Business

US Supreme Court Ruling on Patents has International Implications

By Dweep Chanana ⋅ May 26, 2007 ⋅  Email this post ⋅  Print This Post ⋅ Post a comment

The Economist reported earlier this month (Patently Obvious – May 5th issue), that the US Supreme Court had raised the bar on what deserves a patent, and qualifies as “non-obvious”. In a patent dispute ruling it stated that, “granting patent protection to advances that would occur in the ordinary course without real innovation retards progress.”

The Economist also opines that this is good for the patent system, which was getting bogged down by frivolous patents and infringement claims over simple improvements. It also traces the history of what qualifies as “non-obvious,” suggesting that it was the US Congress that loosened the standard from “flash of genius” (set by the Court in 1941) to anything beyond “a person having ordinary skills”.

This is a useful development, and one with potentially far-reaching implications for loosening pharmaceutical patents worldwide. The most immediate impact, reported extensively by BusinessWeek is on the high-tech industry, where patents are already being challenged.

But at an international level, and in the field of pharma, the most immediate relation can be seen to Novartis’ challenge of the Indian patent law. Novartis’ Gleevec patent was rejected in India on grounds that the drug was simply a minor modification. In response, not only did Novartis challenge the patent decision, but the patent law itself, calling it “a breach of international law”.

That argument is now under threat. For if the U.S. Supreme Court ruling were to be referenced in India, Novartis could no longer pursue its line of argument when the U.S. itself seems to have rejected it. Taken further, this ruling could become a global standard in establishing what is “non-obvious” or “novel”, dealing a major blow to the pharma industry.

That would prevent the industry from patenting incrementally modified drugs, causing it to loose significant revenue. But then, the industry would be forced to do something truly innovative. For society, and for industry too, that may actually be a good thing.

Update on Novartis’ Legal Challenge

Two related recent news items on the Novartis challenge:

1. IP-Watch reports the case has been fast-tracked in India, and may be resolved very soon.
2. Reuters reports that the Indian government asked Novartis not to proceed with its challenge, in April.