Importation of Patented product constitutes “working” a patent in India if it meets public demand
Introduction: In the intricate realm of patent litigation, where innovation intersects with public health, the case of Cipla Limited vs. Novartis AG & Anr., decided by the Delhi High Court on March 9, 2017, stands as a pivotal exploration of patentee rights, public interest, and interim injunctive relief. This appeal, arising from a suit to restrain patent infringement, pitted Novartis AG, a Swiss pharmaceutical giant, against Cipla Limited, an Indian generic drug manufacturer, over the bronchodilator drug Indacaterol, patented under Indian Patent No. 222346. The dispute centered on whether Novartis’s importation-based working of the patent justified an injunction against Cipla’s generic version, or if public interest and alleged non-working warranted its denial. The Division Bench upheld the Single Judge’s interim injunction, navigating the complex interplay of the Patents Act, 1970, public health considerations, and global trade obligations.
Detailed Factual Background:Novartis AG, a Swiss company (Respondent No. 1), holds Indian Patent No. 222346 for Indacaterol, a bronchodilator used to manage chronic obstructive pulmonary disease (COPD), marketed in India as Onbrez through Lupin Limited (Respondent No. 2), an Indian company, under a 2012 agreement. Indacaterol, a novel beta-agonist, offers 24-hour relief with rapid onset within five minutes, distinguishing it from other bronchodilators. Novartis manufactures Indacaterol in Switzerland, importing it into India without local production.
Cipla Limited, an Indian pharmaceutical company, launched its generic Indacaterol under the brand Unibrez in October 2014, later renamed Indaflo following a trademark dispute. Cipla priced its drug at Rs. 130 for 10 tablets, significantly lower than Novartis’s Rs. 677, claiming greater affordability and access for COPD patients. Cipla alleged that Novartis imported only small quantities (e.g., 53,865 units in 2013, equating to roughly 4,000 patients’ monthly supply), insufficient for India’s estimated 1.5 crore COPD patients, thus failing to work the patent locally. N
ovartis countered that its imports met demand and denied the 1.5 crore patient estimate, asserting that Indacaterol’s unique efficacy justified its patent protection. A prior trademark suit (CS(OS) 3356/2014) saw Cipla undertake to cease using “Unibrez” on November 17, 2014, after Novartis alleged passing off. Cipla also filed a revocation petition under Section 66 of the Patents Act on October 22, 2014, citing public interest, shortly before launching its generic product.
Detailed Procedural Background:The dispute originated in CS(OS) 3812/2014, filed by Novartis in the Delhi High Court, seeking a permanent injunction to restrain Cipla from infringing Patent No. 222346, alongside damages, rendition of accounts, and delivery-up. Novartis filed IA 24863/2015 under Order XXXIX Rules 1 and 2 CPC for an interim injunction. On January 9, 2015, the Single Judge granted the injunction, restraining Cipla from manufacturing, selling, or importing Indacaterol or Indacaterol Maleate, pending either the suit’s resolution or the outcome of a compulsory license application, if Cipla filed one. The order allowed Cipla to seek modification if a compulsory license was granted. Aggrieved, Cipla appealed in FAO(OS) 21/2015, accompanied by applications CM Nos. 731/2015, 1288/2015, and 2098/2015. Novartis filed a cross-objection (CM No. 2090/2015), challenging the injunction’s limitation tied to compulsory licensing.
Issues Involved in the Case:The case presented several critical legal questions at the nexus of patent law, public interest, and interim relief:
Whether Novartis’s importation of Indacaterol constituted sufficient “working” of the patent in India under the Patents Act, entitling it to an injunction under Section 48? Whether Section 83’s general principles, emphasizing local working and public interest, curtailed the patentee’s exclusive rights under Section 48, particularly for a life-managing drug like Indacaterol?
Detailed Submission of Parties: Cipla argued that the injunction was unjust, as Novartis failed to work the patent in India. Cipla contended that Section 48’s patentee rights, prefaced by “subject to the other provisions contained in this Act,” were subordinate to Section 83’s principles, which require patents to be worked commercially in India, not merely imported, and to ensure affordable public access. Cipla highlighted Novartis’s limited imports (e.g., 53,865 units in 2013, serving ~4,000 patients against 1.5 crore COPD patients), arguing that this constituted non-working and impeded public health, per Section 83(d). Cipla’s Indaflo, priced at Rs. 130 versus Onbrez’s Rs. 677, better served public interest by enhancing access. Cipla cited F. Hoffmann La Roche vs. Cipla (2009) for public interest as a fourth factor in injunctions, alongside Article 7 of TRIPS, the Doha Declaration, and India’s GATT submissions, which prioritize public health and local working. Cipla also referenced Franz Xaver Huemer vs. New Yash Engineers (1996), where non-use justified denying an injunction, and Glaverbel S.A. vs. Dave Rose (2010), suggesting royalties as an alternative. Cipla argued that the Single Judge erred in excluding Section 83’s principles from civil court considerations, asserting that public interest warranted denying the injunction.
Novartis defended the injunction, arguing that Section 48 granted exclusive rights to prevent unauthorized use, unimpeded by Section 83, which applies to compulsory licensing under Chapter XVI, not civil injunctions. Novartis emphasized that its patent faced no credible validity challenge, establishing a prima facie case. It denied Cipla’s 1.5 crore patient estimate, asserting that its Swiss-manufactured imports, marketed via Lupin, sufficiently met India’s COPD demand, per Telemecanique & Controls vs. Schneider Electric (2002). Novartis highlighted Indacaterol’s unique efficacy, justifying its patent protection and higher pricing. It accused Cipla of mala fide conduct, citing the Unibrez trademark imitation and premature generic launch post-revocation filing, undermining Cipla’s equitable standing. Novartis distinguished Cipla’s precedents: Hoffmann La Roche involved a challenged patent, unlike the present case; Franz Xaver Huemer concerned total non-use, not applicable to Novartis’s imports; and E Bay’s public interest test was U.S.-specific. Novartis’s cross-objection challenged the injunction’s linkage to compulsory licensing, arguing that Section 48 rights were absolute pending trial.
Detailed Discussion on Judgments Cited by Parties: The court’s analysis was shaped by a robust array of precedents, each contextualized to address patent rights, public interest, and interim relief. The key judgments, their complete citations, and their relevance are as follows:
F. Hoffmann La Roche Limited vs. Cipla Limited, 2009 (40) PTC 125 (Del) (DB): The Division Bench recognized public interest as a fourth factor in injunctions, alongside prima facie case, balance of convenience, and irreparable harm, noting that access to life-saving drugs in India warranted caution. Cipla relied on this to argue that Indacaterol’s role in COPD and its pricing disparity favored public interest over injunction. The court distinguished it, noting that Hoffmann La Roche involved a challenged patent, unlike Novartis’s unchallenged patent, and Indacaterol was not a life-saving drug.
Franz Xaver Huemer vs. New Yash Engineers, 1996 PTC (16) 232 (Del) (DB): The Division Bench held that a patentee’s non-use disentitled them to interim injunctions, citing English and U.S. authorities like Plympton vs. Malcolmson (1875). Cipla cited this to argue that Novartis’s non-manufacture constituted non-working. The court distinguished it, finding that Novartis’s imports constituted working, unlike the total non-use in Huemer.
Telemecanique & Controls (I) Limited vs. Schneider Electric Industries SA, 2002 (24) PTC 632 (Del) (DB): The Division Bench held that imports suffice for working a patent if they meet public demand, rejecting the need for local manufacture. Novartis relied on this to defend its importation model. The court applied this, finding no conclusive evidence that Novartis’s imports were insufficient, pending trial.
Glaverbel S.A. vs. Dave Rose, 2010 (43) PTC 630 (Del): A Single Judge suggested royalties as an alternative to injunctions in certain patent disputes. Cipla cited this to propose royalties over injunction. The court found it inapplicable, as Novartis’s prima facie case and Cipla’s infringement warranted injunctive relief.
Bard Peripheral Vascular, Inc. vs. C.R. Bard, Inc., 670 F.3d 1171 (Fed. Cir. 2012): The U.S. Court of Appeals considered royalties in lieu of injunctions in licensing disputes. Cipla cited this to support royalties. The court deemed it irrelevant, as no licensing arrangement existed, and U.S. law differed from India’s patent regime.
Novartis AG vs. Mehar Pharma, 2005 (30) PTC 160 (Bom): The Bombay High Court denied an injunction due to a challenged patent’s validity. Cipla cited this to question injunctions, but the court distinguished it, noting no credible challenge to Novartis’s patent.
Advanced Cardiovascular Systems vs. Medtronic Vascular, 579 F. Supp. 2d 554 (D. Del. 2008): A U.S. court considered prior licensing in injunction decisions. Cipla cited this, but the court found it inapplicable absent licensing in the present case.
eBay Inc. vs. MercExchange, L.L.C., 547 U.S. 388 (2006): The U.S. Supreme Court included public interest in its four-factor injunction test. Cipla relied on this, but the court rejected its applicability, noting India’s distinct statutory framework.
Baer vs. Union of India, WP 1323/2013 (Del, decided on 15.07.2014): A compulsory licensing case irrelevant to civil injunctions. Cipla cited it, but the court dismissed its relevance.
The court also considered Article 7 of TRIPS, the Doha Declaration, and India’s GATT submissions, cited by Cipla, but found them more relevant to compulsory licensing than civil injunctions.
Detailed Reasoning and Analysis of Judge: The Division Bench meticulously upheld the Single Judge’s injunction, grounding its decision in statutory interpretation, precedent, and equitable principles. The court first addressed the patent’s validity, noting no credible challenge to Patent No. 222346, establishing Novartis’s prima facie case under Section 48, which grants exclusive rights to prevent unauthorized manufacture, sale, or import. Cipla’s infringement, by launching Indaflo, was undisputed, strengthening Novartis’s claim.
On the interplay between Sections 48 and 83, the court rejected Cipla’s argument that Section 83’s principles curtailed Section 48 rights in civil injunctions. Section 48’s preface, “subject to the other provisions,” did not extend to Section 83, which operates under Chapter XVI (Working of Patents, Compulsory Licenses, and Revocation) and guides authorities, not courts, in exercising powers like granting compulsory licenses. Section 83’s own preface, “without prejudice to the other provisions,” further insulated Section 48 from its ambit. The court clarified that Section 83’s considerations—local working, public health, affordability—apply to compulsory licensing proceedings, not interim injunctions, ensuring that patentee rights remain robust absent statutory overrides like Section 84 or 85.
The court addressed the “working” issue, relying on Telemecanique to hold that imports constitute working if they meet demand. Cipla’s data (e.g., 53,865 units for ~4,000 patients) and Novartis’s counter-articles on COPD prevalence were inconclusive without trial evidence, but the court found no basis to deem imports insufficient at the interim stage. Indacaterol’s non-life-saving status, unlike cancer drugs, and the availability of other COPD treatments, diminished Cipla’s public interest argument.
On public interest, the court acknowledged its relevance, per Hoffmann La Roche, but held it insufficient to override a valid patent’s protection absent a challenged validity or exceptional circumstances. Cipla’s pricing advantage was noted, but the court prioritized Novartis’s statutory rights, finding that denying the injunction would cause irreparable harm via market erosion, uncompensable by damages. Cipla’s mala fide conduct—trademark imitation and launching Indaflo post-revocation filing—further weakened its equitable standing.
The court dismissed Novartis’s cross-objection, finding the Single Judge’s linkage to compulsory licensing a reasonable interim measure, though not affecting Section 48’s primacy. The court concluded that the balance of convenience favored Novartis, given the patent’s validity and Cipla’s clear infringement, and public interest did not sufficiently countervail to deny relief.
Final Decision:On March 9, 2017, the Delhi High Court dismissed Cipla’s appeal (FAO(OS) 21/2015) and Novartis’s cross-objection (CM No. 2090/2015), upholding the Single Judge’s interim injunction restraining Cipla from manufacturing, selling, or importing Indacaterol or Indacaterol Maleate until the suit’s resolution or a compulsory license determination. No costs were ordered.
Law Settled in this Case: The judgment clarified several principles governing patent injunctions and public interest:
Section 48 of the Patents Act grants patentees exclusive rights to prevent unauthorized use, subject only to provisions directly impinging on those rights, not Section 83’s general principles.
Section 83’s principles, emphasizing local working and public interest, apply to compulsory licensing and revocation under Chapter XVI, not civil court injunctions.
Importation constitutes “working” a patent in India if it meets public demand, negating the need for local manufacture .
Public interest is a factor in interim injunctions but does not override a valid patent’s protection absent a credible validity challenge or exceptional circumstances.
A patentee’s prima facie valid patent and clear infringement establish entitlement to an injunction, with irreparable harm presumed from market erosion.
Mala fide conduct, like trademark imitation or premature generic launches, weakens a defendant’s equitable claim against injunctions.
Sufficiency of imports to meet demand is a triable issue, not determinable at the interim stage without conclusive evidence.
Case Title: Cipla Limited Vs. Novartis AG & Anr.
Date of Order: March 9, 2017
Case No.: FAO(OS) 21/2015
Name of Court: High Court of Delhi
Name of Hon'ble Judge: Justice Badar Durrez Ahmed, Justice Sanjeev Sachdeva
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.
Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
