Novartis AG & Anr. Vs. Cipla Ltd.

Introduction: In the intricate tapestry of intellectual property law, few cases exemplify the tension between patent rights and public health as vividly as Novartis AG & Anr. v. Cipla Ltd., decided by the Delhi High Court on January 9, 2015. This legal skirmish revolved around the enforcement of a patent for INDACATEROL, a groundbreaking bronchodilator for chronic obstructive pulmonary disease (COPD), against the backdrop of India’s burgeoning public health crisis. The plaintiffs, Novartis AG and its Indian subsidiary, sought to protect their statutory monopoly, while the defendant, Cipla Ltd., challenged the exclusivity by invoking the dire needs of COPD patients.

Detailed Factual Background: The dispute centered on Indian Patent No. 222346, granted to Novartis AG, a Swiss pharmaceutical giant, on August 5, 2008, covering INDACATEROL and its maleate salt, INDACATEROL Maleate. Novartis AG, with a legacy spanning over 250 years, is renowned for its research and development in pharmaceuticals, boasting an investment of USD 7.2 billion in 2013 alone. Its Indian arm, Novartis Healthcare Pvt. Ltd., partnered with Lupin Ltd. under a 2012 agreement to market INDACATEROL Maleate in India as ONBREZ, an inhalation powder for COPD treatment. INDACATEROL, a novel ultra-long-acting β2-agonist, offered 24-hour bronchodilation, a significant advancement over existing 12-hour therapies, approved globally by the European Medicines Agency (EMA) in 2009 and the U.S. FDA in 2011.

Cipla Ltd., an Indian pharmaceutical powerhouse with expertise in respiratory drugs, emerged as the antagonist, launching its own INDACATEROL-based product in October 2014. Cipla’s move followed Novartis’s alleged failure to meet India’s COPD demand, estimated at 1.5 crore patients annually, with imports covering a mere 0.03% of the need (54,000 units against 18 crore units). Cipla argued that Novartis’s high-priced imports—contrasted with its own affordable alternative—exacerbated the plight of India’s COPD-afflicted population, a demographic burdened by smoking, biomass fuel exposure, and inadequate healthcare access.

Novartis countered that INDACATEROL was a meticulously developed New Chemical Entity (NCE), born from late-1990s research to provide sustained relief for COPD patients. Manufactured centrally in Switzerland to ensure quality and cost-efficiency, the drug’s global sales soared, reaching USD 192.2 million in 2013. In India, sales grew from INR 4.2 million in 2010 to INR 23.6 million by September 2014, though Cipla claimed this was a fraction of the need, citing studies projecting COPD’s rise to 2.2 crore cases in the coming years.

Detailed Procedural Background

The legal journey began when Novartis filed a suit (CS(OS) 3812/2014) in the Delhi High Court, seeking a permanent injunction against Cipla for infringing Patent No. 222346, alongside claims for damages and delivery-up. Concurrently, Novartis moved an interim injunction application (I.A. No. 24863/2014) under Order XXXIX Rules 1 and 2 of the CPC.

Cipla, yet to file its written statement, responded to the interim application with a reply dated December 11, 2014, and had earlier, on October 22, 2014, petitioned the Central Government under Sections 66 and 92(3) of the Patents Act, 1970, to revoke Novartis’s patent, citing non-availability and public interest. Novartis filed a rejoinder, reinforcing its patent’s validity and market efforts. The court also noted Cipla’s application to implead the government, on which notice was issued but unresolved by the judgment date. The hearing culminated in a detailed order balancing patent rights with public health considerations, disposing of the interim application while setting the suit for further proceedings.

Issues Involved in the Case: The case distilled into two core issues. First, whether Novartis established a prima facie case of patent infringement warranting an interim injunction, considering the patent’s validity and Cipla’s defenses? Second, whether public interest—specifically the alleged inadequacy of INDACATEROL’s supply and affordability—could override Novartis’s statutory rights under Section 48 of the Patents Act, and if so, how the court should balance these competing interests at the interim stage.

Detailed Submission of Parties: Novartis asserted that Patent No. 222346, unchallenged since its grant in 2008, conferred an exclusive right under Section 48 to prevent Cipla from manufacturing or selling INDACATEROL Maleate. They highlighted the drug’s inventive merit, evidenced by its global approvals and unchallenged patents worldwide, and argued that Cipla’s October 2014 launch constituted clear infringement. On public interest, Novartis denied Cipla’s claims of inadequate supply, citing sales data and readiness to meet any verified demand, and argued that Cipla’s cheaper alternative stemmed from bypassing R&D costs, not superior accessibility. They proposed licensing discussions, which Cipla rebuffed, and emphasized that compulsory licensing or revocation pleas belonged before the Controller, not the civil court.

Cipla mounted a multi-pronged defense. They challenged the patent’s validity under Section 64, alleging obviousness and lack of novelty, though without detailed substantiation at this stage. Their primary thrust was public interest, invoking Sections 83 and 84 to argue that Novartis’s import-based monopoly failed to meet India’s COPD crisis, with 99.97% of demand unmet. Cipla positioned itself as a savior, offering an affordable alternative at one-fifth Novartis’s price, and cited Articles 7 and 21 of the TRIPS Agreement and Constitution, respectively, to underscore the right to health. They suggested royalty deposits as an alternative to injunction, urging the court to prioritize patient access over patent exclusivity.

In rejoinder, Novartis dismissed Cipla’s revocation plea as an admission of patent validity, arguing that invoking Section 92(3) implied acceptance of infringement. They contested Cipla’s demand estimates as unverified, noting INDACATEROL’s suitability for mild-to-moderate COPD only, and denied any legal mandate for local manufacturing, citing their Swiss plant’s efficiency and quality control.

Detailed Discussion on Judgments Along with Their Complete Citation Cited by Parties and Their Respective Context Referred in This Case:The parties and court leaned on a rich tapestry of precedents, each illuminating distinct facets of patent law and equity.

1. American Cyanamid Co. v. Ethicon Ltd., [1975] RPC 513 (House of Lords)
   Cited by the court, this seminal UK decision established the triad of prima facie case, balance of convenience, and irreparable loss as the bedrock for interim injunctions. The Court  applied it to assess Novartis’s infringement claim against Cipla’s public interest defense, emphasizing judicial discretion in equitable relief.
2. eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) (U.S. Supreme Court)
   Referenced by the court, this U.S. ruling rejected automatic injunctions in patent cases, mandating a four-factor test: irreparable injury, inadequacy of legal remedies, balance of hardships, and public interest. Justice Singh drew on its public interest prong to weigh Cipla’s plea against Novartis’s rights, noting its global influence on patent jurisprudence.
3. Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc., 670 F.3d 1171 (Federal Circuit, 2012)
   Cited by the court, this U.S. case denied a permanent injunction for a vascular graft patent, prioritizing public access to life-saving devices. Justice Singh analogized it to INDACATEROL’s role in COPD treatment, exploring royalty as an alternative to injunction, though finding insufficient data to apply it here.
4. F. Hoffmann-La Roche Ltd. v. Cipla Ltd., 148 (2008) DLT 598 (Delhi High Court)
   Invoked by the court, this Delhi High Court decision denied an interim injunction due to patent validity doubts and public interest in affordable cancer drugs. Justice Singh distinguished it, noting Novartis’s patent lacked credible validity challenges, yet endorsed its public interest ethos.
5. Bayer Corporation v. Union of India & Ors., Writ Petition No. 1323 of 2013 (Bombay High Court)
   Cipla cited this Bombay High Court ruling, which held that importation constitutes “working” a patent only with sufficient justification. Cipla argued Novartis’s imports failed this test, but the court relegated such pleas to the compulsory licensing forum under Section 84.

Detailed Reasoning and Analysis of Judge

The Court’s reasoning unfolded in a meticulous two-part analysis: statutory interpretation and equitable balancing. He first clarified the Patents Act’s framework, noting that Section 48 grants patentees exclusive rights, subject to Chapter XVI (Sections 83-92), which governs compulsory licensing and revocation for non-working. However, the court held that these public interest grounds—e.g., inadequate supply or unaffordability—belong to the Controller’s domain, not the civil court’s in infringement proceedings, as per Sections 104 and 107. Cipla’s reliance on Section 83 was thus misplaced in resisting the injunction.

Yet the court did not dismiss public interest outright. Drawing from American Cyanamid and eBay, he recognized it as a facet of balance of convenience, particularly in life-saving drug cases. The court cited U.S. precedents like Bard and Indian rulings like Hoffmann-La Roche to affirm that public health could temper patent enforcement, potentially through royalty instead of injunction. However, The court found Cipla’s evidence—articles and estimates—lacking specificity on INDACATEROL’s demand shortfall, while Novartis’s affidavit of surplus stock and willingness to increase supply undercut Cipla’s narrative.

Exploring alternatives, The court rejected Cipla’s royalty deposit proposal as inequitable, noting it left Novartis unrewarded during trial despite a prima facie valid patent and infringement. The court also declined to fix royalty , citing inadequate financial data and the Act’s compulsory licensing mechanism as the proper avenue. Balancing Novartis’s statutory rights with Cipla’s public interest plea, he opted for a conditional injunction, restraining Cipla pending a time-bound compulsory licensing decision, if pursued, to ensure neither party’s interests were wholly sacrificed.

Final Decision: On January 9, 2015, The court granted an interim injunction, restraining Cipla from manufacturing or selling INDACATEROL Maleate until either a compulsory licensing application, if filed within two weeks, was decided within six months, or the suit concluded. Cipla could seek modification if successful before the Controller or if a licensing consensus emerged. The order was tentative, leaving final merits and licensing pleas untainted.

Law Settled in This Case: The judgment clarified that public interest grounds under Section 83 (e.g., non-working or unaffordability) are not defenses in patent infringement suits but must be pursued via compulsory licensing under Section 84 before the Controller. However, courts retain equitable discretion to consider public interest as part of balance of convenience, potentially molding relief (e.g., royalty) in life-saving drug cases, though such alternatives require robust evidence and cannot usurp statutory mechanisms.

Case Title: Novartis AG & Anr. Vs. Cipla Ltd.:Date of Order: January 9, 2015:Case No.: CS(OS) 3812/2014: Name of Court: High Court of Delhi at New Delhi: Name of Judge: Hon'ble Justice Shree Manmohan Singh

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Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi