Time to re-evaluate the full extent of India’s TRIPS compliance

The order of March 2012 relating to the granting of a compulsory licence by the Indian Patent Office in favour of Natco Pharma against Bayer’s patent for sorafenib tosylate and other actions prior to that sparked a debate on whether the India’s patent laws are compliant with the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement.

Affirmation of the order by the Intellectual Property Appellate Board (IPAB) – except for an increase in the royalty rate – in March 2013 added fuel to the debate. The Indian Supreme Court’s decision of April 2013 to ultimately reject the patent application of Novartis for its cancer drug, Glivec, marked the peak of the debate.

IPR concerns

Many multinational companies, and the US government, have expressed concerns about India’s intellectual property rights (IPR) laws and patents regime, especially section 3(d) of the Patents Act. It has also been alleged that India does not provide a strong enforcement regime regarding enforcement of patents.

Here, the author evaluates the current position of India’s Patents Act, and the hurdles faced during prosecution and litigation. In terms of legislation, India’s Patents Act is unique for: prescribing the highest number of artificial exclusions; prescribing duty of disclosure; requirement to file a working statement; providing pre and post-grant opposition and patent revocation; accepting oral evidence in instances of traditional knowledge; prescribing prior use anywhere in the world as a novelty destroying factor; providing for grant of compulsory licences; patent disclosure standards – best mode and source of biological material need to be provided in the specification.

While the act has some unique provisions, it does not discriminate between a foreign and a domestic applicant. In practice, it has been seen that the artificial exclusions – especially section 3(d) related to prohibition of evergreening and section 3(k) related to computer programs or business methods – equally affect domestic players.

In terms of prosecution hurdles, subsequent to the Supreme Court’s decision, the Indian Patent Office has been applying the test of “demonstration of increased therapeutic efficiency” as a criterion for grant of applications falling under the purview of section 3(d).

The change in the language of the objection – as contained in the first examination report – from “all major Patent Offices such as USPTO, EPO, JPO etc.”, to “all major Patent Offices”, to “all countries outside India” clearly illustrates the gradual increase in the level of compliance on the part of an applicant in terms of the duty of disclosure (section 8) requirement.

The fact that “non-compliance of the duty of disclosure” is being taken as a ground in pre, post-grant and revocation actions has made compliance an important aspect. Having said that, once again statistics show that such a ground has been taken in disputes between two domestic applicants as well, and the adjudicating bodies – i.e. Indian Patent Office, IPAB or the courts as the case may be – have not diluted the compliance requirement in favour of a domestic applicant.

On the other hand, in the infringement case of Roche v Cipla, Delhi High Court stated: “Under these circumstances, even in case the said compliance of section 64(1)(m) of the act has not been made by the plaintiffs, still there lies a discretion in the court not to revoke the patent on the peculiar facts and circumstances of the present case. The said discretion exists by use of the word ‘may’ under section 64 of the act. Thus, solely on one ground of non-compliance of section 8 of the act by the plaintiffs, the suit patent cannot be revoked” – and allowed the patent to stand. The data demonstrate that when a foreign applicant has been involved, there has been some level of understanding and hence, some level of dilution in favour of the foreign applicant.

Huge number of disputes

In relation to IPR enforcement, Indian courts continue to receive a huge number of trademark and copyright-related disputes. In most of the trademark disputes, the parties involved are domestic applicants, and there is seldom a cause of concern.

A growth in terms of patent enforcement cases has been seen in the past eight years. Initially, patent litigations involved multinational companies and significantly large domestic companies in the area of pharmaceuticals, for grant of interim injunctions. Indian courts have done a commendable job in striking a balance between patent rights and the right to protect public health, and in particular to promote access to medicines for all.

However, learning from past mistakes, multinational companies have adopted different argument strategies and the courts are now experiencing an avalanche increase in the number of interim injunction grants. For instance, in litigations involving the drug Galvusm, for diabetics, Novartis has filed quia timet suits against Glenmark, Bajaj Healthcare, Cadila Healthcare and Alembic Pharmaceuticals, and has had success in all litigations.

It is pertinent to note that despite India being the country with the largest diabetic population, Indian courts have awarded ex parte interim injunctions against Bajaj Healthcare (in Novartis v Bajaj) and Alembic Pharmaceutical (in Novartis v Alembic) and the remaining defendants – Glenmark in Novartis v Glenmark, and Cadila in Novartis v Cadila – have undertaken not to infringe the patent until the next date of hearing. In yet another litigation, again involving a drug for diabetics, sitagliptin, patentee Merck (MSD Pharmaceuticals) found partial success, with the courts awarding ex parte interim injunctions against some of the generic companies.

Apart from the above-mentioned cases, the time taken for completion of an ad-interim injunction is substantially short, with ex-parte ad-interim injunctions being completed within three or four days of filing an infringement suit. For a majority of suits, the time between date of filing of suit and date of disposal is less than six years. While that may be considered a long time, if both parties agree to a fast-tracked process, suits can be disposed of within three years.

Keeping in mind all of the above, the designation of India as “priority watch list” rather than “priority foreign country” in the Annual Special 301 Report issued by the US Trade Representative on 1 May 2014 indicates that India’s Patents Act is fully TRIPS-compliant.

G Deepak Sriniwas is the head of the patent prosecution practice at LexOrbis