Drug patent trends in India

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Patients everywhere would benefit from top-down reform to align India’s patent law with global norms say Pravin Anand and Archana Shanker of Anand and Anand

India has witnessed exponential growth in infringement actions before the high courts and the Intellectual Property Appellate Board (IPAB) in the past 10 years, especially with respect to pharmaceutical patents. Decisions in these cases have ramifications for patients in India and around the world.

Pravin Anand
Pravin Anand

To protect the IP of innovators and ensure the latest life-saving medicines are able to reach patients in India, the country’s patent system must begin to reflect established international norms. Indeed, the rapid increase in cases where patents are revoked, denied or otherwise infringed sets a dangerous precedent that could effectively bar new pharmaceuticals from being approved in India as innovators become increasingly wary that their IP could simply be expropriated without proper compensation.

However, just as each nation must consider its culture, values and norms when crafting laws and regulations, India’s patent system must remain fundamentally Indian. The challenge for the Indian government will lie in creating a system that rewards innovation and risk, and also remains in sync with long-established international precedents and laws. The degree to which this can be accomplished will in large part determine not only the future of innovation in India, but also how quickly patients in India will have access to new ground-breaking medicines.

India must recognize that denying or revoking patents or mandating compulsory licences to increase the profits of its generic pharmaceutical companies is not a recipe for the long-term health and welfare of its citizens.

The following brief history of evolving Indian patent law, focusing on pharmaceuticals, highlights many inconsistencies that appear to be at odds with both Indian and international precedents. Innovating companies should note that the law remains in flux and there is still much opportunity for positive reforms.

Brief history of Indian patent law

The Supreme Court in 1978 in Bishwanath Prasad Radhey Shyam v Hindustan Metal Industries held that under section 13(4) of India’s Patents Act there is no presumption of validity of a patent. The courts in India still follow this interpretation, which does not appear to be sound and is certainly not in consonance with the laws of most other nations.

On the positive side, the Bishwanath case relied heavily on Halsbury’s Laws of England and various English cases for determining “obviousness” and laid down a sound test. In contrast, the IPAB later commented that the obviousness test was different under India’s Patents Act.

The introduction of pharmaceutical product patents in the 2005 brought an unexpected burst of litigation, while the constitution of the IPAB, in the wake of the Patent (Amendment) Act of 2002, led to a flood of invalidity actions coming up before the IPAB, a roving tribunal mainly seated in Chennai.

Archana Shanker
Archana Shanker

Section 64 of the Patents Act provides for revocation of a patent before the IPAB or in a counterclaim for revocation in an infringement action before a high court. Recently, a division bench of Delhi High Court, in the Enercon case, interpreted the invalidity provision contained in section 64 to give the IPAB and the concerned high court a simultaneous jurisdiction despite the reliefs being identical. An appeal on this point is currently being heard before the Supreme Court.

Since the 1960s, only one case before the Indian courts (Roche v Cipla before Delhi High Court) has extensively discussed the issues of patentability and infringement after a complete trial. In contrast, the IPAB since its inception has decided nearly 50 revocations and 30 appeals. Nearly 140 decisions have come in the past six years, with a whopping rise in revocation petitions of 30% in 2012 and nearly 43% in 2011.

Inconsistencies with international norms

Some of the decisions of Indian courts and the IPAB that have resulted in significant departures from patent jurisprudence in other countries include the following:

  1. In the Novartis case, the Supreme Court diluted the well-acknowledged distinction between “coverage” and “disclosure” for the purpose of anticipation and infringement, thereby affecting an applicant’s ability to formulate claims broader than the invention itself. In this case, the patent owner had claimed that a salt was covered by a basic patent and the court then deemed that it was disclosed in the patent.
  2. The IPAB attributed special skills to the person skilled in the art and held that for the purpose of obviousness, the hypothetical person to whom the patent would be addressed is not a dullard and has a creative imagination. For insufficiency, however, this is a person with average skill and does not have sufficient capability to work the patented invention based on the disclosure made in the patent specification. This is in complete contrast to the laws of other countries which say that the person is the same for both insufficiency (enablement) and obviousness and that the hypothetical person lacks creative imagination. The tribunal specifically referred to US law on this point and observed that the Indian law was different.
  3. The IPAB, in invalidation proceedings, analysed the elements of a claim not as a whole but taking only those elements after transition terms such as “comprising” and comparing them with the prior art, both for the purpose of anticipation and obviousness. In this way, the IPAB would examine the post-transition elements and make a determination whether those features exist in prior art and end up nullifying almost every invention. This led to a new concept for anticipation which the IPAB evolved called “partial anticipation”, which is contrary to the “all the elements rule”.
  4. On amendment, the IPAB seems to have developed jurisprudence totally contrary to the intent and provisions of India’s Patents Act. While, the act empowers the courts and IPAB to grant reliefs in respect of any valid claim in infringement proceedings or to that extent even allow amendments once a high court or the IPAB has made an invalidation determination, the IPAB in many cases has disallowed amendments on the ground of “delay”. This is against the grain of sections 58 and 59 of the act and defeats their express language, which permits amendments even when there is an invalidity finding. An amendment to narrow the claim and remove the objection on obviousness was disallowed if the claims were obvious. In other words, a mistake cannot be corrected if there was a mistake!
  5. Besides disallowing amendments, the IPAB revoked patents and all claims of the patent if the parent claim was held to be invalid. This is contrary in particular to section 114 of the Patents Act, which contemplates relief on valid claims despite some claims being held invalid.
  6. The IPAB in some cases held that the test of obviousness is different from those in the US and UK but would not specify what the test is. In several invalidation cases, it held that unlike the law in other countries, where for the purpose of obviousness, the hypothetical construct is a person of ordinary skill in the art, in India the standard for obviousness is higher as this hypothetical construct is not an “ordinary” person. The result is that almost any invention could be held to be obvious.
  7. For secondary pharmaceutical inventions (salts, ethers, esters, polymorphs, etc.), applying the Supreme Court findings in Novartis, the provisions of section 3(d) were added as a fourth element to novelty, utility and non-obviousness. The court held that the Indian test for patentability has a higher threshold.
  8. In some cases, the IPAB held that an applicant seeking revocation could succeed even where there was no evidence in support of obviousness. This would be considered shocking in most jurisdictions.
  9. Decisions show a clear tendency to ignore cases from other jurisdictions which are favourable to the patentee but to adopt those which have gone against the patentee.
  10. Infringement actions rely heavily on expert evidence to demystify the science for the judges. Each side usually has one or two experts and, in most cases involving foreign companies, experts come from overseas. Their evidence is filed on affidavits and they are then cross-examined. If the trial has been expedited, the cross-examination takes place before a retired judge and is therefore rapid and convenient. If a witness cannot visit India, a videoconference is permissible to record evidence. The IPAB, in contrast, does not encourage or entertain cross-examination and therefore ends up interpreting affidavits of experts (which may say opposite things) based on its own views or on arguments of counsel.
  11. In almost all cases where patents have been revoked the hindsight principle has been completely ignored and obviousness is tested by the first impression formed by the judge rather than seeing the problem through the eyes of a person of ordinary skill in the art. Simply because an applicant could explain the invention and the IPAB could understand the invention seems to be the basis for holding the subject matter to be obvious.
  12. The IPAB has concentrated on subjective factors alone, ignoring objective factors such as commercial success, number of countries in which patents have been granted and long-felt need. In a subjective determination, the attitude or perspective of the hearing officer becomes all important and any “bias” towards either side would be reflected in the decision. The more subjective a test, the greater the need for reliance on the evidence of unbiased experts as the determination of obviousness, without such evidence, can be totally arbitrary.
  13. One of the biggest flaws is the IPAB’s interpretation of section 8 in a series of cases that specifies the disclosure requirement under Indian law. This provision was intended to facilitate examination before there was internet. Although it is recognized that today’s examiners can freely obtain information from patent databases, the IPAB in several matters recently has upheld a super strict interpretation of section 8 that makes complying an impossible task for most patent owners. Delhi High Court in Roche v Ciplasaid that a section 8 violation still leaves the court with discretion whether to invalidate the patent, but the IPAB ignores this and holds that a section 8 violation leaves it with no choice but to annul the patent.

Silver linings and reform opportunities

Despite these trends, there are signs that the law is in a state of flux and may yet yield positive reforms on the side of innovators. For example:

  • The Pfizer cases relating to sunitinib and the Bristol-Myers Squibb cases relating to dasatinib have upheld the right of the innovator to keep infringers out of the market via the grant of interim injunctions.
  • A large number of ex parte injunctions have been granted in the nature of status quo orders when generic companies have applied for manufacturing or marketing approval from the drug regulatory authorities before the product is launched.
  • In Roche v Cipla, although the plaintiff lost on infringement, the court upheld the patent.
  • In the Glaxo lapatinib case, the IPAB upheld the patent for the basic compound although it annulled the patent for its ditosylate salt and held that in an obviousness analysis, the challenger of a patent cannot do a “hip-hopping” over prior arts unless the “hopscotch-outline” of the invention was before the person skilled in the art.
  • In several other cases such as Philips VCD and DVD cases, interim orders have been passed for the deposit of royalties to protect the interest of the plaintiffs.
  • Patent trials have been expedited on a fast track to be disposed of within a year or so.
  • Jurisprudence on damages has developed. Delhi High Court issued about 150 orders for damages in trademark and copyright cases from 2005 to 2013 and similar awards are expected when more patent cases are finally decided.

Conclusions

While there have been a few bright spots in India’s evolving patent law, the trend against foreign innovators in favour of domestic companies (which did not contribute to the underlying IP) remains a cause for concern. Most patent owners are simply looking for an unbiased hearing, as a positive attitude on IP can be crucial in the subjective determination of the obviousness standard. With this, the focus of capacity building would not be so much to enhance knowledge but to create among hearing officers a healthy respect for IP and a familiarity with the challenges for an innovator. It is disturbing that when there is no drug for a disease, one would pay anything for a cure but once a drug is invented its value suddenly disappears.

This, in a nutshell, is the state of the present Indian law with literally hundreds of cases being contested before the high courts of Delhi, Bombay, Calcutta and Madras, mostly Delhi, and revocations before the IPAB.

On 20 September Madras High Court set aside 12 orders of the IPAB (which had cancelled 12 patents in the wind energy field) on the ground that the IPAB had not decided whether the revocations were validly instituted. This demonstrates that the law is in a state of flux and the principles will evolve over the next few years. While there remains hope that recent trends may be reversed in favour of innovators that took great risks to bring new and revolutionary products to market (regardless of whether they are foreign or domestic), much work remains to be done to educate all levels of the government of India on the enormous value and potential of IP. Until then, we are bound to experience the vicissitudes of litigation.

Pravin Anand is the managing partner and Archana Shanker is a senior partner at Anand and Anand.