Roche, the Swiss drug maker, lost its antiviral drug patent for Valcyte in India patent widely used by AIDS patients. The assistant controller of patents and designs, said that the patent covering Valcyte (valganciclovir hydrochloride) lacks inventive step and does not demonstrate significantly improved efficacy over previous compounds. Section 3(d) of India’s Patent Act, which sets out the limitations of patentable subject matter, says “the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance”. This highly contested criterion is obviously the “hook” based on which the India Patent Office was able to decline patent protection. The patent office found that the invention was novel but lacked inventive step because it was obvious to try and develop a version of ganciclovir, an earlier anti-viral drug that had to be administered intravenously, to be administered orally.
Obviously this decision helps India generic makers, like Ranbaxy Laboratories and Cipla, who launched cheaper  generic versions of the drug in the India market, among which the generic drug Valcept, launched in 2008. These companies, along with Matrix Laboratories and Bakul Pharma, were among the opponents against Roche ‘s patent.
One question that comes up is whether politics -the desire to give free or cheap access to anti-AIDS medicines to deal with affordability issues- comes in the way of proper intellectual property policy, that is to grant a fair equitable and predictable patent (grant) system.
Firstly a bit of history. India had inherited The Patents and Designs Act 1911 from the colonial times that provided for protection of all inventions and a patent term of 16 years. However, a few domestic chemical and pharmaceutical enterprises that tried to develop their own technology in the 1960s were prevented to work their technologies by foreign patent owners using broad and vague provisions of the Patent Act. Under pressure from domestic industry, government adopted a new Patents Act in 1970 that reduced the scope of patentability in food, chemicals and pharmaceuticals to only processes and not products. The term of process patents was reduced to 7 years in food, drugs and chemicals and to 14 years for other products. The compulsory licenses could be issued after three years. It is by now widely recognized that the 1970 Act has facilitated the development of local technological capability in chemicals and pharmaceutical industry by enabling the process development activity of domestic firms as confirmed by a number of quantitative studies.
The 1970 Act imposed substantial limits on patent rights; these limits were intended to encourage indigenous inventions and secure their production in India on a commercial scale (India Patents Act 1970, § 83). First, and most importantly, pharmaceutical products could not be patented. Second, firms were permitted to patent only a single process for making a pharmaceutical; a firm could not block competitors by patenting all possible processes for making a drug. Third, the term for pharmaceutical process patents shortened to five years from the grant of the patent or seven years from application filing, whichever was less, compared to 14 years from application filing for all other inventions. And fourth, the Act imposed very broad “compulsory licensing” provisions for pharmaceutical process patents. Within three years of the grant, the patents were deemed “licenses of right,” meaning that anyone could use the process if they paid a royalty (Chaudhuri 2005, 37-8). In sum, pharmaceutical products had no protection, and pharmaceutical processes were protected for only three years if a royalty were paid and five years if no royalty were paid.
There seems an ambivalent attitude, even contradictory, towards inventive step in developing countries. It is often stated that inventive step requirements are way low in developed countries, notably the EPO countries and the US . These (alleged) low standard of inventive step raises two concerns for developing countries. The first is that as applied in developed countries, it could hinder research of importance to developing countries. The second concern is that developing countries would be expected to apply a similar standard in their own regimes. Many have urged developing countries to think carefully before doing so and to explore whether a different higher standard is more desirable. One suggestion that has been made would be to require the patent applicant to demonstrate that the proposed invention reflects a standard of inventiveness higher than that which is normal in the industry involved.
In fact, inventive step standards in the EPO and USPTO are amongst the highest in the world. And, as a generalization, the smaller the contribution to the art, the narrower the scope of protection in any granted patent. This is because, in general, patents in the US and EPC countries give protection commensurate with the technological contribution.
But creating higher standards of inventive step results in a double edged sword. It may keep the foreign applicants out of the door, but it also raises the bar for domestic applicants, and that, of course was not the intention of domestic Indian generics at all. The Roche case is under appeal. It is hoped that the criteria for inventive step will be in line with developed countries’ standard and not a plaything for proponents and adversaries of the patent system as such.
Or will this concept of inventive step be seen as “TRIPS flexibilities”, a term best articulated in 2002 by Murasoli Maran, then commerce minister, famously remarked: “We are all aware that the text of TRIPS is a masterpiece of ambiguity, couched in the language of diplomatic compromise, resulting in a verbal tightrope walk, with a prose remarkably elastic and capable of being stretched all the way to Geneva.” It is not the first time politics influence patent granting. In Boehringer Ingelheim Pharmaceuticals, Application 2845/DEL (2008) the India Patent Office expressly, when refusing a patent application for nevirapine, stated: ” The (India, ipeg) Patent Office should give a strict interpretation of patentability criteria as decision of thereof shall affect the fate of people suffering from HIV/AIDs for want of essential medicine.”
 Ironically, although Section 3(d) was intended to limit evergreening by multinational corporations, it also limits the ability of domestic firms to obtain patents for incremental innovations. Domestic firms are in the early stages of investing the large amounts of money and scientific expertise necessary to discover new drugs. Their patents have focused on manufacturing processes and incremental innovations. For example, the Indian firm Ranbaxy has reported that its patent applications in 2004 focused on process discoveries for generics. In 2007, its patent filings focused on new drug delivery systems and other incremental innovations. Ranbaxy anticipates it will not be in a position to seek patents for new drug discoveries until 2012 (from: Journal of International Commerce and Economics , “A “Calibrated Approach”: Pharmaceutical FDI and the Evolution of Indian Patent Law“). Further reading on the controversy on article 3D of the Indian Patent Act, read here, also informative: Aditya Kant, “Section 3 (d): “New”Indian Perpsective“.
 The affordability issue with regard to the treatment of HIV with antiretrovirals(ARVs), or drugs to treat opportunistic infections associated with the disease, has been raised raises many times. The minimum annual costs of ARV therapies, even at deeply discounted or generic prices which do not cover R&D costs, far exceed the annual health expenditure per capita of most developing countries. Current per capita health expenditures in low income developing countries average $23 per year, but the most inexpensive ARV triple therapies are now just over $200 per year.9 Thus, without extra funding for medicines and health delivery services, treatment for all those requiring it will remain unaffordable even at the cheapest generic prices. The World Health Organisation (WHO) estimates that fewer than 5% of those who require treatment for HIV/AIDS are receiving ARVs. Only about 230,000 of the 6 million estimated to be in need of such treatment in the developing world actually receive it, and nearly half of these people live in Brazil.
 from “Integrating Intellectual Property Rights and Development Policy”, WIPO, 2002
 from publication “A “Calibrated Approach”: Pharmaceutical FDI and the Evolution of Indian
Patent Law, see note 1.
 See, for example, the 2002 report of the UK Government installed Commission on Intellectual Property Rights. The pharmaceutical industry was rather critical on the Commission findings, see e.g. GSK’s criticism on the Report, November 2002.