On the heels of Novartis victory taming evergreening of patents on medicines, European Investment Clause proposals in EU-India FTA threaten to undo all gains

By Brook Baker, Senior Policy Analyst

The stunning reaffirmation of India's commitment to prevent evergreening of patent monopolies on medicines has been widely celebrated following the India Supreme Court's decision upholding the rejection of a secondary patent on Novartis' cancer medicine, Glivec.  It is widely hoped that the willingness of Indian courts to fairly review and limit patent monopolies on medicines, as they are expressly allowed to do under the WTO TRIPS Agreement, will be repeated in the pending court review of India's first compulsory license to Natco on a Bayer cancer medicine, Nexavar.  

However, India's efforts to preserve policy space so as to ensure access to medicines for all, both in India and in developing countries more broadly, is under threat because of an obscure provision that the EU is seeking in its pending trade negotiations with India.  Under the so-called investment clause, foreign IP investors, like Novartis and Bayer, will be given rights to sue the Indian government directly whenever their expectations of profit are frustrated by government decisions and policies.  Using loose standards like minimum standards of treatment, indirect expropriation, and national treatment, transnational corporations will be able claim that denying patents, granting oppositions, revoking patents, issuing compulsory licenses, and registering generics before patent expiration all violate their expectations for profit.

Threats like this used to be theoretical, but the theoretical has now become real.  In November of 2012, Eli Lilly sued the government of Canada for $100 million under NAFTA's investment chapter because Canada had invalidated a patent on a medicine used to treatment attention deficit disorders.  The patent was invalidated pursuant to requirements in Canadian patent law that an applicant must satisfy the promise of utility (in India called industrial applicability) by disclosing evidence pointing to a claimed benefit of the medical innovation.  

Eli Lilly didn't like this ruling, so it is seeking to greatly expand the accepted meanings of minimum standards of treatment, indirect expropriation, and national treatment to argue that Canada should not be able to have a patent standard on utility and disclosure of utility that is any higher than that currently practiced in the US and EU.  It argues further that it should not have to disclose information needed to satisfy patent requirements in Canada that is above and beyond what is required in clearinghouse, patent application forms filed pursuant to the Patent Cooperation Treaty.

If Eli Lilly can file this kind of expansive, topsy-turvy claim in Canada with respect to its decision to revoke a patent, what would prevent Novartis and Bayer to file claims against India because it has adopted strong protections against evergreening in section 3(d) of its Patents Act and allowed compulsory licensing in section 84?  In fact, these are exactly the kinds of claims that a major international corporate law firm, Jones Day, is urging companies to file under existing investment clauses that India has ill-advisedly entered into.

Novartis and Bayer, and the rest of Big Pharma, are relentless in their search for monopoly rights and monopoly profits.  The right to sue governments directly when their unquenchable thirst for profits is thwarted is a dangerous escalation of corporate power.  These kinds of cases are expansive to defend (average cost to governments over $8 million/case) and have cost taxpayers globally nearly $3 billion and counting.  Four hundred investor-state cases are currently pending, and pharmaceutical claims, once the floodgates are unlocked, will expand that number.

Indian trade negotiators should heed the demands of trade activists who are warning against the inclusion of an Investment Clause in the EU-India FTA, and particularly the right to bring such cases with respect to alleged IP infringements where the risk of expanded monopolies and reduced access has deadly consequences. 

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