Novartis AG v. Union of India (2013)

This is the single most important patent decision in Indian law, and it is important for three separate reasons. It contains the authoritative account of why Indian patent law is shaped as it is, from the 1911 Act through Ayyangar to the amendments of 1999, 2002 and 2005. It fixes the meaning of efficacy in s. 3(d). And it establishes that for a new form of a known substance in the pharmaceutical field there is a double hurdle: the ordinary tests of invention, and the s. 3(d) test on top.

The Patents and Designs Act 1911 governed India before and after Independence, and the verdict on it was harsh: the Patents Enquiry Committee found that the Indian patent system had failed in its main purpose, namely to stimulate invention among Indians and to encourage the development and exploitation of new inventions for industrial purposes in the country. The committee under Justice Bakshi Tek Chand reported in 1949 and 1950 and said the Act should contain a clear indication that food, medicine and surgical and curative devices were to be available at the cheapest price commensurate with reasonable compensation to the patentee.

Justice N. Rajagopala Ayyangar, appointed in 1957, reported in September 1959. His central insight was that the patent system would not yield the same results when applied to under-developed countries. He recommended retaining the system with improvements, of which the first was to define with precision which inventions should be patentable, and equally clearly to identify inventions whose patenting would retard research or industrial progress or be detrimental to national health, and to make those non-patentable. That sentence is the origin of ss. 3, 4 and 5.

The Patents Act 1970 came into force on 20 April 1972. Section 5 as enacted allowed only process patents, and no product patents, for substances used as food, medicine or drug and for substances prepared by chemical processes. That is the legal foundation of the Indian generic pharmaceutical industry, and the Court notes that the Act thereby recognised and maintained the distinction between invention and patentability.

India was a founding member of the GATT and a WTO member from 1 January 1995, bound by TRIPS. The amendment of 1999 inserted the mailbox and exclusive marketing rights machinery, and the Court records plainly that, faced with the threat of trade sanctions after the Appellate Body decided against India on the United States' complaint on 19 December 1997 and a panel reported on the European Communities' complaint on 24 August 1998, Parliament passed the Patents (Amendment) Act 1999. The 2002 amendment redefined invention and extended the term to twenty years. The 2005 amendment deleted s. 5, split opposition into pre-grant and post-grant, and rewrote s. 3(d) by adding words about a new form of a known substance, deleting the word mere before new use, and adding an Explanation.

Novartis applied for a patent on the beta crystalline form of Imatinib Mesylate, the anti-cancer compound marketed as a leukaemia treatment. The application was refused, essentially on s. 3(d). The matter reached the Supreme Court.

1. Does the subject product satisfy the tests of invention in ss. 2(1)(j) and 2(1)(ja)?
2. Is it excluded by s. 3(d) as a new form of a known substance that does not result in the enhancement of the known efficacy of that substance?
3. What does efficacy mean, and what is the relationship between the definition of invention and the exclusions?

The patent was refused. The beta crystalline form of Imatinib Mesylate failed the test of s. 3(d).

Invention and patentability are different questions. An Indian patent requires two things: that the subject matter be an invention within s. 2(1)(j), and that it not fall within ss. 3, 4 or, before 2005, s. 5. The Court said that in whichever way s. 3(d) may be viewed, whether as setting up standards of patentability or as an extension of the definition of invention, the subject product failed it.

What efficacy means. Efficacy is the ability to produce a desired or intended result, and its content depends on the function, utility or purpose of the product. For a medicine that claims to cure a disease, the test of efficacy can only be therapeutic efficacy, and therapeutic efficacy must be judged strictly and narrowly. The Court drew textual support from the 2005 wording — enhancement of the known efficacy — and from the Explanation's requirement that the derivative differ significantly in properties with regard to efficacy. Not all advantageous or beneficial properties are relevant, only those directly relating to efficacy.

The application to the facts. The physico-chemical properties relied on — more beneficial flow properties, better thermodynamic stability and lower hygroscopicity — may be otherwise beneficial, but cannot even be taken into account under s. 3(d), because they have nothing to do with therapeutic efficacy. The Court added that each form has properties inherent to that form, such as solubility to a salt and hygroscopicity to a polymorph, and a mere change of form with properties inherent to that form does not qualify as enhancement of efficacy.

The Explanation and the burden. The Explanation deems salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of a known substance to be the same substance, unless they differ significantly in properties with regard to efficacy. The burden of showing that difference is on the applicant, and it is a burden about efficacy specifically, not about advantage generally.

The double hurdle. The synthesis to reproduce in an answer is this: in the case of chemicals and especially pharmaceuticals, where the product for which protection is claimed is a new form of a known substance with known efficacy, the product must pass, in addition to clauses (j) and (ja) of s. 2(1), the test of enhanced efficacy in s. 3(d) read with its Explanation.

What the case does not decide. The Court was emphatic, and candidates lose marks by ignoring it: s. 3(d) does not bar patent protection for all incremental inventions of chemical and pharmaceutical substances, and it would be a grave mistake to read the judgment as undoing the fundamental change brought by the deletion of s. 5. The Court also cautioned that a new product in chemicals and especially pharmaceuticals may not necessarily mean something altogether new or completely unfamiliar or not existing before.

1. Invention under s. 2(1)(j) and patentability under ss. 3 to 5 are separate gates, and both must be passed.
2. In s. 3(d), for a medicine, efficacy means therapeutic efficacy, judged strictly and narrowly; properties unrelated to therapeutic effect are irrelevant.
3. A pharmaceutical new form of a known substance with known efficacy must clear both s. 2(1)(j) and (ja) and s. 3(d).