NOVARTIS AND THE "C" WORD: FLAWED PATENT STRATEGY

A couple of more news reports have emerged on the threat by Novartis to move its investments to China, in the wake of the Glivec patent litigation. In an earlier post, SpicyIP had noted:

"Evoking the name of China is a clever move and one aimed at jolting our Ministers and bureaucrats into action. I couldn't help being amused at the paradox though. China's IP regime being lauded by an MNC?? The sun must have risen in the West today!! Just a few months back, the US initiated WTO consultations with China over its poor IP enforcement record."

The following truths now emerge:

1. Novartis had no immediate plans to set up an R&D center in India. Rather, their plan was to capitalise on India's reputation as a back office (IT backend support center!!): See this interview of Ranjit Shahani, MD, Novartis India by PB Jayakumar and Shyamal Majumdar of the Business Standard. I reproduce an extract below:

Q. Will the ongoing controversy affect your plans of setting up an R&D centre in Hyderabad?

Ans. Neither Novartis AG nor Novartis India announced plans to set up an R&D centre in India. The reports that came out regarding this were actually wrong, except for our commitment announced earlier on setting up an IT backend support centre in India. A lack of respect for international intellectual property laws will serve as a limiting factor on India’s desire to expand its research-based pharmaceutical industry.

Novartis prioritises investments in R&D in countries which respect intellectual property, a key factor in our decision-making. The Chinese government has made great progress in strengthening protection for intellectual property, and Novartis has announced a significant R&D centre in Shanghai. Concerning our plans in Hyderabad, Novartis reviewed options to acquire land there, but no final agreement has been signed.

2. And as regards the Novartis statement above that "The Chinese government has made great progress in strengthening protection for intellectual property", Joe C Mathew provides an appropriate response in his Business Standard opinion titled "India no IPR pariah":

"Amidst threats of Big Pharma relocating its R&D from India due to inadequate intellectual property rights (IPR) protection, data available with the Pharmaceutical Research and Manufacturers of America (PhRMA), an association of US drug manufacturers, indicates that India's record in protecting IPR is far better than rival destinations like China.

In its annual memorandum to the United States Trade Representative (USTR), PhRMA said US pharmaceutical firms, which account for $43 billion of the $55.2 billion global drug R&D investments, had suffered a 34 per cent loss on their total sales in China due to inadequate IPR protection during 2006.

In contrast, India does not even figure among the list of 23 countries in which PhRMA member firms suffered substantial financial damages from IPR-related problems. "

In the meantime, a McKinsey report predicts that the Indian pharmaceutical market will treble to 20 billion dollars by 2015. Quite clearly, by moving away to China, Novartis will lose out on some of this valuable pie.

A friend of mine writes to inform me of a recent challenge by Dr Reddy's to a Novartis patent in the US. This patent pertains to a combination of amlodipine besylate and benazepril hydrochloride (brand name: Lotrel) used to treat cardiovascular disorders. Will this combination be treated as an "obvious" one in the US? Not clear at this point--but if the rulings in KSR vs Teleflex and Pfizer vs Apotex are anything to go by, it seems that the "non-obviousness" standard has become more rigorous in the US. Click here for an earlier SpicyIP post, commenting on the Pfizer vs Apotex decision, rejecting the amlodipine besylate patent.

In his characteristic tongue in cheek manner, my friend quips: "if Novartis loses this patent case in the US, will it shift all its investments from the US to China??


Compare and contrast Novartis’ aggressive and weakly thought out patent strategy with that of Roche, which has gone on to acquire four patents already. Joe C Mathew reports on this in the Business Standard.

"It is raining product patents for Swiss drug maker Roche. Roche has received four product patents for its global drug brands while fellow Swiss pharma firm Novartis is still struggling with the Indian patent laws.... Last year Swiss drug maker Roche received India’s first product patent for its hepatitis treatment drug Pegasys and now in the last few weeks, it has been granted four more product patents. Roche has obtained product patents for its latest drug Mircera, which is an advanced form of organ transplant drug Erythropoetin. Roche has also been granted product patents for Tarceva, the drug it launched last year for treatment of lung cancer. That’s not all; Roche has received product patents for its anti-viral brand Valgancyclovir and breast cancer drug Herceptin."

Roche's patent covering pegylated interferon (Pegasus) has now been challenged in a post grant opposition by Wockhardt and Lawyers Collective, but one hardly hears much of this in the press.

Roche has been strategic enough to play it quiet, increasing the chances of it’s patent applications being decided in a more objective manner. Novartis has only exacerbated the politicization of this dispute by threatening to move investments to China—and given that most adjudicators are not hermetically sealed off from society, it is likely that a steady stream of anti Novartis headlines pouring out of leading newspapers will have their desired impact.

Counterfeiting Claims and Taming the Dragon!

Not Exactly short on trivia, but what is the national animal of China? Is it the dragon or the monkey or are they waiting to make a clone to appoint as one? If the economic culture is anything to go by then my answer would be’Monkey’ in the buzzer round!

Recall the parable of the hat maker and the monkey, who tricked the monkey into returning his stolen hats by getting the monkey to ‘copy his act’.

‘Copying’ and Couterfeiting culture of China taking on unsassuming proportions, the Dragon is under Fire’ from the Big A…C has well earned the dubious distinction of fondly nurturing its spurious market and the marketers with its lax IP enforcement laws. Quite an Alphabet soup…’A busts C’….not exactly a wholesome broth ! But its just not the goods from the big A, China has not spared the Nike, the Swiss knife or the Kanjeevaram Saree. An all pervasive sweep that’s spared none in its foray of piracy and counterfeit.

In the sharpest sign of a toughening U.S. stance on Chinese trade, the Bush administration lodged a pair of formal complaints with the World Trade Organization over the widespread availability in China of counterfeit American goods and barriers to sales there of U.S.-made copyrighted products.

"This is more than a handbag here or a logo item there; it is often theft on a grand scale," said U.S. Trade Representative Susan Schwab.

A USTR report states

The Office of the U.S. Trade Representative announced that the United States has requested the World Trade Organization (WTO) to establish a dispute settlement panel, the next step in its WTO case challenging deficiencies in China’s legal regime for protecting and enforcing copyrights and trademarks on a wide range of products.

Under WTO rules, the WTO Dispute Settlement Body (DSB) will consider the U.S. request for establishment of a panel at its next meeting, which is scheduled for tomorrow.

Will India fall suit in action?….Recommended, in view of the fact that indigenous Indian crafts, goods and labour skilled in the crafts have been poached upon by the Chinese!!!!.

And supposedly in an attempt to do damage control and salvage its flagging reputation, Chinese has launched a four-month campaign (why four month I wonder? Is that a lucky number in Chinese astrology?) war on tainted food, drugs and exports to boost the image of ‘Made In China’ brands, state media reported on Friday. Little short of issuing orders at Tinamen, Chinese Vice Premier Wu Yi, called the campaign a stern political task- a reminder that officials’ career may be on line.

About time China abandoned its naqli (fake) garb and donned its asli (original) avatar!

INDIA'S TRYST WITH INTELLECTUAL PROPERTY: TOWARDS A "MIDDLE PATH"?

As part of its efforts to celebrate the 60th anniversary of India's independence, DNA requested me to write an article on India and intellectual property. For those interested, it can be found here. I've also copied it below.

I've advocated in this article that the Novartis patent case be permitted to run its course and the matter decided on merits by the IPAB/courts, so that we get some guidance on how "efficacy" is to be interpreted. This seems a particularly timely suggestion, now that the Drug Action Forum in Karnataka is calling for a boycott of Novartis, unless they withdraw their case!!

India’s Tryst with Intellectual Property: Towards a “Middle Path”?

'If you make the string too tight, it will break. If you make the string too loose, it will not play'.

These pearls of wisdom, communicated by a music teacher to his pupil in order to explain to him the optimal tautness of the string of a musical instrument, helped catapult the Buddha to nirvana. It led this saint to articulate the “Middle Path” — a position that urges one to avoid taking “extreme” positions. What’s the connection with intellectual property (IP), you may ask? Well, just as we have religious extremism, we’re now witnessing an increasing extremism in IP debates as well. Consider the following news headlines that screamed out at us in the wake of the Novartis patent litigation in India: ‘Patents kill…’, ‘We will defy patents to save lives”, and others in a similar vein.

These statements, reflective of a deep antipathy to patents, ignore the fact that the dispute before the court hinges on a very technical issue about whether or not a new form of a pharmaceutical substance is patentable. Section 3(d) of the Indian Patents Act, 2005, aims to prevent a phenomenon commonly referred to as “ever-greening” by requiring that, in order to patentable, new forms of existing pharmaceutical substances should demonstrate increased “efficacy”. Novartis’s patent application covering Gleevec, an anti-cancer drug, was rejected on the ground that it lacked increased “efficacy”. This prompted Novartis to appeal the rejection of its patent, which in turn prompted most of the headlines above!

Shouldn’t the case be permitted to run its course? What credibility would we have left as a country if we introduce terms such as “efficacy”, not known to any other patent regime, and then expect interested stakeholders to desist from taking up the issue before courts in the hope of gaining some clarity on how such terms are to be interpreted?

Patents are not ‘bad’ per se, as most of these statements make them out to be. Rather, as with most other things in life, they are susceptible to abuse. In this regard, it is important to strike a distinction between the grant of a patent and the regulation of its ‘use’. Assuming that the Novartis patent issues, there are plenty of built-in safeguards in India’s patent regime to ensure that the prices remain in check.

Some may point to the fact that Indians have always believed in sharing knowledge, and the institution of a ‘knowledge commons’ since time immemorial. The very notion of intellectual property is, therefore, antithetical to Indian culture. A quick look at history helps dispel this myth. Yes, there was a fair bit of sharing, but predominantly between one class of people, the Brahmins, and any leakage from this class was prohibited and sometimes even visited with severe sanctions — a very effective form of ‘trade secrecy’, one might say.

Of course, the picture is not complete without a look at the extreme views advocated on the other side of the fence — views that extol the one-sided wonders of the patent system, views, for instance, that promise a country like Eritrea rapid innovation and industrial success if only it introduced a patent regime similar to that in the US. Here again, lessons from history help qualify this highly romanticised view of patents.

Contrary to popular perception, India had a pharmaceutical product patent regime since 1911, thanks to the British and their propensity to gift colonies with laws/policies that were similar to theirs. And yet, this gift did not help create any indigenous pharmaceutical industry in India — not very surprising, given that most countries need to imitate first before inventing and strong IP regimes stand in the way of permitting such imitation. This colonial regime also resulted in extremely high drug prices. A US Committee investigating drug prices the world over found that in 1961, Meprobamate, an anti-anxiety pill, cost more than twice as much in India as it did in the US!

Independent India was therefore keen on breaking away from its colonial past and putting in place a regime that reflected ‘national’ interest. A committee headed by a sagacious judge, Rajagopala Ayyangar, undertook a quick survey of patent regimes the world over and found that most industrialised nations began by installing regimes that permitted some level of technological imitation. It also found that the chemical industry in India had the potential to reverse engineer drugs. It therefore recommended the abolition of product patents and the introduction of process patents for pharmaceuticals. As process patents are weaker than product patents, the idea was that such patents would not prevent the domestic industry from reverse engineering existing drugs and manufacturing generic versions via alternative processes. The success of the Indian generic industry today is testimony to the far-sightedness of Ayyangar’s policy.

India has imitated for more than 30 years now. So, is this the right time to shift to a product patent regime? Unfortunately, we don’t have the luxury of asking that question anymore, since TRIPS obligates us to do so, and we did so in 2005. But what we can do is calibrate how much protection we wish to grant to pharmaceutical inventions. Section 3(d) is in many ways an example of such calibration, and reflects India’s attempt to minimise the impact of product patents by granting it to only those substances that are truly “inventive”. However, it uses terms such as “efficacy” that haven’t been defined. And this is why it is critical that we let the Novartis case run its course so that standards for interpreting such terms evolve.

India is neither ‘developed’ nor ‘developing’. It is what I would call a ‘technologically proficient’ developing country. We’re strong in certain technology sectors and therefore need to find ways to add incentives to encourage innovation in these areas. Yet 26 per cent of our people live below poverty line and we are “developing” to that extent. The age-old IP rules that were premised on this neat distinction between developed versus developing countries don’t fit us anymore. This calls for ‘new’ norms, and we need to ‘innovate’ in our IP policy as well, without blindly copying norms created by the west. Perhaps the time is ripe to constitute another committee to help us determine what the optimal ‘tautness’ of our patent/innovation policy string ought to be in today’s knowledge economy.

SPICYIP TIDBITS

1.Muga Recognised as Assams’Original Yarn

A Report from the Assam Tribune

After a long wait, Assam’s luminous golden muga silk has now secured the recognition under the Intellectual Property Rights that it has its origin in Assam only. In the changed trade and commercial scenario under the World Trade Organisation (WTO) regime, this recognition called Geographical Indications (GI) — will definitely provide better legal protection to this golden yarn, its fabric and the people connected with their production.

The certificate of GI registration of muga, which is the first GI right the State has attained, will be presented to the Chief Minister at a function scheduled for 9-45 am of August 24 at the Panbazar auditorium of the Institution of Engineers here.

It needs mention here that in case of GI, only the registered proprietor and authorised users can initiate infringement actions. The authorised users can exercise the exclusive right to use the geographical indication.

With the coveted G.I under its belt, its time to work on the larger socio-economics. As mentioned in the Spicyip blog Emerging Issues in G.I-Muga Silk of Assam,IP rights share a symbiotic relationship with all other factors that impact society at large.

While Spicyip offers its congratulation to the State of Assam, we would also like to make our submission that all other factors need to be addressed for the G.I to take effect in spirit and intent.

2.Calculus from Kerala

Recall Spicyips’ post on Ancient India and Maths,……

An article from the Hindu

A little-known school of scholars in southern India discovered one of the founding principles of modern mathematics hundreds of years before Sir Isaac Newton, to whom the finding is currently attributed, according to new research findings announced here.

George Gheverghese Joseph, an academic and author, says the ‘Kerala School’ identified the ‘infinite series’, one of the basic components of calculus, circa 1350.

The discovery is attributed in books to Sir Isaac Newton and Gottfried Leibniz at the end of the 17th century, the University of Manchester reported on in its website.

And there is strong circumstantial evidence that Indians passed on their discoveries to mathematically savvy Jesuit missionaries who visited India during the 15th century. That knowledge, the researchers argue, may have been passed on to Newton.

Dr. Joseph said: “The beginnings of modern math’s is usually seen as a European achievement but the discoveries in medieval India between the 14th and 16th centuries have been ignored or forgotten…

3.Advances in the Human Biomed Sciences.

Spicyip in its blog ‘Its all in the Genes’ reported on the currents trends witnessed in the area of Genetic engineering and the socio-legal implications for mankind at large.

An article in the TOI that’s also sending waves of consternation in international life science circle

In a quest to define life, Scientists claim that ‘We’re close to creating life from scratch’

‘Scientists Expect An Announcment within 3-10 years from Anyone in the Little known Field.’

Craig Venters discovery of a synthetically engineered life form intended to aid production of new fuel lines was a precursor after all to developing new human life forms .

It is worth reflecting that even as we grapple in our minds with the issues and conflicts that are likely to emerge from this new bio-med order, borrowing ethical precepts such as Dharma , Karma and Niyaya from traditional Indian philisophy may just about lend us the markers to reconcile the dichotomies.Bringing in the new with something old and something borrowed, as conventional wisdom suggests could possibly lend that essential touch of sense and sensibility that is required to balance the precarious facets and ethical dilemas that is likely to storm the traditional bastions of society and thought.

Lessons to be learnt from License to remake My Cousin Vinny

Funny how the Indian Entertainment Industry seems somewhat schizophrenic at times! Readers might recall that in my last post on the Urmi Juvekar copyright infringement case, I had said it is strange that the courts seem to have found a concept to be copyrightable. I also opined that the copyright laws don’t seem to warrant such a decision even though equity would certainly call for it. A recent newspaper report might actually strengthen the argument in favor of Ms. Juvekar’s copyright violation claim.

According to the report, Ravi Chopra is obtaining a copyright license over the popular English movie “My Cousin Vinny.” The acclaimed film maker is paying good money to buy rights over the movie in order to make a Hindi version of it, even though in his own words, the movie is only “loosely inspired” by the 1992 comedy.

One might argue that the decision to buy the license to the movie is more guided by an individual’s sense of right and wrong rather than a legal requirement. In Ravi Chopra’s words: "Though it's loosely inspired by 'My Cousin Vinny', we've acquired copyrights for the remake. If we're making a film about the prevalence of the legal system and how the wronged can be subjected to untold harassment if the right legal advise isn't provided to them, then it was only right that we do the legally correct thing by buying the original's right."

However, this is the not the only instant in recent times where Hindi film makers have made the righteous move of seeking a license before working on an inspiration. In the movie Kal Ho Na Ho, rights were acquired over Roy Orbison’s song “Oh, Pretty Woman” before the shooting of a Hindi song that was otherwise original in its own right. One might ask – if the entertainment industry is so conscientious, why not acknowledge the contribution of Ms. Juvekar Chiang and give her her dues for the concept of a reality show?

In both cases – in the case of the remake of “My cousin Vinny” and the copying of the literary work of a reality show, the issue is the same – whether a mere concept or idea is copyrightable. If the industry practice is anything to go by, the film industry is now creating a precedent – even if a movie concept is “loosely inspired” by the concept of a pre-existing movie, a copyright is sought. If this is now going to be the industry practice, defendant TV Channels like Global Broadcast News and CNN ought to beware; they also ought to learn from their wiser brethren in the film industry.

General Question for the readers: In case of a TV program, the channel that is showing the infringing work owns the copyright over the program and therefore, in case of a copyright violation, it is the channel that is sued. According to Section 17(b) of the copyright act, “in case of a … cinematograph film made for valuable consideration at the instance of any person, such person shall, in the absence of any agreement to the contrary, be the first owner of the copyright therein.” This suggests that in a film, the copyright rests with the producer (who I believe is the one that funds the making of the movie) in the absence of an agreement to the contrary. Does this mean that the producer is liable in case the film is found to violate a copyright? Probably so… any insights?

YOGA PATENT CONTROVERSY: RIP...

Thankfully, the government is now well advised (by the Indian embassy in the US), that there is no cause for concern on the Yoga patent front--particularly since there are no patents on Yoga asanas. Readers will recollect that SpicyIP has been reiterating this point and cautioning against the media hype generated in the wake of Suketu Mehta's NY Times editorial. Interested readers can click on a label titled "Yoga" on the left hand side of the SpicyIP homepage.

Sandeep Joshi from the Hindu Reports

"India might have succeeded in cautioning the U.S. Government against granting patents to yoga postures (asanas), but it has failed to ensure that devices and accessories used in yoga are not patented by the U.S. firms a nd individuals.

The United States Patents and Trade Mark Office (USPTO) database shows that it has granted as many as 168 patents to yoga-related devices and accessories used in conducting exercises that include yoga mattresses, grip blocks and yoga socks, besides some devices used for doing stretching exercises, Union Minister of State for Industry Ashwani Kumar has said in reply to a question in Lok Sabha.

“Similarly, there are about 3,700 trademarks on yoga accessories which have been listed in the database registered and pending trade marks by the USPTO. However, the U.S. organisation’s database does not show any pending case for grant of patent on yoga practised in steam room,” he said, adding that the Government has so far not taken up the issue with the U.S. Government.

After reports of patents being granted by the USPTO to yoga postures a few months ago, the Union Commerce and Industry Ministry had brought the matter to the notice of the Indian mission at Washington, which in turn took up the case with the U.S. Trade Representative. However, the U.S. Government clarified that no patent had been granted to asanas. Now the latest information reveals that the U.S. firms and individuals are busy patenting accessories and devices being used in conduct ing yoga."

Of course, Sandeep's note assumes that there are problems with the patenting of Yoga devices--note his first line""India might have succeeded in cautioning the U.S. Government against granting patents to yoga postures (asanas), but it has failed to ensure that devices and accessories used in yoga are not patented by the U.S. firms and individuals."

We'll forgive this as journalistic excess. As SpicyIP has been reiterating, provided one is not too keen on doing Sirsasana with the patented Yoga socks, there is no real cause for concern.

Now that "patents" are not an issue in this troubling controversy, the government needs to begin engaging with the real issue i.e. "the copyright claim" by Bikram. It needs to seriously consider whether Bikram's claims ought to be challenged --particularly since the earlier challenge by the Open Source Yoga movement is now settled and we don't have a precedent.

Bilateral Buzz on IPRs'

A fortnight of hectic parlays on trade negotiations where key accords where signed and strategic understandings arrived at .

Swiss Fondue and fine Basmati do not a meal together make’, but yes, the Indian bilateral menu has been served with a generous serving of Swiss and Pakistani fare comprising of key IPR issues.

India and Switzerland on Tuesday signed a memorandum of understanding (MoU) on safeguarding intellectual property rights (IPRs). The agreement envisages setting up of a joint committee to develop a dialogue on issues of intellectual property. The MoU was signed by Union Commerce and Industry Minister Kamal Nath and Federal Councillor of Swiss Confederation’s Department of Economic Affairs Doris Leuthard.

As per the MoU, a joint working group would be established to respond to questions relating to intellectual property, such as preventing the production, distribution and sale of counterfeit products, as well as raising awareness of the risks associated with these products. The agreement also envisages the setting up of a joint committee he committee, which will meet once a year in India or Switzerland alternately, will serve as a forum for consultations to address specific issues in the area of intellectual property in the bilateral relations and help in the development of continued institutional cooperation for regular technical exchanges between intellectual property institutes in the two countries.

Playing host to one and toast to another, talks with Pakistan resumed inter alia on matters of geographical interest. In the light of current chronicles- I would read that as a run up to the much coveted Super Basmati issue and:-

Post fanfare and ‘journalistic whoopsies’ traded between the India and Pakistan,

the Third Meeting of India-Pakistan Joint Study Group (JSG) at Commerce Secretary-Level was held in New Delhi on 2 August 2007, co-chaired by Mr. G.K. Pillai, Commerce Secretary, Government of India, and Syed Asif Shah, Secretary, Ministry of Commerce, Government of Pakistan.

The JSG report is primarily aimed a developing a policy framework to maximize benefits of geographical proximity, identifying opportunities for enhancing economic cooperation.

Given the geographical proximity, issues pertaining to products of geographical appellation, where origins of product or practice of the craft line bear a common line of ancestry attributable to both countries (and more) bear significance.

Seizing attention in this context are the border crafts such as the Kutch embroidery, the Phulkari, the Kantha practiced on both sides of the border. The LOC or the frontiers adjoining neighboring countries not only establish geo-political interests, or determine occupation based on religion; creed, but also would be a key determinant in establishing equations on traditional crafts and knowledge characteristic to both countries. While we engage in debates over ‘Whose frontier? Yours or mine?......traditional crafts for want of appropriate protection mechanism are slowly falling prey to Chinas’ poach of the traditional crafts(Yes the China menace is real- and issues at length will feature in a blog to follow)

As is the popular saying ‘when elephants fight, it’s the ants that die.’ With the U.S. all set to take the China issue to the WTO, lets hope that the counterfeiting of traditional crafts features in the cause list of complaints as well and prominently so!

SPICYIP TIDBITS

1. Asia Pacific Countries wish to copy Section 3(d)

The ET reports:

"More than 10 countries in the Asia-Pacific region are planning to adopt the much-debated provision which makes it difficult for drug makers to get patent protection for anything less than breakthroughs in pharmaceutical research. The provision describes what sort of pharmaceutical substance is worthy of a patent. The idea is to prevent companies from blocking the entry of cheaper rival products by passing off old medicines in new bottles as patent-worthy inventions.

Maldives, Pakistan, Sri Lanka, Vietnam, Indonesia, Malaysia and Bangladesh are actively considering adopting Section 3d of the Indian patent law. We get a lot of enquiries from a host of countries about the provision. The Philippines has already amended its law on similar lines, an official of the ministry of commerce & industries said. The nations that provided for patents for finished pharmaceutical products in 2005 now want greater flexibility in honouring their WTO commitments, Indian Pharmaceutical Alliance (IPA) secretary-general DG Shah said. "

One can't help but be amused at the situation--the blind leading the blind!! While India is still figuring out what the term "efficacy" means, these brave countries have rushed in.....

Now we can all collectively engage with the various interpretative battles that loom around section 3(d)?

2. Novartis sues Ranbaxy in the US

Interestingly, as Ranbaxy fights Novartis in India in a litigation that is making international headlines, Novartis drags Ranbaxy to court in the US. This patent infringement suit follows a Para IV filing by Ranbaxy under the Hatch Waxman Act. The Business Standard Reports:

"Novartis, Europe’s third-biggest drugmaker, has sued Ranbaxy Laboratories to block sales of a generic version of the blood-pressure medicine, Diovan, in the US....

Ranbaxy, based in Gurgaon, originally agreed not to sell the drug until the patent expired. In June, it amended its application to say the patent is invalid, Novartis said in a complaint in the federal court in Newark, New Jersey. Novartis, based in Basel, Switzerland, said Ranbaxy “lacked a good faith basis’’ for its claim.."

ps: Many are surprised to hear that Ranbaxy is a party to the Novartis patent litigation in India. Not too surprising, since Ranbaxy was initially sued by Novartis , upon the grant of an exclusive marketing right (EMR) to Novartis in 2003. See post here.


3. "Pharma MNCs bullying govt with China sword?"

The Economic Times carries a condensed version of my earlier blog posting on the Novartis dispute and the need to move away from rhetoric towards a more constructive evaluation of section 3(d).


4. Recent article on Indian Patent Case (Bilcare) by American Law Professor:

Professor Sarnoff has recently posted an excellent article on SSRN dealing, in part, with an Indian patent case. Titled, "Bilcare, KSR, Presumptions of Validity, Preliminary Relief, and Obviousness in Patent Law", the abstract is as below:

"In Bilcare Ltd. v. M/S The Supreme Industries Ltd., the Delhi High Court affirmed a lower court order vacating ex parte injunctions against an alleged infringer of a patent, rejecting arguments that the patent should be presumed valid even though the patent was the subject of opposition proceedings. In KSR International, Inc. v. Teleflex Co., the U.S. Supreme Court reversed the U.S. Court of Appeals for the Federal Circuit's long-standing interpretation of Section 103 of the Patent Act, i.e., that a challenger seeking to prove invalidity must demonstrate a teaching, suggestion, or motivation to combine prior art references. These cases reveal important insights (within varying procedural and substantive legal contexts) into statutory and judicial presumptions of validity that result from the grant of patents by administrative agencies. The article explains how such presumptions relate to evidence and proof rather than to the weight accorded to legal judgments. Using Bilcare as a reference, the article suggests that opportunities to present evidence challenging validity should be provided even in preliminary relief contexts, and discusses concerns that arise when validity is challenged in both administrative and judicial systems. The article then describes how the KSR decision adopted substantive legal rules for obviousness that supersede the statutory presumption of validity, shift the burdens of production and persuasion, and (for some inventions) limit the scope of relevant evidence that can be used by patent holders to prove non-obviousness. Finally, the article argues that the U.S. statutory presumption should not continue to be construed by the courts to impose heightened burdens of proving invalidity."

Isn't it interesting that an American law professor is not only discussing an Indian patent case, but also suggesting that the law as endorsed in this case (that there is no "presumption of validity" under Indian Patent Law) might be the way forward for the US as well.


5 . "European Pharmaceutical Law Forum" Conference, Washington D.C., October 23-25

The Orange Book Blog, an excellent resource for those wanting to track Hatch-Waxman type cases, highlights an upcoming conference:

"Informa Life Sciences will be presenting a unique conference entitled "European Pharmaceutical Law Forum" in Washington, D.C., October 23-25. The conference will provide an invaluable introduction to the laws and regulations governing the pharmaceutical, biotech and generics industries in Europe. At this premier global event you will be brought up-to-date with the key European cases shaping international pharmaceutical law and hear the latest regulatory and legal developments governing drug development, registration and commercialization in Europe. Leading European lawyers, in-house counsel and representatives of the European Commission and the Federal Trade Commission will present crucial information to help optimize your international legal strategy. Orange Book Blog is a media partner of this conference."

Genetic Patent - Law & Strategy by Dr. Kalyan

Biotechnology is one areas of technology that has influenced patent law like no other. It poses several challenging questions for patent jurisprudence: What ought to be the optimal patentability requirements for micro-organisms and genetic inventions? Do such inventions satisfy the requirements of novelty, non obviousness and utility? More importantly do they pose ethical and moral issues?

Dr. Kalyan, in his book titled Genetic Patent – Law & Strategy, endeavours to address the aforesaid issues in a comprehensive manner, with particular reference to India. Besides providing a comparative analysis on how patent claims regarding genetic inventions have been considered by the Authorities in US, EU and India, the author has elucidated the conceptual issues with the help of interesting and contentious cases, patent office decisions.

I will be posting the complete review of the book later.

SPICY TIDBITS

Starting today, we're beginning a new section titled "Spicy Tidbits" that will bring you short announcements of leading news in the world of IP and innovation law/policy, in so far as they have some relevance for India.

1. The US moves ahead with its WTO complaint against China, asking for the establishment of a panel. The International Herald Tribune reports:

"The Bush administration has asked the World Trade Organization to rule in a complaint against China over the piracy of copyrighted movies, music, software and books, escalating a dispute that has roiled commercial relations.

The U.S. Trade Representative's office took the formal step Monday of asking the WTO to decree that China's laws fall short of international agreements, after consultations failed to resolve differences over what the United States says are weak Chinese laws to safeguard patents and copyrights."

Recall earlier post about the paradox inherent in the threat by Novartis and others to move investments to China, owing to India's not so optimal "IP" climate.

2. The UK is moving for greater "price controls" in relation to drugs. Recall earlier post about similar efforts in India.

3. Krishna Ravi Srinivas (Indian Institute of Management Bangalore - Department of Economics and Social Sciences) has posted Intellectual Property Rights and Traditional Knowledge: The Case of Yoga (Economic & Political Weekly, Vol. 47, No. 27-28, pp. 2866-2871, July 2007) on SSRN. I extract the abstract below:

Intellectual Property Rights (IPRs) related to traditional knowledge (TK) have been controversial and there has been accusations of bio-piracy and unauthorized appropriation of TK in the form of patents etc. There were reports that patents on Yoga had been granted by U.S. PTO and this was later denied. Patents on accessories, devices that enable practice and teaching of Yoga have been granted. Similarly there many trademarks related to Yoga have been granted. The copyright claims of the founder of Bikram Yoga have been controversial and the cases on these copyright claims have been settled out of court. Yoga with origins in India has become part of global consumer culture and has been transformed into what is called as 'transnational yoga'. Hence it has many meanings in different contexts. This article addresses the controversies and discusses the complexities involved in intellectual property rights related to Yoga.

Recall the earlier SpicyIP posts on the Yoga controversy.

THE RESURGENCE OF PRICE CONTROLS IN INDIA

In an earlier blog posting, I'd noted:

"...pharmaceutical patents are not “bad” per se, as some of the statements in the press would have us believe—rather, as with most other things in life, they are susceptible to "abuse". In this regard, it is important to strike a distinction between the grant of a patent and the regulation of its “use”. Our fears of a prospective abuse of a patent and excessively high prices should not cause us to deny patent protection to an invention that otherwise merits it"

One such mechanism to regulate the use of a patent and to rein in the perceived ill effects is "price control", a mechanism widely prevalent in Europe to ensure that drug prices are not excessive. Other mechanisms in this regard include compulsory licensing (under the Indian patent act, a compulsory license can be granted if the price of the patented drug is "excessive") and even competition law (where an excessive price may be seen as an "abuse" of a dominant position in the market). More recently, in a country famed for it's "sub solar" approach to patenting ("everything under the sun is patentable"), the House of Representatives passed a legislation effectively permitting the importation of lower-cost drugs from places such as Canada, Australia and Europe. Given the staunch White House opposition to this legislation, one is not certain if it will finally make it. For an excellent coverage of this and other pharmaceutical matters, see Ed Silverman's blog titled "Pharmalot".

All of the above is to highlight that in the heat of the debate on patents and the Novartis litigation, we often tend to forget the existence of these ex-post (prospective) mechanisms to control the potential abuse of a patent right. Live Mint carries a very interesting article today on this theme by Brian Druker, chair of Leukemia Research and professor of medicine at the Oregon Health and Science University Cancer Institute. Most importantly, Dr Drucker is recognized as the key researcher behind the discovery of STI571 or imatinib (marketed as Glivec by Novartis). I've highlighted some key portions of this article below:

"In 1993, I moved to Oregon Health Sciences University in Portland and had a single goal of finding a company that had the best inhibitor for Bcr-Abl and to bring it into clinical trials. My work in Oregon on a therapy for CML was primarily funded by public sources, particularly the National Cancer Institute. My persistence with scientists at Ciba-Geigy (now Novartis) helped to keep the development of imatinib on their agenda despite uncertainty from product managers. As imatinib progressed through early and late clinical trials and demonstrated outstanding results, scientific and media interest in our discovery increased. The approval of imatinib by the FDA in May 2001 for use in CML was the culmination of a 10-year project for me, something I had dreamed of since medical school.

However, the price at which imatinib has been offered for sale by Novartis around the world has caused me considerable discomfort. Pharmaceutical companies that have invested in the development of medicines should achieve a return on their investments. But this does not mean the abuse of these exclusive rights by excessive prices and seeking patents over minor changes to extend monopoly prices. This goes against the spirit of the patent system and is not justified given the vital investments made by the public sector over decades that make the discovery of these medicines possible.

Public institutions around the world have continuously played a critical role in the research that leads to vital new medicines reaching the market. Without access medical research becomes a luxury good. Most of my colleagues would be very uncomfortable if we felt that this would be the result of our decades of effort."

In order to appreciate the role that "price controls" are likely to play in India in the coming years, it's essential that we go back a little in time. I've extracted portions of an article that I had written in 2005, upon the passage of the patents amendment act, introducing pharmaceutical product patents for the first time in India:

"When India passed its Patent Act in 1970, it also instituted a Drug Price Control Order (DPCO) under the Essential Commodities Act of 1955 to control the price of drugs and ensure access to the general pubic.75 Under this order, prices of bulk drugs and their formulations were fixed by the government as per a specified formula that allowed a 100% margin on ex factory cost. Price changes of the remaining drugs were also to be monitored. However, over a period of time, as a result of sustained lobbying by the Indian pharmaceutical industry, the number of drugs listed in the DPCO fell from 347 in 1979 to 76 in 1995.

A new pharmaceutical policy in 2002 that sought to relax controls even further was challenged on the ground that, under the policy, certain life-saving drugs had the potential of being excluded from the DPCO. The challenge made its way to the Supreme Court and is yet to be resolved. Going by this history, one is prone to be a little sceptical of the role of price control in India.

However, more recently, there are indications that, in view of the 2005 Act and its expected impact on prices, the government is considering strengthening the price control regime to increase competition and ensure affordable medicines to the general public. To this end, a new Drug Pricing (Regulation & Management) Act is being considered. The proposed Act would, while retaining the DPCO within its ambit, have additional provisions such as end-to-end price monitoring and negotiated settlement of prices of new/patented drugs. It would also lay emphasis on cutting promotional expenses that contribute substantially to the price of the drug."

If the recent enthusiasm of the National Pharmaceutical Pricing Authority (NPPA) is anything to go by, one can be certain that price controls will begin playing an important role in a post product patent environment in India--it's therefore critical that we begin engaging in this debate.

Turna Ray, who's been tracking the Novartis dispute and other pharmaceutical-patent developments in India, carries a very insightful analysis in this regard in the Pink Sheet. I reproduce some of the excerpts below:

India Highlights "Public Interest" To Reign In Prices For Non-Scheduled Drugs
India's National Pharmaceutical Pricing Authority has imposed a 15-day deadline on 11 drug manufacturers to rein in costs of certain drugs, citing the "public interest" of lower prices for consumers.

NPPA sent notices July 30 to several drug manufacturers - Cadila Pharmaceuticals, Deepti Care Health, Dr. Reddy's Laboratories, GlaxoSmithKline, Lupin Labs, Mepro Pharmaceuticals, Ranbaxy, UCB India, Wallace Laboratories, and Yash Pharma - highlighting price hikes of more than 20 percent for 11 non-scheduled drugs during selected one-year periods in 2004-2005.

.....Established in 1997, NPPA comprises independent experts charged with setting prices for controlled drugs, as well as monitoring or fixing prices of decontrolled drugs. Provisions under the Drugs Prices Control Order of 1995 empower NPPA to regulate drug prices for a list of 74 commonly used bulk drugs. In addition, under paragraph 10(b) of the DPCO, NPPA may "fix" prices of drugs not on the list, so-called non-scheduled drugs, if it is necessary for the public interest.

....NPPA's authority to control prices of non-scheduled drugs in the public interest is stipulated under the DPCO, so "unless this provision ... is challenged on constitutionality grounds, the NPPA is free to continue imposing price controls," George Washington University Law School Visiting Professor Shamnad Basheer told PharmAsia News.

Basheer cited the Madras High Court's recent decision to throw out Novartis' case challenging the patentability of imatinib mesylate to illustrate the strength of the "public interest" plea in Indian courts.

"The recent Novartis judgment upheld the constitutional validity of section 3(d) [of the Indian Patent Act] that seeks to prevent ever-greening by limiting the patentability of pharmaceutical substances," Basheer said. "A key reason that propelled the judges to find in favor of constitutionality was the fact that section 3(d) was introduced with a view toward furthering 'public health' goals by ensuring an affordable source of generics to the public."

"In much the same way, the DPCO advances public health aims and is therefore likely to be seen as furthering the aims of the Constitution of India and not contravening it," Basheer said.

Foreign Firms Unhappy

....In a recent report on foreign trade barriers, the Pharmaceutical Research and Manufacturers of America said that India's "pricing regime, combined with the lack of an effective patent or other intellectual property protection, makes the commercial environment in India unfavorable for research-based companies."

In Basheer's view, the impact of price controls on foreign investment remains unclear.

"Europe has extensive price controls. Has this impacted pharmaceutical investment in Europe? Some would say, 'Yes' because a number of European companies have shifted their R&D base to the U.S.," Basheer posited. However, he noted that while this shift may be attributed to price controls, one can also argue that it may be due to the U.S. having better scientists, universities, and research infrastructure. Another example is China, where multinational corporations continue to invest "despite its not-so-glitzy intellectual property regime," Basheer said ("The Pink Sheet" DAILY, May 24, 2007).

"Are we missing something here? Or is it reflective of the simple truth that intellectual property is not the sole or even a substantial determinant of foreign direct investment inflow?" Basheer said. "Rather, R&D will be outsourced to countries like India and China, when such countries offer key advantages, such as low costs, highly skilled personnel, infrastructure, [and] a good science/technology base."

Despite these advantages, big pharma has been known to put its foot down against government intervention in regulating prices in emerging markets. After Thailand's Ministry of Public Health issued compulsory licenses for three drugs - Bristol-Myers Squibb's HIV drug Sustiva, Abbott's HIV drug Kaletra and Sanofi-Aventis' antiplatelet drug Plavix - Abbott announced it would no longer launch new products in Thailand ("The Pink Sheet" DAILY, July 30, 2007).

But given Thailand's experience, "we also have to be sensitive to the fact that extensive price controls may boomerang, in that the drug manufacturer may opt to not sell in the Indian market at all," Basheer warned. "This hurts the consumer more."

THE NOVARTIS PATENT DISPUTE: OF "SPINS" AND EMPTY RHETORIC

A couple of days back, in a legal dispute involving the patentability of Novartis's famed anticancer drug, Gleevec, the Madras High Court ruled that section 3(d) of the Indian Patents Act was constitutional. It also held that it lacked jurisdiction to rule on whether or not section 3(d) contravened TRIPS--and that the appropriate forum to adjudicate this issue was the WTO. I'd hinted at the excessive spin on this judgment by interested stakeholders in an earlier blog posting. Let me develop this further by starting with a statement from Novartis to ET that strategically uses the "C" word:

"Multinational drug makers would prefer China for investments in pharmaceutical research so long as India keeps the bar for patenting a drug so high, warns drug major Novartis on Monday after the Madras High Court turned down the company's challenge to the country’s patent law."

Evoking the name of China is a clever move and one aimed at jolting our Ministers and bureaucrats into action. I couldn't help being amused at the paradox though. China's IP regime being lauded by an MNC?? The sun must have risen in the West today!! Just a few months back, the US initiated WTO consultations with China over its poor IP enforcement record. In fact, a recent news item reveals what Novartis really thinks of the Chinese record on IP:

"The apprehension among industry players regarding IPR protection struck feverish high after a widely publicized incident involving the detention of Chinese employees from three pharmaceutical companies in France last October. They were accused of allegedly violating the intellectual property of a Sanofi-Aventis drug when showcasing an active pharmaceutical component. Cases like this do ring the alarm bell over China's inefficient IPR policies.

Yi Yang, associate director of Novartis Pharmaceuticals Corporation cautioned earlier this month of a budding concern among MNCs that Chinese employees at mainland utilities would leave and establish their own companies using unauthorized duplicates of pharmaceutical expertise."

The interesting question to pose is: why are Novartis and other MNC's still investing in China, despite it's not so glitzy IP regime. Are we missing something here? Or is it reflective of the simple truth that IP is not the sole or even a substantial determinant of FDI (foreign direct investment) inflow. Rather, R&D will be outsourced to countries like India and China, when such countries offer key advantages, such as low costs, highly skilled personnel, infrastructure, a good science/technology base etc. In short, as SpicyIP has often been reiterating, strong IP cannot by itself lead to "innovation"--rather it has to be combined with several other non IP factors. The fact that, of the emerging economies, China continues to attract the maximum FDI would seem to suggest that the non IP factors play a critical role in inducing more FDI.

Unfortunately, we don't have any concrete data as yet that conclusively demonstrates the extent to which strong IP regimes spur the flow of increased FDI. Till we have such data, engaging in rhetoric of this sort is not going to help. And in a world that is coming to be more sensitive to the "butterfly effect", getting to this data "holy grail" may prove more complicated than one thinks.

More importantly perhaps, the Novartis case does not stand for the proposition that India disfavours incremental innovation. Quite the contrary.... the Madras High Court decision supports the constitutionality of section 3(d)-- a section that incentivises "incremental innovations" (innovations that are more effective improvements over what existed before), as opposed to mere trivial variants.

In essence, section 3(d) aims to prevent a phenomenon commonly referred to as “ever-greening” by requiring that, in order to patentable, new forms of existing pharmaceutical substances should demonstrate increased “efficacy”. The underlying assumption is that derivatives that are structurally similar to known pharmaceutical substances (such as salt forms, polymorphs etc), will, by and large, be functionally equivalent as well--and if this is not the case and the new form of an existing substance works better than the old form, it is up-to the patent applicant to demonstrate this and claim a patent.

In much the same way as the rest of the world, India is keen on incentivising more R&D and attracting more FDI --but in areas where it matters. By introducing section 3(d) in its patent regime, India demonstrates a clear preference for R&D and FDI flows that are likely to spur genuine "incremental" advances and not the creation of trivial derivatives that do not provide any added "efficacy" over and above what existed before.

Therefore, reading the Novartis case to suggest that India does not support innovation is unwarranted. In the same way, viewing the Madras High Court judgment as something that will cure all our public health woes is misguided. Just as "patents" alone are not sufficient to enhance our innovative capabilities, "patents" are not the sole reason for lack of access to important medication. Rather, some very substantial "non" IP factors contribute to our access crunch. This is more than borne out by the fact that, despite the absence of a product patent regime till 2005, and the existence of some of the most well known generic companies that supply low medications to the rest of the world, we have an atrociously low level of "access" to HIV medication. Interestingly, a recent news item states that CIPLA is being castigated for charging higher prices for its HIV drugs in India than in Africa.

This is not to suggest that Novartis ought to be granted a patent without further examination on merits. Rather, it is to suggest that pharmaceutical patents are not “bad” per se, as some of the statements in the press would have us believe—rather, as with most other things in life, they are susceptible to "abuse". In this regard, it is important to strike a distinction between the grant of a patent and the regulation of its “use”. Our fears of a prospective abuse of a patent and excessively high prices should not cause us to deny patent protection to an invention that otherwise merits it--particularly since we've already created a fairly high threshold in the form of section 3(d).

In the specific context of Gleevec, let's rationally assess the prospective (ex-post) impact of the patent, without caving in to emotional rhetoric:

1. Gleevec was and is being supplied for free by Novartis in India to most patients--of course, one may argue that there is some mismatch between the theory and practice of doling out free medicines--as the administrative hassles can prove quite onerous in some cases. But surely, there are still a substantial number of cases where this medicine does get supplied for free and with more "press", we can get Novartis to completely close the gap between theory and practice!!. In a recent conversation with a reputed doctor from the All India Institute of Medical Sciences (AIIMS), I was informed that all of AIIMS' supplies are from Novartis (free of charge).

2. More importantly, the issuance of a patent covering Gleevec does not stop generic supplies. Rather, under the Indian patent regime, generic companies, such as Natco and Ranbaxy that were manufacturing the drug before the advent of the product patent regime in 2005 can continue doing so--provided they pay a "reasonable royalty" to Novartis. The next round of patent litigations will likely hinge around what is "reasonable"--funny that in a case dripping with rhetoric, we will soon engage with what it means to be "reasonable"!!

3. Apart from the above "compulsory licensing" provision, the government can deploy "government use" provisions to manufacture and supply the drug at low costs. In the wake of the bird flu scare (a hype to which I very easily succumbed), I co-authored a paper detailing the various compulsory licensing and government use provisions that the government could invoke to ensure a cheap and affordable supply of Tamiflu, a drug that was expected to work well in those circumstances. If the recent enthusiasm of the NPAA (National Pharmaceutical Pricing Authority) is anything to go by, price controls are likely to get stronger in India.

4. Most importantly perhaps, the patent only covers the beta crystalline form of Imatinib Mesylate--one of the many polymorphic forms in which Imatinib Mesylate exists. Generic manufacturers are free to use other polymorphic forms--and indeed, I've been informed by a friend who works in a leading Indian generic company that Hetero seems to have a version of the drug that relies on such a different polymorphic form.

Also, amidst all the euphoria around the Madras High Court judgment, it bears reiteration that the case hasn't been finally decided as yet i.e. it is still possible that Novartis might be awarded the patent (though I think it unlikely). All the High court did was to defend the constitutionality of section 3(d). The IPAB (Intellectual Property Appellate Board) will still have to decide whether Novartis' claimed invention entails some "added efficacy" over an earlier known substance under section 3(d) and therefore merits a patent.

Unfortunately, this new IP appellate body has been mired in controversy owing to the appointment of Chandrasekharan, who, as the Controller of Patents, had filed an affidavit before the High Court, supporting the initial rejection of Novartis' patent by the Patent Office. As SpicyIP has been reiterating, this violation of a cardinal principle of natural justice creates a hole in an otherwise strong case for the government!!

The Novartis case should be permitted to run its course before the IPAB/courts. What credibility do we have left as a country if we introduce terms such as “efficacy” not known to any other patent regime and then expect interested stakeholders to desist from agitating the issue before courts, hoping to gain clarity on how such terms are to be interpreted?

Amidst all the "spinning" generated by the Novartis case, it is heartening to see that the government has not succumbed to rhetoric and is beginning to constructively engage with the "real" issue that this dispute raises. An ET report notes:

While lawyers would battle it out as Novartis' appeal continues, the government is working on a new patents manual that is expected to reduce subjectivity in deciding what is "significantly more effective that the already known".

Drawing out guidelines for determining "efficacy" is indeed the need of the hour. While the Madras High Court judgment is being celebrated, it does come with certain problems--it wishes away the 'efficacy" problem as something to be defined in each specific fact situation. And interestingly enough, it states that the term "enhancement of known efficacy" is not "indeterminate", since Novartis, being a pharmaceutical company knows what this means and can determine its import. That strikes me as a puzzling proposition. Novartis thought that it knew what "efficacy" and "enhancement of known efficacy" meant---and alleged before the patent office that its new beta crystalline form had an increased bio-availability of 30% and was therefore more "efficacious". Guess what--the patent office didn't agree!! Unfortunately, apart from a categorical statement that it did not agree, the patent office did not really tell us as to what they thought the term "efficacy" meant and why Novartis' alleged invention did not demonstrate enhanced efficacy. Given this background, isn't it only fair for Novartis for plead that they are clueless as to what the term means.

In all fairness, the court wasn't expected to rule on the ambit of "efficacy"--but was merely addressing a constitutional issue i.e. did the introduction of a term such as "efficacy", without corresponding guidelines elucidating its scope, make section 3(d) vague, inherently "arbitrary" and almost always prone to an "uncanalised" exercise of discretion? Was section 3(d) therefore likely to violate the "equality" clause enshrined in Art 14 of the Constitution?

Drawing on earlier case law and ignoring the bard's dictum that "brevity is the soul of wit", the court held that Parliament may introduce undefined terms such as "efficacy" and leave it to the administrative agencies to flesh it out. To this extent, there is a distinction between "discretion" conferred on an administrative agency and an "arbitrary" exercise of such discretionary power and one does not automatically follow from the other. There are two safeguards that could rein in any potential abuse of discretion. Firstly, the wordings of section 3(d) and its explanation provide some clues on how to interpret "efficacy" and thereby control/guide the "discretion". I've read and re-read section 3(d) and am at a loss to understand how the wordings of this convoluted section could help anyone!! Secondly, the possibility of an appeal serves as an important safeguard against the potential for abuse of discretionary power.

In short, the court held that since section 3(d) did not confer “uncanalised” discretionary power on the patent controller, it was constitutionally valid.

The above dictum is sound from constitutional law perspective. However, from the perspective of a patent office that is faced with a term ("efficacy") that does not find mention in any other patent regime in the world, wouldn't it be more sensible if the scope for subjectivity were reduced by laying down some broad guidelines. Such guidelines would also have the added advantage of providing some amount of legal certainty to patent applicants who needn't litigate each time to determine the ambit of this term.

So how exactly do we define the term "efficacy"? Given that India borrowed a large part of section 3(d) from a drug regulatory directive in Europe, should we define this in a drug regulatory sense? Doing so would not only impose an extremely high patentability hurdle, but also make a patent applicant run into serious problems with the "novelty" test--one of the cardinal pre-requisites for obtaining a patent. Since the drug would have been administered to volunteers during clinical trials, there is likelihood that it will be construed as "known" substance at the time of submitting a patent application.

Interestingly enough, the Madras High Court judgment relied on a medical dictionary definition to hold that the term "efficacy" in section 3(d) meant "therapeutic" efficacy. Would increased "bioavilability" (which is what Novartis claims for its beta crystaline form) count as "therapeutic" efficacy? What about salt forms that provide more heat stability and enable the drug to be transported to various parts of rural India without refrigeration? It seems that under the Madras High Court's "therapeutic" efficacy construction, this may not count. But should this be the case? If the intention behind section 3(d) is to provide incentives to new forms of pharmaceutical substances that come with genuine advantages, then ought not heat stable forms to qualify? The US and EU provide that salt forms with "unexpected properties" are "inventive" and therefore merit patent protection--and such unexpected properties would include not just "therapeutic" efficacy, but any other other significant advantage as well, such as heat stability. Should India be interpreting section 3(d) to reach a similar result?

Clearly, defining "efficacy" is no easy task--but we have to begin somewhere. Let not the various spins put on the case by interested stakeholders blind us. Spins should be deployed where we need it most---to help improve our international record in cricket!!

NOVARTIS CASE AT IPAB STAYED....

In a rather sensible move, the Chennai High Court has temporarily stayed the IPAB proceeding, pursuant to a complaint by Novartis that Chandrasekharan may be a biased party and ought not to sit in judgment over the appeal. SPICYIP has been reiterating time and again that Chandrasekharan ought to be replaced--else an otherwise strong case for the government could get dragged on owing to this infirmity.

The ET Reports:


"Hearings in Novartis’ appeal against the rejection of patent for its anti-cancer drug Glivec have been suspended yet again, after the Madras High Court restrained the Intellectual Property Appellate Board (IPAB) for four weeks from proceeding with the appeal.

Earlier this month, Swiss drug major Novartis had filed a petition with the High Court in Chennai contesting the IPAB’s decision to let former Patent Controller General S Chandrasekaran hear its appeal for Glivec, insisting that he was responsible in the first place for rejecting its patent application. Novartis had first filed a petition with the IPAB, which was dismissed last month.

According to an agency report from Chennai, a division bench of chief justice A P Shah and Justice P Jyothimani granted the interim stay on Thursday and ordered notice to the Centre and three others. It adjourned further hearing of the case to September 10.

“Novartis is petitioning the High Court for a new technical member, because we disagree with the appointment of the former Controller General of the Indian Patent Office to the IPAB,” said a company spokesperson.

Interestingly, there is a recent case that draws a parallel to Novartis’ petition. In May, the Delhi High Court held that Mr Chandrasekaran could not hear Belgium’s Magotteaux International’s appeal to the patent office decision, as it was under his tenure that the patent application had been rejected in the first place.

In case the ruling goes in favour of Novartis, the IPAB will need to appoint another person to hear the Swiss drug major’s appeal. Only a person with over five years’ experience working with the patent office, or a patent attorney with at least 10 years’ experience, may qualify.

However, with the Madras High Court holding valid section 3(d) earlier this week, chances that the IPAB will revert its decision seem slim, feel legal experts.


The Madras Patent Office rejected Novartis’ patent application for Glivec in January 2006, arguing that the Basel-based drug maker’s innovation did not meet the requirements of section 3(d) — a legal provision unique to India, which stipulates that modifications of known medicines cannot be patented unless they make the drug significantly more effective.

Glivec is patented worldwide. However, the invention of Glivec’s base compound, Imatinib mesylate, was patented in 1993, and is therefore not eligible for a patent in India, which joined WTO only in 1995. Novartis is seeking patent protection for a crystalline form of Imatinib mesylate, which was patented in 1997.

The Madras patent office said the creation of a new form of Imatinib mesylate was not a major innovation. To this Novartis replied that the base compound had no clinical value in the beginning as it could not be administered to patients."

"Suicide" Inducing Drug in India: Need For More Stringent Drug Regulation

Bloomberg reports on a very troubling case of a "suicide inducing" diet control drug, that though not likely to be approved in the US, has been approved in India. It notes, in pertinent part:

" Sanofi-Aventis SA's Acomplia weight- loss pill, linked to suicide, is becoming popular in generic form in India. That may end the product's chances of ever reaching the U.S., where it has been delayed by regulators. Cipla Ltd. and Ranbaxy Laboratories Ltd. are among six drugmakers exploiting a loophole in India patent laws, selling copies of the medicine under names like Slimona and Defat. The pills are sold without prescription for as little as 12 cents.

Should the knockoffs, used without supervision, lead to an increase in suicides, the U.S. Food and Drug Administration's opposition may stiffen. The drugmaker's shares, near the lowest in two years, won't rise anytime soon because the company has few medicines to replace Acomplia's lost sales, analysts said. Sanofi had predicted Acomplia would generate $3 billion a year. ``This is going to be potentially disastrous,'' said Jeffrey Mechanik, an endocrinologist at Mt. Sinai Hospital in New York. ``People are going to be over-dosing'' if generics flood the market and people take them inappropriately, he said.

"Under Indian intellectual property law, pharmaceutical companies can use a process called reverse engineering to make drugs patented before 1995. The patent on Acomplia, which regulates hunger impulses, dates to 1994. Sanofi hasn't heard from Indian authorities on some of the company's patent applications filed after 2000, spokesman Jean- Marc Podvin said. Sanofi received approval to sell Acomplia in India in May, the same month as the generic-drug makers. The company hasn't decided whether to sell its branded version there.

``We're evaluating our options,'' Podvin said. ``Of course, it's a concern.'' A pharmacy in New Delhi's commercial center sells the pills for the equivalent of 22 cents apiece. At another in Mumbai, the tablet can be bought for 5 rupees (12 cents). No Warning The Indian regulator approved rimonabant, or generic Acomplia, requiring patients get a prescription and medical advice on its risks. Those include depression and anxiety --side effects that were serious enough to prompt an FDA panel of advisers to reject the pill. Both stores sold the medicine without an explanatory leaflet or a doctor's note.


European regulators, who approved the medicine last year, tightened prescribing rules last month to say Acomplia shouldn't be used by those taking antidepressants or who have depression. ``There is a risk that if you can just buy it over the counter and really want to lose weight for that wedding, you may end up committing suicide before you get married,'' said Stephen Bloom, a professor of metabolic medicine at London's Imperial College. ``The rest of the world will watch. It's very kind of the Indian nation to be testing drugs for us like this.''

Torrent Pharmaceuticals Ltd. started selling its version, Rimoslim, two months ago and aims to sell 100 million rupees' worth within 12 months. Rimoslim is ``an extremely affordable therapy for the masses,'' the Ahmedabad-based company said in a statement on its Web site in May. Asked via e-mail whether there were concerns about patient safety, Ruchir Modi, Torrent's vice president of marketing, said ``we can only wait and see how this unfolds'' with the FDA."


Can we afford to wait and see "how this unfolds", when people's lives are in danger??

What is interesting in the above report is the spin on "intellectual property rights" and the indirect suggestion that India's rather "weak" patent protection for the drug in question is somehow to blame. Drug safety has nothing to do with intellectual property rights--and is a separate concern altogether. In other words, the presence or lack of a patent covering Sanofi's drug is not determinative of the issue of whether or not the drug is "safe" and "effective" and merits regulatory clearance. And this is precisely why we have a "patent office" deciding whether a drug is patentable and a separate "drug regulator" deciding whether, irrespective of the patent, the drug is "safe and effective" for use by consumers. A patent is testimony to the fact that the drug in question is really "inventive", whereas a regulatory clearance from the drug regulator endorses the fact that the drug is "safe and effective"--and without such regulatory clearance, a drug cannot be introduced into the market.

Anyway, it is deeply troubling that when the drug has already received negative reviews from an FDA panel, it has not only been approved in India but is selling across the counter in large quantities.

The pathetic state of drug safety regulation in India has not quite merited the attention that it deserves. I guess we've been too caught up in the "patent" debate to give this more pressing concern over drug safety our due attention. Our drug regulatory framework is a mess--with both central and state regulators having jurisdiction over drug safety issues, and with companies often indulging in forum shopping to locate the most lax state regulator.

The government needs to take note of incidents such as this and to ramp up the regulatory structure to ensure that drug safety and consumer welfare come first. Else, as Professor Bloom rightly notes, we'll continue to be a "testing" ground for the rest of the world.

NOVARTIS LOSES AT THE HIGH COURT: FOCUS NOW SHIFTS TO IPAB

Many of you may have already heard the breaking news today........the Madras High Court ruled against Novartis, holding that section 3(d) is not unconstitutional. It also ruled that it is not competent to adjudicate upon whether or not section 3(d) is TRIPS compliant.

Not a very surprising result for SPICYIP, which had already predicted this outcome in an earlier post, noting as follows:

"Which way is the court/IPAB likely to go? Difficult to tell at this stage, but to the extent that one might reasonably predict outcomes, this is my take:

i) The Madras High Court is likely to avoid ruling on the TRIPS compatibility of section 3(d). Firstly, since India is a "dualist" nation, international treaties are not directly enforceable in India, but have to be separately legislated upon before they are enforceble. No doubt, the Vishaka case was an exception to this rule--but one will remember that the court was careful to qualify that international norms would be incorporated only if such norms did not conflict with domestic law.

The Novartis challenge is quite different. Secton 3(d) is already part of domestic law. Novartis seeks to invalidate existing domestic law (section 3(d)) as not complying with an international legislation i.e. TRIPS. Secondly, the right forum to moot such a challenge is the WTO dispute resolution panel and not a domestic court. Thirdly, given the sensitivity of the Novartis case and the international uproar, the Chennai High Court is more likely to duck the issue , on the ground that it lacks jurisdictional competence.

ii) If the Madras High Court were to however rule on this aspect, the decision is likely to go against Novartis i.e. the likely holding will be that section 3(d) is compatible with TRIPS, as it is an "obviousness" standard that member states are free to define in a manner consistent with their national policy. Section 3(d) does not "discriminate" against the pharmaceutical sector but only makes a "justified" differentiation, given the specificity of salt forms in the pharmaceutical sector i.e. other technology sectors such as mechanicals, electronics etc do not face “different salt form” kind of issues.

It bears noting that US patent law encompasses a heightened utility requirement in the context of gene patents—i.e. in order to be patentable, a gene sequence has to demonstrate “substantial”, "specific" and "credible" utility. This came out of a desire to put a stop on the multitude of frivolous gene patent applications that cited the obvious utility of being a “mere probe”. These steps that cater to the specificities of technology sectors are perfectly legitimate exercises of national discretion by member states. And India is no different. For similar reasons, section 3(d) is not likely to be struck down as an “arbitrary” standard under Art 14 of the Constitution of India."

Anyhow, for those interested in more detail, there are plenty of news/blog items reporting on this important judgment--and as expected, both Novartis and civil society groups have begun putting their spins on the outcome. In particular, note the following statement from Novartis:

"Medical progress occurs through incremental innovation. If Indian patent law does not recognise these important advances, patients will be denied new and better medicines,' said Paul Herrling, head of corporate research at Novartis."

I’m not sure I agree with this. As discussed in an elaborate exchange with Prabir Purkayastha of the Delhi Science Forum, section 3(d) protects incremental advances, provided those advances are really “incremental” and not “frivolous”. Novartis seems to assume that section 3(d) will bar all kinds of incremental advances—and not just those that fail to demonstrate "increased efficacy".

Now that we have this TRIPS/constitutional law issue out of the way, one can pay closer attention to the "tamasha" unfolding at the IPAB. What's the likely outcome at the IPAB? Well, prudish as I am when it comes to gambling, I'm willing to bet on the following outcome:

1. The High Court will not permit Chandrasekharan to hear the appeal as a "technical" member of the IPAB. In all likelihood, he will be recused and another technical member appointed to take his stead (just for this case). Or perhaps the IPAB will decide the matter without him--but I'm not sure whether they could do this, given that their "patent" competence came only from the appointment of Chandrasekharan.

2. The IPAB will likely rule against Novartis, on grounds of both section 3(d), as well on general "non obviousness" grounds. Firstly, the Board is likely to hold that the 1992 patent application covering the Imatinib free base also anticipates the Imatinib Mesylate salt (perhaps in an "inherent anticipation" sort of way).

Therefore, under section 3(d), the "efficacy" comparison has to be between "Imatib Mesylate" and the "Beta Crystalline form of Imatinib Mesylate". If this is the case, there is bound to be no sufficiently enhanced "efficacy", as would enable Novartis to cross the section 3(d) threshold.

3. Even assuming Novartis' invention does manage to pass the section 3(d) "efficacy" threshold, it would fail to pass muster under the normal "inventive step" or non obviousness" standard. In other words, understanding that the claimed invention is really a 2 step process (i.e getting from Imatinib to "Imatinib Mesylate" and finally to the "Beta crystalline form of Imatinib Mesylate"), it is likely that the court may hold that:

i) Imatinib Mesylate is obvious from Imatinib free base
ii) The "beta crystalline form of Imatinib Mesylate" is obvious from "Imatinib Mesylate".

It'd be interesting to hear which way our readers expect the decision to go. Are we all betting on the same outcome?? Let's watch the dice roll....