WHY NOVARTIS NEEDS TO CHALLENGE THE MADRAS HIGH COURT JUDGEMENT


Businesslawyer.in, a fabulous initiative by students of the National Law School of India Univ (Bangalore), my alma mater, carried a short note of mine on the Novartis case. I’ve reproduced it below:

“Friends, Indians, Countrymen, lend me your ears; 

I come to bury the Madras High Court judgment, not to praise it.


The Madras High Court decided a landmark case involving Novartis’ famed anti- cancer drug, Glivec. Ignoring the bard’s dictum that brevity is the soul of wit, the court in a tryingly long decision held that section 3(d) of the Indian Patents Act was constitutional. It also held that it had no jurisdiction to adjudicate on the TRIPS issue i.e. whether or not section 3(d) (the section in the Indian patents act under which Novartis’ application claiming Glivec was rejected), was compliant with TRIPS. Several commentators lauded the judgment and rightly so⎯it’s conclusions cannot be faulted. However, there is much to be said for the manner in which they were arrived at.

What is perhaps most surprising is that Novartis issued a statement that although it disagrees with the judgment, it will not appeal to the Supreme Court. This note points out why it is imperative for Novartis to challenge this judgment.

Section 3(d) essentially states that new forms of existing chemical substances do not merit patent protection, unless they demonstrate significantly enhanced “efficacy” over the previously known substance. The Madras High court defended the constitutionality of section 3(d) by holding that the terms “enhancement of known efficacy” and “significant differences in properties with regard to efficacy” were neither vague, arbitrary nor discriminatory. Nor did the inclusion of such terms in section 3(d) without accompanying definitions amount to a delegation of an essential legislative function.

Although the conclusions are correct, the reasoning leaves much to be desired. Indeed, the judgment is a convoluted morass of mutually conflicting propositions. Illustratively, the court is not clear whether section 3(d) embodies an ‘economic’ rationale or whether it encapsulates ‘social welfare’ goals or both. Paradoxically, while the court demonstrates a hands-off approach to TRIPS by claiming that it has no jurisdiction to adjudicate on it, it discusses TRIPS provisions in an effort to defend the constitutionality of section 3(d). Most surprisingly perhaps, the court denies any scope for vagueness and uncertainty in the term “enhancement of known efficacy” by claiming that Novartis, being a pharmaceutical giant, knows what this means. This proposition strikes me as puzzling⎯is the court suggesting that Novartis self certify the increase in efficacy demonstrated by its drug? In which case, do we need to waste the time of the patent office and courts over this issue? Important flashback⎯Novartis assumed that its demonstration of a 30% in bio-availability would be sufficient to procure the patent—unfortunately, the patent office didn’t think so!

Had this been a case that turned purely on the esoteric nuances of patent law, one might have forgiven the court. After all, for a country that is coming to grips with pharmaceutical product patents after a long hiatus and has thus far been exposed to a mere 80 odd patent cases, one cannot expect sophisticated legal reasoning. However, for a country that is lauded for producing some of the most sophisticated constitutional law jurisprudence, this is shameful!

Novartis may or may not be interested in the finer aspects of constitutional law. However, it ought to be concerned with the court’s pronouncement on the term “efficacy”. A medical dictionary definition was relied upon to hold that the term “efficacy” in section 3(d) meant “therapeutic” efficacy and therefore “what the patent applicant is expected to show is, how effective the new discovery made would be in healing a disease”.

Under such a definition, the kind of derivatives that qualify for patent protection are likely to be severely limited. For instance, increased “bio-availability” (which is what Novartis claims in its application for Glivec) may not count as “therapeutic” efficacy. The court makes this clear by stating that an increase in the potency of the drug does not amount to an increase in efficacy. However, Novartis could easily challenge the court’s assumption that section 3(d) is limited to drugs and therefore “efficacy” ought to be construed as “therapeutic efficacy”. A plain reading of section 3(d) would make clear that the section also applies to other “chemicals” such as agro-chemicals. A pesticide or fertilizer cannot be tested for patentability on the basis of whether it enhances a “therapeutic” effect on the human body!

If Novartis does not challenge this portion of the Madras High Court judgment, and if the IPAB follows this dictum (as to whether the IPAB is bound by this ruling of the Madras High Court is a moot issue), then Novartis effectively loses the case. It may as well withdraw its appeal from the IPAB! It is paradoxical that Novartis would continue to threaten to move investments to China, despite being called on their bluff—whilst at the same time desisting from fighting where it really matters.

Amidst several calls that Novartis withdraw its case, it bears reiteration that we must let this case run its course, so that we get more clarity on section 3(d). Let me close by paraphrasing the Bard of Avon:

O judgement! thou art fled to brutish beasts, 
And men have lost their reason…. Bear with me; 
My heart is in the coffin there with the HC judgment, 

And I must pause till it come back to me”

Shamnad Basheer

Shamnad Basheer

Prof (Dr) Shamnad Basheer founded SpicyIP in 2005. He is currently the Honorary Research Chair of IP Law at Nirma University and a visiting professor of law at the National Law School (NLS), Bangalore. He is also the Founder of IDIA, a project to train underprivileged students for admissions to the leading law schools. He served for two years as an expert on the IP global advisory council (GAC) of the World Economic Forum (WEF). In 2015, he received the Infosys Prize in Humanities in 2015 for his work on legal education and on democratising the discourse around intellectual property law and policy. The jury was headed by Nobel laureate, Prof Amartya Sen. Professional History: After graduating from the NLS, Bangalore Professor Basheer joinedAnand and Anand, one of India’s leading IP firms. He went on to head their telecommunication and technology practice and was rated by the IFLR as a leading technology lawyer. He left for the University of Oxford to pursue post-graduate studies, completing the BCL, MPhil and DPhil as a Wellcome Trust scholar. His first academic appointment was at the George Washington University Law School, where he served as the Frank H Marks Visiting Associate Professor of IP Law. He then relocated to India in 2008 to take up the MHRD Chaired Professorship in IP Law at WB NUJS, a leading Indian law school. Prof Basheer has published widely and his articles have won awards, including those instituted by ATRIP and the Stanford Technology Law Review. He is consulted widely by the government, industry, international organisations and civil society on a variety of IP issues. He also serves on several government committees.

11 comments.

  1. Avatarrajesh

    Dear shamnad,

    I respectfully disagree with your interpretation that “the court suggesting that Novartis self certify the increase in efficacy demonstrated by its drug?”

    On the contrary, what the Court has said (categorically) is simply that A duty is cast upon the patent applicant of an invention in the pharmacology field to show that the invention had resulted in the enhancement of a known efficacy of that substance.

    In this connection, what the court has stated is reproduced as follow:

    “……the writ petitioner is not a novice to the pharmacology field but it, being pharmaceutical giant in the whole of the world, cannot plead that they do not know what is meant by enhancement of a known efficacy and they cannot show that the derivatives differ significantly in properties with regard to efficacy.”

    Accordingly, I believe that the courts stand was not ambiguous.The purpose of making above statement was just to GIVE A GENTLE CHIDE TO THE PETITIONER, and NOT TO give the patent applicants a power to define the standard of “efficacy”.

    Furthermore, I DISAGREE WITH OUR assumption that ACCORODING TO THE COURT, section 3(d) is limited to drugs and therefore “efficacy” ought to be construed as “therapeutic efficacy”.

    In this connection the court has clearly held that:
    The amended Section not only covers the field of pharmacology but also the other fields. As we could see from the amended Section, it is made applicable to even machine, apparatus or known process with a rider that mere use of a known process is not an invention unless such a known process results in a new product or employs atleast one new reactant. Therefore the amended Section is a comprehensive provision covering all fields of technology, including the field of pharmacology. In our opinion, the explanation would come in aid only to understand what is meant by the expression “resulting in the enhancement of a known efficacy” in the amended Section and therefore we have no doubt at all that the Explanation would operate only when discovery is made in the pharmacology field. [Para 13]
    In this case the Court finds that the Explanation creates a deeming fiction of derivatives of a known substance are deemed to be the same substance unless they differ significantly in properties with regard to efficacy. Therefore it is clear from the amended Section and the Explanation that in the pharmacology field, if a discovery is made from a known substance, a duty is cast upon the patent applicant to show that the discovery had resulted in the enhancement of a known efficacy of that substance and in deciding whether to grant a Patent or not on such new discovery, the Explanation creates a deeming fiction that all derivatives of a known substance would be deemed to be the same substance unless it differ significantly in properties with regard to efficacy. In our opinion, the amended Section and Explanation give importance to efficacy. [Para 13]

    PLEASE CORRECT ME IF MY UNDERSTANDING IS INCORRECT!!!!!!

    Regards

    Reply
  2. AvatarSushant

    You presented primarily two reasons for Novartis needs to challenge. Here are some counter points:

    1. “Bio-availability” of an existing product was improved by 30%. First, bio-availability refers to the stability of the compound in human body. 30% better means you need 30% less of an existing product. This only has dosage implication with no improvement over its success rate of treating a disease.

    2. Efficacy can be interpreted as “increase in bio-availability”. With this limited definition, one can get patent on entire active ingredient of the drug. This means not only the beta crystalline form (the more stable form) gets protection but also the entire molecule. Providing wider protection for smaller discovery should be discouraged by the patent office and high court may have taken the right decision.

    Reply
  3. AvatarMrinalini Kochupillai

    I am curious – was the Madras HC’s findings on the definition of efficacy an issue that it was actually required to address or was it merely supposed to decide the constitutionality of 3(d)? In other words, can the meaning of “efficacy” as laid down by the HC be considered to form part of the ratio of the case or is it merely an obiter?

    Reply
  4. AvatarShamnad Basheer

    Dear Mrinalini,

    Note my comment in the post: “as to whether the IPAB is bound by this ruling of the Madras High Court is a moot issue”.

    It is moot because it can be argued either way. One might argue that the courts explication of the term “efficacy” was necessary to sustain its holding that section 3(d) was not vague and was therefore constitutitionally valid. On the other hand, one may argue that the court didn’t need to define efficacy at all–rather, it might have stated that the term could be constitutional, even if left undefined by Parliament–and it was for the patent office to flesh out this definition.

    Reply
  5. AvatarShamnad Basheer

    Dr Nair writes:

    “Dear Shamnad,

    Your note on Novartis case made interesting reading. The Quotes in the beginning and the end were very attractive. However, I felt the need to attract your attention to a few facts.

    In the 1993 patent (US 5521184 or EP 0564409) it is clearly the salt (and not the base) that was tested by Novartis. This is confirmed as follows.

    In the Affidavit filed by the Technical expert, it is stated as follows (Para 8),

    “This affidavit is being submitted now since, no studies relating to the efficacy of Free Base have been carried out in the past”

    It is clear that the Imatinib Base has never been tested before, even though the test results are discussed in the 1993 patent (US 5521184), where it is repeatedly stated that ‘base means salt’ and ‘salt means base’.

    It is a practice in Pharma formulations to express the dose in terms of base even when a salt is used.

    In the Affidavit as well as the Test Report attached, it is clearly stated that the Beta Crysalline salt is compared for efficacy with the Imatinib base (and not with the Alpha Crystalline Salt).

    It is further stated in the Test Report produced and filed by Novartis that the results (30% increased efficacy) of salt over base is anticipated as the salt is highly soluble and the base is nearly insoluble.

    I quote from the report (last line of conclusion),
    “It is suggested to be due to the higher solubility of the salt”.

    Wikipedia defines “Efficacy” as follows,
    “Efficacy is the ability to produce a desired amount of a desired effect”

    “Efficacy” is discussed in Medical, lighting (efficacy of source of light) and Amplifiers etc.

    http://www.yourdictionary.com defines “Efficacy” as “power to produce effects or intended results”.

    Merriam-Webster dictionary defines “Efficacy” as “the power to produce an effect”

    Personally, I consider “Efficacy” as a pre-requisite for a chemical or biological entity or moiety to be claimed to have utility or usefulness in a medical or similar application.

    I felt that your latest thoughts on the subject needed these few factual clarifications.

    With best regards,

    Dr. Gopakumar G. Nair
    Gopakumar Nair Associates”

    Reply
  6. AvatarShamnad Basheer

    Dear Sushant and Dr Nair:

    Great points, but I think you’ve missed the message in my post. My post is not on the merits of whether Novartis will get the patent–in fact, I personally think the application will be rejected on both section 3(d)–but more importantly, on plain “non obviousness” principles. I have explained my reasons in previous posts. You can click on the label “Novartis patent litigation” to read these previous posts.

    The point of this post was fairly simple. If Novartis does not challenge the courts definition of “efficacy”, it effectively loses the case. In other words, there is no point in Novartis fighting the case at the IPAB, if it does not challenge the construction of the term “efficacy” by the court. As to whether “bio-availability” amounts to efficacy is a moot issue and this is what needs to be thoroughly fought out at the IPAB and the courts. It’s not a cut and dry issue and certainly not one that is automatically evident from section 3(d)–not least because section 3(d) applies to agro-chemicals.

    I personally don’t think we should limit it to therapeutic efficacy–as this will block a number of important incremental inventions –eg Ranbaxy’s one a day CIPRO that was a clear improvement over existing CIPRO sold by Bayer-in fact, this incremental invention was succesfully licensed to Bayer by Ranbaxy.

    Reply
  7. AvatarShamnad Basheer

    Dear Rajesh:

    Countering Novartis’ argument that section 3(d) is vague and therefore unconstitutional by stating that Novartis itself knows what the terms (in section 3(d)) mean seems downright stupid to me. As I mention in my post:

    “Novartis assumed that its demonstration of a 30% in bio-availability would be sufficient to procure the patent—unfortunately, the patent office didn’t think so!”

    Remember that this term is not used in any other patent regime in the world. Remember also that this is a drug regulatory term!! Answering a constitutional challenge to such a term by stasting that the challengee knows what it means seems downright stupid to me.

    Gentle Chide–indeed!! I would have preferred less of chiding and more of analysis…but sadly, our judges were carried away with all that attention…

    As for whether efficacy means therapeutic efficacy, I would ask that you read the judgment again. the court clearly states: “The position therefore is, if the discovery of a new form of a known substance must be
    treated as an invention, then the Patent applicant should show that the substance so
    discovered has a better therapeutic effect. Darland’s Medical Dictionary defines the
    expression “efficacy” in the field of Pharmacology as “the ability of a drug to produce
    the desired therapeutic effect” and “efficacy” is independent of potency of the drug.
    Dictionary meaning of “Therapeutic”, is healing of disease – having a good effect on the
    body.” Going by the meaning for the word “efficacy” and “therapeutic” extracted above,
    what the patent applicant is expected to show is, how effective the new discovery made
    would be in healing a disease / having a good effect on the body? “

    Reply
  8. AvatarSushant

    Dear Shamnad,

    The US courts have interpreted “non-obvious” principle in a very liberal way and validated almost all patents. I do not know much of pharma field but the software field is full of “obvious” patents. In light of these things, I personally do not believe that Judges can well evaluate the “non-obvious” principle.

    Therefore, I actually like a more materialistic evaluation of a patent in terms of “efficacy” improvement. As you point out, this is also vague and it needs to go through the courts for wider understanding. But I think this is what courts can do better.

    Should drug patents be limited to those that improve “therapeutic” efficacy? One argument you give is that it will allow more patents. Firstly, granting more patents is not the objective. The real objective is to provide protection equivalent to the effort/risk involved in a new innovation. To harmonize the two points, I would
    advocate for a tiered patent system rather than a flat one.

    Improvement in bio-availability by 30% or more -> 2-5 years
    Improvement in therapeutic usage by 30% or more -> 10 yrs
    Curing a new disease ->25 yrs

    I have one more concern on patent granting. Only people in specific fields can get patent protection. For example, algorithms and softwares cannot be patented in India. Therefore, granting “easy” patents (or monopolies) in other fields is not fair to other people whose work cannot be patented. Software people have to pay hefty sum to pharma companies but have to sell their own work for cheap because they cannot patent their own invention. Allowing everyone to patent is also a dangerous situation.

    Reply
  9. AvatarShamnad Basheer

    Dear Sushant,

    you said: “Efficacy can be interpreted as “increase in bio-availability”. With this limited definition, one can get patent on entire active ingredient of the drug. This means not only the beta crystalline form (the more stable form) gets protection but also the entire molecule. Providing wider protection for smaller discovery should be discouraged by the patent office and high court may have taken the right decision.”

    I am not sure what you mean by this. What is the active ingredient here, according to you? and why is the patentability of the active ingredient implicated by whether we interpret section 3(d) to include an increas in bio-availability…

    Reply
  10. AvatarShamnad Basheer

    Dear Sushant,

    You said: “The US courts have interpreted “non-obvious” principle in a very liberal way and validated almost all patents”

    Not entirely true. I’m not sure if you’ve been following recent trends in the US. The recent KSR decision and some CAFC decisions such as the one dealing with Norvasc demonstrate that the US courts are tightening up their interpretation of non obviousness to permit only meritorious patents. In fact, you should read the Norvasc case–and you will see that the Non Obviousness principle can be applied in a reasonably definitive manner to help us weed out bad patents.

    Software patents are a different issue altogether and ought not to be conflated with pharma patents. I personally don’t think patents are necessary in software to incentivise innovation –so I would knock it off right at the patent -eligibility stage itself. As you will appreciate, the same cannot be said for pharma–which involves huge investments–and even patent skeptics would agree that this is one area where patents may incentivise innovation–though one is not certain of the exact extent.

    You said” should drug patents be limited to those that improve “therapeutic” efficacy? One argument you give is that it will allow more patents. Firstly, granting more patents is not the objective.”

    You completely misunderstood my point. the point urged by me is that if we interpret efficacy narrowly–then inventions like CIFRAN-OD by Ranbaxy get left out–this is a valuable NDDS. In short, what are the kind of inventions we want to incentivise? If we want to incentivise stuff like CIFRAN, we can’t limit the defn of efficacy to “therapeutic efficacy”.

    I think you make a great point in terms of advocating for a more nuanced system that would provide for differential levels of protection. And indeed, some countries provide for “utility models” to do this sort of lesser protection. the only drawback is: to what extent do we differentiate. Do we follow your model for every area of innovation? As you can appreciate, sometimes we have broad thumb rules–only so that we avoid the administrative costs that come up with administering a scheme built on excessive differentiation.

    Reply
  11. AvatarSushant

    Expanding on “With this limited definition, one can get patent on entire active ingredient of the drug.”

    I was thinking that they can get protection on Imatinab free base if they file the patent for the corresponding salt. There is a practice in US to increase the patent life by filing marginal changes to the base molecule and I think it is called evergreening of patents.

    Looks like they were not having the patent on the free base in India. So actually they cannot get patent on it. So I am wrong on that.

    Again I think “non-obvious” requirement of a patent is a vague thing which can swing either side depending on the judge/bench. I only know of software patents and the courts consider almost any combination of technology or an application of a general technique to be non-obvious. I think this cannot be left to a judge and it should be redefined with more objective measures for different kind of patents. “Efficacy” improvement is a far better measure than “non-obviousness”.

    On the Ranbaxy issue, you seem to suggest that CIFRAN-OD patent requires incentive in the form of 20 yr protection. I do not know how difficult it is to make these compounds and cannot comment on it. I am assuming that once you know a molecule that attaches to a foreign body, it is relatively easy to construct more stable or oral dosage of the compound. If this is so, then there is sufficient incentive to reach the market and capture the market quicker than to rely on patents.

    I would like to know if you think capturing market with an oral drug or less dosage requirement is not sufficient incentive for a new form of a drug and if it additionally requires patent protection.

    -Sushant.

    Reply

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