Off-Topic: The Psychology of Attribution

I tried thinking of examples of professions in this day and age where one can safely and practically say that one is competing only with the self, but I honestly can’t think of any mainstream vocation where one could make this claim without sounding clichéd and impractical.

Despite the overwhelming explosion of information about every profession, the irony is that quite a few of us continue to live in the bubble that cut-throat competition is the sole propriety of only the professions we practice. But that’s just the grass seeming greener on the other side.

Competition is here to stay in most fields until we evolve a more sophisticated and collective model of growth. Until that Utopian evolution happens, all we can do is to insist on rigorous adherence to certain first principles to ensure that trust, mutual respect and civility continue to be valued and observed in inter-personal dealings at the workplace.

Among those first principles, the one which needs to be ruthlessly insisted upon and enforced, considering that it is most susceptible to the pulls and tugs of competition, is “attribution”. Philosophical justifications aside, “attribution” is practically critical for team work and effective leadership.

Instead of highlighting the positives of attribution, it would probably help more to know the downsides in failing to give someone her or his due. When a team leader or a colleague fails to attribute someone for his contribution, it slowly leads to resentment, and gives the impression that the leader or the colleague is insecure about sharing credit with his team members.

Resentment in turn leads to progressive levels of dissent because trust in and respect for the leader or the colleague have suffered erosion. After a point, the leader is bound to encounter frequent insubordination, and if he is perceptive enough, is bound to sense a discernible lack of interest in his team members to contribute to the growth of the workplace.

The probable reason why failure to attribute has flammable consequences is that it provides ample fodder to a person’s sense of being a victim, and self-pity is known to be a self-feeding animal. The problem with self-pity is that a person in the grip of this mindset is rarely alive to his or her faults, for he has firmly entrenched himself in an impregnable cocoon of righteous indignation. Needless to say, all this certainly cannot lead to a conducive and productive atmosphere at the workplace.

Attribution facilitates greater co-operation between team members and the leadership even in relatively selfless professions. Someone I know is in the Indian armed forces, and has probably one of the finest service records, which is strewn with acts of bravery. He told me that more than patriotism, it is a fierce sense of loyalty to one’s Commanding Officer which is largely responsible for several acts of unquestioned obedience and bravery during battle. I was told that it is not just the Commanding Officer’s abilities which inspire loyalty, but also the belief that individual acts of bravery of soldiers would not go unnoticed by the CO. This is important because it is the CO who recommends his soldiers for awards of bravery.

This example is not meant to undermine the importance of patriotism, but incentive does play a key role even in the Armed Forces where most of us would typically expect a soldier to be an epitome of selflessness.

Since attribution and incentive are so deeply connected, the former is indispensable to ensure fairness in distribution of incentives. What is pertinent is that the need for rigorous attribution applies all the more if the workplace is in the business of innovation. Enterprises which are in the business of innovation would do particularly well to have specific and sensitive mechanisms in place to recognize individual contributions. Such recognition, contrary to what one might expect, does not undermine the positives of team work. Instead, it forces people to be careful enough to not accept undue credit, which goes a long way in nurturing mutual respect for each others’ talents.

The bottom line is, attribution, which is at the heart of IP jurisprudence, is the hallmark of integrity, and workplaces which fail to recognize this are bound to implode.  

Legality of Pay-For-Delay Settlement Agreements

The intersection of intellectual property law with competition law is something we're fairly familiar with. While the former seeks to grant exclusionary rights, the latter strives to uphold the statutory edict against monopoly. This is yet another area of law where the two clash head-on. 

Pay-for-delay settlement agreements are a type of patent dispute settlement agreement where a sum of money is paid by the originator pharmaceutical company (the patentee) to the generic manufacturer to stay away from the market for a specific period of time. Sai Deepak has recently blogged on the issue here.

This practice of delaying market entry of generic drugs has been called into question both in Europe and in the US. In 2008, the European Commission conducted an investigation focussing on the competition law aspects of such contractual arrangements which seek to keep players off the market, thus having a potential impact on competition. 

In the US, in a judgment delivered just hours ago, the Supreme Court sought to settle the 'circuit-split' regarding the legality of such agreements. While the Eleventh circuit preferred what is called the 'scope-of-the-patent' rule, the Third Circuit favored what it terms as the 'quick-look' approach. 

The scope-of-the-patent rule deems 'pay-for-delay' agreements lawful so long as they do not go beyond the temporal or substantive limitations of the patent grant or the unless the underlying patent litigation is a sham. To put it succinctly, the Eleventh Circuit held such reverse payments to be lawful so long as their anticompetitive effects fall within the scope of the exclusionary potential of the patent. The Third Circuit, on the other hand held that such agreements should be subject to a 'quick-look-of-reason-analysis' and states that any such payments made by a patentee to a generic manufacturer to delay the latter's entry into the market is per se unlawful as it amount to an unreasonable restraint of trade. 

In the present case of Federal Trade Commission v. Actavis, the FTC challenged the Eleventh Circuit's ruling arguing that the scope-of-the-patent rule is a 'paradigmatic antitrust violation' that results in increased prescription costs of customers. Instead, it chose to endorse the quick-look rule, comparing reverse payments to price-fixing. 

As a counter, the respondents argued that reverse payments are not per se anticompetitive and can be seen in the same light as agreements wherein infringers bargain for lower royalty rates in return for delayed entry into the market. 

The Supreme Court, today, rejected the quick-look approach argued for by the FTC by a 5 to 3 vote and held that reverse agreements are not presumptively unlawful. It ruled in favor of the 'rule of reason' and left it to lower courts to decide upon whether advantages of the settlement outweighs the harm caused to consumers. 

In my opinion, even if one is to view it from a competition law angle, it is better to have a late entrant into the market than not have one at all. The delayed entry in no case goes beyond the life of the patent. The FTC's approach seems to take it for granted that the generic manufacturer would win the lawsuit, had there been one. If one is to assume the opposite, an agreement of this sort is bound to benefit consumers in the long run as opposed to risking the generic manufacturer from being ousted by a court's decision. 

If one can resist the temptation to argue on the merits of these approaches, logically speaking, there is no way one can determine in whose favor the balance would have tilted if a lawsuit had ensued. And thus, there is no way to determine whether the agreement is anticompetitive or not, with certainty. 

To reiterate what Sai Deepak has said, there have been no reported instances of pay-for-delay agreements in India making it difficult to gauge whether they would be legal here. It sure will be worth the wait to see how the Competition Commission would decide if such a case were to come up. 

Isolated DNA not patentable subject matter, says the US Supreme Court.

Keeping up with the recent trend of path breaking decisions, the Supreme Court of the United States, four days ago, in a unanimous ruling in Association for Molecular Pathology v. Myriad Genetics held that DNA is not patentable in the United States any longer. 

The issues before the Court were as follows:

1. Do DNA sequences amount to patentable subject matter?

2. If not, are cDNA (Complementary DNA) excluded too?

As regards the first question, the court unanimously held that DNA sequences, being products of nature cannot be granted patents. Myriad, in this case, did not create anything new but merely extracted existing genetic material found in human blood. The genetic information in the BRCA1 and the BRCA2 genes were neither created nor altered, the court added. 

The court also held that HAD Myriad created synthetic genetic material, it would have obtained a patent, for the simple fact that those do not exist in nature, thus answering the second question. (cDNA is nothing but synthesized DNA from a messenger RNA template). cDNA, by virtue of having a chemical composition distinct from that of naturally occurring genes, is thus entitled to patent protection. 

This decision overrules the landmark judgment in the Diamond v. Chakravarthy case which had upheld patentability of human genes. It is important to now note that the court, however clarified that the instant case does not include method claims, patents on new applications of knowledge about the genes or the patentability of DNA sequences in which the order of naturally occurring nucleotides has been altered. 

In most patent systems including the US, EPC and India, abstract ideas are not patentable as they are not regarded as being inventions in themselves. Laws of nature, comparable to abstract ideas are thus not patentable, either. What is patentable is a method of practical application of the abstract idea. 

In the Myriad judgment, the court, in my opinion has failed to differentiate between two vital things- That patenting an idea is not the same as patenting something that embodies that idea. In this case, Myriad's contribution was the knowledge of the function of the BRCA1 and BRCA2 genes and its 

claims were constructed similarly- they focussed on the genetic information contained in the said genes and not on their chemical composition. 

Therefore, Myriad's claim, in effect, related to these genes embodying this information. If seen this way, the court's only objection seems to have been with the claim- The claim to the information in the genes alone. Had Myriad constructed its claim in such a way that it clarified it sought to patent the information as embodied in the molecule, the court would have perhaps granted the patent. 

By this, the court has only erred by being ambiguous. If indeed, as the court clarifies in the end, new applications of knowledge about the genes are patentable, if it is possible to enumerate all applications of knowledge about the genes in the claim, would it effectively not be the same as seeking a patent for the genes themselves? 

Pay-For-Delay Does not Pay: EU Imposes Penalties on Ranbaxy and Eight Other Pharma Companies

A few hours ago, it was reported that the EU’s competition law regulator has decided to impose penalties on Ranbaxy and eight other pharma companies for indulging in “pay-for-delay” deals, which resulted in delayed introduction of generic drugs in the market, and denied access to affordable drugs to patients. This is the culmination of an inquiry that was launched in 2009 by the anti-trust regulator of EU.

Pay-for-delay deals usually form part of the settlement of patent infringement litigation between pharma companies. In contrast to ever-greening by patenting (which is covered and forbidden under Section 3(d) of the Indian Patents Act), pay-for-delay involves a concerted action on the part of the patentee and a generic company to deliberately delay the release of the generic version of a patented drug, which gives an extended market breather to the patentee. Instances such as these typically fall within the realm of Competition law, which could involve cartelization as well as abuse of dominance.   

According to a study undertaken by the US Federal Trade Commission, pay-for-delay deals burn a hole worth US3.5 billion in the taxpayers’ pockets. Earlier this year, the US government released a document titled “Reducing the Deficit in a Smart and Balanced Way”, wherein it was observed that banning pay-for-delay deals could save the US government USD 11 billion in federal health programs.

So far, to the best of my knowledge, there have been no reported instances of pay-for-delay deals between pharma players in India. If at all there is a settlement reached between warring parties in on-going pharma patent infringement suits, it would be interesting to see the reaction of the Competition Commission of India. 

Bowman v. Monsanto: The US Supreme Court Rules on Patent Exhaustion

Three days ago, the United States Supreme Court delivered the much awaited judgment in Bowman v. Monsanto Co. The court held that the patent-exhaustion doctrine which limits the extent to which patent holders can control an individual article of a patented product after an authorized sale, does not extend to permitting a farmer to reproduce seeds protected by a patent, without the patentee’s permission.

The Supreme Court, upholding the decision of the Federal Circuit, ruled in favour of Monsanto by rejecting Bowman’s argument that the exhaustion doctrine and the “self-replicating” nature of seeds makes such reproduction through planting and harvesting legal.

Limiting its scope, the court held that the doctrine only restricts the patentee’s rights with respect to the “particular article sold” and does not affect the patentee’s right to prevent a buyer from making new copies of the patented seeds. This reasoning effectively nullifies the fact that Bowman’s initial purchase of the patented seeds from a grain elevator was an authorised one, making Bowman guilty of infringement for having engaged in the practice of planting, watering and harvesting the Roundup Ready seeds.

If the court were to hold otherwise, it would only be going against its own judgment in the J. E. M. Ag Supply Inc. v Pioneer Hi-Bred Int’l Inc. case. In this case, the court looked at the Plant Variety Protection Act together with the Patents Act and held that the two statutes establish different but non-conflicting schemes and since the requirements under the latter are more stringent, protections under it are bound to be greater.  

In my opinion, the judgment upholds the true spirit of the doctrine as in this situation, the patentee has received a reward only for the particular article sold and not for its subsequent recreations. If a farmer is indeed allowed to buy seeds and replicate them in his farm, it would lead to what in the court’s view is “a mismatch between invention and reward”.  Through this interpretation of the first sale doctrine, one the one hand, farmers benefit through the consumption of the product by planting and harvesting the seed while on the other, the patentee benefits by solely holding the right of reproduction, through which his innovation stands to be rewarded.

Drawing a parallel with the first sale doctrine in the case of books as recently decided by the US Supreme Court and discussed here, the first sale doctrine only allows you to sell the books that have already been published and sold. It does not allow you to make copies of the book and sell them, which if done would be a clear case of infringement.

The court’s act of balancing invention and reward is a welcome one which perhaps ought to be done more frequently by Indian courts as well and not just in patent cases. The same needs to be examined in any case involving intellectual property. When the balance tilts excessively in favour of either, the option is to either increase the amount of protection given or contain abuse of monopoly. In this sense, too, I feel the judgment is a welcome one.

Full Bench Opinion of the Delhi High Court on Designs and Passing Off

On May 15, 2013, the Full Bench of the Delhi High Court delivered its 47-page majority opinion and 94-page minority opinion on three questions referred to it concerning the Designs Act, 2000 and passing off. Following were the questions referred to the full Bench:

(1) Whether the suit for infringement of registered design is maintainable against the another registered proprietor of the design under the Designs Act, 2000;

(2) Whether there can be availability of remedy of passing off in the absence of express saving or preservation of common law of Designs Act, 2000 and more so when the rights and remedies under the Act are statutory in nature; and

(3) Whether the conception of passing off as available under the trademarks can be joined with the action under the Designs Act when the same are mutually inconsistent with that of remedy under the Designs Act.

Following are the conclusions of the majority opinion delivered by Justice Rajiv Shakdher in Paras 34 and 35 

34. On various issues raised we may crystallize our opinion as follows:

(i) A plaintiff could institute a suit for infringement of a design against a defendant, who was also a holder of a registered design. The expression "any person" found in Section 22 of the Designs Act would not exclude a subsequent registrant as, according to us, no such words of limitation are found in said Section.

(ii) The plaintiff would be entitled to institute an action of passing off in respect of a design used by him as a trade mark provided the action contains the necessary ingredients to maintain such a proceeding. The argument that such a suit could be instituted only after the expiry of the statutory period provided under Section 11 of the Designs Act, does not find favour with us. This is for the reason that in a given fact situation the plaintiff may have commenced the use of the design as a trademark after its registration. While Section 2(d) of the Designs Act excludes from the definition of a design, any trademark which is defined as such in clause (v) of sub-Section (1) of Section 2 of the 1958 Act or property mark, as defined in Section 479 of the IPC, or any artistic work as defined in clause (c) of Section 2 of the Copyright Act -the use of the design as a trademark post its registration, is not stipulated as a ground for cancellation under Section 19 of the Designs Act.

(ii) (a) In this context we must note the argument of Ms Singh, learned amicus, that passing off action may perhaps be maintainable provided the mark has attained secondary meaning. In our opinion, the issue before us is limited to whether a remedy by way of passing off action would be available qua a registered design used as a trademark by the plaintiff - we are not inclined to comment on the quality of evidence which may be required, if at all, to be produced by the plaintiff to prove whether the mark has acquired the necessary secondary distinctive meaning, for him to secure success, in the action instituted in that behalf.

(iii) We are also of the view that a composite suit for infringement of a registered design and a passing off action would not lie. The Court could, however, try the suits together, if the two suits are filed in close proximity and/or it is of the view that there are aspects which are common to the two suits. The discretion of the court in this matter would necessarily be paramount.

36. Accordingly, our answers to the three issues are as follows:

ISSUE No.I: A holder of a registered design could institute a suit against a defendant who is also in possession of a registered design

ISSUE No.II: A holder of a registered design can institute an action for passing off.

ISSUE No.III: The two actions cannot be combined in one suit

Following are the conclusions of Justice Manmohan Singh in Para 134 of his minority opinion:

a) A suit by the registered proprietor of Design for infringement of the registered design is not maintainable against another registered proprietor under the Designs Act, 2000 in so far as the registration covers the same features of the shape and configuration of the same article under the Design.

b) The remedy of passing off in so far as it relates to claim of protection for shape of articles is not available for the purposes of enforcement of rights and remedies under the Design Act. The said remedy is clearly absent under the Designs Act considering the avowed objective of the Act of 2000 which is to provide limited protection with no unnecessary extension.

c) The remedy of passing off in so far as it relates to claim of protection for shape of articles cannot be joined with the suit for infringement of the registered Design. The said remedy of passing off is available in alternative to the statutory protection conferred by the Design Right. For the purposes of the same, the suitor has to elect between the two inconsistent rights and remedies having distinct objects and policies.

Following were the additional opinions expressed by Justice Singh:

a) Notwithstanding the above said conclusion in (b) and (c), the remedy of passing off would continue to be available along with the infringement of registered designs and can be joined with the same in order to prevent consumer confusion which may be caused by the use of trade mark, get up, trade dress or in any other manner excepting the shape of the goods which is or was forming the subject matter of the registration of the Design.

b) The remedy of the passing off in so far as the shape of the article is concerned shall also be available even during currency of the design monopoly or even after the expiry of same to the extent that the claim of the feature of the shape is not covered within the novelty claim under the Design monopoly rights and the said claim of the protection qualifies all the necessary ingredients of the Trade Mark.

c) A remedy of passing off in so far as the shape of the article is concerned shall not be available even after the expiry of the Design to the extent the said feature of the shape of the article is covered within the novelty claim as made under the Design Right as after expiration of the Design, the novel shape claimed under the Design Act goes in public domain.

We will shortly undertake an analysis of the opinion. I thank Ms.Sneha Jain for sharing the decision with me.

Need for a Strategic and Comprehensive Approach to Healthcare

On the 13^th of last month, a timely day-long panel discussion was conducted by NLU Delhi on the Novartis decision of the Supreme Court. Among the participants, the ones whose presentations I found particularly insightful were that of Adarsh Ramanujan of Lakshmikumaran and Sridharan, Dr.K.M.Gopakumar of Third World Network, Mr.Mark Heywood, Founder of Treatment Action Campaign (South Africa), Dr.Gopakumar G.Nair of Gopakumar Nair and Associates, and Mr.P.H.Kurian, former Controller General of Patents, Designs and Trademarks.

In the post-lunch session chaired by Mr.C.H.Unni, Deputy Chief of Bureau, Mint, I had the opportunity to present some of my views which went beyond the decision. This post captures some of those views.

With pharma patent litigation having taken centre stage, the one thing that we need to be wary of is the temptation to expect the patent system to solve all our healthcare challenges, including that of affordable access to medicines. This temptation becomes a necessity all the more in the absence of a clear-cut healthcare strategy, since the Government would want to be seen as doing something, and patent busting is probably the most public way that the government can probably think of to achieve that object, given the (un)popular perception of patents and innovator drug companies.

Patents are without a doubt relevant to the debate, and patents which add no value must definitely be weeded out. But the question is, apart from pitting innovator drug companies against generics and deriving a vicarious pleasure out of this slugfest, have we truly explored all plausible and available options under and outside the Patents Act, 1970?

For instance, if the Government is truly keen on weeding out frivolous patent applications or patents, it ought to have actively explored the pre and post-grant opposition mechanisms, besides revocation by filing oppositions and revocations. After all, the definition of “person” under the Act includes the government, so what has stopped the Ministry of Health from filing oppositions to frivolous patent applications?

Also, what has the stopped the Government from stocking adequate quantities of patented drugs in hospitals and dispensaries owned by the Government, thereby giving effect to Section 47(4) of the Act? Wouldn’t this help increase affordable access to drugs?

Apart from patent-related issues, one of the issues central to the discourse is elevating the quality of research undertaken by Indian pharma companies and providing impetus to the growth of home-grown entities in related areas such as clinical trials. Instead of investing efforts in this direction, the Government has in fact contributed to the potential decline of Indian clinical trial industry by implementing feckless provisions such as the new Rule 122DAB of the Drugs and Cosmetics Rules, 1945, which states that failure of an investigational product to provide the intended therapeutic effect shall be considered as having caused a clinical trial-related injury or death!

As argued in an earlier post, if the very purpose of the trial is to evaluate the drug, what sense does it make to hold the sponsor of a trial or the Clinical Trial Organization responsible for failure of the drug to provide the intended therapeutic effect?

Unfortunately, instead of addressing issues like these, the discourse seems to be focussing entirely on the system of patents. It would help to first formulate our healthcare goals in specific terms, and then explore options under multiple legislations, instead of putting all our eggs in the patent basket.