Teflon coating on armour?
15 April 2006
| For small and medium pharma companies as well as firms in knowledge-based industries, patent insurance is a must, as a single infringement case could be a question of life and death, say intellectual property consultants M Qaiser and P Mohan Chandran. |
You can get insurance protection available for any amount of calamities — accident, fire, earthquakes, floods and death — even from human harm like theft, riots, arson and terrorist attack. Now, insurance has entered the domain of intellectual property (IP). Of especial interest to Indian companies is patent infringement insurance.
Patent insurance comes as a boon to Indian companies that have been embroiled in patent litigation. The Mumbai-based Sun Pharma was sued in 2004 by the US-based Medimmune Oncology for alleged patent infringement of a generic version of its cancer-related drug, Ethyol. In 2005, Astra Zeneca sued Ranbaxy for 'willful infringement' of its patent for Nexium, a drug that treats acidity and heartburn.
Though it is India's largest domestic pharma company and one of the world's major generic drugs producers, Ranbaxy has had a poor record with patent litigations against MNCs; it hasn't won a major lawsuit since 2002. The company has 47 products in the pipeline, considered to be the best in the industry, but 32 of them are under Para-IV filings, where a generic company seeks to nullify a big pharma company's patent, or to prove that its copy of the original drug does not infringe the patent. Analysts in the pharma industry predict that Ranbaxy's future prospects look bleak, as the cost of fighting litigations in regulated markets has risen sharply. In such a scenario, patent insurance is the right tonic for reinvigorating the health of the Indian pharma industry.
But patent insurance is a bit of a contradiction; for, a patent itself is a kind of insurance, an exclusive right granted by the government to make, use or sell the patented product. No one other than the patent - holder can manufacture or market the patented products. Patent insurance is a protection against infringement of patents and the costs associated with it. There are two types — 'patent liability insurance' and 'patent pursuance insurance'.
Patent liability insurance is a defensive instrument, which helps the insured party to fight an infringement lawsuit filed by a rival company. It is also called 'patent infringement defense insurance,' or 'defense cost reimbursement insurance'. In case there is litigation, the insurance company pays a part of the legal expenses incurred and / or the damages to be paid.
