Case Note Novartis Case

Student Law Review (SLR)

CASE COMMENT The Novartis Case : Precedence to Social Welfare over Inventor's Rights Ananya Kumar Singh, Vatsal Joshi *

An attempt has been made to analyze the case Novartis & Ors. .v. Union of India & Ors. 1 , which is a landmark judgment in the field of patent laws. The analysis includes a brief introduction to the facts of the case, an explanation of the judgment and then an in depth analysis of the same.

The case comment discusses the alleged ambiguous and controversial aspects of the India Patent Act 1970. The analysis also attempts to find out the possible violation of TRIPS Agreement. The authors have critically analyzed the judgment based on the international position of India in the pharmaceutical sector, Bentham's principle of Utilitarianism, the duties of a welfare state and its justification as per the International Customary Law. The authors have concluded that the judgment should not be subject to criticism and is an affirmative step taken by the Supreme Court of India in the interest of its people and for the greater good of those countries who are dependent on India for generic life saving drugs. The authors are well aware of the changing dimensions of patent laws in India and are well versed with its importance in the industrial as well as pharmaceutical sector .

The case comment is an attempt by the author to study, analyze and examine the aspects which are contentious with respect to the laws of the land and thus make the stand of the Supreme Court in the present case clear to the reader.

* IInd Year Students, National Law Institute University, Bhopal 1 AIR 2013 SC 1311

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I.

INTRODUCTION

The debate on the current patent regime in India has gained immense importance in India and the international forums. It can reasonably discerned from the provisions of Article 72 and 83 of the Agreement on TRIPS that the major policy objective of a patent system is to create a balance between the inventor's rights and the duties and responsibilities of a welfare State , which includes making the life saving drugs easily accessible. It was agreed that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health.4 It must be understood that the social impact of intellectual property is more keenly felt in the discipline of pharmaceutical patents.5 The recent Novartis Case6 dealing with ever-greening of the pharmaceutical drug marketed as Glivec ,is now holding the centre stage for debate in light of the serious social implications it is expected to have on India , developing countries and the least developed countries. This paper shall attempt to analyse if the Novartis judgment establishes an equilibrium between the welfare responsibilities of the State and the inventor's rights.

II.

THE NOVARTIS CASE

Novartis applied for a patent in the Madras Patent Office in 1998 for Imanitib Mesylate in Beta crystalline form . The Indian Patent regime was in a transitional phase during 1995 to 2005 , as per the TRIPS Agreement . Therefore , the Patent application filed by Novartis 2

Article 7 - Objectives: the protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology , to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare , and to a balance of rights and obligations. 3 Article 8 -Principles: 1. Members may , in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement. 4 , Peter K. Yu, The Objectives and Principles of TRIPS, Houston Law Review, 46 (2009) 5 Rebecca S. Eisenberg , Patents , Product Exclusivity and Information Dissemination : How Law directs Biopharmaceutical Research Development , Fordham Law Review, 477 (2003) 6 Novartis AG & Ors. .v. Union of India & Ors. , AIR 2013 SC 1311.

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remained dormant in the "Mailbox Procedure". It was taken up for consideration only after amendments in compliance with the TRIPS Agreement were made in 2005. It was contended that a product patent should be granted to Novartis on grounds of enhanced efficacy.

The enhanced efficacy was asserted by Novartis with respect to the better flow

properties and

thermodynamic stability, but the most important being bioavailability.

Bioavailability refers to the proportion of the pharmaceutical product which is absorbed into the blood during circulation and thus is an indicator of its efficiency. The Beta Crystalline form was contended to have 30% increased bioavailability which would enhance the effectiveness of Glivec7. The Assistant Controller of Patents and Design rejected the application on grounds of : a) obviousness to a person skilled in the art under scrutiny b) novelty Accordingly , patentability of the product was hit by Section 3 (d) 8 of the Indian Patent Act , 19709. Novartis filed two writ petitions before the Madras High Court seeking to declare Section 3(d) of the Act unconstitutional as it violates Article 14 of the Indian Constitution and is not in compliance with the Agreement on TRIPS. The High Court rejected these petitions and upheld the constitutionality of Section 3 (d) of the act. The Madras High Court then transferred the petitions challenging the orders of the Assistant Controller to the IPAB ( Intellectual Property Appellate Board), as it did not have the jurisdiction in the matter. The IPAB held that the patentability of beta crystalline form of Imatinib Mesylate was affected by Section 3(d) of the Act , although the requirements of novelty and non obviousness were being met. The provisions of Section 3(d) were interpreted strictly and it was

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The Mesylate salt of Imatinib, a tyrosine kinase inhibitor with antineoplastic activity. Glivec is the name under which this compound is marketed : National Cancer Institute U.S.A , NCI Medical Dictionary: Glivec , ( October 22 , 2013 ) http://www.cancer.gov/drugdictionary?cdrid=37862 8 What are not inventions.—The following are not inventions within the meaning of this Act,— (a) an invention which is frivolous or which claims anything obviously contrary to well established natural laws; (b) an invention the primary or intended use or commercial exploitation of which could be contrary public order or morality or which causes serious prejudice to human, animal or plant life or health or to the environment; (c)the mere discovery of a scientific principle or the formulation of an abstract theory or discovery of any living thing or non-living substance occurring in nature; (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. 9 hereinafter referred to as the Act

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observed that with respect to India , the grant of patents require a "higher standard of inventive step". The Appellate Board relied on the decision of the Madras High court, which held that enhanced efficacy means enhanced therapeutic effect and stated that the compound in question lacked efficacy and therefore fell within the scope of Section 3(d ). The above observation was made keeping in mind the constitutional obligations of the State to provide healthcare and easier access to life saving drugs and to curb Evergreening .10 Novartis challenged the decision of the Appellate Board in the Supreme Court.

III.

ANALYSIS OF THE JUDGMENT

The Supreme Court gave a detailed and comprehensive judgment in the instant matter ,taking into account the history of patent laws in the country. The reports of Justice Ayyangar, which ultimately led to the the framing of the Indian Patent Act 1970 was discussed to demonstrate the evolution of patent laws in India. Owing to the Constitutional obligations of the State towards its citizens , the national interests outweigh the interests of an individual inventor. Here , "national interest" refers to the easy accessibility of life saving drugs to the masses. Novartis' application for patent was rejected as it failed the test of invention under Section 2 (j) , 2(ja) and 2 (1) and test of patentability under Section 3(d).The Court interpreted Section 3(d) in accordance with the text of the statute and context of the legislation or the legislative intent, to mean that it was meant to deal with pharmaceutical products and chemical substances only. Major objective of this section was to prevent "Evergreening" and thus discourage monopoly of certain players in the market. Therefore , a second tier , or a higher threshold of qualifying standards was set up for pharmaceutical products.

In light of the above discussion , it is clear that "efficacy" under Section 3(d) means "therapeutic efficiency". Novartis had relied upon better flow properties , increased

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. Evergreening may be defined as a process of extending the term of patent protection on a drug while making minor changes which do not affect the efficacy of the drug. Swaraj P. Baruah , A Purposive Patent Policy : Reigniting The Section 3(d) Debate in the light of India's international Obligations, Nalsar Student Law Review , Vol. 6 , 143 (2011)

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thermodynamic stability and bioavailability of the product as grounds for grant of patent. However , the Court held that the above mentioned properties of the beta crystalline form did not enhance the efficacy of the treatment as compared to the free base form. All beneficial and advantageous properties are not relevant , but only such properties which directly relate to the efficacy.11 Thus , the Court gave a strict and narrow interpretation to the term "efficacy".

IV.

CONCLUSION

The decision of the Supreme Court is appropriate keeping in mind India’s position as “The Pharmacy of the World” .It is the largest exporter of life saving generic drugs ,70% out of which goes to the developing countries. 12 Life saving drugs for diseases like AIDS and malignant cancers were exported to developed, developing and the least developed countries from India at minimal prices. “In every case generic prices present an opportunity for cost savings; in some cases, the branded price per pack of a drug is up to 11 times the cost of the approved generic version.” 13 The current decision of the Supreme Court is in sync with the constitutional obligations of the State to promote social welfare. Further , it also serves the interests of a large number of least developed countries which depend upon India for medical assistance. According to Jeremy Bentham’s principle of Utilitarianism , ‘pain’ and ‘pleasure’ are the sovereign masters under which every human being is bound. 14 Legislations are made for the people and utility of legislation is judged on its capability of maximizing the pleasure and minimizing the pain of the subject.

" India is a welfare state governed by a Constitution which holds the pride of place in the hearts of its citizens. It lays special emphasis on the protection and well-being of the weaker 11

Kalyan Kankala , Novartis Case Review-Business and Legal Iimplications, http://www.sinapseblog.com/2013/05/novartis-case-review-business-legal-implications.html (October 24 , 2013) 12 World Medicines Situation, 2004, WHO (WHO/EDM/PAR/2004.5) 13 Bringing Hope: Supplying ARVs for HIV/AIDS treatment, PEPFAR, May 2006 (with partial data available for fiscal year 2006). 14 Jeremy Bentham , An Introduction to the Principles of Morals and Legislations, 1 , Dover Publications (2007)

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sections of society and seeks to improve their economic and social status on the basis of constitutional guarantees spelled out in its provisions."15 The Benthamite perspective, instead of focussing on ‘whose rights’ or ‘who deserves’, thinks of the welfare of the largest number of people. The Court's decision is a major setback to the interests of the major pharmaceutical companies. But , it caters to the interests of the people of India and of the countries to which India exports the generic drugs and who are unable to afford the branded drugs.16 Article 27.1 of the TRIPS Agreement provides for three strict standards (novelty, nonobviousness and industrial application) based on which patents are given. However these terms are not defined anywhere and the level of strictness on judging a product for patent is dependent on the country. Article 3.2 of the World Trade Organization Dispute Settlement Understanding (“WTO DSU”) provides that provisions of an agreement should be clarified in accordance with the “customary international law”. Article 31 of the Vienna Convention on the Law of Treaties, 1969 states that interpretation must be in accordance to the “context”, ”object”, and “purpose”. Thus when Article 7 and Article 8 of the agreement are interpreted taking into account the reference from Article 31 of VCLT and Article 3.2 of WTO DSU , the judgment of the Supreme Court of India is appreciable. Thus , in light of the above discussion , the observations made by the Supreme Court in the instant case should be lauded.. The decision is an attempt to prevent the practice of abuse of patents through Evergreening , thus preventing anti - competitive practices in the market. The Court has also laid down a very strict and high standard for the qualification of a product as an "invention", thereby upholding the principle of social welfare.

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Vikram Deo Singh Tomar .v. State of Bihar , AIR 1988 SC 1782 Will the lifeline of affordable medicines for poor countries be cut? Consequences of medicines patenting in India, available at http://www.who.int/hiv/amds/MSFopinion.pdf (last visited 20th oct 2013). 16

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