Novartis switching planned research investments from India to China

Novartis is reported to be switching hundreds of millions of dollars in planned research investments from India in the next few years in response to a court ruling rejecting it’s challenge to a section of the country’s Patents Act that aims to restrict certain kinds of patents. Novartis is planning to move the investments to China.

India’s patent law, which took effect in January 2005, allows patents for products that are new inventions developed after 1995, when India joined the World Trade Organization, or for an updated drug that exhibits improved efficacy. Novartis bought a civil lawsuit against the Indian government after it rejected the company’s attempt to patent a new version of its leukemia drug Gleevec in January 2006.

The patent was rejected on the basis that the drug is a new formulation of an existing drug developed before 1995. Novartis argued that that it is an improved drug. The ruling said that the court does not have jurisdiction over whether Indian patent laws complied with the WTO’s intellectual property laws.

Joint-ownership of patents inhibits licensing deals

Joint ownership of patents can be a major stumbling block to licensing deals being negotiated across international borders. In most countries the joint ownership of intellectual property legally prevents any of the joint owners licensing their interest in the jointly owned patent without the consent of the others (Japan: Article 73(3) The Patent Law; UK: Section 36(3) Patents Act 1977; Australia: Section 16(2) Patents Act 1990), Canada: Forget v. Specialty Tools of Canada Inc (1995) 62 CPR (3d) 537). A joint patent owner, however, does not need consent to exploit the invention themselves and does not need to account for any profits it makes from it. By contrast, in the United States an owner of a joint patent can license their interest in a patent without the consent of the other owners and do not have to account to them for any royalties or payments received as a result of the license (Schnack v. Applied Arts Corporation 278 N.W. 117 Mich 434). In the US neither party can grant an exclusive license to the joint patent without the consent of the other. With no standard set of rules on joint ownership of patents, it is easy to see how negotiations for licensing deals taking place on a global scale can become long and protracted.