REFUSING TO SUPPLY IN CHEAP JURISDICTIONS MAY BE OKAY, SAYS AG

IPKat - fishing for IP stories for YOU: "Friday, October 29, 2004 REFUSING TO SUPPLY IN CHEAP JURISDICTIONS MAY BE OKAY, SAYS AG Yesterday in Case C-53/03 Synetairismos Farmakopoion Aitolias & Akarnanias (Syfait) and Others v Glaxosmithkline AEVE Advocate General Francis Jacobs gave his Opinion as to whether a drug company may plead the threat of parallel trade as an excuse for limiting the amount of IMIGRAN, LAMICTAL and SEREVENTIT it sends to pharma wholesalers in 'cheapo' regimes. In his conclusion he recommends that the European Court of Justice rule as follows: '(1) A pharmaceutical undertaking holding a dominant position does not necessarily abuse that position by refusing to meet in full the orders sent to it by pharmaceutical wholesalers only by reason of the fact that it aims thereby to limit parallel trade. (2) Such a refusal is capable of objective justification, and thus of not constituting an abuse, where the price differential giving rise to the parallel trade is the result of State intervention in the Member State of export to fix the price there at a level lower than that which prevails elsewhere in the Community, given the combined circumstances of the European pharmaceutical sector at the current stage of its development, and in particular: �- the pervasive and diverse State intervention in the pricing of pharmaceutical products, which is responsible for price differentials between the Member States; �- the regulation by the Community and the Member States of the distribution of pharmaceutical products, which establishes nationally demarcated obligations upon pharmaceutical undertakings and wholesalers to ensure the availability of adequate stocks of those products; �- the potentially negative consequences of parallel trade for competition, the common market, "

The Use of Exculpatory Opinions in Defending Against A Charge of Willful Infringement (12/05/04) from Mondaq

McDermott Will & Emery - United States - The Use of Exculpatory Opinions in Defending Against A Charge of Willful Infringement (12/05/04) from Mondaq: The exercise of intellectual property rights has become a mainstay of business over the last 10 years. Indeed, business models are proliferating where obtaining patents for the purpose of licensing and enforcement are the sole activity of the enterprise. Even among those entities that routinely engage in R&D or the manufacture and sale of products, more and more are investing in the acquisition of IP rights, and many have realized that enforcement of those rights against competitors is an effective tool in protecting markets and/or generating revenue. As a consequence, corporate executives and general counsels are likely to face, at least once in their careers, a charge that their companies are infringing upon another entity’s intellectual property rights. Especially threatening is the receipt of a notice that your company’s products infringe patents held by another. The threat is worrisome for a variety of reasons. First, the threat is often leveled at a company’s core technology, changes to which are almost never trivial. Second, patent infringement carries with it the very real threat of devastating injunctive relief. Finally, damages in such cases, while nominally calculated in terms of a reasonable royalty or lost profits, may, at the discretion of the court, be enhanced up to three times for so-called willful infringement. In order to navigate this minefield and defend themselves against claims of willfulness, many companies engage counsel in order to obtain advice as to whether their actions violate valid patent rights of some third party and/or how to avoid such violations by design arounds. This article, addresses defenses to a charge of willfulness, and in particular, some of the issues which may arise when relying on opinions of counsel as a defense to a patent owner’s claim of willful infringement. The "Totality of the Circumstances" Test When considering whether an infringer acted in bad faith, thereby supporting an increased damage award, courts look at a "totality of the circumstances," including (1) whether the infringer copied the invention of another; (2) whether the infringer, when it knew of the other’s patent, investigated the scope of the patent and formed a good-faith belief that it was either not infringed, invalid or both; (3) whether the infringer mounted a substantial (albeit unsuccessful) challenge in the issues of validity and infringement; (4) the closeness and complexity of the legal and factual issues presented; (5) whether the infringer engaged in good faith efforts to design around the patent; and (6) the infringer’s behavior in the litigation. 1 Because there are few situations where sufficient evidence of actual copying or litigation conduct egregious enough to find willfulness are present, the primary focus for courts when considering willful infringement claims is usually on whether an alleged infringer has formed a good-faith belief that its conduct was justified. In the seminal case, Underwater Devices, Inc. v. Morrison-Knudsen Co.,2 the U.S. Court of Appeals for the Federal Circuit imposed as affirmative duty on a potential infringer to exercise due care to determine whether or not its activities are infringing. This duty includes obtaining competent legal advice from counsel before initiating possibly infringing activity. The requirements for an opinion of counsel as evidence of good-faith in defense to a charge of willful infringement has led to several problems relating to waiver of the attorney-client privilege with respect to such opinions, and often to matters beyond the scope of the opinions. Following Underwater Devices, in Kloster Speedsteel AB v. Crucible Inc.,3 the Federal Circuit found that silence by the accused infringer on whether it obtained legal advice relating to infringement could warrant an adverse inference that the accused infringer either had not obtained an opinion (as required by Underwater Devices) or that the opinion was adverse. The Court followed its Kloster Speedsteel decision with its holding that the failure of an infringer to introduce an exculpatory opinion of counsel at trial could lead to an adverse inference instruction to the jury. Fromson v. Western Litho Plate & Supply Co.4 Thus, although the test for determining willful infringement ostensibly requires a multifaceted review of the totality of circumstances, the Federal Circuit jurisprudence has, for many years, imposed an opinion requirement. In the view of many, the opinion of counsel "requirement," coupled with the adverse inference, has led to a serious erosion of attorneyclient privilege. Waiver of the Attorney-Client Privilege Under the present state of the law, in addition to the affirmative duty to seek and obtain advice-of-counsel, if a company finds itself in a lawsuit facing a charge of willful infringement it is all but required to disclose the legal advice it received relating to infringement and/or validity. In other words, by merely raising the willful infringement claim, a patent owner presents the accused infringer with the Hobson’s choice of either waiving its attorney- client communications or confronting an adverse inference instruction on the issue of willfulness. Most choose waiver. The "choice" mandated by the Federal Circuit authority requires considerations not found in any other area of law. The most obvious is the effect and scope of the privilege waiver resulting from reliance on an opinion of counsel. There is no question that reliance on opinions of counsel as evidence of goodfaith results in a waiver of privileged communications. The thorny question facing accused infringers is just how broad a waiver results. Accused infringers agonize over this question and district courts have found the task of line drawing to be a daunting one. The uncertainty on this issue is well illustrated by the following quote from a court struggling to fairly decide the issue: "In few, if any, areas of the law has the tail taken to wagging the dog as vigorously as in the privilege waiver disputes endemic to patent infringement cases. Defendants often rely upon an advice-ofcounsel defense when confronting the threat of enhanced damages for willful infringement. The consequent waiver of privileges and protections that the adviceof- counsel defense entails, however, is now the basis of innumerable disputes like the one at bar, distracting the court and the parties from addressing the fundamental questions of infringement and validity. It seems that a whole subspecialty of opinion practice has developed as part of infringement defense strategy. Litigation resources are heavily invested in delaying the moment when an accused infringer must choose between relying on advice-of-counsel or maintaining typical privileges, or in seeking bifurcation on the issue of willfulness, or in trying to control the scope of waiver, once the advice-ofcounsel route is taken." Rhodia Chimie, et al. v. PPG Industries, Inc. 5 Scope of Waiver It is long settled that if an accused infringer chooses to rely on an advice-of-counsel defense, it waives privilege with respect to the communications transmitting the reliance opinion. Thorn EMI North America, Inc. v. Micron Tech.6 Materials considered by reliance counsel in rendering the opinion, but not communicated to the accused infringer, are typically protected as work product and are not discoverable. EMI No. Am. See also, Dunhall Pharm., Inc. v. Discus Dental, Inc.;7 and Steelcase, Inc. v. Haworth, Inc.;8 Even when a work product waiver occurs it is not unlimited in time but ends once a lawsuit is filed.9 However, some courts have extended the waiver to include all communications between the client and counsel, in some instances including trial counsel. Haney v. Timesavers, Inc.10 (Broad waiver found where "document logs show that a number of documents were sent from the [defendant’s trial counsel] to the [reliance opinion counsel] and to others concerning infringement and validity…as a result, [trial counsel] has provided opinions to advise [defendants]);" FMT Corp. v. Nissei ASB Co.;11 Electro Scientific12 (Trial counsel implied that communications with reliance opinion counsel were substantial.); Matsushita Elec. Corp. v. Loral Corp.13 (Defendant patentowner’s defense of good faith litigation was based on opinion given by trial counsel.); Carl Zeiss Jena GmbH v. Bio-Rad Labs. Inc.14 (Written and oral reliance opinion were given by trial counsel.); Fonar Corporation, et al. v. Johnson and Johnson15 (Various outside lawyers’ authored opinion signed by in-house counsel.). While the scope of the waiver in any given case cannot be accurately predicted, the cases provide some guidance that will help counsel limit the potential scope of the waiver. First, where practical, opinion counsel should be separate from trial counsel. Broad waivers, including trial counsel’s work product, have been found where trial counsel also rendered an opinion regarding the infringement or validity matters at issue. While the different counsel can be members of the same law firm, the risk of a broad waiver is mitigated if they are not. Second, opinion counsel and trial counsel should not communicate on the substance of the opinions lest it be inferred that trial counsel influenced opinion counsel. Broad waivers have resulted where trial counsel and opinion counsel share information and theories. Though opinion counsel may be able to bring trial counsel "up to speed" more quickly, it must be remembered that opinion counsel was engaged to provide objective advice on issues of infringement and validity. Trial counsel’s view on whether opinion counsel was articulate and appropriately analytical is only marginally relevant to trying the substantive defenses of the particular action. In preparing an opinion memo, the opinion writer typically has no more than a commercial validity search report and/or a relatively abbreviated consultation with a person knowledgeable about the accused device or method. When this is compared to the resources typically available to defense counsel, it is no wonder that different prior art and different or additional reasons for asserting non-infringement are likely to percolate up. As long as the opinion was competent as delivered and was relied upon in good faith by the client, the Underwater Devices criteria are met. Third, avoid any appearance of "opinion shopping." Don’t engage counsel to prepare an opinion and then stop the process in favor of a new counsel without good cause to do so. Are the Winds of Change Blowing? Based upon recent actions, the Federal Circuit appears to be keenly aware that these scopes of waiver issues—sequela to the duty to obtain an opinion and the negative inference imposed if the opinion is not produced to the plaintiff—need to be reviewed and addressed. Recently, the Court sua sponte decided to review en banc certain issues regarding exculpatory opinions, waiver and the adverse inferences. In Knorr-Bremse Systeme Fuer Nutzfahrzeuge GMBH v. Dana Corp., et al.,16 the Court asked for amicus submissions on the following questions: (1) Is the adverse inference appropriate when an accused infringer invokes the attorney-client privilege and/or work-product doctrine with regard to willful infringement? (2) Is it appropriate to draw an adverse inference with respect to willful infringement when the accused infringer has not obtained legal advice? (3) Should the existence of a substantial defense to infringement be sufficient to defeat liability for willful infringement even where no legal advice has been obtained? At least 14 amicus briefs were submitted. With near unanimity, the amici answered the Court’s questions as follows: (1) The adverse inference is inappropriate when a defendant invokes the attorney-client privilege and/or work-product doctrine with regard to willful infringement. (2) It is not appropriate to draw an adverse inference even when a defendant has not secured legal advice. (3) The existence of a substantial defense to infringement should be sufficient to defeat a willfulness claim regardless of whether legal advice was sought and obtained. Some parties went even further, asking the Court to simply abolish the Underwater Device rule. As of this writing, oral argument has been completed and the patent bar eagerly awaits guidance from the en banc Federal Circuit. Given the Court’s request and the overwhelming call for change, it appears that some Federal Circuit guidance on these issues may soon be forthcoming. However, until that happens, it is important to understand the opinion "requirement" and the attendant attorney-client privilege waiver virtually inherent in presenting a defense to a charge of willful infringement. Paul Devinsky Stephen J. Akerley Paul Devinsky, a Washington, D.C. based-partner, concentrates his practice on patent, trademark and copyright litigation, counseling and prosecution and on trade secret litigation. Stephen J. Akerley, a partner in Silicon Valley, focuses his practice on high-profile patent, trade secret, trademark and copyright cases as well as technology-related commercial disputes. Footnotes 1 See, e.g., Anjimoto Co. v. Archer-Daniels-Midland Co., 228 F.3d 1338 (Fed. Cir. 2000); SRI Int’l Inc. v. Advanced Tech. Labs. Inc., 127 F.3d 1462 (Fed. Cir. 1997); Gustafson, Inc. v. Intersystems Indus. Prods., Inc. 897 F.2d 508, 510 (Fed. Cir. 1990) ("Willfulness is determined from the totality of the circumstances...."); and Bott v. Four Star Corp., 807 F.2d 1567, 1572 (Fed. Cir. 1985). 2 717 F.2d 1380, 1389-90 (Fed. Cir. 1983). 3 793 F.2d 1565, 1580 (Fed. Cir. 1986). 4 853 F.2d 1568, 1572-73 (Fed. Cir. 1988). 5 Civil Action No. 01-389-KAJ, Memorandum Opinion, October 8, 2003. 6 837 F. Supp. 616 (D. Del. 1993). 7 994 F. Supp. 1202, 1205-06 (C.D. Cal. 1998). 8 954 F.Supp. 1195 (W.D. Mich. 1997). 9 Dunhall, supra. 101995 U.S. Dist. LEXIS 15222, *8-9 (D. Ore. 1995). 111992 U.S. Dist. LEXIS 21500, *7, 24 U.S.P.Q.2D (BNA) 1073 (N.D. Ga. 1992) 12175 at F.R.D. 539, 540 (N.D. Cal. 1997). 131995 U.S. Dist. LEXIS 12880, *1-4 (S.D.N.Y. 1996). 142000 U.S. Dist. LEXIS 10044 *1. 15227 U.S.P.Q. (BNA) 886, 887 (D. Mass. 1985). 16Case Nos. 01-1357, - 1376, 02-1221, - 1256 (Fed. Cir.); on appeal from the U.S. District Ct for the Eastern District of Virginia (Case No. 00-CV-803).

LEX ORBIS - India - Data Exclusivity � The Indian Perspective (21/09/04) from Mondaq

LEX ORBIS - India - Data Exclusivity � The Indian Perspective (21/09/04) from Mondaq: by Manisha Singh Nair, Under Special 301 of the U.S. Trade Act of 1974 India has been put on the ‘PRIORITY WATCH LIST’ of USTR (United States Trade Representative) for failing to provide an adequate level of protection or enforcement and market access for persons relying on Intellectual Property protection. The absence of ‘data exclusivity’ legislation inter alia forms the reason for India’s inclusion in the list. Special 301’ is a part of the U.S. Trade Law that requires the USTR to identify countries that deny adequate protection for Intellectual Property Rights or that deny fair equitable market access for the U.S. persons who rely on IP protection. PRIORITY WATCH LIST’ are the countries or trading partners that have very serious problems in terms of scope and/or impact on U.S. commerce requiring the focus of increased bilateral attention on the problem areas. The Government of India has constituted a High level Inter-ministerial committee to consider steps to be taken in the context of the provisions of Article 39.3 of the TRIPS agreement for the protection of undisclosed information. As the Indian government caves in to the economic coercion of the U.S. government backed by the omnipotent Pharmaceutical lobby of U.S this paper attempts to analyze what India stands to lose or gain and what alternative we have to come out of this conundrum victoriously. There are several burning questions that come to the forefront with regard to the issue of data exclusivity – does Article 39.3 of the TRIPS agreement mandate ‘data exclusivity’ or mere ‘data protection’? should the developing countries like India adopt measure of data protection other than data exclusivity? would data exclusivity sound death knell for the India pharmaceutical industry with a strong generic base? what would be the ramifications of such legislation on Indian Population more than half of which lives under abject poverty? It is imperative to find answers to these questions, as we have to reconcile the apparently opposing mandates of public health and strong IP protection. The predicament before the developing countries like India is how to strike a fine balance between public health and the demand of increased IP protection. Before attempting to analyze these issues it is important to understand the meaning of ‘data exclusivity, its genesis, impact on drugs and the reasons for conferment of this privilege. Data exclusivity –meaning, genesis and impact Data exclusivity is generally defined in United States as a period of exclusive marketing rights granted to a new drug application (NDA) upon obtaining marketing approval by the regulatory authority if certain statutory requirements are met. The regulatory bodies require the pharmaceutical companies to submit extensive data establishing the safety and efficacy of a new drug before approving it for sale. This data arises out of many years of research and clinical trials and is the most expensive part of drug development. It is estimated that the total cost of drug development and marketing is approximately $500 in industrialized countries. Data exclusivity laws prevent the regulatory bodies from accessing the originators data when considering an application for a generic competitor seeking approval to sell an equivalent competing product. Thus in the countries where data exclusivity is granted the regulatory authorities can take up the applications for generic versions only after the expiry of data exclusivity period. In the alternative the competitor is required to generate his own marketing approval data. The period of data exclusivity is provided by the national legislation of a country and as such there is no uniform period. Data Exclusivity legislation was for the first time enacted by United States of America in the year 1984.The 1984 Drug Price Competition and Patent Term Restoration Act popularly known as Waxman-Hatch Act provides for there different terms of marketing exclusivity depending on the type of drug. Each type of exclusivity has specific requirements and results in various lengths of time for which the applicant is granted the exclusive marketing rights. Three main Types of exclusivity are Orphan, Waxman-Hatch and Pediatric granted for 7years, 5years and 3 years respectively from the date of approval of the drug. Exclusivity for the first time approval of a new chemical entity in the US is for a period of 5 years. Interestingly data exclusivity provision is seen in US as balancing the interests of innovator or pioneer drug firm that bear the research and development and the interests of the generic drug industry that can increase competition and lower the cost of the drug The reasons for granting exclusivity in United States have been enumerated as- to achieve balance between the pioneer drug industry and the generic drug industry Costly clinical trials that established the safety and effectiveness of the drug would not need to be repeated in order for a generic drug to enter the market place. Once information has been established about a drug, there is no requirement for a second sponsor to prove the safety and efficacy a second time. exclusivity is an incentive to a new drug development in particular in the absence of patent protection. unnecessary death of and suffering to the animals due to duplication of tests could be avoided. Side effects to the human subjects due to repetitive trials can be obviated. European Community adopted data exclusivity in the year 1987 vide the Directive 65/65 EE (amended 87/21/EEC). The period of data exclusivity in European community varies from 6 to 10 year. Data exclusivity arose in the European Community during the time when there was no patent for biotech products in order to protect the biotech industries and afforded the biotech products some form of market protection. U.K., Sweden, Netherlands, Germany, Italy, France and Belgium grant 10 years data exclusivity. More than half of the members of European union provide 6 years of data exclusivity. In Japan, the data exclusivity period varies from 4 years (for medicinal products with new indications, formulations, dosages, or compositions with related prescriptions) to 6 years (for drugs containing a new chemical entity or medicinal composition, or requiring a new route of administration) to 10 years (for orphan drugs or new drugs requiring pharmaco-epidemiological study). In New Zealand the protection period is 5 years. There is no data exclusivity period for data relating to new uses or formulations of old active ingredients Data exclusivity is primarily granted for pecuniary reason that is to enable the initial registrant to recover investment made by him in obtaining the marketing approval. In the absence of data exclusivity period, generic drugs could be introduced onto the market on the basis of bioequivalence tests without the having to replicate the time consuming and expensive clinical trials that are used to establish safety and efficacy of the product. The duplication of the tests would be inefficient use of the resources. Bioequivalence means-‘the absence of a significant difference in the rate and extent to which an active ingredient or active moiety becomes available at the site of drug action when administered at the same molar dose under similar conditions’ If bioequivalence is established, the products will have the same clinical effect and safety profile, and are considered to be therapeutically equivalent and interchangeable. TRIPS Agreement As a part of the Uruguay Round of the World Trade Organization (WTO) multilateral negotiations a new and rigorous treaty on intellectual property rights- the TRIPS was established in 1994. Beginning on the 1st of January 1995, the Agreement on Trade Related Aspects of Intellectual Property Rights administered by WIPO became the standard for protecting IPRs in those nations seeking to engage in international trade and enhance their prospects for economic growth. Thus the members of WTO are obliged to adhere to and provide for the minimum protection prescribed by the TRIPS. Accordingly, member countries are required to amend their laws to bring them in conformity with the substantive standards laid down by TRIPS. Failure to do so within the conceded time would certainly lead to referral of the matter to the Dispute Settlement Body of WTO. An affirmative finding of the Body and non-compliance may culminate into trade retaliations by the member nations. Developing countries where product patent was not being granted at the time of adoption of TRIPS were given time till 1st January 2005 to bring their patent law in line with TRIPS. India being one of them is legally bound to make the requisite amendments in its domestic patent law by the said date. However there are certain controversial and unsettled provisions in TRIPS, which have triggered considerable deliberations and debate in the international fora. The scope, meaning and the manner of their implementation remain nebulous. Article 39.3 dealing with data protection is one such provision. Article 39.3 runs thus: 3. Members when requiring as a condition of approving marketing of pharmaceutical or of agricultural chemical product which utilize new chemical entities, the submission of undisclosed test or other data, the originator of which involves considerable efforts shall protect such data against disclosure, expect where necessary to protect the public or unless steps are taken to ensure that the data are protected against unfair commercial use" Thus, if in respect of pharmaceutical or agricultural chemical products which utilize a ‘new chemical entity’, the regulatory authority of a country requires submission of ‘undisclosed clinical and test data’ for granting marketing approval it is under obligation – protect the data against ‘unfair commercial use’ protect the data against ‘disclosure’ expect where it is necessary to protect the public or unless steps are taken to ensure that the data are protected against ‘unfair commercial use’. The diclosure is permitted only in two circumstances- Where it is necessary to protect the public Where the data is protected from unfair commercial use As it is evident from the language of the Article, latitude is given to the individual members to take such steps as they deem fit for protecting data against ‘unfair commercial use’. The purpose of Article 39.3 can be inferred from paragraph 1 of the same article that is to ‘ensure effective protection against unfair competition’. Article 39.1 provides- 39.1. In the course of ensuring effective protection against unfair competition as provided in Article 10bis of the Paris Convention (1967), Members shall protect undisclosed information in accordance with paragraph 2 below with data submitted to governments or governmental agencies in accordance with paragraph below. Unfortunately the agreement refrains from defining the practices that would constitute ‘unfair commercial use’, thus allowing the several interpretations to creep in. The term ‘unfair competition’ has been defined in article 10bis of Paris Convention but that does not aid in identifying the practices that would fall within the gamut of the ‘unfair commercial use. Reference may also be made here of the WIPO model provision on protection against unfair competition (1996). Article 6 of the model provisions lays down the acts that would amount to unfair competition in respect of Secret Information. It reads as follows: Article6 (1) -Any act or practice, in the course of industrial or commercial activities, that results in the disclosure, acquisition or use by others of secret information without the consent of the person lawfully in control of that information (hereinafter referred to as "the rightful holder") and in a manner contrary to honest commercial practices shall constitute an act of unfair competition. Two points emerge from this general principle: Firstly the disclosure, acquisition or use of the secret information must be without the consent of person lawfully in control of that information. Secondly it must be in a manner contrary to the ‘honest commercial practices’. Applying it to pharmaceutical products utilizing new chemical entity, when the undisclosed data is submitted to the drug Regulatory authority, it becomes the trustee of that data and the originator remains the person lawfully in control of the data or ‘the rightful holder’. The authority thus not being the ‘rightful holder’ cannot use the data for any purpose other than for which it is submitted without the consent of the ‘rightful holder’. The sole purpose for which the data is submitted by the originator is to enable the authority to evaluate the data for ascertaining the safety and efficacy of the drug before granting marketing approval. Therefore the regulatory authority should not be allowed to rely on that data without the consent of the originator for testing the safety and efficacy of the subsequent applications. Further where considerable cost is incurred by the originator in order to earn reward for his investment, it would be unjust to deprive him of the legitimate and reasonable profits by allowing the other persons to avoid the cost of undertaking the similar procedure and rolling out the same drug at much lower price. Thus compelling a person to suffer loss would tantamount to acting in a manner contrary to honest commercial practices. The model also provides some examples of unfair competition in respect of secret information. It provides that disclosure, acquisition or use of secret information by others without the consent of the rightful holder may, in particular, result from (i) industrial or commercial espionage; (ii) breach of contract; (iii) breach of confidence; (iv) inducement to commit any of the acts referred to in items (i) to (iii); (v) Acquisition of secret information by a third party who knew, or was grossly negligent in failing to know, that an act referred to in items (i) to (iv) was involved in the acquisition. [Article 6(2)] This list is however inclusive and not exhaustive in nature and can very well include use of data to grant approval for those drugs for which it was not meant. Information is regarded as secret if - (i) It is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; (ii) It has commercial value because it is secret; and (iii) It has been subject to reasonable steps under the circumstances by the rightful holder to keep it secret. Article 6(4) of the said model correspond with Article 39.3 of the TRIPS agreement and is full of the same ambiguities as the latter. The model also deliberately refrains to define unfair commercial use. Article 39.3 of TRIPS has bifurcated member nations into two camps viz: - One consisting of developed countries reading ‘data exclusivity’ into Article 39.3.The most vociferous advocates include United States of America and European Union. The second Group consisting of Developing countries who subscribe to the view that data protection does not extend to granting ‘data exclusivity’ as data exclusivity invariably leads to market exclusivity, which is not envisaged by Article 39.3. Opponents of data exclusivity rely on the negotiating history of TRIPS to refute the contention that TRIPS mandates ‘data exclusivity’. The United States and European Union had made the proposal to the GATT signatories to adopt explicit language that would obligate members to Guarantee data secrecy and exclusivity for "a reasonable period" except upon compensating the initial registrant for the "reasonable value" of any use that offered a "commercial or competitive benefit" to any other person, including the government. However the proposal was rejected by the negotiators who finally adopted the present provision. An insight into the background of the Article 39.3 would make it amply clear that the interpretation forwarded by the developed countries does not withstand scrutiny. Moreover, an author argues that if the intention had been to have such exclusive marketing rights, this term, which is used in Article 70.9 of TRIPS, would have been used here too. Therefore, she avers, that a reasonable interpretation would be that the obligation on the authorities would be to keep the test data secret and to prohibit others from accessing this test data for unfair commercial use, such as sale to rival firms and this substantive obligation would exclude use by the authorities without disclosure of the data (Jayashree Watal, 2000). It is evident from bare reading, that Article 39.3 does not per se mandate data exclusivity. However many countries recognize marketing approval data as ‘trade secret’ of the drug developer and hence justify the data exclusivity laws. Proponents of this view give cogent reasons for regarding ‘clinical and test data’ as trade secret. The reasons forwarded are- Protection in form of confidentiality obligation, granted to the data is consistent with the treatment of the data as trade secret. Article, 39 falls in section 7 of the Part II of the TRIPS Agreement, which is concerned with Trade secrets and the Drug Marketing approval provided in Paragraph 3 is just a subset of the trade secret. Article 1.2 of the TRIPS Agreement labels the subject matter protected by Section 7 as a category of ‘intellectual property Article 1.2 reads thus: For the purposes of this agreement, the term "Intellectual Property" refers to all the categories of intellectual property that are subject to Sections 1 to 7 of Part II Therefore it is argued that prohibition on unfair commercial use when considered in the backdrop of trade secret principles does require data exclusivity (Aaron Xavier Felmeth, 2004). Should India adopt measure of data protection other than data exclusivity? Developed countries traditionally take the view that strengthening IPR protection fosters economic growth in developing countries by facilitating international investment while simultaneously rewarding domestic innovation. By contrast developing countries see IPR protection as impeding the flow of knowledge by increasing cost and decreasing access to new technology. Developed countries argue that IPRs therefore slows economic development and decrease social welfare, at least in short term (Gary Smith, 1999). This argument against IPRs becomes all the more vehement in respect of Pharmaceutical products, as patented drugs are costly and unaffordable for the poor population. Moreover developing countries do not have the economic resources to provide health insurance cover to the people. Data exclusivity protection is often charged of being a superfluous or sui generis form of protection. Many arguments are advanced against data exclusivity, which can be summed as follows- Undermines genuine innovation as it encourages originator companies to focus their activities in changes in the product rather than focus on developing new innovative and beneficial product. All the TRIPS members to 20 years have uniformly extended the product patent period. Patents are increasingly being granted for new uses, indications, dosages and change in formulations. Data exclusivity period is granted without originator having to demonstrate any of the basic principles of novelty or inventiveness. Data exclusivity leads to ever greening of patents. Hypothetical example is often cited-suppose X Company applies for marketing approval of its drug in 17th year of patent, assuming data exclusivity period to be of 5 years, the total period of protection will increase to 22 years. Thus it could keep the generic drug producers out of the market for longer duration. Poor consumers of medicines would suffer as a result of lack of competition in the market. The battle lines over data exclusivity are predictably drawn between net exporters and net importers of intellectual property. The developing countries including India are reluctant in granting exclusive marketing privileges to affluent foreign drug companies for the fear that it would escalate the prices of drugs. On the other hand the developed countries fail to see any incentive to market such drugs in India in the without adequate recompense in form of data exclusivity. Many sections of Indian Society fear that the data exclusivity will cause slew of problems for the consumers in India, would give excessive benefits and protection to the MNC pharmaceutical companies, deprive people of the generic equivalents, prices of the drugs would become exorbitant as a result a large chunk of the population will have to go without even the essential drugs. Before we consider the ill effects of data exclusivity we must bear in mind that India is different from the other developing countries in various aspects. India has a well-developed Pharmaceutical industry, which has already notched up a large share in US generic market. Unlike other countries India has excellent outsourcing opportunities for clinical trials, R&D and technical services. In addition, fleet of highly trained scientists makes India an attractive destination for research projects. More than 15 percent of the scientists engaged in pharmaceutical R & D in US are of Indian origin. Empirical evidence suggests that a stronger intellectual property protection would facilitate the flow of FDI in the developing countries. A study conducted by Mansfield indicated that effective intellectual property rights protection could be an important factor in securing foreign direct investment and technology transfer, especially in high technology industries. The findings indicate that, in relatively high-technology industries like chemicals, pharmaceuticals, machinery, and electrical equipment, a country's system of intellectual property protection often has a significant effect on the amount and kinds of technology transfer and direct investment to that country by Japanese and German, as well as U.S. firms (Edwin Mansfield, 1995). Some of the international researches clearly indicate that a close relationship exists between level of Intellectual property protection and R & D expenditures. It was found that foreign R & D expenditures by Research based pharmaceutical firms was concentrated in Western Europe where patents are adequately protected and the R &D expenditures decreased by 6.6 percent over a period 1977 to 1987 in Latin America where the protection is relatively very poor (Rapp and Rozek, 1990) According to a US representative protection of test data is key to company decisions on location of clinical trials. According to the U.S. National Institutes of Health (NIH), lack of data exclusivity in India is the primary reason why India only ranks 9th (compared to China which ranks 2nd), in funding given by the NIH outside of the U.S. U.S. pharmaceutical companies spent $30 billion on R&D in2001. Pharmaceutical industry is a research and development intensive industry. Indian Pharmaceutical companies on an average allocate only 2 percent of their sales for R&D activities (only some allocate 6 percent). The growth of this highly competitive, technology-based industry is not possible without substantial investment. Most of the Indian companies do not have the requisite financial resources to conduct extensive researches for bringing out novel drugs. If data exclusivity legislation is enacted in India it would provide the necessary incentive to the originators to market their drugs in India without the fear of generic manufacturers and other multinational drug manufacturers free riding on their data. The benefits that would flow would be numerous. The Data Exclusivity laws would set the environment that would Afford the opportunity to the Indian Research based pharmaceutical companies to bag important research projects form top pharmaceutical companies of US and European countries. Increase the diffusion of knowledge and technology. Indian pharmaceutical industry needs to be aware and in possession of latest technologies used in developed countries in order to acquire a cutting edge in this sector. India is lagging behind in developing technology for the latest drug delivery system. Create demand for Indian scientists in the domestic research organizations and thus would be effective in checking brain drain from India. Most of the talented Indian scientist migrate to the greener pastures in US, UK and other European countries. These scientists would have less incentive to emigrate if their creative work was adequately protected in India. The research organizations once equipped with the structural resources can conduct researches that are specific to the diseases prevalent in India. Diseases such as tuberculosis, malaria, leprosy, plague and dengue fever continue to pose serious problems in India and take millions of lives each year. It is unlikely that such researches would be undertaken by the research firms located in developed countries. Facilitate the entry of new drugs in the market particularly those that are not protected by patent. Employment opportunity in the pharmaceutical sector would increase manifold. Bring about scientific and technological integration. More over if the Indian Pharmaceutical Industry has to give strong competition to countries like China and Israel we must create an environment, which allures the foreign firms to invest in India rather than to these countries. In china, the period of data exclusivity is 6 years and a data exclusivity law is already in the offing in Israel. China in September 2002 PRC Drug Administration Implementing Regulations introduced a new data exclusivity right. Under this law, the government (that is the SFDA) has an obligation to "protect against [the] unfair commercial use by any other person the undisclosed clinical data and other data … submitted by a manufacturer or marketer in obtaining the approval of manufacturing or marketing a drug containing new ingredients. During this six year period, any person who relies on data which is subject to the exclusive right shall be refused marketing approval unless the data relied upon is generated by himself or on his behalf. Data Exclusivity and pharmaceutical industry in India The Indian pharmaceutical industry is one of the most advanced among those of the developing countries. The ranking of the industry in the global market is fourth in volume (eight percent share in world market) and thirteenth in terms of value (1 percent share in the world market). The industry exports products worth rupees 141 billion to over 65 countries. The annual turn over is rupees 226 billion. Besides all the above, India has the largest number of US Food and Drug Administration (FDA) approved manufacturing facilities outside US. The number of Drug Master Files (DMFs) filed with the US FDA is twenty six percent higher then Spain, Italy, China and Israel. The Indian pharmaceutical industry has availed tremendous advantage of the absence of product patent regime in the past. By using the copycat technique of reverse engineering, it has succeeded in bringing out generic versions of almost every new drug developed in the other parts of the globe within 5 to 6 years of its introduction in the market. At present there are over 60,000 generic brands in 60 therapeutic categories in the market. The generic pharmaceutical companies of India offer cheap alternative for expensive branded drugs. Bristol-Myers Squibb (BMS) an American firm sells stavudin treatments for $3,400/year in US and $55/year in Africa, Cipla an Indian firm can sell the same drug for $40/year. Similarly Cipla and Ranbaxy laboratories can provide a daily dose of three antiretroviral for $244 and $292 per patient per year. A similar treatment from major US Pharmaceutical costs at least $562 per year. National Sector units like Ranbaxy, Dr. Reddy’s laboratories, CIPLA, Sun Pharmaceuticals, Wokhardt, Zydus Cadila and others have come out with original research on development of new drugs, delivery system and even new molecules, acquiring patents in countries US and others. The products of Indian manufactures are accepted on the WHO list of essential drugs and also approved by the regulatory authorities in EU and US. The pharmaceutical industry is not unanimous on the issue of grant of data exclusivity in India. There are two Trade associations representing the Pharmaceutical industry - Organization of Pharmaceutical Producers of India (OPPI) and the Indian Drug Manufacturers’ Association (IDMA). OPPI has requested the government to amend Schedule Y of the Drug and Cosmetic Act to include provisions for Data Exclusivity for period of 4 or 6 years from the date of marketing approval whereas IDMA opposes data exclusivity legislation in India. IDMA attributes the growth of the Indian pharmaceutical industry to the Indian Patent Act of 1970 or in the other words to the absence of product patent regime. OPPI is of the view that the discovery, development and bringing to market a new drug the originator requires to conduct extensive chemical, pharmacological and clinical research and testing and generate data for submission to the Drug Regulatory Authority for marketing approval of the new drug. This activity takes 8-10 years of painstaking efforts. The data generated in such work is proprietary to the originator and needs to be protected OPPI is composed of both the national as well as multinational firms. Most of the leading pharmaceutical companies are its members.foreg- Aventis Pharma ltd, Novartis India ltd, Pfizer ltd, Eli Lily &Co. (Ind) Pvt., Workhardt ltd, Johnson &Johnson ltd, Merck Ltd, Glaxo Smith Kline etc. IDMA represents the national sectors of the of the Indian Manufacturers. It has a membership of 500 Indian large, medium and small companies. Members include: Ajanta Pharma Ltd, Cadila Health Care Ltd, Cadila Pharmaceuticals Ltd, Dabur India Ltd, Dr. Reddy’s Laboratories, Lupin laboratories, Merrill Pharmaceuticals etc. Unlike Indian Pharmaceutical industry, generic industry of US strongly advocates strengthening of the Intellectual property regime by accepting the data exclusivity laws. Once the period of exclusivity is over the generic drug producers can prove bioequivalence on the basis of the clinical and test data submitted to the regulatory body. Thus the interest of consumers can be balanced with that of the intellectual property holders. Impact of data exclusivity on access to health care "The Hatch –Waxman period of data exclusivity works in this country because the people in US have Health insurance that pays for essential drugs and because we have a safety care net to assure that the poorest in our society are not left without medical care and treatment. But to impose such a system on a country without a safety net, depriving millions of people of life of life saving drugs is irresponsible and even unethical. In developing countries we must do every thing in our power to make affordable drugs for the life threatening diseases available now"- Henry Waxman In India, however the drugs, which are put in the Indian essential drug list, are not patented and the prices of these drugs will not be affected by strong patent protection. Moreover the product patent would only apply to new drugs, which would make a very insignificant percentage of the total market. The empirical data is not clear whether data exclusivity definitely has adverse impact on the prices of drugs. The multinational Pharmaceutical companies practice the policy of differential pricing that is to say that the prices of the drugs vary from country to country depending on the purchasing capacities of the consumers. Differential pricing policy provides a mechanism, which ensures that the consumers in the developing countries are not excessively burdened with the high prices of the drugs. The flexibilities, which are inherent in Trips like compulsory licensing under Article under Article 31 or the parallel importing from other countries can always be used as a tool for making the drugs more affordable in cases of emergencies and on the grounds permitted by the TRIPS agreement. Compulsory Licensing is "an authorization given by a National authority to a person, without or against the consent of the title-holder, for the exploitation of a subject matter protected by a patent or other intellectual property rights": (Correa, 1999) An author divides the middle income countries like China, Argentina, India etc the consumers of medicines can very well be bifurcated into two groups viz: - rich and the poor. On humanitarian and social grounds the poor people can be exempted from paying the additional cost of a patented product but the rich, must contribute to the cost of research and development that goes towards creating a patented product. So he is opines the Rich cannot be allowed to reap unjust advantage by free riding on the clinical and test data produced by the originator (Arvind Subramanian, 2001). Benefits of granting data exclusivity to the Pharmaceutical products utilizing new chemical entities would certainly outnumber the drawbacks Intellectual Property protection encourages innovation, which is a key factor that contributes to improved health care, through promoting both development of new medicines and economic growth generally. (Nozek and Tully, 1999) Therefore the Indian Government must expedite the enactment of the data exclusivity legislation in India.

PatentCafe Streamlines Claims Test/Claims Chart Development (06/05/04) from Mondaq

patent cafe .com (cafezine) - United States - PatentCafe Streamlines Claims Test/Claims Chart Development (06/05/04) from Mondaq: "patent cafe .com (cafezine) United States: PatentCafe Streamlines Claims Test/Claims Chart Development Web-based Claims Charting Breaks Long Tradition of Hand Comparison 06 May 2004 Article by Andy Gibbs Not long after patent attorneys, R&D researchers or patent drafters being comparison of inventions or patents, the focus converges on the patent claims. The process of comparing claims is cumbersome, time consuming, and when relevant patents remain elusive to traditional Boolean search engines, frustrating. Nevertheless, claims comparison remains the critically important core to patentability searches, invalidity searches, infringement studies, and even in testing proposed claims prior to filing new applications. Litigation: Infringement Analysis: In instances of infringement litigation, the Rules of Practice often require the parties (Claimant, as well as Adverse Party) to submit a clear outline of the infringed claims of the patent. Of course, this applies to trial preparation as well as Markman hearings. The Adverse Party's Obligations typically include the serving on all parties an Adverse Party's Claim Chart. The Adverse Party's Claim Chart usually includes separately, with respect to each claim in Claimant's Claim Chart, the identification of all items of prior art that anticipate the claim or render it obvious. For each item of prior art, a position must be made as to whether it anticipates the claim or renders it obvious. If a combination of prior art references makes a claim obvious, that combination must be identified. The prior art must be identified as specifically as possible, including: (a) prior art patents must be identified by their number, country of origin, and date of issue; and (b) identify where, specifically, within each item of prior art each element of the claim is found. Assessing Patentability: Patent searches result in a stack of prior art patents deemed to be relevant to the present invention. Thumbing through a stack of papers is an inefficient method of quickly assembling the most important prior art, especially when extracting the claims for comparison to the present invention are in paper form, making compilation in an opinion document requires re-typing. Yet again, a digital means to evaluate and assemble comparative claims from a variety of patents would not only streamline the claims charting process, but in reality short-circuit the fatigue that creeps in after digesting the dozens of patents relevant to the present case. Drafting New Patent Claims: In some circles, Festo established a new standard of application writing – that is, draft a high volume of independent and dependent claims so that, in the event of disallowance of a particular claims as written, the claim can be deleted (rather than amended) and there will be another more appropriate claim in the set upon which to rely. More appropriately, had the robust claims analysis tools been readily available, the proposed claims could be tested against all prior art and amended prior to application filing. The specification can then be amended as appropriately to support the amended claims. First Web-Based Claims Charting System: In all of the above instances, and more not specifically addressed, development of a Claims Chart is a reasonable and appropriate method of capturing and evaluating claims of one patent with many others. PatentCafe’s Claims Charting system incorporates its advanced Semantic patent search tools that extract claims directly from the most relevant patent returned in the concept-based search results. Input to the Claims Test / Claims Chart system can be a valid patent number, text of claims copied and pasted into the text box, or the full text of a proposed claims set for a new application. Prior Art Claims are then generated by mining the ICO Global Patent Database using the company’s advanced Latent Semantic Analysis search technology. The more relevant patents (and claims) are presented at the top of the results set for immediate claims comparison to the baseline patent of set of patent claims. The system then takes those claims and immediately builds a Claims Chart online, allowing the side-by-side comparison of claims from a Baseline Patent or proposed claims, against the claims of one or more patents of interest. Output is in PDF format, creating a document that presents the claims of a pair of patents on opposing sides of the page. PDF claims Charts are created "on the fly", creating Claims Charts in a mater of minutes. (sample: http://www.iamcafe.com/papers/ClaimsTest_PDF.pdf Notes, comments and annotations, along with "copy and paste" text from any source are integrated into the claims chart document, appended to the end of the claims test document. The claims Chart utility is included in PatentCafe’s Infringement Litigation Suite http://www.iamcafe.com/Index.asp?option=Litigation, and is available separately as a stand-alone solution for patent or claims drafters or patent researchers. The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Detectability and Software Patents

Bloglines | My Blogs: "Detectability and Software Patents By krajec on Patents in Business Some software ideas suffer from a unique problem: detectability. When an embodiment of an idea is expressed in a language that is compiled and distributed as executable code, how can that idea be detected? If it cannot be detected, there is no way to know if someone infringes. There are many ways patents may be used. In some cases, patents merely buttress a resume, an advertising brochure, or a marketing message. These patents sometimes can also deter other competitors from entering the market and act as a deterrent effect. Enforceable patents that protect the foundational technologies of a company should be detectable. In other words, the patent owner should be able to detect when a competitor is unlawfully copying his idea and take measures to enforce the patent. Some of the most creative and ingenious ideas fall into the first category. For example, a very clever and improved sorting algorithm used deep in the bowels of a software application may be tremendously novel, useful, and non-obvious, but it makes little business sense to patent that technology. The sorting algorithm is best protected as a trade secret, even if the executable code is widely distributed under a license. A competitor may use a completely different sort algorithm to achieve the same result, even if the competitor�s algorithm is much more cumbersome. Patents of the second category typically focus on the overall function of a software application, relate to interfaces used by the application, or define data structures. In each case, clear and immediate detection of infringement is possible. Patents covering this second category are much better suited to licensing or infringement enforcement. For the Patent Office, it may be enough that an invention is novel, useful, and non-obvious, but for "