SEMINAR REPORT 1

TOPIC:

PATENT CASE STUDY:

NOVARTIS

SUBMITTED TO:

Dr. ARMINDER KAUR

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 INTRODUCTION

On 17th May 2006 the Swiss pharmaceutical company Novartis Ltd. filed two cases,
challenging both the Indian patent office’s rejection of its patent application for the
cancer drug imatinib mesylate (brand name Gleevec or Glivec), and the section of the
new Indian patent law which formed the basis of the patent office decision.

Imatinib mesylate (Gleevec) is a cancer drug used in the treatment of Myeloid

Leukemia (cancer of the blood). It is produced and marketed internationally by the
Swiss pharmaceutical company Novartis and various Indian pharmaceutical
companies, such as Cipla, Hetero, Natco and Ranbaxy. Novartis sells Gleevec at Rs.
120,000 ($ 2500) per patient per month in India. Generic versions of the drug are
priced at about Rs. 8,000 ($175) per patient per month on the Indian market.

HISTORY OF THE CASE:

Filing of patent by Novartis

In 1998, Novartis filed an application in the Chennai Patent Office for a patent on
imatinib mesylate (Gleevec). At that time, India did not yet grant patents on medicines
but in November 2003, Novartis was still able to obtain exclusive marketing rights
(EMR) for a period of five years, based on a temporary provision of the previous
Indian Patents Act. The granting of EMR was a TRIPS obligation for countries like
India, which did not grant patents for pharmaceutical products before 2005 (subject to
a number of conditions). After 2005, when the Indian patent office began examining
pharmaceutical product patent applications, EMRs would either be replaced by patents
(if granted) or cancelled (if patents were rejected). The latter scenario applies to the
Gleevec patent application.

The EMR operated like a patent monopoly, preventing Indian pharmaceutical

companies from producing affordable generic versions of imatinib mesylate.

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Producers of generics were forced to withdraw the production and sale of generic
versions of the drug in India and other developing countries.

Cancer Patient Group files Patent Opposition

In 2005, India changed its patent law to become fully TRIPS compliant and Novartis’
patent application on Gleevec came up for examination by the Indian patent office of
Chennai. The Indian Patents Act allows for any person or group to oppose a patent
application before it is granted and the Cancer Patients Aid Association filed an
opposition on behalf of cancer patients in the Chennai patent office

Chennai Patent Office rejects Gleevec patent application

In January 2006, the Chennai Patent office rejected Novartis’ patent application on the
grounds that the application claimed 'only a new form of a known substance.’ This
order of the Chennai patent office brought relief to thousands of cancer patients as it
not only prevented a patent monopoly until 2018, but also automatically cancelled the
EMR . The Gleevec patent order rejecting a 'new form of a known substance' also set
an important precedent for the examination of other patent applications claiming only
improvements of known molecules, including antiretroviral medicines to treat AIDS.

Novartis challenges Patent Order and Indian Patent Law

On 17 May 2006, Novartis filed two sets of cases in the Chennai High Court.

The first case challenges the order of the Chennai Patent office, which rejected the
Gleevec patent application of Novartis, following a pre-grant opposition by the
Cancer Patients Aid Association. Legal representatives of the Cancer Patients Aid
Association will appear on their behalf before the Chennai High Court. Novartis'
constant litigation renews fears about the future availability of drugs if the patent case
of Gleevec is reopened. Further, it has raised serious concerns among other patient
groups, as the Gleevec patent order set an important precedent for the examination of
crucial drug patent applications including those for AIDS treatment.

The second case filed by Novartis challenges the constitutionality of section 3(d) of
the 2005 Indian Patents Act, which was specifically introduced by the Indian
parliament as a safeguard against the misuse of the product patent regime. Novartis in

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its petition is claiming that the section is not in compliance with the TRIPS
Agreement and hence should be declared unconstitutional.

Section 3 (d) of the Indian Patent Law - an important public health safeguard
The section is aimed at preventing pharmaceutical companies from obtaining patents
on trivial improvements or new medical uses of known molecules.

When India became fully compliant with the TRIPS Agreement and introduced a
product patent regime in 2005, it coupled its law with a critical safeguard of refusing
patents on discoveries of new forms or new uses of known substances. The Indian
patent law does not consider such discoveries as inventions, unless an enhancement in
efficacy is proven, and therefore patents should not be granted. This is in accordance
with the TRIPS Agreement which does not define what an invention is and allows
WTO countries to freely “determine the appropriate method of implementing the
provisions” of TRIPS. Indeed the Doha declaration requires that the TRIPS
Agreement is implemented in such a manner that it allows for measures to ensure
access to medicines for all. Section 3 (d) is an example of such a provision.

INDIAN PATENT LAW:

Patents: are form of a certificate granted by a government. It gives the inventor/

innovator the right to exclude others from imitating , manufacturing, using or selling
the invention in question for commercial use during the specified period.

Patents can be granted for:

1. an invention (including a product)
2. an improvement in the invention ( but should not be obvious)
3. a process for producing a product
4. a concept

Administration in India

1. Under the Ministry of commerce and industry is a department of Industrial

policy and promotion. The deptt. has the Patent office which performs statuary
duties in connection with grant of patents, registration of industrial designs.
2. Controlled by the CONTROLLER GENERAL OF PATENTS

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 3. Patent offices are located at KOLKATA, MUMBAI, CHENNAI and DELHI
4. PIS: patent information system located at Nagpur provides and maintains
comprehensive collection of patent information on world wide basis. PIS can
provide patent search, patent literature services, etc.

BASIS OF PATENTIBILITY or
BASIC REQUIREMENTS OF PATENTIBILITY:

According to section 2 (j) of the India Patents (amendment) Act, 2002,

‘Invention’ means a new product or process involving an inventive step and capable
of industrial application.

There are three broad requirements for filing a patent:-

1. NOVELTY (or new)

2. UTILITY
3. INVENTIVE STEP / NON OBVIOUSNESS.

1. NOVELTY

Term ‘ novel’ implies that the invention did not exist previously i.e. it has not been
disclosed in the public through any type of publications anywhere in the world
before the filing of a patent application. It should not be already known to the
public in any form (written, oral, or through use).
An invention will be considered novel, if it does not form a part of the global state-
of- the-art and is sufficiently different from prior art.

Prior Art/ APriori Knowledge

The applicant should check that :-
- patent specifications are not known before date of filing or any erlier patent
filed.
- Not published anywhere till date of filing.
For this purpose, literature/ patent search should be undertaken

2. UTILITY

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The invention must be useful for the beings
i.e. invention must be capable of industrial application.
It is not necessary that the invented has a concrete shape or is a commercial
success. The emphasis lies on the utility of invention

3. INVENTIVE STEP AND NON OBVIOUSNESS

A patent application involves an inventive step if the proposed invention is not

obvious to a person skilled in the art i.e. skilled in the subject matter of the ptent
application.
The invention therefore, should be technically advanced hence enhancing the
science.
The invention should not be so obvious that it comes automatically to a person
skilled in the art.

Section 2 (ja) of Indian Patents Act states that ‘inventive step’ means a feature that
involves technical advance as compared to the existing knowledge or having
economic significance or both and that makes the invention not obvious to a person
skilled in the art.

NON PATENTIBILITY

According to Chapter II of the Indian patents Act, 2002, some inventions do not
fall within the meaning of this act. Such inventions, thus, cannot be patented.

In this chapter, three sections are present:

Section 3: What are not inventions.
Section 4: inventions relating to atomic energy are not patentable
Section 5: inventions where only methods or processes of manufacture are
patentable.

The Novartis drug- Gleevec was refused a patent on the basis of section 3(d) of the
Indian Patents (amendment) Act, 2005.
This section states: The mere discovery of a new form of a known substance which
does not result in the enhancement of the known efficacy of that substance or the
mere discovery of any new property or use for a known substance or of the mere

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 use of a known process, machine or apparatus unless such known process results in
a new product or employs atleast one new reactant.

Explanation: for the purposes of this clause, salts, esters, ethers, polymorphs,
metabolites, pure form, particle size, isomers, mixtures of isomers, complexes,
combinations and other derivatives of known substance shall be considered to be
the same substance, unless they differ significantly in the properties with regard to
efficacy.

NOVARTIS PERSPECTIVE

“Novartis is challenging the Indian patent law following the patent office's decision to
decline a patent for Glivec / Gleevec, our ground-breaking cancer treatment.

To be clear, our case in India is solely about safeguarding intellectual property. This is
not about patient access. With our well-regarded record in social responsibility, we are
surprised that some groups are confusing the issue.
We are contesting the rejection of the Glivec / Gleevec patent in India. Furthermore,
we are challenging the establishment of additional hurdles to patentability in India that
discourage both breakthrough and incremental innovation. Patents save lives by
stimulating innovation. With effective patent laws, companies such as Novartis can
continue to bring improvements and innovations to patients and societies.

We commend the progress India has made in advancing intellectual property rights,
but more needs to be done to align this increasingly important industrial country with
its international obligations. We call on the Indian Government to grant the patent for
Glivec / Gleevec and ensure its laws reflect international standards of patentability.

The case is generating public interest and inquiry, in particular around the potential
impact on access to medicines. We have heard these concerns and want to clarify our
point of view.

Novartis is deeply concerned that patients have access to medicines Novartis is

concerned that all patients have access to the medicines they need, as demonstrated
by our well-regarded record in social responsibility.

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Our case in India is solely about safeguarding intellectual property, not about
patient access Novartis is not challenging any provisions of the Indian patent law
that were put in place to promote access. We are challenging parts of the Indian
patent law that led to the rejection of the Glivec / Gleevec patent.

We are contesting the provision of Indian Patent Law that has led to the rejection of
the Glivec / Gleevec patent in India. Our case does not challenge provisions that
provide for access under international trade agreements, specifically the WTO’s
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the
Doha Declaration. In fact, Novartis supports the TRIPS conditions that promote
access for developing countries. We are challenging the establishment of additional
hurdles to patentability in India that discourage both breakthrough and incremental
innovation.

Protecting innovation is the best protection for patients, laying the foundation for the
massive R&D investments made by the pharmaceuticals industry that are vital to
medical progress. With effective patent laws, companies continue to bring
improvements and innovations to patients and societies. For a research-based
company such as Novartis, patents are not negotiable.

Glivec / Gleevec is recognized as one of the medical breakthroughs of the 20th

century Glivec / Gleevec is a life-saving drug for cancer and has been widely
recognized as true innovation. That Glivec / Gleevec failed the Indian test for
patentability indicates the deficiencies in India’s patent system.

The journey of Glivec / Gleevec through the patent process in India illustrates the
difficulties faced in a country in transition. The Indian patent law creates new hurdles
for pharmaceutical innovation, unjustifiably and illegally narrowing what is
patentable. The list of exclusions under challenge in our legal case includes new
chemical compounds (defined as “derivatives of known compounds”), combinations,
salts and esters of known compounds. These exclusions, among other therapeutic
areas, could impact innovation in HIV/AIDS treatments by denying patents for
combination therapies. They could also impact infectious diseases where new
antibiotics resulted from introducing new salts and esters of the known compound
penicillin.”

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 PRE-GRANT OPPOSITION

Health organisations from across the world have came forth in support of the Indian
Government in its ongoing legal case against drug manufacturer Novartis and urged
the Swiss company to drop its patent case in India.

"The treatment with Gleevac costs Rs 1,20,000 per month for a patient as compared to
Rs 8,000 per month with its generics. If Novartis wins the legal battle, it will set a
wrong precedent for other patent cases and have widespread implication on provision
of other life saving drugs," said Dr Amit Sengupta of People's Health Movement, a
health organisation working for the poor people.

"India is an important source of cheap medicines for the developing countries and if
Novartis wins the case, it may lead to drying up of a source of affordable medicines to
these countries. I urge the Indian Government and Novartis to keep people's health
above IPR concerns," said Dr Unni Karunakara of Médecins Sans Frontières, another
health organisation.

About 67 per cent of medicines produced in India are distributed to developing

countries. Further, about 50 per cent of the essential medicines distributed by
UNICEF in the developing world come from India, according to these health
organisations.

Utilising the pre-grant opposition procedure, public interest groups (like the CPAA)
and generic companies challenged the patent application on Glivec. The patent
application has been opposed mainly on five grounds.

First, that there is prior publication of the invention through patent applications filed
in many countries, including Canada and the US, in 1993, by taking priority from the
Swiss applications filed in 1992. Claims in the patent applications show that the patent
is granted not on the compound in its free state but also for the salt form of Imatinib
mesylate . In fact, the patent specification filed in the US states: ‘Owing to the close
relationship between the novel compounds in free form and in the form of their salts,
including those salts that can be used as intermediates, for example in the purification
of the novel compounds or for the identification thereof, here before and hereinafter
any reference to the free compounds should be understood as including the
corresponding salts, where appropriate and expedient.'

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Second, it was stated that there is no inventive step involved in the making of the beta
crystal form of I matinib mesylate . According to the opposition, it was stated that
specification does not disclose any technical advancement for making the beta crystal
form, and the process disclosed in the specification is too obvious to the person skilled
in the art. Hence, the patent applications fail to satisfy the inventive step.

Third, it was argued that the crystal salt form does not amount to invention, since
there are well-known methods of making salt from the free base of I matinib mesylate
. The specification describes the same methods and therefore it does not amount to an
invention.

Fourth, it was pleaded that the patent application does not claim any added
therapeutic efficacy either from the free base or from the alpha crystal form disclosed
in the earlier applications. Hence, the patent application cannot satisfy the scrutiny of
Section 3 (d) of the Patents Act.

Fifth, it was contended that at the time of filing the patent application in 1998,
Switzerland was not recognised as a convention country in India . Therefore, a patent
application from Switzerland is not eligible for the one-year priority available to
applications from convention countries. However, Novartis filed the patent application
one year from the date of the initial filing in Switzerland ; it therefore was no longer
novel.

Accepting these objections, the Patents Office rejected Novartis' patent application on
beta crystaline salt of I matinib mesylate in January 2006. Challenging the decision,
Novartis filed two writ petitions: one challenging the order of the Patents Office
refusing to grant a patent for beta crystalline salt of I matinib mesylate, and the other
challenging the constitutional validity of Section 3 (d) of the Indian Patents Act.
Subsequently, the first petition challenging the decision of the Controller of Patents
was transferred to the Intellectual Property Appellate Board (IPAB) by the Madras
High Court. This is still pending with the IPAB. The second petition is known as the
Section 3 (d) petition.

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 COURT DECISION

The court refused to examine whether Section 3 (d) violates the obligations under the
TRIPS Agreement and held that “ …this court has no jurisdiction to decide the
validity of the amended section, being in violation of Article 27 of TRIPS, we are not
going into the question (of) whether any individual is conferred with an enforceable
right under TRIPS or not. For the same reason, we also hold that we are deciding the
issue namely, whether the amended section is compatible (with) Article 27 of TRIPS
or not”.

In fact, the court urged Novartis AG (Switzerland) to resort to the disputes settlement
mechanism provided under the WTO framework. The very next day, the Federal
Councillor, Department of Economic Affairs for the Swiss Confederation, stated: “We
must have a reliable TRIPS system and the one in India is good enough. The Swiss
government never gets involved in any judicial pronouncements of other countries.”
This effectively ruled out the possibility of approaching the WTO disputes settlement
body.

On the issue of Section 3 (d) being violative of right to equality owing to the
arbitrariness and vagueness of the phraseology, the court held that “… in sum and
substance what the amended section with the explanation prescribes is the test to
decide whether the discovery is an invention or not is that the patent applicant should
show the discovery has resulted in the enhancement of the known efficacy of that
substance and if the discovery is nothing other than the derivative of a known
substance, then, it must be shown that the properties in the derivatives differ
significantly with regard to efficacy”.

The court also clarified the meaning of the term ‘efficacy'. According to the court “…
the meaning of the word efficacy and therapeutic effect… what the patent applicant is
expected to show is, how effective the new discovery made would be in healing a
disease/having a good effect on the body ”. Thus the court equated the meaning of
efficacy with a therapeutic effect on the body. While doing so, the court also accepted
the argument of the respondents that “… petitioner is not a novice to the
pharmacology field but it being pharmaceutical giant in the whole of the world,
cannot plead that they don't know what is meant by enhancement of a known efficacy
and they cannot show the derivatives differ significantly in properties with regard to
efficacy ”.

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Hence it was held that a patent applicant has to show enhanced therapeutic effect
in order to obtain a patent for a new form of a known substance or for its
derivatives. Therefore the court held that Section 3 (d) is not violative of Article
14 of the Constitution of India.

CONCLUSION

The judgment was welcomed globally by treatment activists and public interest
groups. While disagreeing with the judgment, Novartis stated that it may not appeal to
the Supreme Court of India, whose judgment is the law of the land. However,
Novartis warned that the court ruling would discourage much required investments in
drug innovation. Along the same lines, the US-India Business Council (USIBC)
demanded changes in the Indian law to encourage investments. The empirical
evidence suggests there is no need to take these threats seriously.

As far as the implication of the judgment is concerned, it suggests that the meaning of
the term ‘efficacy' should be judged in light of the therapeutic effect of the new form
on the body. Hence, the burden of proof is on the applicant to show the enhanced
efficacy. However, the application of therapeutic effect as a benchmark for efficacy
does not shut out the possibility of evergreening of patents. For instance, a
combination of two drugs may offer substantial improvement in therapeutic effect and
may be held patentable. Further, this judgment is still a high court decision, and is yet
to gain the status of the law of the land. Nevertheless, it will have a persuasive effect
as far as high courts are concerned.

The present judgment only upholds the constitutional validity of Section 3 (d) 1.
However, the real success of this judgment can be measured only when the Patents
Office and the courts apply it on a case-by-case basis.

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