ITC Limited Vs. The Controller of Patents

Introduction:  The case of ITC Limited Vs. The Controller of Patents, Designs & Trademark represents a significant clash between intellectual property rights and public health considerations in India. At its core, the dispute revolves around the rejection of a patent application for a novel nicotine aerosol delivery device, which ITC Limited claimed was distinct from electronic nicotine delivery systems (ENDS) like e-cigarettes. The Calcutta High Court, in its judgment, grappled with issues of procedural fairness, statutory interpretation, and the balance between innovation and public policy. This case study delves into the intricate details of the case, analyzing the factual and procedural background, the arguments presented, the judicial reasoning, and the broader implications for patent law in India.

Detailed Factual Background:  ITC Limited, a prominent Indian conglomerate, filed a patent application (Indian Patent Application No. 685/KOL/2015) on June 10, 2015, for an invention titled "A Device and Method for Generating and Delivery of a Nicotine Aerosol to a User." The device was described as a non-electronic system comprising a tube with two components: one containing an aerosol-generating substance (nicotine or alkaloids) and another holding an aerosol-promoting substance (pyruvic acid). These components were arranged in a parallel configuration, and upon inhalation, a chemical reaction between the substances produced a nicotine salt-based aerosol for delivery to the user. ITC emphasized that the device did not rely on electrical or electronic heating mechanisms, distinguishing it from e-cigarettes or ENDS.

The Controller of Patents and Designs, Kolkata, rejected the application on June 26, 2023, under Section 15 of the Patents Act, 1970, citing Section 3(b), which prohibits inventions whose primary or intended use is contrary to public order, morality, or causes serious prejudice to human, animal, or plant life, health, or the environment. The Controller’s decision referenced various statutes, an Indian Council of Medical Research (ICMR) White Paper, and other documents, including a newspaper article, to argue that the device posed health risks akin to e-cigarettes. ITC challenged this rejection in the Calcutta High Court, alleging procedural irregularities and misapplication of the law.

Detailed Procedural Background: The procedural journey of the case began with ITC’s patent application in 2015. The Controller issued a First Examination Report (FER), which did not cite documents supporting an objection under Section 3(b). Subsequently, a hearing notice dated May 1, 2023, introduced new documents, including an online newspaper article and references to the ICMR White Paper on ENDS dated May 29, 2019. ITC participated in a hearing on May 30, 2023, and submitted a reply on June 14, 2023. However, the Assistant Controller’s order on June 26, 2023, relied on additional documents and statutes not previously disclosed, including the Prohibition of Electronic Cigarettes Act, 2019, and various environmental and drug-related laws.

ITC appealed the rejection under Section 117A of the Patents Act, 1970, before the Calcutta High Court’s Commercial Division. The appeal, heard by Justice Krishna Rao, concluded on April 8, 2025, with the judgment delivered on April 30, 2025. ITC argued that the Controller’s reliance on undisclosed documents violated principles of natural justice, while the Controller defended the rejection, asserting that the device’s nicotine content exceeded permissible limits and posed public health risks.

The case raised several critical issues:  First, whether the Controller’s reliance on documents not disclosed to ITC during the examination process violated principles of natural justice? Second, whether the invention fell within the scope of Section 3(b) of the Patents Act, 1970, as an invention causing serious prejudice to human health? Third, whether the Controller’s classification of the device as an e-cigarette or ENDS was justified, given ITC’s claim of a non-electronic chemical reaction-based mechanism?

ITC Limited’s Submissions:  ITC argued that the device was a novel, non-electronic invention that generated nicotine aerosol through a chemical reaction, not electrical heating, distinguishing it from e-cigarettes or ENDS. It emphasized the device’s parallel configuration of nicotine (60-90 microliters) and pyruvic acid (120-140 microliters), delivering 0-15 micrograms of nicotine per puff, which he claimed was within safe limits. It contended that the Controller’s reliance on Section 3(b) was misplaced, as the provision required proof of “serious prejudice” tied to the invention’s primary or intended use, not speculative health risks.

It highlighted procedural lapses, arguing that the Controller introduced new documents, including the ICMR White Paper and various statutes, without providing ITC an opportunity to respond, violating natural justice. He cited Ssangyong Engineering and Construction Company Limited vs. National Highways Authority of India (2019 SCC OnLine SC 677), where the Supreme Court set aside an arbitral award for relying on undisclosed evidence, as analogous to the Controller’s actions.

It further argued that the Controller’s reliance on the Prohibition of Electronic Cigarettes Act, 2019, was erroneous, as the device was not an e-cigarette. He referenced a presentation by Shri DPS Parmar, former Deputy Controller, which excluded tobacco-related inventions from Section 3(b) examples, and cited Balsinor Nagrik Co-op. Bank Ltd. vs. Babubhai S. Pandya (AIR 1987 SC 849) to argue that statutory provisions must be read holistically. He also invoked Article 27(2) of the TRIPS Agreement and Article 4quarter of the Paris Convention, asserting that patentability should not be denied merely due to domestic sales restrictions. Finally, he cited Manganese Ore (India) Ltd. vs. Regional Asstt. CST ((1976) 4 SCC 124) to argue that the Controller’s inconsistent treatment of tobacco-related patents was arbitrary.

Controller’s Submissions: Controller argued that the device fell under Nicotine Replacement Therapy (NRT), which was not approved under the Drugs and Cosmetics Act, 1940, for the claimed nicotine levels (60-90 mg per tube). Chakraborty asserted that nicotine, even in therapeutic use, posed health risks, particularly to the lungs and cardiovascular system, and cited the ICMR White Paper to link ENDS, vapes, and NRT to nicotine addiction and lung diseases. He argued that the device’s aerosol delivery mechanism was akin to e-cigarettes, falling under Section 3(b) due to its potential to promote addiction.

He defended the procedural fairness, noting that ITC received a hearing notice on May 1, 2023, attended the hearing, and submitted a reply. He claimed the relied-upon documents were publicly available on government websites, and the ICMR White Paper was referenced in the hearing notice. He cited Article 47 of the Constitution, which mandates the State to improve public health, to justify the rejection. He also relied on Basawaraj and Another vs. Special Land Acquisition Officer ((2013) 14 SCC 81) and Fuljit Kaur vs. State of Punjab and Others ((2010) 11 SCC 455) to argue that prior erroneous grants of patents did not confer a right to similar relief.

Detailed Discussion on Judgments Cited by Parties: 

Ssangyong Engineering and Construction Company Limited vs. National Highways Authority of India (2019 SCC OnLine SC 677):  ITC cited this case to argue that the Controller’s reliance on undisclosed documents violated natural justice. The Supreme Court held that an arbitral tribunal’s use of government guidelines not in evidence prejudiced the appellant’s ability to present its case, warranting the award’s annulment under Section 34(2)(a)(iii) of the Arbitration and Conciliation Act, 1996. The Calcutta High Court found this precedent persuasive, noting that ITC was similarly denied an opportunity to address the Controller’s cited statutes and documents.

Balsinor Nagrik Co-op. Bank Ltd. vs. Babubhai S. Pandya (AIR 1987 SC 849):  ITC relied on this case to argue that Section 3(b)’s “serious prejudice” must be read with “primary or intended use.” The Supreme Court emphasized holistic statutory interpretation, which ITC used to contend that the Controller misapplied Section 3(b) by focusing on potential health effects rather than the device’s intended purpose. The High Court indirectly endorsed this by questioning the Controller’s broad application of Section 3(b).

Manganese Ore (India) Ltd. vs. Regional Asstt. CST ((1976) 4 SCC 124): ITC cited this case to highlight the Controller’s arbitrary rejection, given prior grants of tobacco-related patents. The Supreme Court held that administrative actions must be consistent to avoid arbitrariness under Article 14. The High Court acknowledged this argument but focused primarily on procedural fairness.

Basawaraj and Another vs. Special Land Acquisition Officer ((2013) 14 SCC 81): The Controller cited this case to argue that prior erroneous patent grants did not entitle ITC to similar relief. The Supreme Court clarified that Article 14 does not perpetuate illegality. The High Court did not directly engage with this precedent, prioritizing procedural issues.

Fuljit Kaur vs. State of Punjab and Others ((2010) 11 SCC 455): The Controller used this case to reinforce that mistaken relief in other cases does not confer legal rights. The Supreme Court held that equality under Article 14 cannot justify extending erroneous decisions. The High Court’s focus on natural justice rendered this argument secondary.

Detailed Reasoning and Analysis of Judge: Court’s reasoning centered on procedural fairness and the misapplication of Section 3(b). The Court found that the Controller’s reliance on undisclosed documents, including the ICMR White Paper, various statutes, and a newspaper article, violated natural justice. Citing Ssangyong Engineering, the Court held that ITC was prejudiced by its inability to address these materials, which were not referenced in the FER or hearing notice. The Court noted that the Controller’s claim of public availability did not excuse the failure to provide ITC an opportunity to respond.

On the substantive issue, the Court scrutinized the Controller’s classification of the device as an e-cigarette or ENDS. It highlighted ITC’s claim that the device used a chemical reaction, not electrical heating, and noted that the Controller’s reliance on the Prohibition of Electronic Cigarettes Act, 2019, was not raised in the hearing notice, denying ITC a chance to rebut. The Court also examined Section 3(b), referencing Shri DPS Parmar’s presentation, which excluded tobacco-related inventions from typical Section 3(b) exclusions like gambling machines or biological warfare devices. This suggested that the Controller’s application of “serious prejudice” was overly broad.

The Court further considered international obligations under Article 27(2) of the TRIPS Agreement and Article 4 quarter of the Paris Convention, which discourage patent denials based solely on domestic sales restrictions. It also noted Section 83(d) and (e) of the Patents Act, which distinguish patent grants from commercial exploitation, reinforcing that patentability should not hinge on public health policy alone. While acknowledging the Controller’s public health concerns under Article 47, the Court prioritized procedural fairness and remanded the case for fresh consideration.

Final Decision: The Calcutta High Court allowed ITC’s appeal (IPDPTA No. 121 of 2023) on April 30, 2025, setting aside the Controller’s order dated June 26, 2023. The matter was remanded to the Controller for fresh consideration within six months by a different officer, with instructions to decide without influence from the Court’s observations.

Law Settled in the Case:  The case clarified that patent examination processes must adhere to principles of natural justice, requiring controllers to disclose all relied-upon documents to applicants for a fair opportunity to respond. It also underscored that Section 3(b) of the Patents Act, 1970, should be applied narrowly, focusing on an invention’s primary or intended use, not speculative health risks. The judgment reinforced that patent grants are distinct from commercial exploitation, aligning with TRIPS and Paris Convention principles, and highlighted the need for consistent application of patent law to avoid arbitrariness.

Case Title:ITC Limited Vs. The Controller of Patents: Date of Order:April 30, 2025: Case No.IPDPTA No. 121 of 2023: Name of Court:High Court at Calcutta: Name of Hon'ble Judge:Justice Krishna Rao

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