India’s intellectual property failures demand Obama’s attention


On May 11, 2013, Indian President Pranab Mukherhee said “The future prosperity of India in the new knowledge economy will increasingly depend on its ability to generate new ideas, processes and solutions.” He was right not just about India, but indeed about the whole world; we need strong incentives to innovate, invent, and create – and that must include meaningful legal protections for the products of invention and creation. Unfortunately, despite the rhetoric, India has been moving sharply against protecting intellectual property rights, with serious repercussions for companies that want to invest in India and by implication for global innovation and economic growth.

Phil Kerpen1

In a recent study by the U.S. Chamber of Commerce, India (not China, whose intellectual property practices have received far more scrutiny from American politicians and the media) ranked dead last in patent protection and treaty participation, as well as second-to-last in copyright protection – behind China and ahead of only Russia. And India is continuing to move in the wrong direction, imperiling key industries and broader relations with the United States and Europe.

The pharmaceutical sector has been under particular assault. Starting in March of last year, India began issuing compulsory licenses for drugs under a new policy requiring local manufacturing, a condition which is clearly illegal under international trade law. The first compulsory license was issued on Nexavar, a Bayer cancer drug. Then they began outright revoking patents, starting this past October with Sutent, on which Pfizer has a clearly valid patent recognized in over 90 countries. Similar moves to revoke and deny valid patents followed against Roche’s Tarceva and Novartis’s Glivec – even though Novartis was giving away Glivec for free to 95 percent of the Indian market.

These are all cancer drugs. India is a market of over a billion people. The total cost of bringing a new drug to market is now $1.2 billion according to the Tufts Center for the Study of Drug Development, in part due to regulatory compliance and litigation expenses. The potential to sell innovative drugs to the entire world market, including India, is therefore critical to continued global innovation – and winning the fight against cancer and other major global killers.

The problems are not limited to drug patents. On the copyright side, the Motion Picture Distributors Association lists India as one of the worst havens for distributors of pirated movies, with new movies appearing on the Internet in India an average of 3.15 days after theatrical release. The music industry estimates that in 2012 about 90 percent of music downloads in India were unlicensed, at a cost of $431 million to the industry and the artists being ripped off. The software industry estimated in 2011 that 63 percent of PC software was pirated to the tune of $2.9 billion. That means higher prices for the rest of the world.

In June, Democrat Max Baucus and Republican Orrin Hatch sent a stinging letter to John Kerry demanding action on India’s recent protectionist moves. “We have serious concerns about policies adopted by the Government of India that shut out U.S.-made innovative products and transfer U.S. intellectual property to its domestic industry,” they wrote. “These policies are directly harming U.S. businesses and threaten the millions of U.S. jobs supported by trade in innovative products.”

Kerry reportedly pressed the issue during his subsequent visit – as did Vice President Joe Biden in a visit that followed – but India is still moving in the wrong direction. In just the past month they revoked patents on two more cancer drugs: Roche’s Herceptin and GlaxoSmithKline’s Tykerb.

With the stakes so high and pressure from the secretary of state and the vice president apparently ineffective, it’s time for Congress to demand President Obama directly engage this issue and insist President Mukherhee make good on his lofty promise to protect the “new knowledge economy.”

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