India: Rejection Of Patent To Sovaldi: Gilead Takes Refuge In Principles Of Natural Justice

Last Updated: 23 February 2015
Article by Priya Anuragini

Close on the heels of the US President's historic Republic day visit to India, Gilead, a US based Biopharmaceutical Company, was successful in securing some relief from the Delhi High Court after the Indian Patent Office (IPO) refused to grant patent to its drug Sovaldi used to treat Hepatitis C Virus (HCV)1. While IPO had, earlier, denied the patent on the ground of pharmaceutical innovation falling foul of section 3(d) of the Patents Act, 1970('Act'), Delhi High Court remanded the case back to IPO for fresh consideration on Gilead's plea of non-compliance with the principles of natural justice.

Why Sovaldi did not find favour with IPO?

In a 35 page detailed order IPO reviewed, in detail, all the substantive objections against the grant of patent and opined that the patent, though novel and inventive, was not innovative enough to thwart Section 3(d) Challenge.

Section 3(d) of the Act raises the bar for patentability of inventions, particularly pharmaceutical innovations, in India and proscribes ever greening of inventions. Often attacked by multinational pharma companies as too restrictive and inimical to their interests, section 3(d), inter alia, disallows grant of patent to mere discovery of a new form, property or use of a known substance unless such discovery results in the enhancement of the known efficacy of the substance in question. Efficacy in case of medicinal formulations has been interpreted to mean therapeutic efficacy by the Indian Supreme Court in Novartis AG v. Union of India2.

Applying the Apex Court's mandate to the matter at hand, IPO observed that the compounds claimed in the application are structurally close to the compound disclosed in the prior art in as much as both the compounds have the same use in the treatment of HCV infection and though the claimed compounds employ a unique and novel substitution pattern which imparts them high potency and low toxicity, critical in the treatment of HCV infection, this kind of variation can only make the compoundsnovel and inventive. For the purposes of section 3(d) however, IPO explained, this novel and inventive compound would deemed to be the same compound as disclosed in the prior art unless it differs significantly in properties with regard to efficacy. Therefore, to ward off the Section 3(d) challenge it was mandatory for the applicant to submit the therapeutic efficacy data to show significant difference in the properties with regard to efficacy and to this end, clinical trials should have been provided. While Gilead did submit cytotoxicity data to show difference in properties, IPO found it insufficient for supporting the claim of significant improvement in the therapeutic efficacy.

Delhi High Court's Verdict: Principles of Natural Justice Sacrosanct

One interesting aspect of IPO's refusal to grant patent to Sovaldi was that the rejection came in examination proceedings under Section 14 of the Act despite there being at least 3 pre grant oppositions pending against Gilead. IPO, however, instead of initiating pre grant opposition proceedings under section 25(1) of the Act thought it fit to reject the patent only on the basis of objections raised in the first examination report, though most of the objections coincided with the grounds raised in the oppositions. And when the issue of pendency of pre grant oppositions was raised by Gilead, IPO took the view that since procedural formalities under Rule 55 of the Patent Rules, 2003, in respect of opposition applications had not been completed, hearing under section 25(1) could not be initiated and in as much as the patent was already being refused under Section 14 of the Act, the pre grant opposition in any case became infructuous. This approach, however, was not approved by the Delhi High Court in the writ filed by Gilead3. In so far as IPO's order incorporated most of the grounds taken in the opposition, the Hon'ble Court was of the view that opposition applications injected bias in the proceedings under Section 14 of the Act. The bias, being inimical to the interests of the applicant, in this case Gilead, an opportunity of being heard was indeed warranted. While the IPO claimed that similarity between the grounds, that formed basis of rejection of the Patent with those raised in the opposition application, was nothing but happy coincidence, High Court held that, once grounds taken in the opposition application were available with the IPO, the appropriate course of action in consonance with the principles of natural justice would have been to issue notice to Gilead under Section 25 of the Act and to hold simultaneous proceeding under both section 14 and 25 of the Act giving Gilead an opportunity of defending itself against both examination and pre grant objections. The IPO Order was, accordingly, set aside and remanded back for a fresh decision after hearing under both Section 14 and 25 of the Act.

Will the Clock Turn Back?

Considering that it is well established that pre grant opposition aids the examination, it was only reasonable for Gilead to demand an opportunity of hearing with regard to both, more so, when the grounds taken in the opposition and examination converged. Delhi High Court's recognition of the same has paved the way for another hearing in the case and though the case has been remanded back purely on procedural grounds, the hearing will be on substantive threshold of patentability and the all-important issue of scope of 3(d) with Gilead having full and complete access to all the objections raised by India based pharma companies. It would be interesting to see if Gilead is ultimately successful in thwarting off the 3(d) challenge though the possibility remains weak as its Indian opponents are in no mood to give up.

1 Application No. 6087/DELNP/2005,13th January, 2015

2 Novartis v. Union of India, Civil Appeals Nos. 2706-2716/2013, Supreme Court of India, 1st April, 20133

3 Gilead Pharmasset LLC v. Union of India, W.P.(C) 687/2015,High Court of Delhi,30th April,2015

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