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TABLE OF CONTENTS

1. Brief Facts....................................................................................03
(Before Madras High Court )
2. Issues...........................................................................................04
3. Arguments.....................................................................................04
4. Before Supreme court.................................................................07
5. Conclusion ......................................................................................12
6. Bibliography ...................................................................................14

Brief Facts:In 1993, Novartis filed patents worldwide for the active molecule Imatinib . Novartis
did not patent Imatinib in India because the 1970 Act did not allow patenting of
pharmaceutical products at that time. After Indias entry into the WTO in 1995, Novartis filed
a mailbox patent application in the Madras Patent Office for Imatinib Mesylate , a beta
crystalline form of the free base Imatinib . In 2002, Novartis started its Gleevec donation
program in India to provide Gleevec to patients who were unable to afford the medicine, but
halted that program after Indian drug manufacturers began to produce a generic version of
Gleevec. In2003, the Patent Office granted Novartis Exclusive Marketing Rights (EMR) in
India, which allowed Novartis to enjoin generic Gleevec manufacturers and raise the price of
Gleevec almost ten-fold.
In January 2006, the Madras Patent Office refused to grant Novartis a patent for
Imatinib mesylate. The first major ground for rejection was that because Imatinib mesylate
was a salt form of the free base imatinib, and Novartis claimed all pharmaceutical salt forms
of imatinib in its 1993 patents, the Indian application therefore lacked novelty and inventiveness. The major ground for rejection was based on Section3(d) of the 2005 Amendment,
which required that new forms of a known substance could only be patented as a product if
they demonstrated enhanced efficacy. Although Novartis disclosed information that
imatinib mesylate had a 30% increase in bioavailability (the percentage of the drug absorbed
into the bloodstream) as compared with imatinib, the Patent Office found this insufficient to
meet the enhanced efficacy requirement of Section 3(d).
In May 2006, Novartis filed two writ petitions before the Madras High Court under
Article 226 of the Indian Constitution to declare that section 3(d) of the Patents Act, 1970
as substituted by the Patents (Amendment)Act, 2005 is non-complaint with the TRIPS
Agreement and / or is unconstitutional being vague, arbitrary and violative of Article 14
of the Constitution of India and consequentially to direct the Controller General of Patents &
Designs to allow the Patent Application. The respondents to the suit were the Indian
Government, the Patent Office, several Indian generic drug manufacturers and an Indian
public interest group. The Indian generic drug manufacturers were Natco Pharma, Cipla,
Hetro Drugs, Ranbaxy, Indian Pharmaceutical Alliance and Sun Pharmaceuticals. The Indian
public Interest group was Cancer Patient Aid Association. The case was bifurcated between
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the Madras High Court and the Intellectual Property Appellate Board (IPAB). The challenges
on TRIPS compliance and constitutionality of Section 3(d) were heard by the Madras High
Court.

Issues:

Whether courts in India have jurisdiction to review if Section 3(d) of the 2005
Amendment is compliant with Article 27 of TRIPS, and alternatively, whether courts
in India can grant declaratory relief that Section 3(d) is not compliant with TRIPS and
therefore violative of Article 14 of the Constitution of India.

If the courts do have jurisdiction, whether Section 3(d) complies with Article 27 of
TRIPS.

Whether Section 3(d) violates Article 14 of the Constitution of India because it is

vague, arbitrary and confers uncontrolled discretion to the Patent Controller.

Arguments: Whether courts in India have jurisdiction to review if Section 3(d) of

the 2005 Amendment is compliant with Article 27 of TRIPS and
alternatively, whether courts in India can grant declaratory relief that
Section 3(d) is not compliant with TRIPS and therefore violative of
Article 14 of the Constitution of India?
The Madras High Court held that it did not have jurisdiction to decide a case
concerning the compliance of a domestic Indian law with an international treaty.
In support of its arguments, Novartis relied on a case from the United Kingdom,
Equal Opportunities Commission & Another v. Secretary of State for Employment,
in which the court held that British courts had jurisdiction to decide a case
concerning the compatibility of a British law with the European Community Law.
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The Madras High Court distinguished the facts of the Novartis dispute with those
under Equal Opportunities Commission, because the European Community Law
had been domesticated as the domestic law of England through the European
Communities Act, whereas the Indian government had not domesticated TRIPS.
Furthermore, the Madras High Court asserted that the nature of an international
treaty is contractual, and accordingly contains provisions for dispute settlement.
Since Article 64 of TRIPS expressly provides that disputes should be taken to the
Dispute Settlement Body of the WTO, the Madras High Court held that Novartis
should seek to enforce TRIPS though that mechanism and not an Indian court and
thus there is no violation of Article 14 of the Constitution of India.
Concerning the alternative argument of granting of declaratory relief, the Madras
High Court asserted that courts have broad discretionary power to grant
declaratory relief under Article 32 of the Constitution of India. The court held,
however, that declaratory relief should not be given where it would serve no
useful purpose to the petitioner. Because Novartis could not compel the Indian
parliament to enact or amend a law even if Novartis were to get a declaration that
Section 3(d) was noncompliant with TRIPS, the court held that Novartis was not
entitled to declaratory relief.

If the courts do have jurisdiction, whether Section 3(d) complies with

Article 27 of TRIPS.
Because the Madras High Court held that it did not have jurisdiction to decide
whether a domestic law violated an international treaty, it refused to decide
whether Section 3(d) is compliant with TRIPS. Nevertheless, the court opined
that TRIPS allows flexibility for the individual needs and situations of every
member country. Incomplying with the TRIPS obligations, India has a
constitutional duty to provide good healthcare to its citizens, including giving
them access to affordable drugs. Thus, the court opined that the Union of India is
right by taking into account the factual aspects prevailing in India and validity of
Section 3(d) should be analysed with consideration of its objectives of preventing
ever-greening and making generic drugs available in the market.
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 Whether Section 3(d) violates Article 14 of the Constitution of India

because it is vague, arbitrary and confers uncontrolled discretion to the
Patent Controller.
The court held that Section 3(d) did not violate Article 14 of the Constitution of
India and was not vague or arbitrary, and did not confer uncontrolled discretion to
the Patent Controller. The court rejected Novartiss arguments that Section 3(d),
which denies patents to new uses of known substances unless the patentee can
show enhancement of the known efficacy or differing significantly in
properties with regard to efficacy, was ambiguous and unclear. While these two
phrases are not explicitly de- fined, the court held that it was common practice for
the legislature to use general language and leave the courts to interpret the
language based on the context and facts of each case. Moreover, the court held
that Novartis was a sophisticated party who had the technological expertise to
comprehend the enhanced efficacy requirement.
The court also rejected Novartiss argument that Section 3(d) was arbitrarily
enacted. Novartis argued that the actual amended Section 3(d) was not the same as
the one originally proposed to the Parliament, which made no mention of an
efficacy requirement, and was substituted in the current form of Section 3(d)
without explanation. The court held that Section 3(d) was not arbitrarily enacted,
referring to the parliamentary de- bates leading to the 2005 Amendment. The
debates revealed that there was widespread fear that the earlier proposed
amendments would deny Indian citizens of access to affordable medicines and
open up the possibility of ever-greening. Thus, the court found that the
legislature did not arbitrarily enact Section 3(d) in its final form.
Finally, the court held that Section 3(d) did not confer unlimited discretionary
power to the Patent Controller and was not discriminatory. The court emphasized
that discretionary power did not necessarily mean that it would be discriminatory.
The Patent Controllers discretionary power under Section 3(d) in deciding
whether a known substance has enhanced efficacy did not automatically lead to an
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arbitrary exercise of discretionary power or discrimination against Novartis.

Furthermore, the court opined that the judiciary should be more deferential to the
legislature in the field of economic regulation. Because the Patent Act was designed to encourage the economic interests of India, the courts should be
especially cautious before overruling the legislature.

Decision of Madras High Court:Honble Madras High Court dismissed both the writ petitions under Article 226 of the
Constitution of India concerning the writ of declaration to declare that section 3(d) of the
Patents Act, 1970 as substituted by the Patents (Amendment)Act, 2005 is non-complaint
with the TRIPS Agreement

and / or is unconstitutional being

vague, arbitrary and

violative of Article 14 of the Constitution of India and consequentially to direct the Controller
General of Patents & Designs to allow the Patent Application. No order as to costs was given
to Novartis A.G.

Arguments before the Supreme Court

Novartis
The legal team of Novartis was led by ex-Solicitor General of India Gopal Subramaniam and
senior advocate T. R. Andhyarujina. Novartis had attempted to patent imatinib mesylate in
beta crystalline form (rather than imatinib or imatinib mesylate), thus they sought to prevent
extant literature on imatinib or imatininb mesylate from being considered as prior art. The
thrust of the arguments by Novartis' legal team was two-fold:
firstly, that the Zimmerman patents and the journal articles published by Zimmerman et
al. do not constitute prior art for the beta crystalline form as it is only one polymorph of
imatinib mesylate, thereby providing the required novelty and inventive step;
and secondly, that imatinib mesylate in beta crystalline form has enhanced efficacy over
imatinib or imatinib mesylate to pass the test of section 3(d).

To prove novelty and inventive step it was argued that the Zimmermann patent did not teach
or suggest to a person skilled in the art to select the beta crystalline form in preference to
other compounds of which examples were given in the Zimmermann patent. Further, even if
the beta crystalline form was selected, the Zimmermann patent did not teach a person to how
to prepare that particular polymorph of the salt. Having arrived at the beta crystal form of
methanesulfonic acid addition salt (mesylate salt) of imatinib, Novartis contended that the
inventors had to further research to be able to ensure that particular salt form of imatinib was
suitable for administration in a solid oral dosage form. Hence, the coming into being of the
beta crystalline form of imatinib mesylate from the free base of imatinib was the result of an
invention that involved technical advance as compared to the existing knowledge and brought
into existence a new substance. Research was required to define and optimise the process
parameters to selectively prepare the beta crystalline form of imatinib mesylate. As the
Zimmermann patent contains no mention of polymorphism or crystalline structure, the
relevant crystalline form that was synthesized needed to be invented. There was no way of
predicting that the beta crystalline form of imatinib mesylate would possess the
characteristics that would make it orally administrable to humans without going through the
inventive steps.
To prove that the beta crystalline form enhanced efficacy over other polymorphs, it was
stated that beta crystalline form has (i) more beneficial flow properties, (ii) better
thermodynamic stability, (iii) lower hygroscopicity, and (iv) increased bioavailability.

Respondents
There were seven named respondents who were represented before the court along with two
Intervenor/Amicus. The respondents were spearheaded by Additional Solicitor General of
India Paras Kuhad.
Various arguments were brought before the court but primarily focussed on proving imatinib
mesylate in beta crystalline form is neither novel nor is it non-obvious due to publications
about imatinib mesylate in Cancer Research and Nature in 1996, disclosures in Zimmerman
patents, disclosures to FDA and finally that efficacy as referred to in section 3(d) should be
interpreted as therapeutic efficacy and not merely a physical efficacy.
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The respondents quoted extensively from Doha Declaration, excerpts from parliamentary
debates, petitions from NGOs, WHO, etc. to highlight the public policy dimension of
arguments in regards to easy affordability and availability of life saving drugs.\

Supreme Court Decision

Supreme Court decided the matter de novo looking into matters of both fact and law.
The court first analysed the question of prior art by looking into Zimmerman patent and the
related academic publications. It was clear from the Zimmerman patent that imatinib
mesylate itself was not new and did not qualify the test of invention as laid down in section
2(1)(j) and section 2(1)(ja) of the Patents Act, 1970. The court then examined the beta
crystalline form of imatinib mesylate and wrote that it, "for the sake of argument, may be
accepted to be new, in the sense that it is not known from the Zimmermann patent. (Whether
or not it involves an inventive step is another matter, and there is no need to go into that
aspect of the matter now). Now, the beta crystalline form of Imatinib Mesylate being a
pharmaceutical substance and moreover a polymorph of Imatinib Mesylate, it directly runs
into section 3(d) of the Act with the explanation appended to the provision".
In applying 3(d) of the Act, the Court decided to interpret "efficacy" as "therapeutic efficacy"
because the subject matter of the patent is a compound of medicinal value. Court
acknowledged that physical efficacy of imatinib mesylate in beta crystalline form is enhanced
in comparison to other forms and that the beta crystalline form of imatinib mesylate has 30
per cent increased bioavailability as compared to imatinib in free base form. However as no
material had been offered to indicate that the beta crystalline form of imatinib mesylate will
produce an enhanced or superior efficacy (therapeutic) on molecular basis than what could be
achieved with imatinib free base in vivo animal model, the court opined that the beta
crystalline form of imatinib mesylate, does not qualify the test of Section 3(d).
Thus in effect, Indian Supreme Court upheld the view that under Indian Patent Act for grant
of pharmaceutical patents apart from proving the traditional tests of novelty, inventive step
and application, there is a new test of enhanced therapeutic efficacy for claims that cover
incremental changes to existing drugs.
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The Court took pains to point out that the subject patent application was filed during a time of
transition in Indian patent law, especially with regard to striking Section 5, which had barred
product patents and adding section 3(d), for which there was no case law yet. The Court also
took care to state the decision was intended to be narrow: "We have held that the subject
product, the beta crystalline form of Imatinib Mesylate, does not qualify the test of Section
3(d) of the Act but that is not to say that Section 3(d) bars patent protection for all
incremental inventions of chemical and pharmaceutical substances. It will be a grave mistake
to read this judgment to mean that section 3(d) was amended with the intent to undo the
fundamental change brought in the patent regime by deletion of section 5 from the Parent
Act. That is not said in this judgment."

Reception
The decision received extensive coverage from Indian and international media.
It reignited debates on balancing public good with monopolistic pricing and innovation with
affordability.
Several commenters, including Novartis, noted that a decision either way would not have
affected the ability of generics companies in India to continue selling generic Gleevec. The
new patent law India adopted in 2005 contains a grandfather clause that allows generic copies
of drugs launched before 2005, which includes Gleevec, to continue to be sold, albeit with
payment of a reasonable royalty to Novartis. Other commenters noted that the case was
unique with respect to its timing and the importance of the drug, and that large
generalizations should not be taken from it. "As a case study, Glivec is peculiar and unlikely
to be representative going forward. Had it been invented a few years later (or TRIPS
implemented a few years earlier), Glivec likely would be patented in India, even under 3(d)
standards. Newly discovered compounds are likely to receive basic patents and to be less
vulnerable to 3(d) rejections." Prashant Reddy, author of the Spicy IP blog and postgraduate
student at Stanford University Law School, was quoted in Nature Drug Discovery as saying:
It was a very limited ruling in most aspects and very fact-specific. Although the Court has
interpreted efficacy to mean only therapeutic efficacy, it has left the exact scope of
therapeutic efficacy to be defined in future cases....Most importantly, the Court made the
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nuanced distinction between the rent-seeking practice of evergreening and the beneficial
practice of incremental innovation, and has clarified that Indian patent law forbids only the
former."
There were however strong negative and positive reactions.
Support
The judgement garnered widespread support from international organisations and advocacy
groups like Mdecins Sans Frontires, WHO, etc. who welcomed the decision against
evergreening of pharmaceutical patents.
Most news item contrasted the huge price difference between patented Gleevec of Novartis
and the generic versions of Cipla and other generic companies. Some commentators have
stated that this strict patent requirement would actually enhance innovation as the
pharmaceutical companies would have to invest more in R&D to come up with new cures
rather than repackage known compounds. Others have suggested that exclusions under
section 3(d) present the hard cases that lie at the margins of the patent system due to the
eternally unsettled nature of the definition of the term 'invention'. Several patent law experts
have also pointed out that stringent conditions for patentability are followed in many
jurisdictions around the world, and there is no reason India should not follow the same
standards, given the extent of poverty and lack of availability of affordable medicines in the
country.

Opposition
Ranjit Shahani, vice-chairman and managing director of Novartis India Ltd is quoted as
saying "This ruling is a setback for patients that will hinder medical progress for diseases
without effective treatment options." He also said that companies like Novartis would invest
less money in research in India as a result of the ruling. Novartis also emphasized that it
continues to be committed to access to its drugs; according to Novartis, by 2013, "95% of
patients in Indiaroughly 16,000 peoplereceive Glivec free of charge... and it has
provided more than $1.7 billion worth of Glivec to Indian patients in its support program
since it was started...." The New York Times quoted Chip Davis, the executive vice president
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of advocacy at the Pharmaceutical Research and Manufacturers of America, the industry

trade group: It really is in our view another example of what I would characterize as a
deteriorating innovation environment in India. The Indian government and the Indian courts
have come down on the side that doesnt recognize the value of innovation and the value of
strong intellectual property, which we believe is essential.

Conclusion :The Indian Patents (Amendment) Act, 2005, defines what a new invention as any
invention or technology which has not been anticipated by publication in any document or
used in the country or elsewhere in the world before the date of filing of patent application
with complete specification, i.e. the subject matter has not fallen in public domain or that it
does not form part of the state of the art in Section 2 (1) (l).
According to Section 2 (1) (ja) of the above act, inventive step means a feature of an
invention 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. Thus, the definition of invention and inventive step makes it clear that any existing
knowledge or thing cannot be patented. Therefore, discoveries are excluded from patenting,
subject to Section 3, unlike the practice of granting patents for a discovery in the United
States.

Section 3(d) stipulates the conditions to be fulfilled for patenting of an invention. The
efficacy criterion is discussed in the section as :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 new use for a known substance or of the mere use of a known process,
machine or apparatus unless such known process results in a new product or employs at
least 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 properties with regard to efficacy.
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Thus, Section 3 (d) prohibits patents of derivatives of known substances, unless such
derivatives display enhanced efficacy.The explanation following the rule clarifies which
substances will be considered derivatives of known substances and further requires that
efficacy must differ significantly.
However, Indias patent law needs to be clear and reliable in order to effectuate the
purpose of advancing innovation. The 2005 Amendment and Section 3(d) introduced
considerable uncertainty into Indian patent law. Section 3(d)s limitation on patenting
derivatives of known substances stems the problem of uncertainty about how the Indian
patent office and judiciary will interpret enhanced efficacy. The2005 Amendment does not
define efficacy. Nor is it defined in the Indian Manual of Patent Practice and Procedure
(MPPP).

In the present Novartis AG case, there was 30% bioavailability enhancement

compared to the earlier Alpha crystal form which was considered not sufficient by the Patent
Office to grant a patent. While the Madras High Court did not directly address the issue of
what kind of data would establish enhanced efficacy the court relied on a medical dictionary
definition to opine that efficacy means therapeutic efficacy.

On a closer look, Section 3(d) not only permits patenting of

pharmaceutical products, but also new forms of known substances, provided there is a higher
standard of efficacy of the new product. Neither the Act nor the rules and international
practice gives a clear definition of efficacy. It can be construed that the intention of the
legislature, when they re-drafted Section 3(d) in 2005, was to prevent pharmaceutical
companies from ever-greening their patents by re-combining known substances. The High
Court also suggested that efficacy can be defined as the ability of a drug to produce a
desired therapeutic effect but it did not provide any guidance on how enhancements might
be quantified, such as in terms of fewer side-effects or lower dosages. Thus, the concept of
efficacy of a new form / product of known substances still remains a vague concept in
Indian Patent Law.

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