The Madras High Court in a recent judgment, dated 2nd December, 2008 has set aside the grant of a patent to Roche, in relation to its drug Valganciclovir because in the Court’s opinion the Chennai Patent Office’s decision to not grant a hearing to the petitioners/pre-grant opponents, who in this case were The Indian Network for people living with HIV/AIDS and the Tamil Nadu Networking People with HIV/AIDS, was in violation of Section 25 of the Patent Act. The Court also ordered the re-hearing of the pre-grant opposition by the end of January, 2009. The judgment can be accessed over here at the website of the Lawyer’s Collective which was involved in the litigation.
Valganciclovir is a vital drug for patients suffering from HIV/AIDS. The original patent application was filed in India in 1995 and the application bears the number No.959/MAS/1995. The Patent Office granted it a patent bearing number Patent No.207232 in April, 2007.
Some of our readers may remember that the several NGOs were outraged when the Patent Office decided to go ahead and grant Roche the patent without hearing the pre-grant opposition filed by them. While several of the interested parties went ahead to file a post-grant opposition the two petitioners above challenged the decision of the patent office in a writ petition to the High Court. You can read our previous posts over here.
The provision in question: Section 25 lays down the law in regards both the pre-grant and post-grant opposition. The judgment revolved around the interpretation of Section 25(1)(k), according to which “the Controller shall, if requested by such person for being heard, hear him and dispose of such representation in such manner and within such period as may be prescribed” as also Rule 55(6) of the Patent Rules, 2003 which lays down the procedure to conduct a pre-grant opposition.
The substance of Roche’s submission to the Court can be split into two parts:
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That when Section 25(1)(k) was read along with the rules to the Patent Act, and also keeping in mind the general scheme of the Patent Act, it can be concluded that the word ‘shall’ in Section 25(1) was only directory and not mandatory and therefore it was very much within the power of the Controller to deny a hearing at the stage of pre-grant opposition.
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The second limb of Roche’s strategy was to argue that the pre-grant opposition proceedings before the Controller were not quasi-judicial proceedings but administrative proceedings. If in case Roche had managed to successfully argue that the pre-grant opposition proceedings were administrative in nature, then in that case it could argue that the decision of the Patent Office to not grant a hearing amounted to a mere irregularity which would not vitiate the decision of the Patent Office to grant Roche a patent. On the other hand if the Court concluded that the hearing was a quasi-judicial proceeding then in that case the refusal to grant a hearing would amount to a serious error in law resulting in the cancellation of the decision to grant the patent. There is a difference in the standard of judicial review of administrative proceedings and quasi-judicial proceedings because usually quasi-judicial proceedings deal with rights which are considered to be much more important than those dealt with in administrative proceedings and as a natural result quasi-judicial proceedings are subject to stricter judicial scrutiny.
The judgment and reasoning:
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The Court disposed of the first set of Roche’s arguments with the simple reasoning that the principles of statutory interpretation as interpreted by a SC precedent mandate that If the words used are capable of one construction only then it would not be open to the Courts to adopt any other hypothetical construction on the ground that such hypothetical construction is more consistent with the alleged object and policy of the Act. Since in this case Section 25(1)(k) expressly uses the word ‘shall’ the Court decided to give the provision a formalistic interpretation and as a result held that Section 25(1)(k) was a mandatory provision of law and not a directory provision of law. The Court further buttressed its arguments with the help of Rule 55(6) of the Patent Rules (2003) which basically holds that the the controller may reject the application for a patent after considering all the representations against the patent application that are made during a hearing.
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On the point of whether or not the rights of the petitioners would have been prejudiced by the grant of the patent the Court went beyond the statutory rights to rule that the fundamental rights of the petitioners were being prejudiced by the grant of the patent.
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On the point of whether or not the pre-grant opposition is an administrative proceeding or a quasi-judicial proceeding; the Court shot down Roche’s arguments and proceeded to rule that pre-grant oppositions are quasi-judicial proceedings. The reasoning behind this was quite simple and logical. The Court determined that since Section 77 of the Patent Act vested in the Controller the power of a Civil Court with provisions for examination, cross-examination of evidence, requiring the discovery and production of documents, power to impose costs etc. In addition the Court also went into detail as to whether or the proceedings were in the nature of a ‘lis’ or litigation. It concluded that the proceedings were very much in a nature of a lis since both parties were producing evidence and were contesting a certain set of rights amongst each other.
On the basis of the above arguments the Court held that the decision to grant the patent was bad since the statutory rights of the petitioners had been violated. As a result the patent was struck down and the Patent Office was ordered to conclude the hearings for a pre-grant opposition by the 31st of January, 2009.
The possible criticisms of the judgment: A reading of Feroz Ali’s books on whether or not it is mandatory to have hearings for pre-grant and post-grant oppositions reveals several potential flaws in the Madras High Court’s decision. I attempt to highlight only one of these arguments in my own words below:
The pre-grant procedure should ideally be viewed as an extension of the application process since the primary reason for allowing it is to aid the patent office cope with the information deficit it maybe facing. The fact that hearings are not compulsory can be ascertained from the fact that the Patent Rules do not mention anywhere a procedure for such hearings. Normally delegated legislation formulated by bureaucrats in the forms of rules would not always be used to interpret the main statute however the Patent Rules are delegated legislation which are ratified by the Parliament and hence should have the same force as a statute. In fact in para 11 of the judgment the Court itself concludes that the rules are statutory in nature. The Patent Rules however do lay down a substantive procedure (Rule 62) to conduct hearings for a post-grant opposition. The fact that the statutory framework (the Rules) provides clearly for hearings in the case of post-grant oppositions, highlights and re-enforces the fact that the statutory framework (Patent Rules) fail to lay down any equivalent procedure in the case of a pre-grant opposition. Clearly the legislature was of the opinion that it was enough to have mandatory hearings for only ‘post-grant’ opposition proceedings. Hence it can be convincingly argued at the stage of appeal that the word ‘shall’ used in Section 25(1)(k) is in fact directory and not mandatory. Therefore it is upto the Controller as to whether or not he should grant a hearing.
It remains to be seen as to whether or not the Government of India and Roche appeal this decision. Personally I think they should appeal because this decision has the deadly potential to increase the workload on the already stressed out Patent Office. Interesting question for all of you out there: are all patent offices in the other metros bound by this decision? Looking forward to your comments.
Aftermath of the judgment: The first casualty of the judgment will be the proceedings in the Bombay High Court where Roche is seeking an interim injunction restraining Cipla from continuing to infringe its patent for Valganciclovir. Since the patent has been struck off the register it remains to be seen as to whether the Bombay High Court will stay its proceedings until the Patent Office hears the pre-grant opposition or whether it would dismiss the suit since it is infructous. A second casualty would be the post-grant oppositions to this drug which I think have already begun.
My apologies for getting this post out rather late but this judgment was the judicial equivalent of post-modern art i.e. although it was intellectually well reasoned, it was completely lacking in any form or structure and instead consisted of a generous splattering of issues, arguments and reasoning at various points without even the cursory sub-headings that so often form the foundations of the eminently readable judgments of the Supreme Court’s Justice S.B. Sinha as also the judgments of the Delhi High Court’s Justice Bhat. As is the case with post-modern art this judgment too had meaning in it, its just that it took me a lot of time and effort to truly ‘appreciate’ its depth. As usual please feel free to post your take on the judgment in the comments section.
Don’t u think that it is becoming a mockery of both Indian Patent system and the Indian Judiciary?
High Court giving judgements which according to the Patent Law of India is not entitled to…. & The Patent Office to re-examine again a patent which they have granted… as if they do not have any pending work…..and that too when they are so under-staffed…
I understand many vested interests are closely observing the developments, and they would love the judgement….
Your view points on this….
Well I wouldn’t go so far as saying that they are creating a mockery of the Patent Act. This was a pretty difficult case and the outcome was highly dependant on the skill of the lawyers arguing it. In this case both counsels have been involved in patent litigation but Mr. Anand Grover has been far more involved in the opposition proceedings than the opposing counsel and I am guessing that he had a much better grasp of the pre-grant issues that he was required to argue.
And you’re right when you say that a lot of people are going to love this judgement. There have been several NGOs who, despite knowing that the law was not clear on the issue of hearings, proceeded to unfairly portray the patent office in a bad light.
I hope that the Patent Office appeals this judgement for its own sake.
Prashant
Hi prashant
Do u agree with me that now Indian patent system requier seperate IP court where we do not have/received different judgement on the same topic .
regards
Anon-1
I don’t think that the NGO’s portrayed the Patent Office in bad light.
Prashant, I was told by people who are in this matter, that the Chennai Patent Office has actually ‘lost’ the Valganciclovir patent file?
So, there is no record left of what reasoning was given to PO by Roche for the patentability of Valganciclovir.
Frequently Anon.
Hi Prashant,
Nice summary of the judgment and insightful analysis indeed. But I have few doubts and comments:
In my opinion, the argument that pre-grant opposition is not mandatory for the reason that it is extension of the application process does not stand for two reasons: a) There are specific grounds mentioned in case of pre-grant opposition, which sufficiently alludes on aspects of adversarial nature of the opposition proceedings. If such grounds weren’t mentioned, and if it was purely to cure the infirmities that might have possibly crept in during the application process, broader grounds for challenge would not have been mentioned in the Act. In fact, the provision would then read to require mention of grounds to cure lacuna in the application process without any resort to specific substantive grounds. Viz., the patent office would have called for comments on specific aspects wherein they need third party inputs. But contrary to this, the grounds for pre-grant are substantive, and also that they are placed in equal footing with that of post-grant opposition. b)The fact that the application is published ends the application process. There is nothing that the applicant will have to formally do as part of his application process with the patent office after publication. The job then lies with the patent office, i.e., only to grant the patent, provided there is no pre-grant opposition.
But as you have pointed out, how an under staffed patent office will manage pre-grant oppositions is something that we seriously need to look into. May be the mandatory nature of pre-grant opposition is the safety valve for deeply scrutinizing the applications examined by the same under staffed patent office during the examination process?
Best,
Yogesh
@Anonymous:
“High Court giving judgements which according to the Patent Law of India is not entitled to….”
Could you kindly elaborate on what you mean by this statement? Just that the Court got it wrong? Or are you pointing at some deeper jurisdictional issue?
Regards,
Another Anonymous Coward
@Anon 1: Well having an effective and independent IPAB would solve some of the problems in regards the diverse opinions that maybe rendered on the same issue. However it is quite complicated to completely exclude the jurisdiction of the High Courts especially since they are SC judgements which have clearly stated that the High Court has the power to intervene in all those cases where there is a violation of fundamental rights and there is no statute that can bar such a remedy especially since the High Court’s powers are considered to be a part of the ‘basic structure’ doctrine.
@ Frequently Anon.:
I find it difficult to believe that the PO has ‘lost’ the Valganciclovir patent file – I’m sure such a story would have found its way to the media (has it already?). If you could find somebody who is willing to give us some information about this, on the record, we would love to hear from him/her. If you are right about this then in that case the patent office deserves to be publicly castigated for such a major blunder.
My statement in regards the NGOs however was based on a personal experience where the representative of the NGO in question pointed out that the PO granted the patent without hearing the pre-grant opposition. What the representative did not mention was the fact that there was a gray area in the law which had to be decided by a court of law. I think it is very unfair to give out only half the story and make the patent office look like villains.
Hey Yogi,
Firstly, thank you for the compliments – they are getting increasingly rare these days. 🙂
You’ve raised some interesting points.
On the point of the application process, I think it ends only when the patent is granted and not when the patent is published for opposition. In India the publication gives out only priority information, party info and a small abstract. The patentee can still amend the application even after publication. So I think it would be reasonable to conclude that the application process ends only when the patent is finally granted. Therefore any proceedings before the grant of a patent should be viewed as a part of the application process.
In regards your proposition on the ‘pre-grant’ mechanism operating as a safety valve, I am sure it will operate as a safety valve but I am also quite sure that it will slow down the over-all process in the patent office. Ideally we shouldn’t have to choose between safety and efficacy but I think the Madras HC’s decision has forced us to choose safety over efficacy.
Best,
Prashant
Also in a pre-grant opposition you are challenging the patent application and not the patent itself, hence it is a part of the application process unlike a post-grant opposition where you are challenging the patent itself.
“Do u agree with me that now Indian patent system requier seperate IP court where we do not have/received different judgement on the same topic”
“@Anon 1: Well having an effective and independent IPAB would solve some of the problems in regards the diverse opinions that maybe rendered on the same issue. However it is quite complicated to completely exclude the jurisdiction of the High Courts”
Legally, unquestionably Prashant is correct. The jurisdiction of the HC under Article 226/227 can never be excluded.
However, it might be a good idea for the HCs to have a dedicated IP Bench like a Tax Bench. I don’t know if the HCs follow this practice.
@Prashant:
1. On first principles, is the mere fact that the Rules have been ratified by Parliament sufficient to use them as interpretative tools? A ratification does not have the same legislative weight as a legislation surely? Several delegated legislations are laid down before Parliament; does that mean that they become as weighty as the statute?
2. In any event, you might be able to rely on the Rules to solve certain ambiguities; you cannot rely on the Rules to create the ambiguity itself. Therefore, you must rely on something other than the Rules to indicate that ‘shall’ might mean ‘may’. Only after you do this will you be able to rely on the rules to say that in fact, ‘shall’ means ‘may’.
3. If, as you state, the provision grants a discretion, where do we see the principles which will guide the exercise of the discretion?
These are a few doubts I have on your excellent post. The post is an excellent piece of writing though; not something I can say about some of the comments though.
Regards,
Another Anonymous Coward.
Hello – Sorry for the delay in replying to your comments.
@Ranjit – I’m not sure about this but I’ve heard that the Bombay and Madras High Courts do have dedicated IP benches. I would however like to point out that this seems to be more of an administrative mechanism and I doubt whether the judges in question are IP specialists. However if they stick to the bench they can develop the relevant expertise. For E.g. I think Justice Sanjay Kishan Kaul of the Delhi High Court has been hearing only IP cases for a quite few years now and he can be regarded as an IP specialist for all practical purposes. At the end of the day however the judges are only as good as the counsel who argue before them.
@AAC – Very interesting questions as usual. However before answering them I just want to make some points in regards the statutory interpretation of the word ‘shall’.
In the case of Sainik Motors v. State of Rajasthan AIR 1961 SC 1480 Justice Hidayatullah held that “The word ‘shall’ is ordinarily mandatory but it is sometimes not so interpreted if the context or the intention otherwise demands”. So clearly “shall” need not always be mandatory. The interpretation given to it depends on the “context” or the “intention”. The question therefore is whether or not the ambiguity in the rules can be considered to provide the relevant “context” or “intention”.
Considering that the judgement itself presumes the rules to be of a “statutory nature” I would argue that the omission by the rules to provide for a hearing provides enough “context” or “intention” to read the “shall” as directory and not mandatory.
Also a reading of G.P. Singh on statutory interpretation reveals that the Supreme Court “also holds that rules made under a statute are a legitimate aid to construction of the statute as contemporanea expositio.” AIR 1976 SC 2463. The commentary also reports that Courts have allowed subordinate legislations to be used for clarifying any ambiguity in the statute itself.
Leaving aside the semantics and depending on only first principles I do not really see why there should be too much a difference between a statute and the rules when the rules itself have been approved by the Parliament. The only difference between the statute and the rules in this case is that while the statute has been framed by the Ministry, the Rules are framed by the Patent Office. In both cases Parliament has adequate opportunity to debate and bring about amendments to both the statute and the rules. In this case why can’t we place both the statute and the rules at par? What is the difference between the two?
Prashant
Thanks for the thoughtful response Prashant. Just one last point – assume for a moment that the Rules did not exist. Is there still a case for arguing that “shall” means “may”?
Legally, I agree that you do have a strong point. But think of making that argument in practical terms before a Court against a good opposing counsel. It will be muh better to convince a judge that the provision is inherently ambiuous, and it is not the Rules which have created the ambiguity. Otherwise, a good counsel is likely to tie up the matter by leaving the impression that your arguments is that the Rules have both created and solved the ambiguity. I think that you will be on much surer footing in a Court of law if you rely on the context of the Act itself in bringing out the ambiguity. Otherwise, the judge in Court will just say “Counsel, the act is clear, I am not going to look at external aids.”
(And for every principle of statutory interpretation, the Judge will find another to counter you)
Regards,
(Please take my questions in a constructive sense to try to get to a stronger argument. If I disagree with your views outright, I will say so directly instead of asking questions) 🙂
AAC.
@ Frequently Anon
I was quite closely involved with the case through out the proceedings before the Madras High Court. Thought the Writ Petition itself mentioned one line about investigations launched into alleged mishandling of the files by the Patent Office, we were told by reliable sources that these were just rumours oublished through the mint and infact there was not a whisper about it by any of the counsels appearing for the NGOs.