TRIPS, Patents and Parallel Imports: A Proposal for Amendment

Abstract

India's amendment to her patent regime in 2005 to introduce pharmaceutical product patents attracted unprecedented attention, both domestically and globally. While multinational pharmaceutical companies were concerned that the Act withered away their exclusive rights, civil society activists decried the new product patent regime, fearing that it would cause steep hikes in the price of life saving drugs. This politicization of patent law produced some interesting results; most recently, a recent Delhi High Court case that denied an injunction to a multinational patentee on the ground that it sold a more 'expensive' drug than the infringing generic manufacturer.

While some provisions in the new patent regime, such as Section 3(d) continue to attract a lot of attention, others have been lost in the legalese. One such provision is Section 107A(b) dealing with parallel imports, which, if read in a strict literal manner could have far reaching implications for the rights of a patentee.

This paper aims to highlight this particular provision, which has thus far not attracted the attention it deserves. It explores the ambiguities inherent in this section and discusses the gaps in the Indian law pertaining to exhaustion and parallel imports. Lastly, it goes on to suggest statutory amendments in order to remove ambiguities inherent in the section and expand the scope of exhaustion envisaged therein, whilst at the same time remaining TRIPS compliant.

The paper is divided into four sections: The first section explains the concept of exhaustion/parallel importation in relation to patents. Section two examines the ambiguities inherent in Section 107A(b). It also explores the gaps in the law relating to exhaustion in India and assesses the TRIPS compatibility of the current provision. The third section recommends a creative way of interpreting the current statutory provision so as to remove the ambiguities, and balance out the rights of patentees and parallel importers in an optimal manner without violating the TRIPS Agreement. The final section recommends statutory amendments to Section 107A(b).

Keywords: Patents, India, TRIPS, Parallel Imports, Exhaustion, Pharmaceuticals

JEL Classification: O34, K10, K33