Teva loses in the patent battle against NATCO

Introduction

The Delhi HC, in a recent judgment, returned the plaint filed by Teva Pharmaceuticals Industries Ltd. (“Teva”), Yeda Research and Development Co. Ltd. (“Yeda”) and Teva API India Limited (“Plaintiffs”) seeking permanent injunction for restraining NATCO from manufacturing Glatiramer Acetate product (Copaxone) for sale in the US. It was held that the Court did not enjoy the jurisdiction to entertain the suit. For BusinessLine report, see here. [Glatiramer Acetate (also known as Copolymer 1, Cop-1 or Copaxone – as marketed by Teva Pharmaceuticals) is used to treat multiple sclerosis. Multiple sclerosis is an inflammatory disease in which the insulating covers of nerve cells in the brain and spinal cord are damaged. This damage disrupts the ability of parts of the nervous system to communicate, resulting in a wide range of signs and symptoms, including physical, mental and sometimes psychiatric problems.]

[Note: Both sides presented various arguments pertaining to the question on jurisdiction of the Delhi HC to entertain the suit. I intend to confine this post to the most compelling factor which led to the return of the plaint viz., the Plaintiffs not contending the infringement of process patent within the jurisdiction of Delhi HC. Further, I would like to note that I am not opining on the merits of the dispute.]

Background

Teva, Yeda and Regent Drugs Ltd. filed CS (OS) No. 1708 of 2007 against NATCO in Delhi HC for a permanent injunction restraining the latter from infringing its Indian Patent (No.190759) (“Indian Patent”) and the rights there under. Indian Patent is a process patent for producing Glatiramer Acetate. NATCO submitted that the process used by them is entirely different from the process protected under Indian Patent.  NATCO later filed a counter claim for revocation of Indian Patent on various grounds.

Facts

According to The BusinessLine report dated 17 January 2012, NATCO and Mylan Pharmaceuticals Inc. (“Mylan”) agreed inter alia to collaborate on development and marketing of Glatiramer Acetate in India and United States.  Citing infringement of the Indian Patent by NATCO, Plaintiffs sought permanent injunction restraining NATCO from manufacturing Glatiramer Acetate product in India for sale in the US vide CS (OS) No. 3193 of 2012.

According to the Plaintiffs, the Defendants have two different Glatiramer Acetate (GA) products – one for sale within India and the other for export to Mylan. They are using two different manufacturing processes to make these products. This 2012 suit was not regarding the process used by Defendants for making the Glatiramer Acetate product for the Indian market (“GA-first product”). Instead it was concerned with the process for making the Glatiramer Acetate product that the Defendant is manufacturing in India on behalf of Mylan for sale outside India (“GA-second product”).  It was, therefore, contended that the causes of action in suit CS (OS) No. 1708 of 2007 and CS (OS) No. 3193 of 2012 are distinct.

In response to CS (OS) No. 3193 of 2012, NATCO, vide IA No. 10390 of 2013, filed an application under Order VII Rule 10 CPC for return of the plaint for want of jurisdiction. NATCO also filed IA No. 10389 of 2013 under Order VII Rule 11 CPC seeking rejection of the plaint. NATCO also filed IA No. 10638 of 2013 under Sections 10 and 11 of the CPC praying that further proceedings in CS (OS) No. 3193 of 2012 should be stayed in view of the pendency of the earlier suit CS (OS) No. 1708 of 2007.

Application for return of plaint

The Court decided on the application filed by the Plaintiffs under Order VII Rule 10 of the Code of Civil Procedure, 1908 (for return of plaint) i.e., IA No. 10390 of 2013, questioning the jurisdiction of the Delhi HC to entertain the suit.

Decision

The Court noted that CS (OS) No. 3193 of 2012, as stressed by the Plaintiffs, is a quia timet action.  According to the judgment, “it was only an apprehension that Natco, having tied up with Mylan, is likely to export the infringing Copolymer-I to US and other countries.”(paragraph 22) The Court discerned that “the case of the Plaintiffs concerns the infringement of the process involved in the GA-second product, which the Plaintiffs term as the ‘Mylan process’ and about the possible infringement for the purposes of ‘export’ of the said product to the US and elsewhere.” (paragraph 28) [For our post on quia timet action, see here. Quia timet means ‘because he fears’ and is an injunction to prevent a possible future injury.]

The Court noted that there is no averment to the effect that the Indian Patent is infringed within the jurisdiction of the court. Further, there is no averment that “the manufacturing of the product for export to the US and elsewhere is happening or is apprehended to happen within Delhi.” (paragraph 31) The Plaintiffs submitted that the NATCO’s act of manufacturing the Glatiramer Acetate product for sale in the US and elsewhere amounted to a clear infringement of the Indian Patent. Considering the above, it was held that the Court does not enjoy the jurisdiction to entertain the suit CS (OS) No. 3193 of 2012. The Court directed the plaint to be returned to the Plaintiffs for presentation in the appropriate court.

Comments

Firstly, note that the plaint has only been returned. This does not preclude the Plaintiffs from contesting the case in a proper forum and more importantly, contending the case on merits.

Secondly, as held by the Delhi HC in the instant judgment, the averments in a plaint alleging infringement or apprehended infringement of a process patent (or any statement of claim initiating a quia timet proceedings) will have to be precise. ‘Wordsmithing’ is a dangerous exercise if you have a genuine case. The Delhi Court referred to the judgment in Astrazeneca Canada Inc. v. Novopharm Limited where it was held that “an action cannot be brought on speculation in the hope that sufficient facts may be gleaned on discovery that will support the allegations made in the pleadings.” It is, therefore, quite important to observe the following in a quia timet action in the light of this Delhi HC judgment (which referred to the Ontario Court judgment in Connaught Laboratories Limited v. Smithkline Beecham Pharma Inc.) and they can be overlooked only at one’s own peril:

a) a statement of claim initiating a quia timet proceedings alleging patent infringement must allege a deliberate expressed intention to engage in activity the result of which will raise a strong possibility of infringement;

b) the activity to be engaged in must be alleged to be imminent and the resulting damage to the plaintiff must be alleged to be very substantial if not irreparable; and

c) the facts pleaded must be cogent, precise and material. The facts cannot be equivocal or speak only of intention or amount to mere speculation.

Thirdly, at a stage prior to trial where the plaintiff prays for a quia timet injunction and the defendant seeks return of the plaint on the basis of jurisdiction, the court will take all the contentions in the plaint to be correct and decide jurisdiction accordingly. As held by the Delhi HC in Bristol Myers Squibb Company v. Bhutada and Ors, “…the Court is not expected to examine the written statements to test the veracity of the averments in the plaint. Also, considering that in a quia timet action the averments in the plaint would invariably express only an apprehension of an infringement, the Court can only examine whether such apprehension is prima facie credible enough for entertaining the suit, postponing the testing of the veracity of such averment to the stage of trial.” It is evident that the Plaintiffs didn’t specifically aver the infringement of Indian Patent within the jurisdiction of Delhi HC. It may or may not be an oversight. Either ways, it was the factor which went against the Plaintiffs. As evident from the judgment, this affected the prima facie credibility of the apprehension. It is imperative to show that the cause of action, wholly or in part, arose in Delhi vide Section 20(c) of CPC. Also, Section 20(b) of CPC will not be attracted unless a) the leave of the Court is taken or b) NATCO acquiesces in such institution of suit. Neither condition is satisfied in the instant case. I shall reproduce the relevant parts of Section 20 of CPC for the benefit of readers:

“20. Other suits to be instituted where defendants reside or cause of action arises – Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction –

(a)…..

(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or

(c) the cause of action, wholly or in part, arises.

Explanation – A corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.”

Lastly, Teva is apparently the largest generic drug manufacturer in the world. It is quite interesting to see the largest generic drug manufacturer in the world increasingly turning hawkish in recent times!! I reckon it to be the recent trend of (many) generic pharmaceutical companies!! (puns intended)