Introduction

The Novatis case which challenges the constitutionality of Section 3(d) of the Indian Patents
Act and it also challenges the position of the Section with that of the TRIPS Provisions.
Section 3(d) aims to prevent a phenomena which is called the “ever-greening” of the patents
which do not show significantly enhanced “efficacy”. The court in this case held that Section
3(d) is constitutional and held the court does not have jurisdiction to the issue relating to
TRIPS.
The author in this paper gives a detailed analysis of the Novartis Case and the issues related
to it. Then proceeds to the problems relating to Section 3(d) giving detailed analysis of the
words and phrases used in the said section. The author then gives recommendations for the
amendment of Section 3(d) also providing the difficulties in the amendment.
The Novartis Case
The issue which arouse in this case is relating to the patenting of drug Glivec which is
actually a beta crystalline form of imatinib mesylate which is a salt form of Imatinib free
base. Now Novartis already applied for Patent under the mailbox programme which was to be
reviewed by the Assistant of Controller of Patents. But the same was opposed by various drug
companies and NGOs and the Assistant of Controller of Patents rejected the patent
application by Novartis. Novartis previously acquired the EMR rights but as the Patent
application was rejected the right also died a natural death.
Novartis challenged the constitutional validity of Section 3(d) on the grounds that it violated
the Right to Equality under Article 14 of the petitioner and on the ground that there is
excessive delegation by the legislature of essential legislative function in Section 3(d). The
court rejected both the arguments and stated that if some guidelines and definitions are not
there in a statute then that itself will not make it unconstitutional. The Section is legislated in
such a way that there are no rigid formula for that and it have to be necessarily analysed case
to case basis and if a certain formula is to be included in the statute then the formula will be
case specific. Then the courts will be tied by Section 3(d) and there will be no relief that can
be provided by the courts in case of an invention of a new drug.
In contrast with the issue of Delegated Legislation the court said that the statute is skeletal in
nature and that the same is needed to be there. Also the section is framed in a way in which
the legislature lacks the knowledge and expertise to frame detailed rules and in this case the
framing of detailed rules is impossible. The power which is delegated was necessary owing to
the new inventions and also to the nature of pharmaceutical innovations.
What is “Efficacy”?
The court while deciding the Novartis Case relied on the Dorland’s Medical Dictionary
definition of “efficacy” and of “therapeutic” and went on to hold that efficacy just means
therapeutic efficacy which essentially means that drug will be tested on the basis of how
much it affects the body (healing of disease). It means that if any incremental innovation is
carried out on the drug which increases the efficacy of the drug relating to its potency (bio-
availability, resistance to heat, solubility etc. then the patent will not be granted to the drug.
The claim made by Novartis was that the newly invented drug have 30% more bio
availability than previously known substance and is patentable as it is an increase in efficacy.
First of all the court assumes that Section 3(d) only applies to pharmaceuticals which is not
the case as the application 3(d) is also to agro-chemicals, fertilizers, pesticides etc. The
problem which will arise is that the above principles which the court gives cannot be applied.
It is interesting to note that a large part of section 3(d) is copied from a drug regulatory
directive, if this is so then the whether the definition of efficacy should be according to the
provisions of the drug regulatory directive? Also there is no rigid definition of efficacy by the
US or EU Patent Law. The efficacy word which is used in the Section is new as in it is never
used in any other patent law in the world.
The time in which the author wrote this paper the case of Novartis AG was pending before
the IPAB, now the question arises whether the ratio that the High Court gives will be binding
on the IPAB and Patent Office. According to Article 227 of the Indian Constitution the
decisions of a High Court is binding on tribunals hence the decisions will be binding on IPAB
and as the Patent Office though administrative have quasi-judicial powers (Controller may
receive evidence on affidavits, summon witnesses, require discovery of documents, review
her decision etc.) which means that the position of the patent office is of the same as that of a
tribunal and hence the decisions are binding on both.
An Expansive “Explanation”
Normally an explanation which is provided in any Section can only “explain” the main
provision and cannot add or subtract anything from the Section. There are two phrases used
in Section 3(d) which are “enhancement of known efficacy” (main Section) and “significant
difference in properties with regard to efficacy” (in explanation). The problem which arise is
that the explanation provided in Section 3(d) actually expand the scope of the Section. The
explanation allows patentability of a drug which is a new form of known substance but with a
new use but the same is not patentable under the main Section. This is one of the
inconsistency that is there in Section 3(d).
Ironing Out the Creases in Section 3(d)
If we look at Section 3(d) we can see that it is somewhat a patent eligibility criteria rather
than a patentability standard. Now patent eligibility criteria means that what can be patented
(in most of the jurisdictions patent eligibility manifests itself in the term “invention”) and
patentability standard means that the requirements which are needed to be satisfied to grant
patents to those who have passed the patent eligibility criteria. But the intent of the legislature
in this case was to make Section 3(d) a patentability standard so if we analyse the Section we
can see that Section 3(d) is kind of a special rule for the non-obviousness requirement. Also
in a sense Section 3(d) is also providing a utility test which the innovation needs to satisfy.
Section 3(d) also uses the word “derivative” which is also an unsettled position. Currently a
case is going on between Roche, which owns a patent covering Tarceva (Erlotinib), an
anticancer compound and Cipla, which manufactures and sells a generic version, Erlocip
which will hopefully solve the position. However if we take into account the intent of the
legislature then the term “derivative” will be equal to “structurally similar”.
The position of the phrase “known substance” is also unclear. Take for example the Novartis
Case the drug in question if have to be compared then what it will compare to imatinib
mesylate or Imatinib free base? Also if something is known then it is not new, now can we
consider imatinib mesylate as known or new? According to the Patent Manual the
comparison will be with imatinib mesylate, however the same is case specific and also the
Manual does not carry the force of law and hence is not binding.
The author also gives recommendations that if a new drug is having a new use but having
same efficacy as that of a known substance then the same must be allowed to be patentable.
Also Section 3(d) prohibits “mere discovery of new forms” and hence the author gives an
argument stating that creation of a new form cannot be ever equated with discovery and
hence the same will not suffer the wrath of Section 3(d).
Even though the drug industry have developed but still it takes time for lab tests for drugs.
This goes completely against the assumption made in the Novartis Case relating to standard
of proof. The proof (lab test results) is required so as to help the court in determining if the
said drug has increased efficacy than the known substance. The standard of proof that is
prescribed is high which is unnecessary and unethical and a lenient standard must be
provided. The author refers to Special Considerations for Asserted Therapeutic or
Pharmacological Utilities guidelines and give suggestion that for proof data generated using
in vitro assays, or from testing in an animal model or a combination thereof must be used
which is more reasonable and that will not be burdensome on the applicants. Also there is no
strict rule regarding how much increase in efficacy happened and no guidelines are given in
the Act. So the author proposes two important suggestions one is to give a numerical value
for efficacy of products so that it will create an objective criteria and the second one is to
apply the “person having ordinary skill in the art” (PHOSITA) test as the court will not be
having expertise in this field.
Towards Bright Line Rules
Taking into consideration the different suggestions that the author provides the author
compiles all that and give a proposed amendment to Section 3(d) of the Indian Patents Act.
There is also an attached difficulty in the proposed amendment which is the passing of the
amendment. If we go by statutory amendment then it will take time and due to the politics
involved in that we are not 100% sure if the same amendment will be passed. The second
way is to change through government rules but the same also comes with limitations. The
rules cannot go against the statutory provisions of the Act and as the amendment proposed by
the author substitution of words, hence it is also not possible. The last choice is to go through
the Patent Manual but as discussed above the same does not have force of law the maximum
effect the Manual can do is that of recommendation or explanation. Hence the last choice that
is left to us is that of the interpretation of Section 3(d) in accordance with the proposed
changes by the judiciary.
Defining “Efficacy”
The author in this section relates the problems of patent office (understaffed and a relative
novice when it comes to examining pharmaceutical product patent applications) with the
intention of the legislature in drafting such a law. If a narrow interpretation is given which the
Madras High Court gave then that will be a bright line and it will be administratively easy for
the patent office. However the same will discourage a large number of pharmaceutical
industries to do research on incremental innovations. Hence the author proposes that a wider
interpretation must be given to Section 3(d) so as to include innovations having higher
efficacy in non-therapeutic ways.
Conclusion
The author conclude by saying that the Madras High Court was correct in holding the
constitutional validity of Section 3(d) but the same is attached with so many vague words and
no guidelines. Section 3(d) needs to be amended according to the author so as to provide
proper guidelines. While some of the suggestions in the paper are of a clarificatory nature and
immediately implementable, other issues such as the definition of “efficacy” will necessarily
involve a more detailed empirical/policy investigation.