India: Cipla v Novartis: Import Qualifies As Working Of Patent

Last Updated: 31 May 2017
Article by Gautam Kumar

The Indian pharmaceutical industry is a major manufacturer of cost-effective generic drugs and is set to become the leading exporter of generic pharmaceutical products. However, recently the Indian pharmaceutical industry has seen several landmark judgments which will have a far-reaching effect on Indian pharma players, as well as international pharma giants.   

In one such case the Division Bench of the Delhi High Court upheld the order of a single judge restricting Indian pharmaceutical company Cipla from selling pharmaceutical products containing any form of Indacaterol, a respiratory drug in which Novartis held a patent. Indacaterol was used to treat chronic obstructive pulmonary disease (COPD) and was sold in India by Novartis under its trademark ONBREZ. Novartis did not manufacture Indacaterol in India; rather, it was manufactured in Switzerland and imported into India through another pharma company, Lupin.

Cipla's primary defence was that:

  • as Indacaterol was not manufactured in India and was imported in small quantities by Lupin, this did not meet patient demand in India; and
  • the price of Novartis's drug was five times higher than the price of Cipla's drug.

Cipla contended that it should be allowed to sell Indacaterol as Novartis was not working the patent in India. It stated that for the grant of an injunction, one consideration – apart from a prima facie case, balance of convenience and irreparable harm and injury – was that of public interest, and in view of this the injunction should be vacated. Cipla contended that public interest would not be served if an injunction was allowed to remain in operation against it by overlooking the demands of patients in India.

Novartis, countering Cipla's arguments, stated that the fact that it did not manufacture the product in India did not mean that the patent was not being worked in India, as sufficient quantities of the drug were imported into India considering the needs of patients suffering from COPD and the imported drugs satisfied local requirements. Rejecting Cipla's statistics on COPD patients in India, Novartis stated that COPD patients did not include asthma-like respiratory symptoms or chronic bronchitis, and therefore the number of COPD patients in India was lower than Cipla claimed. However, the court did not examine the differing numbers, observing that the patients could be considered large in number.

Novartis also argued that Cipla's conduct was in bad faith as it had also tried to pass off Novartis's trademark ONBERZ with its own mark, UNIBREZ, in another suit filed by Novartis. That suit was resolved by Cipla giving an undertaking not to use the UNIBREZ mark in future.

In the present case, after hearing the parties' contentions, the court held that patents are granted to encourage inventions so that these can be worked on a commercial scale and to the fullest extent reasonably practicable. Another consideration was that patents do not impede the protection of public health and nutrition and should act as an instrument to promote public interest in sectors of vital importance for the socio-economic and technological development of India. Most importantly, the court held that it was unnecessary that a patent worked in India had to be manufactured in India. Relying on the decision in Telemecanique & Controls (I) Limited v Schneider Electric Industries SA (2002 (24) PTC 632 (Del) (DB)) the court held that the patent could be worked in India even through imports. The important factor was that sufficient quantity of the drug was made available through imports and the manufacture of the drug was unnecessary for the working of the patent in India; this could also be achieved if the drug in question was imported into India. However, in the case at hand the court considered that whether the extent of imports was sufficient to meet the demands of COPD patients in India was a matter of evidence at trial. The court pointed out that other drugs were available in the market to manage COPD and Indacaterol did not fall in the category of life-saving drugs (ie, cancer medicine). The court also observed that Cipla had failed to make its case that granting the injunction would be contrary to the public interest, and had failed effectively to challenge the validity of the patent. Thus, the Division Bench upheld the order of the single judge and dismissed Cipla's appeal.

This judgment represents another step towards protecting the intellectual property of pharma companies in India and protecting the rights of the patentee so that these cannot be overlooked in the name of public interest. It further clarified that it is unnecessary for a patent to be worked in India by manufacturing, as imports can also be considered as working a patent in India. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Gautam Kumar
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