The vicissitudes of Indian patent law

The-Vicissitudes
From bright sun to dark clouds in no time at all, but Pravin Anand says there is a silver lining.

Ever since 2011, so for a period of nearly two years, the weakest intellectual property legislation in relation to the world of chemistry (patent law in relation to pharmaceuticals and chemical substances) has showed a renewed promise.

From 1972 when the Patents Act, 1970 came into force to 2005, there was no product patent regime for pharmaceutical or chemistry patents in India. Innovator drug companies or those in agro-chemicals suffered. On account of TRIPS the law changed and product patent protection was introduced with effect from 1st February 2005.

The question was: “Would the regime really strengthen or was it going to be an eye wash?”

To answer this question, one needs to examine:-

a) The number and quality of patents granted for pharmaceuticals and agro-chemicals post 2005;
b)The cumulative effect of pre and post grant oppositions in preventing a patent from being finally granted;
c) The success of infringement actions and the history of counter-claims and revocation actions.

This article will examine the third of these aspects.

A bright sun

Three features have emerged in intellectual property litigation, namely:

1) In appropriate cases, ex-parte injunctions have been granted provided the defendant had not yet launched his drug product. The action was filed on the basis of information obtained from the regulatory authorities regarding bio-availability studies, manufacturing licenses etc, leading to an apprehension that the drug product is about to be launched. Hence, one important tip for innovator companies was to move rapidly to the courts rather than wait for the cause of action to cook into a mature broth;
2) The second was the new time revolution that took place in Indian intellectual property. These were the fast track orders, sometimes referred to as “four-months” orders which:

• laid down a tight time schedule;
• directed the filing of evidence on affidavit;
• appointed a local commissioner such as a retired judge to record evidence, in other words cross-examination;
• the use of the High Court Executive Centre; projectors; video equipments; external secretarial services etc, ensuring a rapid disposal of matters.

It is now possible to conclude a matter from beginning to end within a timeframe of one year; 3) The third major change was a “remedies” revolution which came about. Amongst the various remedies like Anton Piller orders etc, punitive and exemplary damages apart from compensatory damages were also granted by the Delhi High Court in a series of nearly 150 decisions. A reasonable percentage of these damages are actually collected (say 30% as of now). The result of these healthy changes was that an infringement action would be quick and the Plaintiff could hope to get an interim injunction during the pendency of the action, as well as damages at the end. Obviously, the speed would affect the cost and rather than lasting for years and years, if the action could be disposed of early, the cost would be substantially curtailed.

The dark clouds

For the last six months or so, dark clouds have appeared on the horizon and started to interfere with the positive changes.

The IP world was waiting for the first decision under the 1970 Patents Act after recordal of evidence. Roche v Cipla was decided on 7 September, 2012 and the suit and the counter-claim were both dismissed. This was most disappointing to innovators globally.

The Novartis case commenced arguments in the Supreme Court and in that case the government took an anti-intellectual property view point. The arguments on anticipation, obviousness and Section 3(d) of the Patents Act even questioned the need for patent law in the pharmaceutical world. There was a lot of blaming, and of course challenging every motive, of multinational corporations, totally losing sight of the need to encourage research and innovation.

Right in the middle of Novartis, there was a shock as the SUTENT patent of Pfizer was revoked by the Patent Office in a post grant opposition.

Soon thereafter, the IPAB revoked the Pegasys patent of Roche. The Enercon patents which had been revoked by the IPAB earlier were the subject of writs before the Madras High Court and the arguments demonstrated that tribunals and courts in India were not clear on whether to follow the US standards (the KSR line of cases) or the British standard (the Wind Surfing and Pozzolli line of cases) or their own unique standard (the standard laid down in Bishwanath Prasad Radhey Shyam v Hindustan Metal Industries).

Pricing issues continued to dominate policy determination and the press, including blogs, continued to hit out at the research-based companies.

The Delhi High Court, which is the premium High Court hearing 70% of intellectual property cases, discussed two reforms, namely:-

• the need to raise the jurisdictional value from Indian rupees two million to Rupees twenty million; and
• an increase in the court fees payable at the time of instituting a law suit by nearly 4 times.

If these amendments come into effect then for every new lawsuit, instead of court fees of about Indian rupees twenty thousand, fees of rupees eight hundred thousand would have to be paid. This would effectively decimate the intellectual property practice before the Delhi High Court.

The silver lining

While the overall position still looks dark and gloomy there is, however, a silver lining at a subtle level.

First and foremost, the Novartis case in the Supreme Court, which after 31 days of arguments (through nearly 130 hours), concluded on a sentimental note with Justice Alam (sitting with Justice Ranjana Desai), reacting to the gratitude expressed by the lawyers. It was like a big family function having come to an end.

The importance given by the Supreme Court to the case in terms of time and patience, in which the judges heard nearly 10 set of lawyers representing 8 parties, was the upper water mark of patent litigation in India.

The other silver lining was the fact that in Roche v Cipla, Hon’ble Mr. Justice Manmohan Singh of the Delhi High Court delivered the judgment of 275 pages of, which the first 148 pages confirmed the validity of the patent for Erlotinib Hydrochloride, in other words Tarceva, a drug for non-small cell lung cancer and pancreatic cancer. Although the issue of infringement was decided against the Plaintiff, the patent itself was upheld as being valid.

The court found a technical violation of Section 8 of the Act but exercised discretion, holding that the violation was not of such a nature so as to invalidate the patent. The decision is in appeal before a Division Bench of the Delhi High Court which has fixed the case for dates in January 2013 to finally dispose of the case.

The third matter is the Pfizer case, where the SUNITINIB patent was cancelled by the Patent Office in a post grant opposition on the 24 September 2012. The patent owner filed a writ before the Delhi High Court, primarily on the grounds that a copy of the recommendations made by the Opposition Board to the Controller of Patents was not supplied to the patent owner even though the same had been relied upon by the Patent Office while revoking the patent. Proceedings in this matter took place before the Single Judge and then the Division Bench of the High Court, as also before the Supreme Court. Finally, two months later (on the 27 November 2012) India’s highest court, the Supreme Court, restored the patent on the register and set aside the Controller’s order. The Court held that the order had been passed in violation of natural justice, in as much as a copy of the Opposition Board had not been supplied to the patent owner.

The arguments that the patent owner was not entitled to a copy – being a foreign national (on the basis of certain limitations of the Right to Information Act) or that the matter was sub judice and hence the Opposition Board’s recommendations could not be supplied – were not considered valid and the court held that even the detailed procedure prescribed under the Patents Act would have to accommodate the principles of natural justice. It was argued that the Intellectual Property Appellate Board provides an alternate remedy and the said Board has the powers to grant interim orders as well. For this reason, the opponent argued that a writ does not lie and the patentees ought to have filed an appeal. It was further argued that in England ….click here to subscribe and read the whole article

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Pravin Anand – Anand & Anand, India

Pravin Anand, managing partner of Anand and Anand, completed his law studies in New Delhi in 1979 and since then has been practising as an advocate and a patent and trademark attorney. He has been a counsel in several landmark IP cases involving the first Anton Piller Order (HMV cases); the first Mareva Injunction Order (Philips case); the first Norwich Pharmacal Order (Hollywood Cigarettes case); right of privacy (Bandit Queen case); dilution in trademarks (Glenfiddich case); recognition of market survey evidence by judiciary (Time warner case); domain names (Yahoo! Case); punitive and exemplary damages (Time magazine) phishing (NASSCOM); the compulsory licensing cases filed against Pfizer and Roche under the Doha Declaration.