The Novartis Case: A Sui Generis Decision That Does Not Jeopardize Pharmaceutical Patent Protection In India.

By: V. Lakshmikumaran
Editors’ Note: The recent patent law decision of the Supreme Court of India on April 1, 2013 (Novartis A. G. v. Union of India & Others, Civil Appeal No. 2706-2716 of 2013), involving the Novartis-manufactured cancer drug, Gleevac (to treat leukemia), made headlines around the world and heightened concerns in the international pharmaceutical industry that India would not provide adequate patent protection for innovative drugs. But when looked at closely, the court’s decision turned on the facts of this particular case, and the meaning of Section 3(d) of India’s Patent Act of 1970, as amended in 2005, under which a new form of a known substance is not patentable, unless the applicant can show that the new form significantly enhances the known efficacy of the known substance. As Mr. Lakshmi Kumaran, a preeminent Advocate, who has argued frequently before the Supreme Court, lays out in this article, any inference that the decision spells weak future patent protection in India is misplaced.

Novartis filed for a patent in 1998 in India for a “beta crystal” form of imatinib mesylate, a drug designed to treat leukemia. Novartis had been marketing this drug under the brand names Gleevec™ and Glivec™. Novartis claimed the “beta crystal” form was a new version of a previously patented version of imatinib mesylate and, therefore, entitled to a patent. Twelve years later, in April 2013, the Supreme Court of India upheld the decisions of the Controller of Patents and Designs, as well as of the Intellectual Property Appellate Board, both of which had held that the new version was not patentable because Novartis had failed to demonstrate that the new version had “increased efficacy” as required Section 3(d) of the Indian Patents Act, 1970, as amended in 2005.

The key questions before the Court included the interpretation of Section 3(d) and its relationship to the concept of “inventive step.” “Inventive step” is a foundational principle in patent law that an invention must be sufficiently inventive or non-obvious, in order to be patented. In other words, the invention must be an adequate distance beyond or above the state of the art. While the Supreme Court’s decision gives significant insight into Section 3(d), to the relief of many (and the dismay of a few), the decision falls short of providing a clear interpretation of the section. Instead, the Court chose to dispose of the case on its sui generis facts. Still, the decision does provide certain useful clarifications on the scope of Section 3(d) and its relationship with concept of “inventive step.”

Section 3(d) was designed to prevent the “ever-greening” of patents. As a matter of public health policy, ever-greening is seen in India as inhibiting the expeditious entry of lower priced generics into a market desperate for low cost drugs. The statute sought to prevent patenting of trivial modifications of currently patented inventions, the effect of which in pharmaceuticals, for example, is to extend a monopoly in the market. Section 3(d) reads, in relevant part:

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 increased 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 process results in a new product or employs at least one new reactant.
Background Facts

Novartis filed a patent application in India on July 17, 1998, claiming priority based upon a Swiss patent application dated July 18, 1997. At the time of filing of the application, Indian patent law did not allow product patents. Under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) of the World Trade Organization (WTO), however, India had until 2005 to phase in product patent protection. Applications prior to that date could be filed in a “mailbox” for consideration after 2005. This is what Novartis did. As long as the application remains in the mailbox and the patent is not granted, generic manufacturers can freely produce the drug without fear of legal action. Once the patent is granted, however, generic manufacturers will either have to obtain a voluntary license from the patent-holder, or a compulsory license from the Patent Office, and pay royalties to the patent-holder. In the absence of either, generic manufacturers must stop production. Novartis had also applied for and received Exclusive Marketing Rights (EMR), for Glivec, under Section 24A of the Patent Act, pending a decision on its patent application. Notably, the increased efficacy requirement of Section 3(d) had not yet been enacted when Novartis made its mailbox filing of its patent application in 1998 for the beta crystal form of imatinib mesylate. That provision was not enacted until 2005. Whether or not the beta crystal form of imatinib mesylate was patentable turned to a large extent on the meaning of “efficacy” in Section 3(d). Did “efficacy” mean “therapeutic efficacy” or “physical efficacy?”

Novartis’s application was examined after 2005 when the Indian Patents Act was amended to fully comply with the TRIPs requirements. However, prior to examination of the patent application, five pre-grant petitions opposing the application had been filed under section 25(1) of the Patents Act. In response, Novartis filed affidavits relating to the beneficial physio-chemical properties of the new form over known substances. Novartis also referred to the 30% increased bioavailability of the new form. Bioavailability is the degree to which a drug or other substance becomes available to the target tissue after the drug has been administered. Here, again, the question was whether increased bioavailability would suffice for overcoming the increased ‘efficacy’ requirement in Section 3(d).

On January 25, 2006, the Assistant Controller of Patents and Designs rejected Novartis’s application for grant of the patent on the several grounds, including anticipation by US Patent 5,521,184 (the patent that had been granted to one of the inventors, Jurg Zimmermann for imatinib derivatives), and the lack of “inventive step” in view of the Zimmermann patent and the knowledge of a person skilled in the art. The rejection was also based on Novartis’s failure to demonstrate that the beta crystalline form of imatinib mesylate satisfied the requirements of Section 3(d). The concept of anticipation in patent law disqualifies an invention from patent protection if the invention is already disclosed earlier such that they may not be considered new or novel—novelty being a requirement for patentability. Thus, “anticipated” inventions are not patentable. The “inventive step” (non-obviousness) threshold, a feature present in most patent laws, requires that an invention should be sufficiently inventive — i.e., non-obvious — in order to be patented. Under Indian law, the Applicant is also required to identify the feature that involves a technical advance or economic significance over prior art. The Assistant Controller granted the applications of those who had opposed awarding Novartis the patent.

Novartis appealed the decision of the Assistant Controller and on June 26, 2009, the Intellectual Property Appellate Board (IPAB) reversed the findings of the Assistant Controller on the issues of anticipation and lack of inventive step. The IPAB, however, affirmed the Assistant Controller’s finding that the product was non-patentable under Section 3(d).

Novartis appealed the IPAB order to the Supreme Court of India. The Supreme Court rejected the patent application holding that it did not fulfill the requirements of Section 2(j) (definition of “invention”), 2(ja) (definition of “inventive step”) and 3(d) of the Act. (Novartis should have first approached the High Court first, but the Supreme Court exercised its discretion to hear the matter on an exceptional basis in view of certain special circumstances, including the importance of the legal issues involved. However, the Court strongly discouraged future litigants from side-stepping the High Court by appealing directly to the Supreme Court.)
Questions Presented to the Supreme Court of India

The critical issue before the Supreme Court was how to interpret Section 3(d). The Court broke down its analysis into three broad questions: First, how must the terms “efficacy” and “increased efficacy” be interpreted? Second, was Section 3(d)’s “increased efficacy” something more than the recognized patent law principle of “inventive step?” Third, what was “known substance,” and “known efficacy,” and had Novartis provided sufficient evidence to prove that the new version had “increased efficacy” over the “known substance.”

Looking at legislative intent, the Court noted that Section 3(d) was amended during the process of allowing product patents in all fields of technology. The court recited a detailed account of the parliamentary debates on Section 3(d) and the circumstances under which it was enacted. The Court even referred to the communications issued by third parties, such as the WHO to the concerned Indian Minister. The Court concluded that Parliament’s underlying legislative intent was to ensure fair access to medicines. The Court observed that Section 3(d) was amended, as it stands today, in order to allay concerns that the pharmaceutical product patent regime would undermine public health considerations. The provision was intended to prevent patent monopolies from being unfairly extended or prolonged, thereby affecting access to medicines. This led the Court to make the following finding:

“[We have] no doubt that the amendment/addition made in section 3(d) is meant especially to deal with chemical substances, and more particularly pharmaceutical products.”

After thoroughly reviewing the background behind the introduction of the provision, the Court, in accordance with recognized principles of statutory interpretation, went by the ordinary meaning of the term “efficacy,” i.e., “the ability to produce a desired or intended result.” The Court also noted that the application of the definition/meaning would vary based on the product under consideration. Having found that the provision was intended to deal with chemical substances, and more particularly pharmaceutical products, the Court held:

“Therefore, in the case of a medicine that claims to cure a disease, the test of efficacy can only be “therapeutic efficacy.””

The Court went on further to hold that“With regard to the genesis of section 3(d), and more particularly the circumstances in which section 3(d) was amended to make it even more constrictive than before, we have no doubt that the “therapeutic efficacy” of a medicine must be judged strictly and narrowly.”

Various propositions were presented to the Court, in terms of defining how exactly this can be proved. For instance, one proposition was that increased bioavailability can never be sufficient for the purposes of overcoming Section 3(d). Another proposition was that “efficacy” and proving “enhanced efficacy” were to be kept flexible, such that safety or significantly reduced toxicity should also be taken into account. However, the Court did not render a finding on these propositions since, in its view, it was not necessary to rule on them to adjudicate the matter.
Section 3(d) is a Distinct and Independent Criteria

Novartis had argued that to the extent a ruling had already been made that the claimed product possessed an inventive step, it could not be considered as a “mere discovery of a new form of a known substance,” and hence, should not be rejected under Section 3(d). Section 3(d) was only inserted, Novartis argued, out of abundant caution to make it legislatively clear that such mere discoveries are not to be granted patents.

The Court, however, rejected this argument. While noting that the argument made sense in terms of the existing scheme of the legislation, the Court held that it nonetheless missed an important distinction–the distinction between “invention”, which subsumes “inventive step” and “patentability,”. “Invention means new product or process involving an inventive step and capable of industrial application.” Section 2(1)(j). “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.” Section 2(1)(ja). Section 3, on the other hand, defines what are not ‘inventions’.

The Court was of the view that “if clause (d) is isolated from the rest of section 3, and the legislative history behind the incorporation of Chapter II in the Patents Act, 1970, is disregarded, then it is possible to see section 3(d) as an extension of the definition of ‘invention’ and to link section 3(d) with clauses (j) and (ja) of section 2(1).” However, in a further analysis of the parliamentary history, the Court found no evidence of a legislative intent to enact Section 3(d) out of “abundant caution.” Rather, the Court was of the view that the legislative history confirms the intent to keep the requirements of ‘patentability’ under Section 3 separate from the concept of ‘invention’ under Section 2(1)(j).

The Court concluded that under the scheme of the Act, an applicant must satisfy the twin tests of “invention” and “patentability” for grant of a patent.
The Decision on Facts

A. The “Known” Substance

Section 3(d) requires comparison of known efficacy of the claimed product with a known substance. The “known” efficacy in this case was not in dispute–the molecules had anti-cancer properties. However, there was extensive debate on what the “known substance” in this case was. While Novartis was of the view that “imatinib free base” was the “known” substance, the opposition regarded “imatinib mesylate” as the known substance. To rule on this issue, the Court analyzed the coverage and disclosure of the cited prior art document – Zimmerman patent. (“Prior art” is all prior publically disclosed information about the product.)

The Zimmerman patent had a large “Markush” claim and even referred to “pharmaceutically acceptable salts” in the claim. A Markush claim, named for the U.S. Patent case of Ex parte Markush, 1925 C.D. 126 (Comm’r Pat. 1925), typically occurs in chemical patent claims and enables the protection of a class of compounds rather than a few specific structures; in other words, a single claim covers alternative chemical structures. Referring to claim scope and extracts of the Zimmerman patent, the Court noted that imatinib free base was itself disclosed and mesylate salt was disclosed as one of the salt forms in which imatinib can be used. Based on this, the Court held that the Zimmerman patent disclosed “imatinib mesylate.” The Court even referred to a finding issued by the Board of Patent Appeals in the U.S. on the corresponding U.S. application for the beta crystalline form, which had concluded that the earlier Zimmerman patent did “teach” “imatinib mesylate”, but stops short of teaching its beta crystalline form. (“Teach” in patent law means to inform and instruct using the documents making up the prior art. The teaching is done by referring to the technology disclosed or revealed by the prior art.)

Going further, the Court also referred to the conduct of the patent applicant as that conduct had a material bearing on the issue. Throughout the entire history of the F.D.A. approval process behind its drug, the applicant had consistently taken the stand that the Zimmerman patent covered “imatinib mesylate.” The patent applicant had also sought an extension of the term for the Zimmerman patent citing the regulatory approval time for Gleevec™. The Court even referred to a legal notice issued by the patent applicant in the U.K., where infringement of the Zimmerman patent was alleged against a generic drug whose active ingredient was “imatinib mesylate.” Based on these facts, the court concluded that mesylate salt was clearly disclosed and claimed in the Zimmerman patent. The patent applicant attempted to argue that in reality, while “imatinib mesylate” was covered within the scope of the earlier claim, it was not disclosed in an enabling manner in this prior art patent. Rejecting this argument, the Court held:

“…Under the scheme of patent, a monopoly is granted to a private individual in exchange of the invention being made public so that, at the end of the patent term, the invention may belong to the people at large who may be benefited by it. To say that the coverage in a patent might go much beyond the disclosure thus seem to negate the fundamental rule underlying the grant of patents.”

“We certainly do not wish the law of patent in this country to develop on lines where there may be a vast gap between the coverage and the disclosure under the patent; where the scope of the patent is determined not on the intrinsic worth of the invention but by the artful drafting of its claims by skillful lawyers, and where patents are traded as a commodity not for production and marketing of the patented products but to search for someone who may be sued for infringement of the patent.”

B. Enhanced Efficacy:

Having found that the “known” compound in this case was “imatinib mesylate”, to overcome the barrier of Patentability under Section 3(d), it was now imperative for Novartis to prove that beta crystalline form of Imatenib mesylate had enhanced therapeutic efficacy over “imatinib mesylate”.

Novartis had relied on two factors to support its patent application vis-à-vis Section 3(d): the first being that the better physio-chemical properties of the new form (better flow properties, better thermodynamic stability, and lower hygroscopicity) made it easier to make, process and store the drug; and the second being that the new form had 30% more bioavailability as compared to previous known forms. The Supreme Court rejected the first argument since better physio-chemical properties were not shown to have anything to do with therapeutic efficacy.
In response to the argument on increased bioavailability, the Supreme Court stated:

“…the position that emerges is that just increased bioavailability alone may not necessarily lead to an enhancement of therapeutic efficacy. Whether or not an increase in bioavailability leads to an enhancement of therapeutic efficacy in any given case must be specifically claimed and established by research data.”

That was not shown in this case. The Court declined to hold that increased bioavailability can never be used for the purposes of Section 3(d).

Throughout the Novartis judgment, the Supreme Court took considerable pains to note that its decision is limited to the facts of the case. The following quote summarizes the attitude of the Court:

“We have held that the subject product…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.”

The Court made it very clear that Section 3(d) was only intended to “check any attempt at repetitive patenting or extension of the patent term on spurious grounds” and is not to be interpreted so as to “undo the fundamental change” under the Indian law to allow product patents for pharmaceuticals. The rejection of the patent application in this case relates more to Novartis’s failure to produce research data connecting the increase in bioavailability to an increase in the therapeutic efficacy.

In sum, the Court’s holding in Novartis sets forth two broad principles: First, Section 3(d) was intended to apply especially for chemical substances, particularly to pharmaceutical products. Second, Section 3(d) can only be overcome by showing an enhancement of “therapeutic efficacy.” By declining to rule on how to establish increased efficacy the Court gave patent applicants sufficient flexibility. The Court’s conclusion that “[w]hether or not an increase in bioavailability leads to an enhancement of therapeutic efficacy in any given case must be specifically claimed and established by research data,” goes to show that the application of the provision is to be evaluated on a case-to-case basis, rather than taking a one-size-fits-all approach. Finally, while the Novartis decision is a reminder that patent applicants must address Section 3(d) with care and finesse, by no stretch of imagination can the decision be construed to be the death-knell of pharmaceutical patenting in India.

V. Lakshmikumaran is the Founder and Managing Partner of Lakshmikumaran & Sridharan (L&S), a full service law firm which he founded in 1985. Based in the firm’s New Delhi office, Lakshmikumaran is an Advocate and Patent Agent. He has advised several leading companies in India and abroad on managing IP portfolios in India, on licensing agreements, valuation of IP assets, and litigation strategy. He is also an authority on the TRIPS agreement and has advised on its interpretation and application. He has handled several high profile cases in the Supreme Court of India. His clients include many well known Fortune-500 companies and leading Indian corporations. He can be reached


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