clarified the system for using patented products within the patent term for generic approval, introduced post-grant opposition, and introduced stricter patentability standards through legislative changes.

The purpose of Section 3(d) was to dissuade evergreening, an immoral practice, according to the statute. Certain novel formulations of older drugs are restricted in their capacity to be patented if they do not meet the requirements for improved efficacy.
According to Section 3(d) of the Indian Patent Act[17], the following inventions are not considered inventions under the Act's definition:

“The following inventions are NOT inventions within the meaning of this Act, - […] (d) the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use of a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant. Explanation: For the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same.”

As a result, Section 3(d) established stricter criteria for patentability for novel formulations of previously discovered chemicals. This clause has shown to be successful in discouraging innovators from engaging in unethical tactics to get longer patent protection.
In April 2013, the Supreme Court of India dismissed Novartis AG, a Swiss medicine manufacturer, from its bid to obtain patent protection for its anti-cancer treatment Gleevec.[18] The decision was made on the basis that Novartis AG had not fulfilled the threshold of efficacy needed by Section 3(d) of the 2005 Patent Act. As a result, the Supreme Court ruled that "under India's patent laws, incremental improvements or modifications to an existing drug are not patentable." Global attention was drawn to this case because of its wider ramifications, which included the issue of patenting with net benefits to society and consideration of the specific conditions of a country. While the ruling may be a victory for Indian companies manufacturing cheap generics, it presented significant hurdles to Western pharmaceutical companies trying to market their products in this country.[19]

TO PATENT OR NOT TO PATENT IN INDIA:

As was previously mentioned, Section 3(d) of the Indian Patent Law expressly addresses inventions that fall under the prohibition against evergreening.
A claim to a previously known substance and known medicinal activity in an invention should not be eligible for patentability under Section 3(d) of the Act unless the invention demonstrates a significant improvement in therapeutic efficacy over the previously known chemical. There have been several disagreements with some of the big pharma over this clause. The Supreme Court of India states that no discernible variation in treatment efficacy has been demonstrated by the Applicants so they weren’t eligible for granting patentability.

A CASE STUDY: NOVARTIS AG V. UOI :

The enormous pharmaceutical corporation Novartis International AG (henceforth Novartis) submitted several patent applications for a medication containing "imatinib" in the US during the 1990s. Novartis then submitted a second patent application for the "beta crystalline" form of imatinib mesylate salt after this one was granted. The active component of Novartis's "Gleevec" medication, imatinib mesylate, has been approved by the US Food and Drug Administration for use in the treatment of chronic myeloid leukemia and in the fight against cancer. With $4.66 billion in sales, Gleevec was Novartis' best-selling cancer medication in 2015. Novartis has acquired multiple international patents throughout the years for imatinib mesylate in its beta-crystalline form. Novartis asserted that it had submitted beta crystalline form patent applications to more than 50 nations and had successfully obtained patents in 35 of them. [20]

However, in India, this was not the case.
In 1998, Novartis applied for patent protection for imatinib mesylate in its beta crystalline form following modifications to India's patent laws and TRIPS. The application was reviewed for a considerable amount of time before being denied in 2006 on the basis that it did not meet the standards for innovation and non-obviousness. Several generic medication producers, including Natco Pharma Ltd. (henceforth Natco) and the non-governmental organization Cancer Patient Aid Association, objected to Novartis' proposal for a number of reasons. They argued that the application lacked innovation, was not obviously used, and did not demonstrate a discernibly improved efficacy. the requirements outlined in Indian Patent Law Section 3(d). In this sense, Novartis was charged with attempting to preserve its unique recipe. The Swiss corporation filed appeals with the Madras High Court, which then forwarded them to the recently established Intellectual Property Appellate Board, or IPAB, arguing in its defence that the Indian Patent Act violated WTO regulations. The Registrar of Trademarks' decisions made during opposition or rectification procedures are appealable before the IPAB. [21]

The Appellate Board overturned the earlier ruling, declaring that the application met the requirements for novelty and non-obviousness since imatinib mesylate's beta crystalline form was genuinely a novel and original invention. Nevertheless, the patent application had to be turned down because the innovation was merely a modified version of a well-known compound rather than a novel material. According to section 3(d) of the Indian Patents Act, Novartis was unable to demonstrate an increase in efficacy.
Novartis subsequently used a Special Leave Petition to appeal the case to the Supreme Court following this ruling. The beta crystalline form, according to Novartis, had improved thermodynamic stability, decreased hygroscopicity, and higher bioavailability, among other advantageous flow features.

After reviewing every document submitted, the Court came to the conclusion that Novartis's advancements in flow characteristics, thermodynamic stability, and other areas had nothing to do with therapeutic efficacy, based solely on previously issued patents and published research.
As a result, imatinib mesylate's beta crystalline form does not satisfy the Indian Patents Act's definition of a "invention."[22]
The Court ruled that there was no question about the necessity to evaluate a medicine's therapeutic efficacy severely and narrowly in light of the history of Section 3(d) and, more significantly, the circumstances surrounding the amendment of this section. Unfortunately, the beta crystalline form of imatinib mesylate did not ensure any increase in therapeutic outcomes.

The Indian Supreme Court denied Novartis's patent application in April 2013.
The Supreme Court's decision was a major comfort to individuals who couldn't afford the life-saving medications produced by this massive pharmaceutical company. In a sense, by obtaining patents over their medications, these corporations—who have already gained billions of dollars—endanger the very lives of the impoverished by preventing people from buying the drugs at inexpensive prices. The Supreme Court stated that under India's Patent Act, a patent cannot be refused, blocking the development of a new invention.
Nonetheless, the Supreme Court's ruling made it very evident that India is a developing nation and that over a billion people depend on affordable access to healthcare.[23]

Following the denial of its patent for "Gleevec," Novartis opted not to proceed with its intention to construct an R&D center in Hyderabad, India. The multinational corporation from Switzerland favoured to "move" millions of dollars in planned investments from India to other places, mainly China. The Supreme Court's and the Indian Patent Office's rulings were evaluated by the American trade association Pharmaceutical Research and Manufacturers of America, or PhRMA, as indicators of the nation's declining climate for innovation.
However, medical professionals and pharmaceutical companies in India weren't taken aback. Indeed, this decision solidified the position of regional businesses as major providers of low-cost generics to the developing world's and India's fast expanding pharmaceutical markets.

Cipla Ltd., Sun Pharma Ltd., and Natco Pharma Ltd. continued to offer Gleevec generics in India at a cost that was approximately 10% less than that of the branded medication. From the perspective of public health, it undoubtedly benefited Indian patients who had not been able to pay the name-brand medication. Gabble & Kohler (2014)[24] examined the Novartis case timeline from several angles. That case, hopefully, contributed to better access to life-saving medications in developing nations and established a significant precedent for the global pharmaceutical business. The authors claim that the Novartis case demonstrates how India is interpreting international law to meet its own goals for public health.[25]

Innovation takes a lot of energy, especially in the pharmaceutical industry where developing a new drug may take years. When a drug is patented, it gets exclusive rights for 20 years, but much of this time is taken up by the regulatory process. To extend the patent, pharmaceutical companies sometimes make minor changes to the drug and apply for a new patent. This is called evergreening. Critics argue that evergreening is a way for companies to increase profits without taking many risks. On the other hand, supporters say that these improvements can have real-world benefits for patients. This work doesn't take a side on the issue. Its goal is to analyse and provide answers.

References

[1] Törnvall, M. (https://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=3810494&fileOId=3990730, FACULTY OF LAW Lund University - Graduate! Thesis,!Master!of!Laws!programme. Available at: https://href.li/?https%3A%2F%2Flup.lub.lu.se%2Fluur%2Fdownload%3Ffunc=downloadFile&amp=&recordOId=1621592&fileOId=1621603 (Accessed: 15 September 2024).

[2] Morgan L. Stringer, It's All about Principle: How Patent Trolling, over Broad Patents, Evergreening, and Patent Shelving Represent a Departure from the Patent Clause and How to Return to the Principle of the Patent Clause, 13 INDIAN J. L. & TECH. 27 (2017). (Accessed: 15 September 2024).

[3] Ibid.

[4] Ibid.

[5] TRIPS: Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, 1869 U.N.T.S. 299, 33 I.L.M. 1197 (1994) [hereinafter TRIPS Agreement].

[6] Ibid.

[7] World Trade Organization (no date) WTO. Available at: https://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm (Accessed: 12 March 2024).

[8] Ibid.

[9] Ibid.

[10] Marta Radelli, Patent Evergreening: Technological Advancement and Abusive Commercial Practices. Availability of Essential Medicine in the Case of Access to Insulin, 2021 QMLJ 66 (2021).

[11] The Patents Act, 1970.

[12] General Agreement on Tariffs and Trade, Oct. 30, 1947, 61 Stat. A-11, 55 U.N.T.S. 194.

[13] The Drugs and Cosmetic Act, 1940.

[14] Ibid at 10.

[15] Erika Lietzan, The "Evergreening" Metaphor in Intellectual Property Scholarship, 53 AKRON L. REV. 805 (2019

[16] The Patents Act, 1970, §3(d).

[17] Ibid.

[18] Novartis AG v. UOI, 13 S.C.R. 148

[19] Debarchan De & Kevin Samuel, Evergreening of Patents: A Barrier to New Inventions, 22 SUPREMO AMICUS [252] (2020).

[20] Uri Y. Hacohen, Evergreening at Risk, 33 HARV. J. L. & TECH. 479 (2020).

[21] Ibid.

[22] Ibid at19.

[23] Uri Y. Hacohen, Evergreening at Risk, 33 HARV. J. L. & TECH. 479 (2020).

[24] Marta Radelli, Patent Evergreening: Technological Advancement and Abusive Commercial Practices. Availability of Essential Medicine in the Case of Access to Insulin, 2021 QMLJ 66 (2021).

[25] Ibid.