Teva v. Merck – II: Division bench shoots down Teva, hints at patent linkage

In Part I, we went through the history of the litigation in the Delhi High Court between Teva and Merck over the former’s alleged infringement of the latter’s Sitagliptin patent (IN209816). In an order dated 30 May 2016, a division bench of Pradeep Nandrajog and Mukta Gupta, JJ. declined to interfere with the single judge’s listing orders, and directed that the applications under Order 39 Rules 1 and 4 be heard on the next date given by the single judge (8 July 2016).

Teva’s primary claim was that it was manufacturing the Sitagliptin API for R&D purposes and exporting small quantities to obtain regulatory approval in various countries, as opposed to commercial exports. Since such activity was squarely covered by Section 107A of the Patents Act, Teva sought the vacation of the interim injunction.

As rightly noted by the division bench in its order, this seems to be a fairly simple question of fact, on which a finding could have been returned by the single judge from a bare perusal of the export documentation presented by the parties. In the words of the bench, such a finding could be returned after a “crisp hearing not lasting beyond 15-20 minutes”.

Despite explicitly appreciating the statutory mandate in Order 39 Rule 3A to dispose of ex parte injunctions within 30 days, the division bench goes on to craft an elaborate defence of the single judge’s listing order.

Two factors appear to inform the division bench’s decision not to interfere and expedite proceedings: an apparent lack of urgency on Teva’s part, and the fact that the Sitagliptin patent would only expire in 2022, meaning that Teva could still obtain regulatory approval well before the expiry if the infringement suit was decided by the end of the year.

I argue that the latter consideration is wholly irrelevant, and the division bench has erred in even entertaining an argument on that front (let alone base its decision on it).

Lackadaisical Lawyering?

The division bench has taken note of two facts that seem to betray a laidback approach from Teva: first, its failure to file a written statement in the original infringement suit; and second, its consent to the adjournment order dated 7 April 2016.

I fail to see how the non-filing of a written statement would have any bearing on the vacation of the ex parte injunction, especially when it’s abundantly clear that Teva has tried every trick in the book to challenge the injunction in front of a judge within reasonable time. Not only did its counsel approach the court under Order 39 Rule 4 within a month of the ex parte, it also attempted to challenge the injunction order through a review petition subsequently. Given that it moved heaven and earth in vain to have the injunction vacated, it is clear that Teva’s conduct demonstrated the urgency with which it treated the matter. Whether or not it responded to Merck’s plaint on merits should be completely immaterial, since the ex parte would have been an immediate threat to its operations, to be dealt with on top priority. Either way, Prashant tells me that a written statement would be necessary for the judge to ascertain the defendant’s position on the issues at hand. Given that the O39R4 IA seems to have set out Teva’s stance (eg. the Section 107A defence) in a fair amount of detail, the non-filing of a written statement seems to be all the more redundant.

With respect to its recorded consent for an adjournment, it must be said that the division bench is on much stronger footing in its decision to brush aside arguments of fact and take the single judge’s order at face value. It’s unclear whether a communication gap or similar confusion resulted in Teva’s counsel consenting to the July date, but a subsequent attempt to assail a date arrived at with its recorded consent seems to be a stillborn argument from the very beginning.

Resurrecting the ghost of patent linkages past?

Matthew McConaughey tells it like it is in 2009’s classic romance, Ghosts of Girlfriends Past

If the division bench had merely thrown out Teva’s appeal on the ground that it was self-contradictory, everything would be hunky-dory. However, the bench seems to go overboard when it dismisses Teva’s plea for expedited disposal on the ground that the suit patent only expires in 2022, leaving the defendant enough time to obtain regulatory approval after the infringement suit is decided at its natural pace.

At the very outset, such reasoning is problematic in its outright dismissal of a litigant’s right to a speedy trial. Worse still, it flies in the face of Supreme Court rulings which mandate that IP cases, by their very nature, must be disposed of as soon as possible.

Most worryingly, there are eerie echoes of patent linkage in the reasoning followed by the bench: “why must we speed things up for you”, it asks Teva, “when you can anyway only launch the product in 2022?” The short answer to this question is that generic manufacturers have a right to produce and experiment with patented drugs regardless of whether such research occurs “just in time” for patent expiry or not. Simply put, it is not the Delhi High Court’s business to interfere if Teva’s marketing strategy calls for early regulatory approval in foreign markets – it would be well within its rights in doing so, and cannot be penalised for an entirely legal business decision.

Bayer attempted to wrestle a patent linkage regime into place in its litigation against Cipla, and the Delhi HC (through Bhat, J.) emphatically rejected its argument on that occasion, in a ruling that was later affirmed by a division bench and allowed to stand by the Supreme Court. In dismissing Bayer’s argument and holding that the Drug Controller General of India was under no obligation to consider the patent status of a drug for the purpose of granting marketing approval, the Delhi HC specifically pointed to the importance of Section 107A in accelerating generic entry, and tied this to the public interest in ensuring that generic marketing begins on the day the patent expires.

Six years on from Bayer v. Cipla, the Delhi HC appears to be dangerously close to letting a more insidious form of patent linkage in through the back door, this time through the garb of conditioning the speedy disposal of injunction applications on the remaining lifespan of the suit patent.

My point here is not that the Delhi HC has made it impossible for Teva to obtain timely regulatory approval in foreign jurisdictions, or that Teva was a fit case for the division bench to intervene and accelerate trial. Teva’s recorded consent to the July date ensures that it is far from the perfect petitioner, and the Delhi HC would have been fully justified in throwing its case out on this ground. However, in basing its reasoning upon the wholly irrelevant consideration that the suit patent only expires in 2022, the bench has handed patentees a new argumentative tool for no good reason. While the ruling may have been a product of the specific facts at hand (delayed disposal would have a negligible chance of materially affecting Teva’s market entry), it unnecessarily opens up an avenue for plaintiffs to justify lengthy delays during the operation of interim injunctions.


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2 thoughts on “Teva v. Merck – II: Division bench shoots down Teva, hints at patent linkage”

  1. Right to “speedy trial” without filing a written statement?

    The lack of a written statement (which is a basic pleading under the CPC) is taken extremely seriously by Courts and a Defendant who chooses not to file a written statement and instead only files a O. 39 R. 4, reviews and appeals suffers owing to that. As I hope you know, O. 39 R. 4 often talks only about the vacation of the injunction without fully replying to each and every point raised in the plaint. On the other hand, a written statement needs to reply to each and every averment in the plaint specifically. This is the reason why a written statement is a very important pleading which is given a lot of importance by Courts.

    Your patent linkage argument is too far fetched. Patent linkage means that the patent status of the drug affects the regulatory approval to the generic. Under a typical patent linkage regime, a generic does not receive regulatory approval (at least immediately) since the drug is protected by a patent. The Court never said that Teva is not entitled to receive regulatory approval since a patent is pending over the drug. At best you may be referring to the Bolar exemption though I leave it to you to clarify that.

  2. I agree with Anon. The non-filing of Written Statement is seen as a very serious infraction. More so, after the coming of the Commercial Courts Act which places a premium on speedy disclosures and clear guideline on filing of written Statement. Also, logically, such disclosures would necessarily would have to be accompanied by filing of the pleadings. This is the Written Statement in case of Defendants.

    Though, I agree that the decision to hear an Order XXXIX Rule 4 is independent of the filing of Written Statement. However, this justification is limited to the date when the O XXXIX R 4 is moved or the ones immediately thereafter. This is so because of the practical difficulty of the Defendant facing an injunction. That is it is practically very difficult to attempt a two-fold task on the first date: vacation or modification of injunction and set up the entire defence.

    However, as it appears in the present case: a sufficient time has lapsed since the Defendant first put an appearance. The filing of Written Statement in time is not only necessary to prevent delay of the trial but also because a Written Statement serves the vital function of stating the entire case and all the defences that the Defendant relies upon. This requirement of full disclosure of the entire claim is not only captured in OII R2 but also, in the logic of having pleadings in the first place. The other way to look at it is that the parties should not be permitted to keep its arguments and narratives undisclosed to the other party by responding to limited questions presented in various applications. This shooting from dark approach where parties tailor replies to individual applications without disclosing a single concrete case is what is prevented by the pleading and thus, the great beneficial effect of having pleadings. To put it simply for the present case, it is to prevent such poker-like strategy that the concept of pleadings (being very different from applications, even interim injunction applications) was laid down.

    In short, the non-filing of the Written Statement creates an impression (though may not be necessarily true for this case; but then all the more the reason that it should have been filed) that the Defendants is attempting to seek reliefs without coming forth with all the facts and the defences it relies upon.

    As I said earlier, this would be condoned for practical difficulty of filing both written statement and O39 R4 on the first date when the Defendants make an appearance. But, this is not the case with this Defendant. Thus, the emphasis on non-filing of Written Statement.

    It appears that the recent trend to minimize delay by early filing of Written Statement has caused the reasoning of its existence – full disclosure of facts and all the defences – to be forgotten. This amnesia on our parts is equally egregious as the anger for non-filing of the Written Statement.

    Rather, it is surprising that the Division Bench permitted the Defendants to file Written Statement without it showing any reasoning to overcome the provisos of OVIII R 1, especially, in view of the recently enacted Commercial Courts Act. Though, it may be argued that OXXXIX R4 was pending and hence, the time-limits on WS do not apply or can be condoned, but this very reasoning has been rejected multiple times by Supreme Court even when applications under Order VII R 10 /11 are pending. Thus, it is very surprising that the Division Bench completely overlooked the express requirements of the Code and the Commercial Courts Act and permitted the Defendants to file the Written Statement at such a belated stage.

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