Novartis AG Vs Union of India

Novartis AG Vs Union of India:Test of Enhanced Efficacy under Section 3 (d) of Patent Act 1970 in relation to pharmaceutical Preparation

Case Title: Novartis AG vs Union of India & Ors.

Date of Order: April 1, 2013

Case No.: Civil Appeal Nos. 2706-2716 of 2013

Neutral Citation: AIR 2013 SUPREME COURT 1311

Name of Court: Supreme Court of India

Name of Judge: Ranjana Prakash Desai, Aftab Alam, H. J.

Introduction :This case primarily revolves around the interpretation and application of section 3(d) of the Patents Act, 1970, in relation to the patentability of a beta crystalline form of Imatinib Mesylate, a drug used to treat chronic myeloid leukemia. The Supreme Court of India had to decide whether this new crystalline form of the drug met the necessary requirements for patentability under Indian patent law, particularly in light of the TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement.

Background:Novartis AG, a pharmaceutical company, filed an application for a patent for the beta crystalline form of Imatinib Mesylate in 1998. The drug, marketed under the names Glivec and Gleevec, is an important cancer treatment. India’s patent regime, however, had undergone significant reforms in 2005, including the introduction of section 3(d), which aimed to prevent "evergreening" of patents, particularly in the pharmaceutical industry. This provision disallows patents for minor modifications of known substances unless they show enhanced efficacy.

Novartis AG sought a patent for a new form of Imatinib Mesylate, claiming that the beta crystalline form exhibited superior stability, better processability, and lower hygroscopicity compared to the alpha crystalline form. The application, filed in 1998, was rejected by the Indian Patent Office under section 3(d), as the change was considered a mere modification of an existing substance with no substantial increase in efficacy.

Historical Development of Patent Law :The Supreme Court of India provided a detailed account of the evolution of patent law in India, particularly in the context of pharmaceuticals. This historical analysis was essential to understand the legislative intent behind the Patents Act, 1970, and its subsequent amendments, especially the introduction of Section 3(d). Below is an overview of the historical development as discussed in the judgment:

Pre-Independence Era: Patents and Designs Act, 1911:The patent regime in India during British rule was governed by the Patents and Designs Act, 1911. This law allowed for both product and process patents, including in pharmaceuticals and chemicals. However, the system was criticized for disproportionately benefiting foreign entities. It stifled innovation in India and made medicines expensive and inaccessible. The Indian pharmaceutical industry remained underdeveloped, with domestic entities struggling to compete with multinational corporations (MNCs).

Post-Independence Review of Patent Law:After Independence, the government recognized the need for a patent regime tailored to India’s socio-economic conditions.

Tek Chand Committee (1949–1950):The government constituted a committee under Justice (Dr.) Bakshi Tek Chand to review the 1911 Act.Findings: The patent law failed to stimulate indigenous innovation. Patents for food, medicines, and surgical devices should ensure affordability and availability to the public. Recommendations included limiting abuse of patent rights, introducing compulsory licensing, and revoking patents that were not adequately exploited in India. Result: Based on these recommendations, the 1911 Act was amended in 1950 and 1952 to introduce compulsory licensing provisions for food and medicines.

Justice N. Rajagopala Ayyangar Committee (1957–1959): A second committee, headed by Justice N. Rajagopala Ayyangar, conducted a comprehensive review of the patent system.Findings: The 1911 Act primarily benefited foreign entities and did not encourage domestic research or industrial development. A large majority of patents in India were held by foreigners, often without significant economic or technological benefits for India.Recommendations: Retain process patents but exclude product patents for food, medicines, and chemicals to make essential products affordable and accessible. Introduce strict working requirements to prevent abuse of patents.Create a patent law aligned with India’s developmental needs. Result: These recommendations became the basis for the Patents Act, 1970.

Patents Act, 1970:Enacted to replace the 1911 Act, the Patents Act, 1970 was a landmark reform that redefined India’s patent regime.

Exclusion of Product Patents: Section 5 explicitly barred product patents for food, medicines, and chemicals. Only process patents were allowed, ensuring that generic manufacturers could produce affordable versions of drugs using alternate methods.Compulsory Licensing: Strengthened provisions to prevent monopoly abuse and ensure public access to essential products.Shortened Patent Duration::The term for process patents in pharmaceuticals and food was reduced to five years from the date of sealing or seven years from the date of filing, whichever was earlier.Impact: This law catalyzed the growth of India’s domestic pharmaceutical industry, enabling Indian companies to develop affordable generic medicines. By the 1990s, Indian pharmaceutical firms accounted for a significant share of the domestic market and emerged as global leaders in generic drug production.

TRIPS Agreement and its Impact:India became a founding member of the World Trade Organization (WTO) in 1995, which included obligations under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).TRIPS Requirements: Mandated the introduction of product patents in all fields, including pharmaceuticals, by 2005. Required provisions for patent protection of at least 20 years from the filing date.

India’s Transitional Arrangements: India used the transitional period allowed under TRIPS (1995–2005) to delay the implementation of product patents for pharmaceuticals and agricultural chemicals. During this period, India amended the Patents Act thrice:

1999 Amendment: Introduced the "mailbox system" for filing product patent applications.. 2002 Amendment: Enhanced intellectual property rights protection to align with TRIPS. 2005 Amendment: Reintroduced product patents in pharmaceuticals and agricultural chemicals but incorporated safeguards like Section 3(d).

Introduction of Section 3(d):Section 3(d) was introduced in the 2005 Amendment to prevent "evergreening" of patents.Purpose: To ensure that patents are granted only for genuine innovations that demonstrate enhanced efficacy, not for minor modifications of existing drugs. To balance the TRIPS obligations with India’s need to ensure access to affordable medicines. The Supreme Court emphasized that Section 3(d) embodies the Indian legislature's conscious decision to adopt a higher threshold of patentability, particularly for pharmaceuticals.

Effect of the 1970 Act and Subsequent Developments:The Supreme Court noted the remarkable growth of the Indian pharmaceutical industry due to the 1970 Act. Statistics Highlighted: The market share of Indian companies rose from 30% in 1970 to over 75% by 2005. India became known as the “pharmacy of the world,” exporting affordable generic medicines globally.The Supreme Court traced the evolution of India’s patent law to underscore the unique socio-economic context in which these laws were framed. The historical trajectory demonstrated India’s deliberate policy choices to balance innovation with public health. The Patents Act, 1970, and the subsequent introduction of Section 3(d) were critical in shaping a patent regime that prioritized affordable access to medicines while adhering to international obligations under TRIPS.

Procedural Background:The procedural trajectory of the case spanned several stages, from the application at the Controller of Patents to the final judgment by the Supreme Court of India. Below is the detailed procedural background:

Application at the Controller of Patents:Patent Application: Novartis AG filed Patent Application No. 1602/MAS/1998 on July 17, 1998, seeking protection for the beta crystalline form of Imatinib Mesylate, used for treating chronic myeloid leukemia.Grounds for Opposition: The application faced five pre-grant oppositions filed under Section 25(1) of the Patents Act, 1970, by various entities, including generic manufacturers and public interest groups. The oppositions argued that: The invention lacked novelty and inventive step. It did not qualify as patentable under Section 3(d) as there was no significant enhancement in therapeutic efficacy.Decision of the Controller (January 25, 2006): The Assistant Controller of Patents rejected the application based on: Anticipation of the invention by prior publication (Zimmermann patent). Obviousness to a person skilled in the art. Non-patentability under Section 3(d).Invalidity of the priority date claimed (July 18, 1997). The decision was issued in five separate orders against each pre-grant opposition.

Writ Petitions in the Madras High Court: Novartis AG filed five writ petitions challenging the Assistant Controller’s decision. Additionally, Novartis AG and its Indian power of attorney holder filed two writ petitions challenging the constitutional validity of Section 3(d), contending that it violated Article 14 of the Constitution and India’s obligations under TRIPS.

Transfer to the Intellectual Property Appellate Board (IPAB): After the establishment of the IPAB, the five writ petitions against the Controller's orders were transferred to the IPAB for adjudication, as per the High Court's order dated April 4, 2007.Judgment on Section 3(d) by Madras High Court (August 6, 2007): The constitutional validity of Section 3(d) was upheld by the High Court, which stated that the provision aimed to prevent "evergreening" of patents and ensure access to affordable medicines. Novartis AG did not pursue the matter further regarding this judgment.

Appeals before the Intellectual Property Appellate Board (IPAB)Hearing and Decision (June 26, 2009): The IPAB reversed the Controller’s findings on novelty, inventive step, and the priority date. It held that: The invention satisfied the tests of novelty and non-obviousness. The claimed priority date (July 18, 1997) was valid. However, the IPAB dismissed the appeal, stating that the beta crystalline form of Imatinib Mesylate did not meet the requirements of Section 3(d), as the claimed invention failed to demonstrate enhanced therapeutic efficacy. The IPAB also suggested that the high pricing of the drug during Novartis’s exclusive marketing rights (EMR) period was a factor under Section 3(b), as it could create public disorder by making life-saving drugs unaffordable.

Special Leave Petitions (SLPs) before the Supreme Court:Direct Approach to the Supreme Court: Novartis AG filed Special Leave Petitions (SLPs) under Article 136 of the Constitution, bypassing the High Court, citing the urgency of the case as the patent’s term would expire in July 2018. The respondents initially opposed this direct appeal, but later consented due to the case's importance.

Hearing of Appeals:The Supreme Court heard arguments from all parties, including Novartis AG, generic manufacturers, and public interest groups like the Cancer Patients Aid Association. The Court considered the broader implications of the case, including: India’s commitment to public health and affordable access to medicines..International obligations under the TRIPS agreement. The legislative intent behind Section 3(d).

Issues Raised: Whether the beta crystalline form of Imatinib Mesylate qualifies as a new invention under section 2(1)(j) and (ja) of the Patents Act? Whether section 3(d) of the Patents Act, which disallows patents on minor modifications unless they demonstrate enhanced efficacy, applies to this case? 

Submissions of Parties:Novartis AG: The company argued that the beta crystalline form of Imatinib Mesylate was a novel and non-obvious invention, and its superior properties in terms of stability and processability justified the grant of a patent. They also challenged the applicability of section 3(d), contending that it violates India's TRIPS obligations.

Union of India & Respondents: The Indian government and public interest groups such as the Cancer Patients Aid Association argued that granting a patent on the beta crystalline form would lead to monopolistic pricing, making the drug unaffordable to many, particularly in India, where affordable generic versions are crucial. They emphasized the need for patent law reforms to ensure that essential medicines remain accessible to the public.

Provisions of Law Discussed: Section 2(1)(j) and (ja): Definitions of “invention” and “inventive step.” Section 3(d): Prohibition on patents for minor modifications of known substances unless they show enhanced efficacy.

Key Elements of the Test for Enhanced Efficacy:

Therapeutic Efficacy is the Benchmark: The Court held that for a new form of a known substance to be patentable under Section 3(d), it must demonstrate enhanced therapeutic efficacy. This means that the new form must show a tangible improvement in the therapeutic effect provided by the substance in treating or preventing a disease.Comparison with the Known Substance: The new form must be compared with the previously known substance (e.g., the free base or earlier forms) to determine whether there is a significant enhancement in therapeutic outcomes.Physical Properties Alone Are Insufficient: Improvements in physical properties like thermodynamic stability, bioavailability, processability, or flow characteristics are insufficient unless they lead to a demonstrable enhancement in therapeutic efficacy.The Court rejected Novartis’s argument that higher bioavailability (absorption in the body) alone constituted enhanced efficacy, noting that bioavailability does not necessarily translate into better therapeutic outcomes.Objective and Quantifiable Evidence Required: The applicant must provide clear, objective, and scientifically quantifiable evidence to substantiate claims of enhanced therapeutic efficacy. Merely asserting or relying on improvements in physical properties or general claims of efficacy enhancement without robust data does not meet the requirement.Therapeutic Efficacy Depends on the Nature of the Substance: The Supreme Court noted that the determination of therapeutic efficacy will vary depending on the nature of the substance. For pharmaceutical drugs, the focus is on the direct therapeutic impact on the body and its ability to cure, prevent, or mitigate a disease.

Detailed Analysis and Reasoning of the Judge:Court’s Observations on Novartis's Claims:

Claims of Beta Crystalline Form: Novartis argued that the beta crystalline form of Imatinib Mesylate had superior physical properties, including stability and reduced hygroscopicity, and higher bioavailability compared to the free base form. However, the Court noted that Novartis failed to demonstrate how these improved properties translated into enhanced therapeutic efficacy for treating chronic myeloid leukemia.Insufficient Evidence: The affidavits and data provided by Novartis did not conclusively establish that the beta crystalline form offered a better therapeutic effect compared to the free base form of Imatinib. The Court observed that the therapeutic efficacy of the free base form was already well-known, and Novartis could not prove that the beta crystalline form had a superior effect in treating the disease.Interpretation of Section 3(d): The Court stated that the legislative intent behind Section 3(d) is to prevent "evergreening" by ensuring that patents are granted only for genuine innovations that contribute significantly to therapeutic efficacy. The Court emphasized the importance of ensuring access to affordable medicines while promoting innovation.

Key Statement from the Judgment:The Court articulated the test for enhanced efficacy as follows:The test of enhanced efficacy in the context of Section 3(d) would depend upon the function, utility, or purpose of the product under consideration. In the case of a medicine, the test of efficacy can only be applied with reference to its therapeutic efficacy."

Decision:The Supreme Court dismissed Novartis AG's appeals and upheld the rejection of the patent application for the beta crystalline form of Imatinib Mesylate. The Court ruled that the invention did not meet the standards of patentability under Indian law, particularly section 3(d), and affirmed the importance of ensuring that patent laws do not hinder access to essential medicines.

Concluding Note:The case highlights the tension between intellectual property rights and public health concerns in the context of patent law. It underscores the importance of ensuring that patent regimes, while promoting innovation, do not impede access to life-saving medicines, particularly in developing countries like India. The judgment reinforces India's approach to preventing evergreening in the pharmaceutical industry, thereby safeguarding public health while honoring international obligations under TRIPS.

Disclaimer:The information shared here is intended to serve the public interest by offering insights and perspectives. However, readers are advised to exercise their own discretion when interpreting and applying this information. The content herein is subjective and may contain errors in perception, interpretation, and presentation.

Advocate Ajay Amitabh Suman,[Patent and Trademark Attorney],High Court of Delhi