Novartis V. Union of India (2013) 6 SCC 1.pptx

Case analysis on Novartis V. Union of India (2013) 6 SCC 1

1. Novartis V. Union of India (2013) 6 SCC 1 Nancy Garg

2. BASIC DETAILS OF THE CASE Court: Supreme Court of India Full case name: Novartis v. Union of India & Others Decided on 01 April, 2012 Citation(s): Civil Appeal No. 2706-2716 of 2013 Case opinions: Upheld the rejection of the patent application (1602/MAS/1998) filed by Novartis AG for Glivec in 1998 before the Indian Patent Office Judges sitting: Aftab Alam , Ranjana Prakash Desai Decision by Mr. Justice Aftab Alam  

3. Section 3(d) Efficacy Therapeutic efficacy Patentable subject matter Patentability Invention, novelty, inventive step Incremental innovation

4. INTRODUCTION India has been at the forefront of creating an alternative patent law model that has since been emulated by many developing countries. The Patent System in India is governed by the Indian Patent Act, 1970 which has seen several amendments and the latest amendment was in 2005. Grant of a patent provides exclusive rights to the patent holder to make, practice, sell, license the patented invention for a period of 20 years. On 1st April, 2013, the Supreme Court passed a landmark judgment in Novartis AG v Union of India, where Novartis challenged the rejection of its patent application Beta Crystalline form of “Imatinib mesylate ”. The Supreme Court rejected the challenge as the drug did not produce any enhanced or superior therapeutic efficacy and on the grounds the there was no innovative step involved. The other major reason for the rejected of the challenge made by Novartis was to prevent the evergreening of already patented drugs.

5. Efficacy and section 3(d) of the Indian Patent Act Section 3(d) of the Indian Patent Act states that “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.” Section 3(d) of the Indian Patent Act, gives important to the term ‘efficacy’, however, does not elaborate it much. According to the Oxford English Dictionary , ‘efficacy’ can be defined as the potential of a drug to produce desired therapeutic effect. The Madras High Court observed that ‘efficacy’ with respect to pharmaceutical product defined it as effectiveness of a newly discovered drug in relieving from the disease and producing the desired effect on the patient body . The court observed that applicant seeking patent for the novel drug had to bring out difference between the present drug and the patented drug about its therapeutic efficacy.

6. Novartis International AG is swiss MNC based in Basel, Switzerland is 3 rd largest beneficiary of registered patents in India. The case of Novartis Anticancer drug Glivec in India

7. BACKGROUND - FACTUAL Novartis, the Swiss Company (Appellants) had filed in Chennai Patent Office a patent application for Imatinib Mesylate in the beta crystalline form on 17 th  July 1998 claiming July 18, 1997, as the priority date from Switzerland. At that time there was a different patent regime in India and therefore the appellants had made a mailbox application for which they got a grant of Exclusive Marketing Right on 10 th  November 2003 for a period of 5 years, and grant of a patent would be considered later. When the grant of the patent was considered after January 1, 2005, the patent application attracted 5 oppositions under Section 25 (1) on the grounds of not being novel, being obvious, and also being barred under Section 3(d). The Assistant Controller of Patents and Designs before whom all the opposition matters were heard all the parties and rejected the appellant’s patent application on the ground that the claimed invention was already foreseen by an earlier publication, the Zimmermann patent; and therefore the invention was obstructed by the section 3(d) of the Act.

8. BACKGROUND - PROCEDURAL The Appellants challenged the orders of Assistant the Controller by filing writ petitions in the High Court of Madras. Two other writ petitions were also filed by the Appellants seeking that Section 3(d) of the Act is unconstitutional as it violates Article 14 of the Indian Constitution and that it does not comply with “TRIPS”. After the constitution of Intellectual Property Appellate Board, the five writ petitions that challenged the orders of the Assistant Controller were moved from Madras HC to IPAB. The two other writ petitions which challenged Section 3 (d) were heard in the HC and subsequently dismissed by the judgment delivered on 6 th  August 2007. It was observed by the HC that the main purpose of Section 3 (d) was to avert evergreening ; to give easy access to residents of the nation to various life-saving medications and to fulfil their commitment of providing quality healthcare service to the citizens of the country. This matter was not appealed any further. The other appeals before IPAB were heard and dismissed on 26 th  June 2009. The findings of the IPAB were opposed to that of the Asst. Controllers’ on the aspects of anticipation and non-obviousness, but it concurred that the patentability of the subject was affected by Section 3 (d) of the Act. The IPAB noted that India has a higher standard of the requirement of inventive steps by establishing Section 3(d) of the Act. The IPAB also made observations in relation to the high pricing of the drug. Hence, The IPAB refused the product patent to the beta crystal form of Imatinib Mesylate. The decision of the IPAB was challenged by the appellants before the Supreme Court in the current matter.

9. August 2009: Novartis approached the Supreme Court of India. 2005: India introduced the Indian Patent Act preventing frivolous patents. January 2006: The Patent Controller in Chennai denied Novartis a patent. May 2006: Novartis challenged the Indian government and four other companies in the Madras High Court. August 2007: The Madras High Court ruled against Novartis's case. June 2009: The Intellectual Property Appellate Board rejected a fresh appeal. 1997: Novartis filed a patent application in India for its drug Glivec .

10. LEGAL ISSUES RAISED Whether the new invention ‘Imatinib Mesylate’ can be qualified to be a new patentable product? Whether the new product included any advancement in technology or pre-existing knowledge so that it comes under the category of non-obviousness? Whether the provisions of Section 3 (d) will be violated if the Patent is granted to the new invention? Whether Section 3 (d) is in violation of the provisions under TRIPS and also Section 14 of the Constitution of India?

11. ARGUMENTS ON BEHALF OF THE PETITIONERS Novartis contented that there is no clarity as to what constitutes “enhancement of efficacy” and “significant enhancement of efficacy” as required; therefore, the law is vague and led itself to arbitrary decision. Novartis challenged the IPAB’s finding on Section 3(d). They argued that this provision related to “discoveries” doesn’t apply to its patent application which satisfies the criteria of novelty, inventive step and industrial application and is an “invention” under  Section 2(1) (j)  of the Patents Act, 1970. Furthermore, they argued that the IPAB’s holding paid no attention to the fact that they held the beta-crystalline is an invention and passed the novelty test and then they applied Section 3(d), relating to discoveries and refused to grant a patent to Novartis invention. Disputing the IPAB’s holding that the term “efficacy” means therapeutic efficacy, they argued that one term in the statute could not have two different meanings. It was only the beta crystalline form of imatinib mesylate that had therapeutic effect unlike the original forms. They pleaded that improved biodiversity and thermodynamic stability are properties that improved efficacy and the beta crystalline form of imatinib mesylate manifested both these properties. Section 3(d) could only be applied for substances already in existence and urged that such efficacy had never been established for imatinib , it is not possible to demonstrate enhanced efficacy of the beta-crystalline form of imatinib mesylate .

12. ARGUMENTS ON BEHALF OF THE RESPONDENTS Various arguments were brought before the Apex Court but the focus was on proving that: Beta crystalline form of imatinib mesylate is neither new (novel) nor is it non-obvious due to publications about imatinib mesylate in Cancer Research and Nature in 1996, and that the efficacy as referred in the section 3(d) should be interpreted as therapeutic efficacy and not just physical efficacy. The respondents also quoted extensively from the  Doha Declaration,  they took excerpts from parliamentary debates, various petitions by NGOs, WHO, etc. to highlight the public policy dimension of the arguments relating to easy affordability and availability of life-saving drugs.

13. LAW APPLIED Section 2 (1) (j) of the Patent Act, 1970 This provision defines the expression ‘invention’ as “a new product or process involving a new product or process involving an inventive step and capable of industrial application.” Section 2 (1) ( ja ) of the Patent Act, 1970 This provision defines “inventive step” as “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.” Section 3 (d) of the Patent Act, 1970 “ 3. What are not inventions – The following are not inventions within the meaning of this Act- (d) 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 regard to efficacy.”

14. POINTS OF SIGNIFICANCE Provisions like Section 3(d) of the Indian Patens Act provide an operational tool for judges to prevent the patenting of incremental changes of existing products. Efficacy may be used as a criterion for examining the notion of “invention”/”patentable subject matter”. Alternatively, it may also be used in the context of the novelty or inventive step examination. In the absence of an express provision comparable to Section 3(d) of the Indian Patents Act, judges may nevertheless have recourse to the criterion of efficacy. In the case of product derivatives, similar chemical structures of the original and the derivative product will usually set a presumption of obviousness, which may only be rebutted by showing surprising effects of the derivative such as enhanced efficacy.

15. POINTS OF SIGNIFICANCE The interpretation of the term “efficacy” will be decisive in this context. TRIPS leaves Members free to define efficacy in a broader sense (including non-therapeutic/physical efficacy, such as improved methods of drug administration) or in a narrow sense, as applied by the Indian Supreme Court (limiting the definition to therapeutic efficacy). Many drug derivatives will pass a broad test of physical efficacy, while failing a test of therapeutic efficacy . Improved bioavailability does not necessarily result in improved therapeutic efficacy. If the claims of an existing patent are interpreted widely to extend the scope of the patent to the greatest possible extent (e.g. in infringement litigation), this wide scope may be used by competitors to challenge the patentability of follow-on patents on derivatives of the patented product.

16. EVERGREENING “Evergreening,” is referred to the practice whereby pharmaceutical firms extend the patent life of a drug by obtaining additional 20-year patents for minor reformulations or other iterations of the drug, without necessarily increasing the therapeutic efficacy. However it has become a practice in the pharmaceutical industry where on one hand innumerable patients struggling to afford the high priced patented drugs, while on the other hand innovators struggling to give immortal value to their creation . The court said that the aim of the patent system is to discourage the extension of the patent after the expiration of the patent term of twenty years so that other firms can produce and market  the drug. The Court said that the Amendment was intended to : Preventing ever-greening; To provide easy access to the denizens of this country for life saving drugs; and To discharge their constitutional obligation of providing health care to its citizens.

17. Judicial Interpretation The court observed that even though beta crystalline could be considered a ‘novel’ invention, it did not pass the test of enhanced efficacy as laid down in section 3(d) of the Indian Patents Act. This formed the ground of rejection of the patent application of Novartis. Section 3(d) clearly specifies that a new form of a known substance in not patentable under Indian law unless it enhances its known “known efficacy”. The term ‘efficacy’ in section 3(d) was interpreted by the court referring to ‘therapeutic efficacy’. The court said that Novartis should have shown enhanced therapeutic efficacy beta crystalline over imatinib mesylate . Novartis argued that the physico - chemical properties of the polymorph form of the imatinib molecule, i.e., better flow properties, better thermodynamic stability and better and lower hygroscopocity , resulted in improved efficacy and hence is patentable under Indian Law. These all were considered as meaningless with respect to efficacy as they did not provide any therapeutic efficacy to the drug .

18. Critical Analysis The answer to the issues raised in this case depended on the chances of the appellant to get the Patent applied for i.e. Imatinib Mesylate. According to the definition of a ‘ new invention’  in the Indian Patents (Amendment) Act, 2005, it is laid down that no invention which has been anticipated by any publication or taken in use in any part of the world before the date of filing of the application for patent which should include complete specification. In other words, it’s not a part of the public domain and also does not form a part of the State of the Art under Section 2 (1) (l ). Deciphering ‘inventive step’ as under Section 2 (1) ( ja ) of the above act, it means that the invention should include a technical advance when compared to the knowledge existing presently, or should attain an economic significance, or both which should ultimately make that invention as not obvious to any person who is skilled in that art . Therefore, it can be derived from the above-mentioned definitions that any pre-existing thing or knowledge cannot be patented.

19. Section 3 (d) is important to note here as it prohibits the grant of Patent to any kind of derivative made out of known substances, but the exception is that such derivatives must show an “enhanced efficacy.” Now, post 2005 amendment, it is required under Section 3(d) that the invention for which a patent claim has been filed, shall be more efficacious than the ‘known substance’ out of which the newly claimed invention has been derived . In the present case, the Appellants thought that it would be easier to prove greater efficacy for ‘Imatinib Free Base’ which is to be identified as the ‘known substance’ instead of ‘Imatinib Mesylate’. But the problem arises, as this was preceded by prior art & subsisted before the claimed invention, and therefore, it would come under the category of ‘known substance ’. While rejecting the argument of Novartis for a broader interpretation of the term ‘efficacy’, SC made it clear that it only included ‘therapeutic efficacy’. It was made clear that only those properties are relevant that directly connect to efficacy and not all advantageous or beneficial properties, and in cases of medicine, it is therapeutic efficacy . On the issue of Bioavailability, it was said that it is the growth potential of a drug to dissolve in the bloodstream of a patient. It was decided that protection can be given under Section 3 (d) in case of a growth of 30% in bioavailability, also, if it can be proved that such increase can lead to greater therapeutic efficacy.

20. Judgment The Supreme Court held that the beta form of Imatinib Mesylate was not an invention as it was obvious from the teachings of Zimmermann’s Patent for the free base form of Imatinib Mesylate, and its properties were also known. Thus, it did not meet the requirements of “invention” as mentioned in Section 2(1) (j) and ( ja ) of the Patent Act, 1970. It was further held that the beta crystalline form of Imatinib Mesylate being a pharmaceutical substance and moreover a polymorph attracts Section 3(d) of the Act . The Court interpreted the expression  ‘efficacy’  under Section 3(d) of the Act, to be therapeutic efficacy meaning ability of the medicine to cure the disease.  Hon’ble Justice Aftab Alam in his decision opined that the beta crystalline form of Imatinib Mesylate had failed the requirement of enhancement of efficacy in Section 3(d) and is thus, not patentable. Therefore, the Court while dismissing the appeals stated that the beta crystalline form of Imatinib Mesylate failed in both the tests of invention, as under the clause (j) ( ja ) of Section 2(1) and patentability, as under the clause Section 3 (d) of the Act . The Supreme Court upheld the rejection of a patent application made by Novartis and also upheld the validity of Section 3(d) and an amendment made to it and therefore, held it to be constitutional and also in consonance with the provisions of TRIPS as well.

21. Impact of Novartis Case The landmark judgment given by the Supreme Court in Novartis AG v Union of India dealt with scope, application and interpretation of section 3(d) of the Indian Patent Act. No doubt that this judgment broader implications on both multinational and domestic pharmaceutical companies. After this judgment there remains no ambiguity regarding patentability criteria under section 3(d) and its enhanced efficacy to mean the enhanced therapeutic efficacy in cases of drugs and medicines. This judgment would lead to invention of more genuine pharmaceutical product, thus creating an environment of genuine research and developmental activities . Apart from this, it will an atmosphere of competition and promote genuine incremental invention.

22. Conclusions – The implications of the Judgment The Supreme Court through this judgment has interpreted enhanced efficacy to mean therapeutic efficacy. The court has made it clear that section 2(d) in no way bars incremental invention. Especially, with respect to bioavailability of a product, the court never said that increased bioavailability could not provide enhanced efficacy to the product. However, to prove that a scientific evidence or a clinical data had to be produced before the court. The court left open the question whether enhanced efficacy refers narrowly to curative effect, or more broadly to improved safety profile and reduced toxicity. This judgment has surely paved way for creating of real incremental invention by both international and domestic pharmaceutical companies. There is no doubt that this verdict will have a positive effect motivating research and development of genuine drugs which could be used for betterment of the public at large. Creating a competitive environment between international and national pharmaceutical companies it will help in reducing the costs of life saving drugs.