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August 10,
2007
Novartis’ Challenge To Section 3(d) Of Patents Act Dismissed
The Madras High Court has held that Section 3(d)
of the Patents Act, 1970 (“Act”) as amended in 2005 does not violate Article 14
(right to equality) of the Constitution of India1. This order was delivered in two Writ Petitions
filed by Swiss pharmaceutical company Novartis AG and its Indian
subsidiary (“Petitioners”). The High Court further stated that it had no
jurisdiction to decide on the validity of Section 3(d) under
Agreement for Trade Related Aspects
of Intellectual Rights (“TRIPS”). The appeal of Novartis challenging the order
of the Controller of Patents that rejected its patent
application for its product B-crystalline of Imatinib Mesylate
(brand name Gleevec
/ Glivec) is still
pending before the Intellectual Property Appellate Board (“IPAB”).
Background
To recapitulate the developments:
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1997
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Novartis AG filed a patent application with the Madras
Patent Office for B-crystalline of Imatinib Mesylate (“Product”)
on the ground that the beta crystalline salt form (mesylate)
of the base imatinib was a new invention.
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1997 – 1.1.2005
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The application was kept in mailbox
as required under TRIPS and the Act.
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1.1.2005
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India
introduced product patent regime and simultaneously
amended Section 3(d) of the Act2.
Section 3(d) disallows the patenting of a new variant of
an already known substance unless such new form has
significant efficacy over the older version. This was
introduced with a view to prevent ever-greening and
granting of frivolous patents.
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January 2006
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The Controller refused to grant a
patent in relation to the Product, on the grounds that
the application lacked novelty, was obvious and was not
an invention in view of Section 3(d) of the Act.
Controller held that the Product was a new version of an
older molecule that Novartis first patented in 1993 and
the increment in efficacy is not substantial enough to
receive the grant of a patent.
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May 2006
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Petitioners filed writ petitions
before the Madras High Court against the Union of India,
the Controller General of Patents & Designs (“Controller”),
Cancer Patients Aid Association (CPAA),
and four Indian generic companies. Novartis contended
that (i) the Controller erred in interpreting the
enhanced efficacy standard imbibed in Section 3(d) with
regard to Product, (ii) Section 3(d) was vague,
ambiguous and contrary to the requirements of TRIPS and
that it violated Article 14 (right to equality) of the
Constitution of India. (iii) the Controller disregarded
the in-house laboratory test performed by Novartis’
scientists on rats to show that a 30% increase in
bioavailability between imatinib and imatinib mesylate
was adequate to meet up the “enhanced efficacy”
benchmark of section 3(d).
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April 2007
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The Central Government issued a notification under
section 117G of the Act whereby all appeals from the
order of Controller, pending before the High Court, were
transferred to the IPAB set up in Madras. Therefore, the
Madras High Court transferred the appeal from the
Controller’s order rejecting patent to the IPAB.
However, the Madras High Court, reserved the right to
pronounce its judgment on the issue of the
constitutional validity of Section 3(d) of the Act.
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The challenge to Section 3(d) was based on two grounds, viz.:
(i) that it is not in compliance with the TRIPS agreement; and
(ii) that it is arbitrary, illogical, vague and violative of
Article 14 of the Constitution of India.
Arguments on ground 1:
Concerning ground one, the Petitioners argued that (i) Section
3(d) ran contrary to various Articles under the TRIPS Agreement,
specifically Article 273,
(ii) in bringing in this amended Section, the obligations
arising out of the TRIPS agreement were not carried out, and
instead, by introducing the amended Section 3(d) the right to
patent an invention under Article 27 was taken away.
Opposing the above views of the Petitioners, the respondents
contended that firstly Section 3(d) was compatible with TRIPS
and in the possibility that it was not, the Indian courts do not
have the jurisdiction to adjudicate upon this issue but such
dispute could only lie before the Dispute Settlement Board of
the WTO. Further, every member country does have the right to
bring in its own local law in discharging their obligation under
TRIPS keeping in mind the needs of the citizens of that country.
Arguments on ground 2:
Section 3(d) requires a patent applicant to show that the new
form or the known substance has enhanced efficacy to be eligible
for patent, but there is no guidance in this Section as to
determining ‘enhancement of the known efficacy’. Vesting this
determination in the hands of the Patent Controller, without the
presence of any guidelines, will result in arbitrary exercise of
power. Hence, on this ground, this section would be violative of
Article 14 of the Constitution of India.
The respondents argued that the Patent Controllers are all
experts with considerable training in this field and in the
event the Patent Controller does give a wrong decision, such a
decision can always be corrected by the IPAB and other higher
forums.
Decision
Ground 1
On the first ground, as stated earlier, the High Court said that
it had no jurisdiction to decide whether Section 3(d) is valid
under TRIPS and only the dispute resolution mechanism under WTO
should be resorted to. The High Court examined that TRIPS is an
agreement between WTO member countries and when the agreement
provides for dispute resolution mechanism, that should be
followed.
Ground 2
The Madras High Court examined various Supreme Court decisions
that deal with validity of a provision of the statute under
Article 14. In one of the judgements of the Supreme Court it was
observed that Article 14 can be invoked only when it is shown
that in the exercise of power there is a possibility of real and
substantial discrimination and such exercise interferes with the
fundamental right guaranteed by the Constitution.
Madras High Court observed that the amendment section has
in-built measure to guide the Controller in exercising its power
under the Act; the amendment section does not suffer from the
vice of vagueness, ambiguity and arbitrariness; and that the
amended section cannot be invalidated solely on the ground that
there is a possibility of misusing the power. Thus, the division
bench of the High Court upheld the constitutional validity of
Section 3(d).
Appeal?
An appeal would lie from the order of the Madras High Court
to the Supreme Court of India. However, it is learnt that
Novartis is not likely to appeal against the decision of the
Madras High Court before the Supreme Court and nor is the
Government of Switzerland likely to take up the Novartis
allegation of non-compatibility of Indian patent law with
the TRIPS agreement to the dispute settlement board of the
WTO.The Madras High Court observed that
the amended section has an in-built measure to guide the
Controller in exercising its power under the Act, the
amended section does not suffer from the vice of vagueness,
ambiguity and arbitrariness, the amended section cannot be
invalidated solely on the ground that there is a possibility
of misusing the power. Thus, the division bench of the High
Court upheld the constitutional validity of Section 3(d).
Future of Novartis’ Gleevec Patent in India
Novartis, now has an
appeal pending with the newly operational IPAB against the
rejection of a patent for the Product. In July 2007, IPAB
rejected Novartis’ plea to challenge the appointment of S.
Chandrasekharan as the IPAB technical member on the ground
that he was 'an interested party' since he was the
controller general of patent office when Novartis' patent
application for the Product was rejected. Contesting this
decision, Novartis has filed a writ petition with the Madras
High Court. The Madras High Court has stayed the hearing on
the Novartis case by the IPAB till September 10, 2007. The
Court has ordered that the IPAB should not continue to hear
the case until the High Court has issued a final decision
regarding the technical member.
Two aspects now remain to be seen; one, whether the High
Court will permit S Chandrasekharan to hear the appeal as a
technical member of the IPAB and most importantly, whether
IPAB allows the Gleevec patent on the ground of novelty and
efficacy.
The future of product
patent regime in India will depend upon the interpretation
of Section 3(d) and the standard of efficacy that is
accepted by IPAB and other courts for grant of patent right.
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