Takeda vs Alphapharm: Implications for Section 3(d)

This comes a little late in the day, but I finally managed to read the CAFC ruling in Takeda Chem. Indus. et al. v. Alphapharm et al (No. 2006-1329 (Fed. Cir. 2007)).

Should be of particular interest to India, given that this involves Actos, an anti-diabetic drug by Takeda Chem Industries, Japan’s leading pharma company. Bloomberg recently reported that “Actos” overtook GlaxoSmithKline Plc’s “Avandia” as the world’s top-selling diabetes medicine after the Glaxo drug was linked in a May 21 report to a higher heart attack risk.

The Orange Book blog captures the essence of this ruling quite well:

“In an opinion released today, the Federal Circuit affirmed the validity of Takeda’s U.S. Patent No. 4,687,777, which covers pioglitazone HCl (among other compounds). Pioglitazone HCl is the active ingredient in Actos, Takeda’s blockbuster drug for the treatment of diabetes. The decision is particularly important because the generic challenger, Alphapharm, had argued on appeal that the Supreme Court’s recent decision in KSR v. Teleflex, as well as the Federal Circuit’s recent decision in Pfizer v. Apotex, mandated reversal.

Alphapharm argued that pioglitazone HCl would have been prima facie obvious over a prior art compound, named “compound b,” that is structurally similar to pioglitazone. According to the Federal Circuit, in chemical cases “normally a prima facie case of obviousness is based upon structural similarity, i.e., an established structural relationship between a prior art compound and the claimed compound.” Moreover, to prove prima facie obviousness based on structural similarity, “a showing that the prior art would have suggested making the specific molecular modifications necessary to achieve the claimed invention is also required.”
The district court found that there was no motivation in the prior art to select compound b as a lead compound in the first place, and that the prior art taught away from its use as a lead compound. The Federal Circuit agreed with this finding, stating that it alone was a sufficient basis for concluding that Alphapharm had failed to establish a prima facie case of obviousness.

The Federal Circuit squarely addressed whether KSR affects its “structural obviousness” jurisprudence:

[The] test for prima facie obviousness for chemical compounds is consistent with the legal principles enunciated in KSR. While the KSR Court rejected a rigid application of the teaching, suggestion, or motivation (“TSM”) test in an obviousness inquiry, the Court acknowledged the importance of identifying “a reason that would have prompted a person of ordinary skill in the relevant field to combine the elements in the way the claimed new invention does” in an obviousness determination.

The Federal Circuit concluded: “Thus, in cases involving new chemical compounds, it remains necessary to identify some reason that would have led a chemist to modify a known compound in a particular manner to establish prima facie obviousness of a new claimed compound.”

Let’s try and think through how such a case might be decided in India. Firstly, the Indian patent office/courts would have applied the much celebrated “section 3(d)”. As SpicyIP has argued in several posts, section 3(d) can be best explained as a refined non-obviousness test that applies in the specific context of chemical inventions. To this extent, it starts off by mirroring the US position on non-obviousness by presuming that structurally similar chemical substances are functionally equivalent as well—and if this is not the case, then it is upto the patentee to demonstrate “increased efficacy” and to thereby establish that the compound is functionally different.

The CAFC held that, despite structural similarities between compound “b” and “pioglitazone”, there could be no finding of prima facie obviousness, since:

i) there was no evidence to suggest that the skilled person would have started out with compound “b”.
ii) it wouldn’t have been obvious to the skilled person to attempt to reach “pioglitazone” by modifying “b” in a certain way.

Now compare this with a section 3(d) approach. Under section 3(d), all one has to show is “structural similarity” between the “new” form and an existing substance. Whether a skilled person would have started out with the existing substance (“b”) or would have found it obvious to reach “pioglitazone” from “b” is immaterial.

Therefore, the standard of proof for knocking down a patent is lower under section 3(d) –or put another way, it is more difficult to get a patent under section 3(d).

Lets move to the second and more “problematic” part of section 3(d)—does the “new form” have increased “efficacy”, when compared with the old substance?

Interestingly, the CAFC in the US found that since “pioglitazone” (the new form) was not “toxic”, this amounted to an “unexpected property”. So even assuming that Alphapharm had established “prima facie obviousness”, the court would have still held pioglitazone to be a non-obvious invention. The court relied on a report which “contained results of preliminary toxicity studies that involved selected compounds, including pioglitazone and compound b. Compound b was shown to be “toxic to the liver, heart and erythrocytes, among other things,” whereas pioglitazone was “comparatively potent” and “showed no statistically significant toxicity.”

Under section 3(d), would less “toxicity” (or a complete absence of toxicity) qualify as increased “efficacy”? Note that the Madras High Court relied upon a medical dictionary 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”.

Would “less toxicity” constitute an increase in effectiveness in “healing a disease”? If it doesn’t, then does not the Indian patent regime wish to incentivise these sort of innovations? Are these not worthy enough? To answer this issue, one has to step back and ask the question: How much does the Indian patent system matter for pharmaceutical companies (both Indian as well as the MNC’s)?

Let’s take Indian companies first, since we in India care more about them than the MNC’s. The leading Indian pharma companies get more than 80% of their revenue from other markets (besides India). Even if India does not provide product patent protection, would this impact their R&D decisions, since the US and EU are the main markets and provide them patent protection anyway. The exception to this is the case of neglected diseases and other diseases that are specific to India (for which there is no US or EU market). Since MNC’s have even lesser of a share in the Indian market (relative to their global market), the Indian market and therefore the Indian patent regime matters to them even less.

I had raised this issue in the comments section to Duncan’s excellent post highlighting a licensing deal between Eli Lilly and Glenmark. Duncan concluded by asking: in the light of growing innovation from Indian companies, would there be pressure to repeal section 3(d)?

Duncan appropriately opines that there is a complex cost benefit economics at work here, and loss of patent protection in India might make a difference to Indian companies. My responsze to him was as below:

“Loss of patent protection in India could mean a loss of revenues for “X”, an Indian pharmaceutical company, since Y and Z (other Indian pharma companies) would now be free to manufacture the same drug in India. But remember that X will still be able to make considerable monopoly profits through patent protection in its main markets (US, EU and Japan). More importantly, its losses in India through a lack of patent protection for its new drug may not amount to much when compared to the losses resulting from the presence of a patent regime in India i.e. if patents were granted to Y and Z for other drugs in India. Remember, X is primarily a generic company that has had a free run thus far (till 2005). Freedom to manufacture and sell a variety of drugs in India and also sell to other countries (where there are no patents) may mean much more in revenues for X. So perhaps on the balance, loss of patent protection in India may be relatively insignificant for X??”

We’re interested in hearing what readers think about this complex issue: how much does the Indian patent regime matter for pharmaceutical companies and their R&D incentives??

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.


  1. AvatarShamnad Basheer

    just came across another case that reiterates the point made in takeda vs alphapharm i.e. that there wil be no prima facie showing of obviousness, if the prior art would have suggested away from the “compound” in question.

    Judge Robinson of the U.S. District Court for the District of Delaware, rejected an obviousness challenge of claims directed to an antibacterial drug, sold under the trade name AVELOX, in Bayer AG v. Dr. Reddy’s Labs., Ltd., 2007 WL 3120794.

    There, the generic argued that the claims were obvious because one of ordinary skill in the art could have modified a structurally similar chemical composition by only applying routine skill and arrive at the claimed invention. The court found, however, that the generic failed to prove that one of skill in the art would have had an apparent reason to start with the lead compound
    that the generic alleged could be modified by routine skill to arrive at the claimed composition.

  2. Avatarvanshika

    Well shamnad,

    The countries who joined TRIPS, the primary purpose was to harmonize the substantive patent laws one of which was to provide patent protection to every invention.

    If India does not give patent protection to the inventions listed in section 3d I think it will tremendoudly effect the Indian economy.

    If section 3d inventions will continue not to be given protection then the domestic companies will not have any thurst to come up with NCEs and will continue to survive as Indian generic companies.

    Now see the contrast, if any company comes up with the invention which is on new pharmacophore (NCE) and there is some activity shown by them, this will surely be granted by the Indian patent office as there is no prior art and it is not new from of old drug. The Indian patent office will not refuse to give patent protection to such inventions even if there is no druggable candidate from that invention. I believe this is correct also because the inventor has come up with the something new which can be further improved upon by others to develop some druggable candidate.

    On the other hand the incremental inventions which are being sold as drugs like beta crystalline form of gleevec are not given patent protection because of section 3d. I think it should be made fairly easy to get patent protection for such inventions because the ultimate users (patients) are getting a better drug,unlike to the above case wherein there is no druggable candidate (whether it is more bioavailable, less toxic, has lesser side effects, better physicochemical properties

    Now also consider another situation through which company can still have patent protection on incremental inventions. If company X files a patent application containing compound B then it will be very easily given patent protection on its new form by filing patent of addition which will remain in force till the time Parent patent is enforced. It will be boon for the inventor if he comes up with the incremental invention at very early stage so that he is able to enjoy patent monopoly for good period of time conferred to him by grant of patent of addition.

    In case of gleevec if the parent invention would have been of year later than 1995 then Novartis could have very easily obatined patent of addition(POA) on the beta crystalline form of gleevec. In India POA can be filed even after the patent on main invention has been granted, unlike to that in US. Now, only because the parent invention is pre 1995 it is not eligible for patent protection in INDIA and thus has become ground for obviosness rejection under section 3d.

    Now, people argue that POA will not atleast lead to evergreening so even if the incremental inventions are given patent protection it should not matter. But I beleive that even if there is no evergreening but the inventor is able to enjoy the market monoploy till the POA is enforced, which is far better rather than having no patent protection for independent patent applications covering incremental inventions. Many NGOs are saying that Section 3d is good for patients as the inventor will not be able to sell the drug at his own rates because it will not get patent protection. BUT why dont people think that that inventors for post 1995/2005 inventions will be able to to get POA for their incremental inventions and would then be able to sell the drugs at their own rates.

  3. Avataryogi

    Excellent post Shamnad…
    You have rightly pointed the economics of Indian generic industry- the one being able to benefit from foreign markets- even with the presence of provision like section 3(d) in the Indian scenario. Now, what we need to answer is whether Indian innovators really need any incentive at home for inventing. As far as NCEs are concerned- there is no question that the patent regime can take care of it- with or without 3(d). However, in case of second use and other incremental stuff, which is increasingly an activity among Indian firms, one may be compelled to think about utility models or something alike. But this comes with a strong caveat “only if need be”. The question of need must be understood in the light of nurturing the home grown innovation. A pseudo patent like system would generate the needed incentives from Indian markets, while keeping an active policy of discriminating foreign inventions. Or it can be tailored to include those foreign inventions which have origin in India- to suggest that R&D is substantially carried out India- which demands good investments for local working in real terms. This can possibly be done by avoiding the term “utility models” as used in Paris to keep away the national treatment provisions. But it remains to be seen if such a policy of discrimination can be adopted if industrial property under Paris “shall be understood in the broadest sense”. This is not to debunk the doctrinal foundations of multilateralism, but to see that there is such a possibility- although, for now, limited to academic brainstorming.
    Coming back to the perceived need of protecting incremental pharmaceutical innovations- I don’t think that innovative Indian pharma companies are really in need of added incentives (other than those derived from foreign markets). This would allow Indian consumers to gain benefits out of imitated drugs- which mean a lot in terms of consumer welfare. Lack of protection would also mean that imitating rivals, who would want to innovate by moving up the value chain at some point of time, will necessarily have to eye foreign markets- which still remain the cream markets for incentives. The questions as to how far could imitating companies keep doing so would essentially depend of availability of sources for imitation- which the above strategy of passive protection can sufficiently handle.
    @ Vanshika
    I didn’t really follow the logic of POA vis-à-vis 3(d). I mean- by ever greening we usually understand that the invention in question gets some type of extended patent protection even after the expiry of the original patent- to conversely mean that if a POA is filed anytime during the life of patent, it would only get protection until the expiry of original patent and not after that. By ever greening one would try to invent around the parent patent with a possibility of getting protection way long the expiry of parent patent. Let me know if this is rather a naive understanding of the term ‘ever greening’.
    Next, I also beg to differ on what you have said about “druggable candidate”. To quote you: “I think it should be made fairly easy to get patent protection for such inventions because the ultimate users (patients) are getting a better drug, unlike to the above case wherein there is no druggable candidate”. I don’t really think that the patent law does consider the patentability criterion by understanding the seeming benefits derived by “ultimate users”. If inventions were to look for perceived benefits derived by “ultimate consumers”- probably- highly innovative technologies- where ultimate consumers are not the end users- would have lost protection!

  4. AvatarShamnad Basheer

    Dear Vanishka,

    Thanks very much for your comments and apologies for the late revert. You raise some good points on incentives to innovate: but then again, you have to go back to my basic question: would indian companies innovate even without patent protection in india? given that their main revenues flow from the US and EU, and these jurdns provide patnet protection, the answer seems to be yes.


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