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Human Events: Five Questions with Mark Elliot, Executive Vice President, U.S. Chamber of Commerce’s Global Intellectual Property Center
October 9, 2013

Today’s Topic: Protecting Intellectual Property Rights in India

Last week ”Five Questions” spoke with Linda Dempsey, Vice President, International Economic Affairs for the National Association of Manufacturers on the topic of unfair trade practices in India. These practices include patent revocation, compulsory licensing and other actions that undercut widely held intellectual property protections

This week we’re pleased to continue the conversation by delving more deeply into the IP side of the issue with Mark Elliot, Executive Vice President for the U.S. Chamber of Commerce’s Global Intellectual Property Center. In this capacity, Mr. Elliot provides strategic leadership to GIPC’s comprehensive initiative to protect the intellectual property rights that are vital to creating jobs, growing the economy, and enhancing U.S. competitiveness.

HUMAN EVENTS: Mark, thank you for joining “Five Questions”. The timing of our focus on U.S.-India trade relations isn’t accidental. On September 27th President Obama met with Indian Prime Minister Singh. The two world leaders talked about the new Miss America, who’s of Indian descent, but not a word publicly about intellectual property abuses in India. This after the White House received a bipartisan letter signed by over 220 Members of Congress, another letter from 14 state governors and numerous communications from concerned businesses, not to mention remarks on the state of U.S.-India trade relations by both Vice President Biden and Secretary of State Kerry. What kind of headway, if any, has the Administration made with the Indian government on this issue?

Mark Elliot: As you mentioned, the Obama Administration, through Vice President Biden, Secretary Kerry and the U.S. Trade Representative, Ambassador Froman,  have already communicated with high level officials in the Indian government and have clearly articulated the business community’s position on a range of IP matters in India. We hope that the President also did that with Prime Minister Singh, in private remarks if not publicly. Overall, we are confident that the Administration has delivered a loud and clear message to the Indian government. Certainly the business community has been quite clear about this – there have been hundreds of media stories covering aspects of these IP protection concerns in India – and it’s a message we hope that the Indian government will heed.

HE: The U.S. pharmaceutical industry seems to be a special target of India’s attempt to prop up their domestic generic drug-manufacturing sector through the mechanisms of patent revocation and compulsory licensing. Share with our audience some egregious examples of this and explain how these actions have a chilling effect on both innovation and foreign direct investment in India.

ME: In the pharmaceutical space particularly, there seem to have been a number of Indian regulatory and court decisions, which greatly concern the industry. In 2012 the Indian government compulsory licensed Bayer’s Nexavar, which is a drug used to treat kidney and liver cancer, in part, because the product was imported and not manufactured locally. This is not a condition for issuing a compulsory license under TRIPS. [Editor’s note: The Agreement on Trade Related Aspects of Intellectual Property Rights, or TRIPS, is an international agreement administered by the World Trade Organization (WTO) that provides a set of minimum standards for intellectual property protection. India is a founding member of the WTO.]

Another drug that suffered a high-profile patent revocation is Novartis’ GLIVEC, which is a leukemia treatment drug. In that case GLIVEC was made available to 95% of 16,000 leukemia patients free of charge. For the remaining 5% the drug was made available with significant subsidies. GLIVEC had its patent revoked under section 3(d) of the Indian Patent Act, a particularly worrisome clause in the law that doesn’t recognize innovation. As a result, Indian generic companies now sell that drug to Indian patients for more than US $2,000 per year, and of course, there is the risk of that drug being exported elsewhere.

HE: So when the India’s then-President Pratibha Patil famously announced in 2009 that 2010-2020 was to be India’s “Decade of Innovation”, that’s wishful thinking given the current state of IP rights abuses in India.

ME: Absolutely, and this is the worrying factor, that some senior government officials in India have articulated that India would really like to focus on building its innovative industries, as well as attracting investments. In May of this year the President of India identified that India’s innovation bottom-line was not very encouraging. The number of patents filed annually in India is well below that of their competitors. For example, the U.S. and China have roughly twelve times the number of patents filed compared to India.

India’s President also called upon the global private sector to increase their investment in India to stimulate innovation there. You don’t have to be an IP expert to work out that there is a direct link between investment and upholding intellectual property standards.

HE: Outside of the pharmaceutical industry, what other U.S. industrial sectors have been negatively affected by Indian IP rights abuses?

ME: The pharmaceutical space has certainly received a lot of attention, and so it should. It should also be noted I think that this is an issue that has not just hit the pharmaceutical industry. We have formed a coalition including a wide array of industry associations ranging from major pharmaceutical manufacturers to leading names in solar energy, agriculture and technology – a grand total of seventeen industry associations, which is quite a substantial representation of global business leaders.

HE: I want to circle back to the coalition you referred to, The Alliance for Fair Trade with India (http://india.enforcementalliance.org), in just a few minutes, but let’s look at one sector in particular, software for personal computers. I saw some numbers and they were just breathtaking both in terms of the sheer scope of piracy activity and the dollar volume lost to U.S. software makers.

ME : That’s absolutely correct. In India, for example, the reported rate of PC software piracy is 63% with an estimated commercial value of almost US $3 billion. In the copyright space there are holes in their legislation, which fails to adhere to global standards.

Incidentally, in both the Nexavar case and the GLIVEC cases I cited earlier, these patents are recognized everywhere else in the world. So India is well and truly an outlier here. Indeed, the GIPC produces an annual Global IP Index and last year India came in dead last, well below the other BRIC nations (Brazil, Russia, India and China). The interesting fact here is that they come last not just in the pharmaceutical space, in the patent area, they come last in trademark  and international treaties – so right across the entire gamut of intellectual property, India performs very, very poorly. And of great concern, this has had an impact on investments in India. We have seen a dramatic drop-off in foreign direct investment to India in the recent years, and this is one of the things that all companies consider when investing in a particular country. The concern that their intellectual property will not be recognized by that country is one of the top three or four factors that companies consider in that process. So when a country has a very poor IP rating it directly impacts investment.

HE: In June of this year the USCC GIPC partnered with the National Association of Manufacturers (NAM) along with a growing list of companies to launch the Alliance for Fair Trade with India (http://india.enforcementalliance.org). How can our audience of grassroots conservative activists get involved in supporting AFTI’s aim of reversing the deterioration in India’s IP climate and convincing the Indian government to treat U.S. businesses fairly?

ME: I think the best thing for people to do is to highlight their concerns with their respective Members of Congress. It’s great that so many Members of Congress have already identified this as a problem area – as you alluded to in your opening question, more than 220 Members, along with 14 governors, have signed letters raising concerns about what’s happening in India. There’s also been a hearing in the House of Representatives on this very issue. So it’s very important that we keep up the pressure on this issue and a very good way to do so is for people to raise their concerns with policymakers.

HE: Mark, thank you again for sharing your time and expertise with this week’s “Five Questions”. History has shown that when markets are transparent, open and free, all parties benefit. If India is to truly enjoy a “Decade of Innovation”, joining the rest of the world in respecting established intellectual property rights is certainly a fundamental place to start.