India: Implications Of The Emerging Patent Litigation In India

Last Updated: 1 July 2008
Article by Manisha Singh

Patent litigation, it seems, has emerged from the shadows for the time being. The nation-wide debate on the denial of patent to 'Gleevec', the cancer drug of the Swiss pharma major Novartis and also on the Patent Act being TRIPS compliant or not, the stand-off between Bajaj Auto Ltd and TVS Motors over patent on the DTS-i Engine technology, dispute over a locking mechanism involving PVC pipes, the rejection of the interlocutory application of F. Hoffman La Roche Ltd to stop Cipla Limited from manufacturing and distributing 'Erlocip', the generic version of 'Tarceva' the patented cancer drug of Roche and again a denial of patent to German pharma major Boehringer Ingelheim's product patent application for its paediatric form of the anti-AIDS drug Nevirapine under section 3(d).

This scenario has given a facelift to the existing patent jurisprudence in India but at the same time has given birth to several issues which seem amorphous in the present circumstances but, as the number of suits increase, will have profound implications.

Section 3(d), it seems, has become the bête noire in the patent domain. There was much discussion on it world-wide after the denial of patent to Gleevec. Again we have another instance in the denial of the paediatric form of Nevirapine for not being significantly efficacious over its known form. Section 3(d) finds place in the Indian patent statute book primarily due to the 'flexibility' provided in the TRIPS Agreement in order to give room to maneuver towards safeguarding national interests. The inventing activity around existing patents and coming out with 'tweaked' products is seemingly barred by section 3(d) when it says that – the mere discovery of a new form of known substance which does not result in the enhancement of the known efficacy of that substance. The test leading towards the determination of derivatives differing significantly in properties with regard to efficacy or to distinguish between incremental innovation and frivolous changes is on the wisdom of the patent examiners. The demand of formulating a guideline or technically adequate explanations on what section 3(d) actually characterizes as un-patentable subject matter, which came up in the aftermath of denial of patent to 'Gleevec', has also gone into the closet as the government is of the view that the law is quite clear as it wants innovation to enhance the known efficacy of a substance. The government thinks that no guideline can be exhaustive and in the absence of one, it would only complicate matters. And in the event of any dissatisfaction legal remedy can always be sought. The implication of this fluid situation will definitely result in a barrage of litigation asking to adjudicate on complex technicalities of chemical and physical sciences. In the absence of a specialized IP court, is the Indian judiciary ready to take up the challenge?

Revocation of patents is provided under section 64 of the Patents Act, 1970. A patent may be revoked on a petition of any person interested or of the Central Government by the Appellate Board or on a counter-claim in a suit for infringement of the patent by the High Court on grounds as enumerated under the section. The access to patent revocation through a counter-claim is rapidly proliferating in infringement suits. Defendants when brought to the court for alleged infringing activities take the recourse of section 64 and make a counter-claim of invalidity of the impugned patent contending lack of inventive step or anticipated by what was publicly known or publicly used in India or to what was published in India or elsewhere. The counter-claim of invalidity, supposedly, has bearing from section 13 of the Patent Act, 1970. Sub-section 4 of section 13 does not warrant validity of any patent issued. The defendants use this particular statutory position to thwart off any attempt by the patentee and also the plaintiff in a typical patent infringement suit, to assert their statutory right, given under section 48 of the Patents Act, 1970, to prevent any third party from making, using, offering for sale, selling or importing the patented product or process. In the civil appeal filed by SHAND Pipe Industries against Hind Mosaic and Cement Works, involving patent on threaded PVC coupling and the locking system used in the threaded PVC pipe joint couplings with PVC pipes, the Apex Court remitted the matter for fresh consideration in accordance with law as it felt that the High Court had not analysed the scheme of the Patent Act, particularly in the context of section 13(4) read with section 48, particularly the effect of counter-claim. Section 13(4) warrants invalidity of issued patents primarily to incur no liability by the patent office for, or in connection with, any examination or investigation or any report or any proceeding thereof so as to safeguard their discretion taken in good faith. Use of no presumption of validity to bolster the counter-claim of patent invalidity is an erroneous move.

Another provision of the Patent Act, which puts patentee into quandary, is section 107. This particular provision provides for the availability of every ground which is taken up for revocation, to be taken as a defence in suits for infringement. The exclusive rights given to a patentee seems to be whittled away or diluted in the present circumstance of indiscriminately taking defence under the enumerated grounds.

Thus we see that the emerging patent litigation appears to be taking its toll on the fundamental thought behind grant of patent i.e. limited monopoly to recoup the investments made in inventing to encourage the sensitivity of innovation leading to increased economic activity.

Added to the above scenario is the new dimension given to patent litigation in the decision of Roche versus Cipla. F.Hoffman La Roche brought an infringement suit on becoming aware that Cipla Limited has launched 'Erlocip' the generic version of its patented drug, 'Tarceva'. In the application for interlocutory injunction filed by Roche, the Delhi High Court, finding that an arguable case is made out by the Plaintiff and the challenge by the defendant genuine, the Court, proceeded to decide on the question of balance of convenience while pointing out that the endeavour is only to consider whether the defendant has raised an arguable case or not in the face of an arguable case of the Plaintiff and not to make a detailed, in-depth scrutiny of the merits of the patent at the interlocutory stage. The Court, while treading with care in cases involving life saving drugs, held that the balancing in such cases would have to factor in imponderables such as the likelihood of injury to unknown parties and the potentialities of risk of denial of remedies. Thus the Court, taking the price differential in the case of a life saving drug as an important and critical factor, opined that as between the two competing public interests, that is, the public interest in granting an injunction to affirm a patent during the pendency of an infringement action, as opposed to the public interest in access for the people to a life saving drug, the balance has to be tilted in favour of the latter. However, the Court while not entitling the Plaintiff to an ad-interim injunction directed the defendant to furnish an undertaking with respect to maintaining faithful accounts of the sale of its product and filing quarterly accounts as well as duly authenticated annual statement of the sales figures in the Court. The Court said that this measure is to provide an equitable balancing order protecting the Plaintiff's interest.

This is a major implication of the emerging patent litigation. Bringing in the issue of public health and consumer access to medicines, the Court has given a new factor to be analysed while considering interim relief. Patent law has inbuilt structure like compulsory licensing to look after public health crises situations. Drug pricing is an altogether different domain which has drug pricing authorities to regulate.

The Indian patent litigation scenario is in birth throes, especially after the passing of Patent (Amendment) Act, 2005. But once these amorphous conditions sublime into concrete jurisprudence, the path is well lit for a robust patent scene in India.

© Lex Orbis 2008

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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