Image from here.
On December 3, the Swiss Senate (Council of States) overwhelmingly approved an FTA, the Trade and Economic Partnership Agreement, between India and the European Free Trade Association (EFTA). With a unanimous 41 votes in favour and 3 abstentions in the Senate, the agreement will now await the approval of the National Council. Signed in March 2024 after 16 years of negotiations, the FTA promises to redefine economic relations between India and the EFTA countries, Switzerland, Iceland, Liechtenstein and Norway. As per reports, this is the first time that India has entered into a legally enforceable agreement on trade and sustainable development with an EFTA partner.
Submitted for ratification to the two houses of the Swiss Parliament in September this year, the FTA is also said to have undergone a round of public consultation involving political, civil society and business stakeholders. India, too, would have benefited tremendously from a similar consultative undertaking on the FTA at home. Nonetheless, as a part of the agreement, the EFTA has committed to increase FDI by USD 100 billion over 15 years and generate 1 million direct jobs in India. EFTA states will also provide concessions on non-agricultural and processed agricultural products from the country. From a Swiss perspective, the agreement is poised to offer customs relief for 94.7% of current exports to India, with the provision of transitional periods for the ease of implementation.
The FTA notably includes provisions that enable Swiss companies to deal with their Indian counterparts on non-discriminatory terms as far as patent protections are concerned. It also streamlines opposition and disclosure processes, hence lowering the overall risks of operating in a reportedly uncertain Indian patent landscape. The FTA further promises stronger trademark protections for marks denoting Swiss distinctiveness and prohibits the misleading use of geographical indications like ‘Swiss’ or ‘Switzerland’ for goods not originating there.
The Indian government has steadfastly endorsed the FTA for aligning the IP regime with TRIPS standards, assuring that national interests in generic medicines and concerns over patent evergreening have adequately been accounted for. However, as previously flagged by guest bloggers Prathibha Sivasubramanian and Sreenath Namboodiri in their post, the development might not be all favourable to India’s considerations. Provisions introduced under Annex 8.A to the chapter on IP Protections in the FTA have posed a slew of questions around their implications on transparency and accountability in the patent grant process. For instance, Article 11.7 of the Annex allows dismissal of pre-grant oppositions if raised on ‘unfounded grounds’; potentially paving the way for arbitrariness in examination. Additionally, Article 12, alongside the amended Patent Rules, reduces the obligation to disclose the information pertaining to the working of a patent, which could severely weaken the imposition and enforcement of compulsory licensing measures in India’s still developing market.
Importantly, the FTA is seen to have diluted the requirements under Section 8 of the Patents Act, which seeks to ensure transparency by mandating disclosure of foreign patent applications and their statuses. As per Article 13.2 of the Annex, mere non-compliance with disclosure requirements may not lead to refusal or revocation of a patent, unless the alleged suppression of information is ‘deliberate’ or ‘willful’. As highlighted by Prathibha and Sreenath, the exemption, coupled with amendments to Rule 12, shifts the burden of verification of the status of foreign application from the applicants to the Controller. This not only poses the risk of granting low-quality or frivolous patents, especially in high-stake areas like public health, but also makes it difficult to ensure accountability within the Patent Office.
Notwithstanding the significant opportunity provided by the FTA in solidifying its trade relations with European counterparts, it is equally vital for India to reassess the agreement in view of its domestic interests. As the agreement moves towards the stage of enforcement, India must devise a strategy to safeguard its existing patent requirements and review the proposed amendments to the Patent Rules (read SpicyIP’s comments here). Perhaps, an absence of public consultations at the India end has also played its part in leaving much room for error, keeping the above material concerns beyond the scope of consideration. Going forward, India must not hold back from advocating for possible corrective measures to balance the terms of the FTA with the need to uphold and protect the integrity of its innovation ecosystem.