The Swine Flu Outbreak: Cipla on a Patent Roll

Clearly the gods are smiling on Cipla. First, they win a patent battle over a highly profitable anti cancer drug, Tarceva.

Simultaneously, a deadly swine flu strikes and claims several human lives in North America. As nations scramble to address a potential pandemic, Cipla has a generic version of Tamiflu ready to supply any government that wishes to stockpile this drug.

Gilead's Patented "Tamiflu"

Tamiflu, a drug patented by Gilead and exclusively licensed for manufacture and sale to Roche is considered one of the best drugs today to cater to this kind of a flu. This is not to suggest that it is the best solution--but only that of all the possible alternatives today, it is the best we have. Even at the time of the bird flu, it was known that Tamiflu was not the optimal drug to cater to such viruses. Despite the passage of so many years and the flight of the virus from birds to humans, it's a pity we haven't seen any improvements. So much for pharmaceutical innovation.

Recently, the World Health Organization raised the worldwide pandemic alert level in this regard to Phase 4, a phase characterized by confirmed person-to-person spread of a new influenza virus able to cause “community-level” outbreaks.”

Indian Patent Office: Gilead vs Cipla

Given this scenario, it must be really fortuitous that Cipla won the Indian patent battle over "Tamiflu" just about a month back. The Deputy Controller of Patents, Dr KS Kardam issued the decision on the 23rd of March 2009, striking down Gilead's patent application covering Oseltamavir (and certain other) compositions on the grounds of :

i) lack of inventive step
ii) failure to comply with section 3(d) and
iii) failure to sufficiently disclose the invention claimed.

As with other patent applications rejected on the basis of section 3(d), the key reason for such rejection stemmed from the fact that no evidence of any kind was submitted to demonstrate increased efficacy--apart from unsubstantiated statements in the patent application by Gilead.

Further, the kinds of advantages cited in the application and during arguments were properties like increased solubility (and consequently, a greater capability of being orally administered)--properties that didn't really impress the Controller as being necessarily more "efficacious".

Interestingly, in this context, the Controller refused to rely on the earlier Novartis (glivec) patent rejection by another Controller (Rengaswamy) on the ground that the matter had been appealed to the IPAB, where it was pending. Further, the Controller stated that the Madras High Court decision in the Novartis (Glivec) case was not very relevant, since it did not lay down any guidelines on interpreting section 3(d).

Likely Cipla Profits?

Despite the favourable patent ruling above, some commentators opine that unless we see a greater spread of the virus, Cipla may not be able to cash in on this potential pandemic. A news item notes:

"“At the current level (swine flu), it’s unlikely that Cipla will get a chance. However, should the swine flu spread and sustain and if Glaxo and Roche run out of their stocks, Cipla could be called in,” Bino Pathiparampil of IIFL Capital told The Telegraph.

According to Pathiparampil, both Roche and Glaxo have adequate stocks to take care of any demand."

I'm not sure I entirely agree with this. Why would all governments necessarily stockpile only Roche's drug? Readers may note that although Gilead holds the patent rights to this drug, Roche is the exclusive licensee and manufacturer.

Firstly, governments may decide to stockpile, not based on current estimates of the spread of the virus, but on the basis of a potential future outbreak. Recollect our earlier point that the WHO has escalated the threat of the virus to Level 4.

In which case, can Roche make adequate supplies for all governments to stockpile, a point we raised in a very early blog post? And in this article here. Since then, Roche tied up with a number of manufacturers (including our very own Hetero) to outsource their manufacture.

Secondly, since Gilead hasn't patented this drug in all countries, these governments may opt for a cheaper priced alternative from Cipla or any other generic manufacturer. And even if a patent exists, some of these governments may decide to override the patent and grant compulsory licenses to enable cheaper alternatives. Unless of course Roche can meet the demands of these countries, in terms of quantity and price.

At least in India, there's no reason why the government would need to buy from Roche, when there is no patent, and Cipla is likely to sell at much cheaper prices. In this news item, Amar Lulla has indicated that Cipla will sell one dose (10 capsules) at Rs 1000 (approximately 20 dollars).

The Indian government just announced that they are no confirmed cases in India. However, it warned against travel to countries that have reported incidents of virus outbreak. The Economic Times also reports that:

"The ministry of health & family welfare will ask drug makers such as Ranbaxy, Cipla, Hetero, Natco Pharmaceuticals and Roche to stock the anti viral to tackle any emergency in the country, a ministry official told ET.

No case of swine flu infection has been reported in the country but the government has already stored 1 million tablets and plans to raise it to 10 million in the next 15 days, said the official who didn't want to be named. "

At the time of the bird flu scare in 2005, Gilead's patent application was still pending at the Indian patent office and one wasn't sure if a patent would issue. And many of us wondered as to how the Indian patent flexibilities could be leveraged to ensure manufacture of the only available drug to cure the flu outbreak. Thankfully, we have a clearer legal terrain in India and thanks to Cipla's challenge, anyone can manufacture this drug now in India.

Of course, Gilead can appeal the Controller's decison. Having read Kardams' well reasoned order, I find it unlikely that an appellate authority will disturb his findings.

The Zanamavir Alternative

Incidentally, there are other alternatives to Tamiflu, most notably, GSK's Relenza (Zanamavir). Dr Kardam's decision has some discussion on the comparison between Zanamavir (the older known substance) and Oseltamavir (the substance sought to be patented). However, he finds that when compared with Zanamir, Oseltamavir does not really demonstrate any increased efficacy under section 3(d).

As global share prices plumet, Cipla's valuation is likely to skyrocket. And it will have much to thank Dr Majumdar for, its attorney who succesfully slayed Gilead's case at the Indian patent office.

But the commercials notwithstanding, let's all hope and pray that the spread of this virus is contained.

Petition for More Patent Information: Please Lend Your Support and Signatures

Our petition calling for greater transparency and the publication of more patent information has now been posted for signatures at i-petitions.

Please click here to access this petition and sign. Please also include your name and designation--as this will lend greater impact to the campaign. Since there is no specific column for your designation and the institution that you represent, can you please include this in brackets after your name?

Your support will ensure that we have greater access to this much needed information. And such access will go a long way towards promoting more transparency and accountability.

Since i-petitions does not accept petitions over 1000 words, I've posted the full length petition on our blog itself. I apologise for the extremely long petition--but wanted to claim as much as possible at one shot (the art of good claim drafting, some might say..). I will post the annexure (laying down the legal position in terms of what can be published) soon.

I want to specifically thank all our readers (particularly IAC) who gave us terrific inputs on an earlier draft petition that we had posted on this blog.

I'm reproducing the shorter version of our petition (as posted on i-petitions) below:

To:
Mr P.H. Kurian
Controller General of Patents, Designs and Trade Marks
Indian Patent Office

Dear Mr Kurian,

On behalf of several intellectual property stakeholders that are signatories to this letter, let me begin by wishing you a very happy World Intellectual Property Day.

I include all members of the public in this group of stakeholders, as the public are not only interested in technological progress and higher rates of innovation in India, but also keen to ensure that they do not pay monopoly prices for undeserved patents.

We chose this momentous occasion to express our gratitude for the wonderful initiatives you have undertaken, since you took office three months ago. Your initiatives have helped inject a fresh lease of life into an ailing institution and will no doubt go a long way towards making this office more transparent and more efficient.

We also chose this occasion to begin engaging with you as a community of IP stakeholders (including members of the public) that are interested in bettering the current Indian patent regime.

May we therefore please put forward some recommendations relating to increasing transparency at the Indian patent office by providing greater public access to more patent information?

A detailed list of our recommendations is available at SpicyIP (blog post titled "A Petition Pleading for Greater Transparency and More Access to Patent Information" dated April 28, 2009).

A summary is provided below:

As you may know, we made a similar petition to the government in 2007, which elicited a favourable response.

Pursuant to this letter and our intervention at the Patent Stakeholder's meeting in Kolkata in November 2008, the government assured us that the database (with easy to access and searchable patent information such as patent specifications and patent office decisions) would be available by March 2009. Unfortunately, the database is yet to be complete. If possible, would you please indicate a rough time line for the completion?

We also urge you to consider making more patent related information available to the public, including the below:

i) All correspondence between patent applicant and the patent office (prosecution history)

ii) Patent office circulars that impact patentability

iii) Working statements meant to be filed by the patentee with the Indian patent office. The Patents Act states that if a patent is not worked for more than 3 years, a compulsory license can be applied for and therefore this information is crucial.

iv) Claim amendments made by patentees/applicants from time to time to address issues raised during prosecution by the office or by opponents who challenge the patent.

v) Section 8 information (on corresponding patent applications elsewhere)

vi) Information pertaining to compulsory licenses and terms of such licenses

vii) Information pertaining to patent licenses that have to be registered under the Indian patents act.

May we also please request that the government be technology neutral whilst implementing the database and providing this information. As of now, it is near impossible to get any information out of the Indian patent office database, without using Internet Explorer.

May we also urge the government to build public private partnerships with the IT sector in India to build a better e-filing system and other innovative IT tools that would help considerably in the administration of the Indian patent office and would make it world class. Perhaps you might consider organising a workshop to brainstorm and get the best ideas and to identify good partners in this regard.

May we also suggest that the government opt for open source IT tools, wherever possible.

As you will appreciate, proper disclosure norms require that patent titles and patent abstract information be very clear and reflective of the inventive concept--and that patent applicants that deliberately obfuscate such information be taken to task.

We thank you for your consideration and are hopeful that you will be open to public input of this sort, aimed at helping improve the functioning of the Indian patent system.

Thanking you very much, we remain,

Most sincerely yours,

Shamnad Basheer
Ministry of HRD Professor of IP Law
NUJS, Kolkata

And other signatories (please see attached list)

Cc: Dr Manmohan Singh, Honourable Prime Minister of India
Shri Kamal Nath, Minister for Commerce and Industry
Mr NN Prasad, Joint Secretary, DIPP

A Petition Pleading for Greater Transparency and More Access to Patent Information

To:
Mr P.H. Kurian
Controller General of Patents, Designs & Trade Marks
Indian Patent Office
Bhoudhik Sampada Bhavan
Near Antop Hill Head Post Office,
S.M. Road, Antop Hill, Mumbai-400037,


Dear Mr Kurian,

On behalf of several intellectual property stakeholders that are signatories to this letter, let me begin by wishing you a very happy World Intellectual Property Day.

I include all members of the public in this group of stakeholders, as the public are not only interested in technological progress and higher rates of innovation in India, but also keen to ensure that they do not pay monopoly prices for undeserved patents.

We chose this momentous day to express our gratitude for the wonderful initiatives you have undertaken, since you took office three months ago. Your initiatives have helped inject a fresh lease of life into an ailing institution and will no doubt go a long way towards making this office more transparent and more efficient.

We also chose this day to begin engaging with you as a community of IP stakeholders (including members of the public) that are interested in bettering the current Indian patent regime.

May we therefore please put forward the below recommendations relating to increasing transparency at the Indian patent office by providing greater public access to more “patent information”?

A PATENT DATABASE: PROMOTING “DISCLOSURE”

As you will appreciate, greater transparency in the functioning of the patent office can be brought about by ensuring that all patent related information is made available to the public in an easy to access, online, searchable format.

Such easy availability will also help in several other ways:

i) It is likely to encourage and strengthen the ‘disclosure” function of patents, encapsulated by the Indian Supreme Court in Bishwanath Prasad Radhey Shyam v. Hindustan Metal Industries [AIR 1982 SC 1444], where the court noted in pertinent part that “The price of the grant of the monopoly is the disclosure of the invention at the Patent Office, which after the expiry of the fixed period of the monopoly, passes into the public domain.”

In other words, patents are a social contract where a 20 year monopoly is granted in return for scientific/technological information.

As you will appreciate, this information is meaningless if it is not easy to access.

ii) Further the Indian patents act itself provides in section 10(4)(a) that every patent application “shall fully and particularly describe the invention and its operation or use and the method by which it is to be performed”. And section 10(4)(b) goes on to mandate that every application shall “disclose the best method of performing the invention which is known to the applicant and for which he is entitled to claim protection”.

Importantly, Section 25(1)(g) and section 25(2)(g) provides that a patent application/grant is susceptible to challenge if the “complete specification does not sufficiently and clearly describe the invention or the method by which it is to be performed”.

The ready availability of patent specifications and claims enables competitors and members of the public to assess as to whether or not the patentee has disclosed all that he/she has claimed in a sufficiently enabling manner.

iii) Lastly, the disclosure and easy access to patent information will enable a robust use of the experimental use exception, an exception encapsulated in section 47(3) of the Indian Patents Act. Researchers that hope to experiment with such patented inventions cannot be expected to keep applying for physical copies from the patent office.

B OUR EARLIER LETTER TO THE GOVERNMENT

I enclose a letter we had sent on 3rd December 2007 to the Prime Minster’s office stressing the importance of a good searchable database with patent information including claims, specifications, and drawings.

In response to our letter, the government replied stating that that they were already digitizing patent records and that it would be complete soon. Please see our blog post for a copy of this response.

We raised the same issue at the Patent Stakeholders meeting in Kolkata and the government assured us then that digitization would be completed and the database ready by March 2009. Please see our blog post in this regard that documents this assurance.

We understand that the records in the database are still not complete. If possible, could you please indicate a likely date for such completion?

C TECHNOLOGICAL NEUTRALITY

While the current database that provides patent related information (complete specifications of applications and patent office decisions) are commendable, it is a pity that such databases can only be accessed through internet explorer, a proprietary browser belonging to Microsoft. We urge the government to be technology neutral here and permit those of us with other browsers such as Mozilla (an open source web browser) and Safari (a proprietary browser belonging to Apple Inc).

Enabling access through these other browsers will be relatively easy, given that the office can easily avail of IT expertise in a land that prides itself as an IT superpower. All one has to do in this regard is to implement the publicly available W3C standard.

D E-FILING, OPEN SOURCE AND CTO

In order to aid it in its mission of providing free and easily accessible online information through its database, the Indian patent office must insist on the electronic submission of information, wherever possible.

In this regard, we commend you for instituting the e-filing system, a system that was aimed at helping patent users. Unfortunately, most users of the e-filing system complain that the system leaves much to be desired. Owing to their lack of confidence, a number of users still prefer to file physical copies with the Indian patent office. May we please request you to examine this issue and explore solutions?

To this end, we urge you to work closely with the highly talented software community in India to devise a better e-filing system, novel software enabled databases and other tools such as search engines that will enable easy access to patent information and make the functioning of the patent office much more efficient.

Where possible, we urge you to opt for open source tools that are functionally the same or better than proprietary software, but costs far less.

Perhaps you could organize a workshop on this theme and invite all interested participants to generate ideas on this theme. Such discussions could also help you locate ideal partners for this project. In fact, we would go to the extent of urging you to create public private partnerships that will help create innovative IT tools for the Indian patent office and set an example for the rest of the world.

Could we also please request you to consider appointing a CTO (chief technology officer) for the Patent Office, who could be a one point contact person for all such IT issues?

D NEED FOR MORE DATABASE INFORMATION

As we mentioned earlier, we commend the government for making great strides in enabling comprehensive access to patent related information. The range of information that is now available via the government website is limited to:

• Published Applications
• Published Patent Grants
• Patent Office Decisions

Could we therefore please request for the provision of more patent related information as below?

i) Prosecution/File History

Since the patents act only requires that communications between the controllers and the examiners remain confidential (section 144), all other information relating to a patent grant ought to be made public. In other words, every communication between the patentee and the patent office ought to be made public. This would enable easy access to the file history or prosecution history. In this regard, may we please request you to review the working of the PAIR system in the US and provide a similar level of public access to patent related information in India as well.

We provide a detailed note (Annexure A) assessing the various sections in this regard pertaining to what information can be made available.

ii) Publishing all Amendments

We also urge that all amendments and changes to a patent application after the first publication of such application be published in a timely fashion. This would also help the public assess the working of this institution and ensure that issues of corruption are minimised.

iii) Publishing All Materials filed during the course of an Opposition

The Indian Patents Act provides for one of the most comprehensive opposition mechanisms ever known in the world. In order to make this mechanism more robust and transparent, all information pertaining to oppositions (oppositions filed, replies filed by the patentee, rejoinders (if any), evidence submitted by parties, all correspondence between parties and the patent office) ought to be published.

iv) Publishing Details of Compulsory Licenses and Revoked/Abandoned Patents

The Patents Act contains elaborate provisions for the grant of compulsory licenses (section 84, 87, 92A etc). May we request that all compulsory licensing applications and their ultimate status, the terms and conditions of such licenses (if granted), etc be published in a timely manner.

Similarly, all patents that are revoked (by the IPAB or the court or voluntarily by the patentee) or abandoned (or not renewed) ought to be notified to the public, so that the public may enter these technological areas without fear of patent infringement.

v) Publishing Patent Licenses and Other “Interests”

Sections 67 to 69 of the Indian Patents Act requires that any interest created in a patent (such as a license), be recorded in writing and registered. Such information, including licensing terms and details of assignments ought to be published.

vi) Publishing “Working” Information and Section 8 Information

Unlike most other patent regime, the Indian patents act (section 146) insists that the patentee submit statements demonstrating the extent of “working” of the patented invention. Such information needs to be made public and ought to be published on the patent office website periodically. As you know, section 84 of the Indian Patents Act provides that a compulsory license can be granted if a patent is not worked in India for more than 3 years after the date of grant.

Further, section 85 also provides that in certain circumstances, a patent can be revoked by the Controller for non-working. Therefore, it is critical that information pertaining to patents that have not been worked be published so that interested parties may apply for licenses. We are given to believe that in the early ‘90’s, such information was routinely published by the Indian patent office.

The Act also insists that patent applicants submit timely information about the status of corresponding applications in other countries (section 8). This information also ought to be published periodically. The importance of such information was touched upon in the recent decision by the appellate bench in the Roche vs Cipla case involving Tarceva, a lung cancer drug.

vii) Publishing Updated Information

May we request that the patent office website provide updated information each week of published applications, patent grants, patent office decisions and any other new patent information (as outlined above) that becomes available that week? At the current moment, the webpage in question merely has a search box to help one identify specific information (by application number, applicant name etc) that one is looking for.

However, it does not inform the public as to which publications were published or granted recently. Therefore, may we please request that when new applications are published (every Friday), this entire list be put up as a separate file on the website? And similarly, with granted patents and opposition decisions. This will enable interested patent stakeholders and members of the public to access the most recent patent related information.

Some of the potential ways in which the above could be achieved are:

i) Having a separate “date range” category in the search box on the current patent office website. Illustratively, if one enters “last 6 months” in the date range category, one should get all the patent applications/grants/decisions as the case may be of the last 6 months.

ii) A technologically superior solution would be to have to an online email subscription service, so that email subscribers can be informed of updated database status such as recent patent publications, grants and decisions. May we please refer to you Bigpatents (http://india.bigpatents.org/), a non profit database that provides Indian patent related information and offers such an email subscription facility to enable the dispersion of updated database information.

xiii) Publishing Patent Office Circulars (and Patent Manual)

In Dimminaco AG v Controller of Patents and Designs (2002) I.P.L.R. July 255, the Kolkata High Court ruled against a patent office decision denying patents to material that contained a living organism. This case exposed the fact that very often, patentability decisions are taken on “secret internal circulars”. In this case, the circular in question was sent out by the CG to all patent office personnel suggesting that no patents ought to be granted to any invention containing living material. The Kolkata office rightly ruled that since there is no statutory bar on living matter patentability, the said circular is bad in law.

May we therefore request that any such internal circulars that are likely to affect the patentability or otherwise of an invention be published on the patent office database? If possible the use of such circulars should be minimized, as such aspects can be easily fitted within the patent office manual.

In this regard, may we also request you to update us on the status of the patent office manual?

ix) Statistical Information

We also kindly request you to provide patent related data (statistics) from time to time. We understand that such information is made available annually through annual reports. Since there is a considerable time lag between the issuance of such annual reports, may we therefore please request that the website include periodic updates of statistical information. Such information could include number of patent applications filed, oppositions filed, cases decided etc and could be published either monthly or quarterly. Of course such information could be published with the caveat that in case of inconsistency, only the final figures laid before Parliament annually are to prevail.

E DE-MYSTIFYING PATENT TITLES AND ABSTRACT INFORMATION

It is rather unfortunate that a number of patentees deliberately mislead their competitors and the public with the titles of patent application and/or their abstracts. The patent office must insist that titles and the abstract reflect the essence of the inventive concept as best as possible. Objections on this count could be raised during the examination process (and in the FER and other like documents).

As you will appreciate, it is on the basis of titles and abstract information that one often decides to further investigate the application or grant in question with a view to challenging it or using the information for other purposes, such as “experimental use”. Therefore, the deliberate obfuscation of such valuable patent information is against the very essence of the patent system and what is stands for. In particular, it eviscerates the “disclosure” function of patents outlined earlier in this letter. The above requirement finds legal support as section clearly states that

Section 10(1) of the Indian Patents Act provides that “every specification shall begin with a title sufficiently indicating the subject-matter to which the invention relates.” (emphasis provided by authors).

Further Section 10 (4)(d) of the Act provides that: “Every application shall be accompanied by an abstract to provide technical information on the invention”.

It goes on to provide that “the Controller may amend the abstract for providing better information to third parties”, once again highlighting the importance of accurate “disclosure”. (emphasis by authors)

The above provisions are further endorsed by the Patent Rules, 2003. Rule 13 (e) clearly provides that:

“The abstract shall be so drafted that it constitutes an efficient instrument for the purposes of searching in the particular technical field, in particular by making it possible to assess whether there is a need to consult the specification itself.” (emphasis by authors)

F CORRECTIONS IN EXISTING PATENT INFORMATION

While we appreciate the benefits of the current database, we are also constrained to bring to your attention certain errors, some of which we are listing below:

i) Some of the entries have been entered wrongly. Illustratively, when searching the term “Pfizer” in the category titled “Public Search for Patents (No. 1-80,000)”, the first string of results that pops up lists an application numbered 27125 as the first result and indicates that the applicant is “Chas Pfizer and Company”. However, when opening the document, one gets a completely different specification which is numbered 27126 and states the applicant to be “Tootal Broadhurst Lee Company Ltd”.

We know that it is not possible to have the perfect database on day one. However may we please request that the office provide patent stakeholders and members of the public with some online avenue to bring these errors to your notice, so that it may be rectified?

We note that the website lists out Mr SK Roy as the contact person in this regard, to whom emails have to be sent. It might be far more optimal if the patent office had an online forum where such mistakes could be highlighted and addressed. This way, other users could also be informed of these discrepancies and also know when such discrepancies are corrected.

G THE RIGHT TO INFORMATION (RTI)

We conclude with an extract from our letter to the Prime Minister dated 3rd December 2007:

“Creating such a database will also conform with the mandate under the Right to Information Act (RTA) to make such information available to the public. Most importantly, urgent action in this regard will serve as an excellent example of India leveraging its IT prowess to achieve a worthwhile public policy goal.”

As you are no doubt well aware, Section 4 (2) of the RTI states that:

“It shall be a constant endeavour of every public authority to take steps …to provide as much information suo motu to the public at regular intervals through various means of communications, including internet, so that the public have minimum resort to the use of this Act to obtain information.”

Section 4(3) then goes on to state that “every information shall be disseminated widely and in such form and manner which is easily accessible to the public.”


We thank you for your consideration and are hopeful that you will be open to public input of this sort, aimed at helping improve the functioning of the Indian patent system.

Thanking you very much, we remain,

Most sincerely yours,

Shamnad Basheer
Ministry of HRD Professor of IP Law
NUJS, Kolkata

And other signatories (please see attached list)

Cc: Dr Manmohan Singh, Hon’ble Prime Minister
Shri Kamal Nath, Minister for Commerce and Industry
Mr NN Prasad, Joint Secretary, DIPP

Roche vs Cipla: Did the Judges Construe the Claim At All?

I'm still coming to grips with the division bench ruling in the Roche vs Cipla matter. I wanted to put out some initial thoughts in the hope that I can get a bit more clarity from some of our more knowledgeable readers.

The facts, known to most of you are briefly as below:

Roche sued Cipla before the Delhi High Court claiming that "Erlocip", a generic product by Cipla corresponding to Roche's originator drug, "Tarceva" violates Roche's Indian patent (IN196774)--hereafter '774 patent. Both drugs are based on a compound that goes by the name of "Erlotinib Hydrocloride".

Trial Court Ruling

The single judge, Justice Ravindra Bhat declined a temporary injunction on the ground of "public interest" i.e. the lower priced generic version of Cipla would enable "more access" to this life saving drug in India. Although Cipla challenged the validity of Roche's patent in this suit and even claimed non infringement, the trial judge found that Roche had established a "prima facie" case of infringement. However, the judge curiously noted that Cipla had raised a "credible challenge" to the patent. For our earlier posts on this case, see here.

At the appellate court, Cipla focussed less on the "public interest" part and more on the "non infringement" aspect, as discussed below:

Non Infringement

The judge held that since Roche had not established infringement of its '774 patent, there was no "prima facie" case in favour of Roche. And therefore the application for interim injunction was dismissed.

Since this was really the "ratio" of the case, I plan to focus just on this "non infringement" aspect in this post.

The other parts of the judges' ruling (that the patent in issue faced a credible challenge of invalidity and was therefore vulnerable + that public interest dictated that no injunction ought to be granted) is really "obiter" and will be taken up in a future post.

To appreciate Cipla's "non infringement" argument, it may help to take a look at the patents that have been implicated in this case.


1. The Suit Patent (774)

Application Number: 537/DEL/1996

Granted patent: IN196774 ('774)

Grant Date: 23 Feb 2007 or 6 July 2007 (we're not sure, since the patent office appears to have found the patent to be in order for grant and then sat on it extensively before issuing a certificate--during which time an opposition was filed by Natco and decided in favour of Roche.

This case again demonstrates the value of PH Kurian's order that no patent certificates shall be kept pending and shall be issued immediatley after the application is placed in order for grant.

Corresponding US patent: US 5747498 ('498). This was granted in the US in 1998.

2. The Future Patent Application ('507)

A later patent application claiming a specific polymorph B of Erlotinib hydrochloride was filed in India (IN/PCT/2002/00507/DEL) (hereafter the '507 application). This corresponds with US patent 6900221 (the '221 patent). This was filed in India in 2002 and rejected in December 2008 after an opposition filed by Cipla on the grounds of section 3(d) primarily.

Cipla's argument runs thus: The '774 patent only disclosed Erltonib Hydrochloride, existing as Polymorphs A+B. Whereas the '507 application claims Polymorph B alone. The Tarceva tablet corresponds to polymorph B alone, since this polymorph is much more stable and capable of being made into tablet form (solid form oral dosage).

The judge found in favour of Cipla, holding that Tarceva really corresponded to Polymorph B, which was the subject matter of '507, an application that was ultimately rejected. Therefore there was no infringement of the '774 patent. The judge then holds that Roche ought to have disclosed the '507 application to the patent office whilst prosecuting the '774 patent. Had this been disclosed, the judge opines that '774 patent may not have been likely to be granted at all! And then goes on to impose costs on Roche in this regard for non disclosure/suppression of material facts.

Concerns with Appellate Ruling

My concerns with the above line of judicial reasoning are as below:

i) The first claim of the '774 patent reads as:

"A novel [6,7-bis(2-methoxyethoxy)quinazolin-4-yl]-(3-ethynylphenyl) amine hydrochloride compound of the formula A."

To me, this appears to be a claim covering the compound: "Erlotinib Hydrochloride". This compound may exist in several polymorphic forms, but any such forms are likely to be subsumed within this patent.

Therefore assuming Cipla's drug relies on only one particular polymorphic form of the Erlotinib Hydrochloride compound (Form B), it will still infringe the main patent. For Cipla cannot get to such polymorphic form wihtout in some way implicating the patent covering Erlotinib Hydrocholride.


Therefore, it ought not to matter that the drug "Tarceva" (and Cipola's generic version) was primarily based on the Polymorph B version (as elucidated in the later '507 application). Making the drug will necessarily infringe the parent '774 patent.


ii) Not only did the court appear to have missed the above chain of logic, it went out of its way to hold that Roche suppressed material information by not bringing the existence of the '507 application to the notice of the court or the patent office (during the course of prosecution of the '774 patent). The court insinuated that by withholding this information, Roche was in some way culpable of fraud.

Firstly, if the '774 patent is broad enough to subsume all polymorphs, is there a need for Roche to disclose any other accompanying patent application to the court? Of coure, there could be a section 8 issue here, but that is a matter for the patent office and the corresponding oppositions filed. Section 8 requires that all information relating to corresponding patent applications/grants in foreign countries be brought to the notice of the patent office. For an interesting discussion on the contours of this provision, see this post by Sai Deepak.

Secondly, I don't necessarily see an inconsistency in Roche’s statements at the patent office with respect to the '507 application: i.e. that although '774 patent subsumes the polymorph, it still does not disclose it adequately enough, meriting another patent application ('507) that is of the "selection" variety. As to whether this second application is meritorious enough to warrant a separate patent is another issue--and the patent office held (in its December 2008 oppn decision) that it wasn't meritorious enough.

Does the strength or otherwise of this later patent application that was ultimately rejected by the patent office affect the strength of Roche's infringement case that was plainly limited to the '774 patent?

At best, whether or not Roche committed fraud by withholding pertinent information appears a contentious issue to me? And not a conclusive one or a strong enough one to merit the awarding of "costs" of Rs 5 lakhs. Imposing such costs on them when they were attempting to legitimately fight on the basis of what they thought to be validly granted patent rights appears a bit extreme to me.

In what can only be termed as the worst kind of a double whammy, Roche lost out on both patents ('774 and '507).


Conclusion 1: Whither the Claim?

The most surprising part of the division bench decision is that they do not refer to the claims of the '774 patent even once. The key question ought to have been:

What exactly does the '774 patent claim? Does it cover Erlotinib Hydrochloride? As I've argued earlier, from my tentative understanding of claim construcition and chemistry, the claim covers Erltoinib Hydrochloride. As to whether or not this is a valid claim is a different issue. But assuming it is valid, does not Cipla's use of a specific form or version of this compound infringe?

Conclusion 2: Deconstructing the Reasoning of the Judges

If my tentative reading of the claim is correct, how did the judges miss it? And why did they go out of their way to impose costs on Roche? I offer three potential reasons and welcome your thoughts on this.

(i) The judges were clearly biased against Roche: In my opinion, this is very very unlikely (not least because I run the risk of contempt here)

(ii) Our judges are still coming to grips with patent law and cannot be expected to master patent nuances on day one. Consequently, there will be mistakes at this stage. However, this would then mean that our courts must, as far as possible, defer to the patent office on issues of claim validity and the like? At least to the extent that such issues of validity, turn not on issues of law but issues of fact, such as determining the scope of the prior art and determining whether something is obvious or not to a person skilled in the art. And particularly when such patent has already been subjected to an opposition. I will come back to this point in a later post.

(iii) Roche's counsel and strategy were no match for that deployed by Cipla.

I personally think the decision came out the way it did owing to reasons number (ii) and (iii) (with reason number (iii) being the predominant reason). I had already suggested this in a number of earlier posts. I also happen to have sat in court during some of the hearings and must say that the combination of Pratibha Singh and Arun Jaitley was simply terrific.

However, notwithstandind the relative deficiences in choice of counsel and in terms of legal strategy, my own view is that Roche has a perfectly appealable case (on merits) to the Supreme Court. If not for anything else, it must get that little black mark of "suppressing material facts" expunged.

As to whether it will be able to obtain a temporary restraining order from the Supreme Court is unclear. Given that two lower courts denied the injunction and Cipla has been selling the drug since December 2007, the apex court is unlikely to grant an injunction. However, there is a good chance that it may just get its claim construction and chemistry right. What do our readers think?

Launching the SpicyIP Website: Our Special Note of Thanks

The SpicyIP website would not have been possible, without the generosity and inputs of the following folks, to whom we are immensely grateful:

i) Arjun Anand and Devinder Rawat of Zyrist:

The first two resources on our IP Resources page (namely, the Ayyangar Report and a comprehensive version of the Indian Patents Act) were made possible, thanks to the generosity of these two gentleman.

Zyrist, their baby is a fabulous platform that leverages web 2.0 to produce what I think is one of the best example of an online market place for innovative ideas. The "About Us" page of Zyrist states:

"Zyrist is a Global Marketplace for Ideas & Innovation. A Marketplace made up of Ideas, Intellectual Property, Inventions, Patents, and Products & Services where professionals and businesses can find solutions or collaborate with others to develop new ones through Open Innovation, Co-Creation and Crowdsourcing. In addition Zyrist creates the ideal platform for the successful commercialization of your Technology, Patents, Expertise and Products & Services."

A journal article once referred to Arjun Anand, CEO of Zyrist as a "serial innovator". A review of his new offering via Zyrist makes clear as to why he deserves this epithet.

ii) James Burden, Founder of IBLJ

The last resource on our IP Resources page (article on Indian IP and economic down) was made possible thanks to James Burden, the founder of India Business Law Journal (IBLJ) and a very dear friend of mine. A gifted entrepreneur and journalist, James has worked around the clock to make IBLJ the leading Indian legal magazine/journal in a short span of 2-3 years.

Apart from the above names, I wish to thank the following folks for helping us at various stages of this website development.

i) Geotech Info, our web developers, who not only did a terrific job developing a functional, yet aesthetic website, but also gave us a substantial discount, in view of our non profit status.

In partiular, I wish to thank Kamalika Guharoy, Pradipto Sen and other developers who worked around the clock to have this ready for us (at least susbtantially so) by today. As a sign of my appreciaton for the wonderful work they did, this is what I wrote in my testimonial:

"Geotech Info has a team of highly creative and dedicated web developers who work around the clock to produce websites of superlative quality. It is clearly a cut above the rest and distinguishes itself by its obsessive focus on client satisfaction and on creating products that are often an ideal blend of functionality and aesthetics.

It actively hand holds clients to help them identify the optimal product likely to suit their businesses/projects and then works towards creating such products. Indeed when I first approached them, I had no idea that my website www.spicyip.com would take the fabulous shape that it finally did.

The focus on quality does not come at the cost of time or price. Geotech ensures that all client time deadlines are met and that the pricing remains amongst the most competitive in the market. All in all, you’d be making a big mistake if you took your web development project elsewhere!"

ii) Swathi Sukumar, who provided excellent inputs on the design of the website and took the "transparency" photograph that now graces our home page. We owe a lot to her aesthetic temperament.

iii) Sreejesh who began our website development project some time back, but had to discontinue due to personal reasons.

iv) Our ex-team mates: On this momentous day, we miss our earlier team members who unfortunately had to leave for personal reasons. Our heartfelt thanks to Aysha Shaukat, Mrinalini Kochupillai and Shwetasree Majumdar who continue to feed us with their excellent inputs and suggestions for improving SpicyIP.

And last, but certainly not the least, we offer our sincere gratitude to our readers, without the support of whom none of this would have been possible.

World IP Day: Launching the SpicyIP Website

SpicyIP wishes all its readers a very creative World IP Day!

May this day bring us together to commemorate the value of intellectual property rights.

May this day also help us appreciate that intellectual property rights are but "trees" in the "wood" of innovation and creativity ...lest we miss the wood for the trees.

May this day help us transition from IP extremism towards a "middle path" position that balances the interest of various IP stakeholders appropriately.

May this day help us cement our commitment to achieving greater transparency in IP policies/institutions.

Last, but not the least, may this day help unleash our creative and innovative juices.

On this historic day, a number of IP related activities are planned around the world and you can get an overview of them on the WIPO website. WIPO itself has decided to focus on the theme of "green innovation" to celebrate this day.

As promised, on this momentous day, SpicyIP brings you two humble offerings:

A. One is a petition to help increase transparency at the Indian patent office.

I will post a separate note on this, including a link to the electronic petition, for which we require your support and signatures. Our last post on this theme also carried a short note on the legality or otherwise of patent related publications. If possible, please do send in your comments by this evening, so that we can incorporate them before finalising and putting this up for your signatures.

B. Our second surprise offering to you is the SpicyIP website!

This website aims to decode Indian IP and increase transparency around IP debates by interalia hosting IP materials that are not otherwise easily accessible.

Secondly, in keeping with our commitment to further "open access" to IP materials, all the content will be free, as far as possible.

SpicyIP Resources

We hope to ramp up our offerings on the IP Resources page. At the moment, we have the following:

i) The Ayyangar Committee Report:

As many of you know, this report formed the backbone of the Indian Patents Act, 1970 and is lauded as perhaps one of the best "policy" documents to come out of India. For those interested in the importance of this report and how it continues to influence the Indian Patent Office, see my article in the IPQ titled "Policy Style Reasoning at the Indian Patent Office".

Unfortunately, there are very limited copies of this report available. And to the best of my knowledge, not a single electronic version is available. We therefore hope that this publication will provide for more informed IP debates in future.

nb: Unfortunately, despite our best efforts, we've been able to upload only part of the report. We promise to bring you a complete version in the next 10 days or so.

ii) The Patents Act, 1970 (as amended upto 2005):

As many of you know, there is no online copy of the complete version of the Indian patents act (i.e. the 1970 Act, as amended upto 2005). Rather, what we have is the 1970 Act and a separate version of the 2005 amendments.

We bring you the first such comprehensive version--so you don't need to waste your time clubbing the 2005 amendment with the existing copy of the Act.

iii) High Court order in the Ramkumar vs Samsung Case:

This order from the Madras High Court issued pursuant to a writ filed by Ramkumar alleging that the customs authorities were not acting upon his application to seize all cell phones that used his allegedly patented dual SIM technology. The order directs the customs authorities to apply the law.

Kruttika will bring you a post on this order, as also other related developments in the Ramkumar vs Samsung case, something that we have been tracking on this blog.

iv) An article from the India Business Law Review:

This excellent article by Vandana Chatlani reviews the economic downturn and what this means for Indian IP.

For those not in the know, the India Business Law Journal (IBLJ) is perhaps the leading magazine on Indian legal issues today and has a terrific collection of high quality articles. Incidentally, this legal magazine has been running a transparency campaign of another kind focussing on Indian law firms, hoping to bring to light aspects such as the salaries offered by law firms and revenues made by them etc. Certainly a more uphill task than our attempt to get the government to make more "patent information" available.

More information about our website offerings are on the "About Us" Page, extracts of which I reproduce below:

"SpicyIP aims to be a leading repository of information/resources pertaining to Indian intellectual property (IP) law and policy. To this end, it will strive to make available intellectual property decisions (from the courts and other IP authorities such as the patent office and the IPAB), intellectual property statutes/rules and parliamentary reports that are not otherwise accessible.

It is committed to enriching the public domain and in furthering principles of open access. All its materials will therefore be provided free of charge. In order to help us in this endeavour, we ask that our readers/viewers please share with us any IP material that they might have which is not otherwise known to the public or easily available.

Although SpicyIP asserts copyright over the specific materials that it creates (analysis of leading cases etc), it permits copying under a Creative Commons Attribution-Noncommercial-Share Alike 2.5 India license.

....Another unique feature of SpicyIP is CLIPP, a platform whereby members of the public can participate in IP policy making, in a style that is somewhat similar to the open source innovation model for software."

Naturally, none of this would have been possible without your ardent support and encouragement. In fact, it was your spirited encouragement that “incentivised” us to create this resource in the first place.

The only thing that we ask for in return is that you let us know what you think of the website. And in particular, please let us know how we can improve.

Lastly, since we're seeking to build up a repository of IP resources not otherwise found, may we please request you to send us any IP materials that you have in your possession and which you'd be kind enough to share. Thank you very much.

De-Coding the Law: What "Patent Information" Can be Published?

In an earlier post, we had outlined a plan to send a letter to the Controller General of the Indian patent office on the World IP Day (tomorrow), calling for more "patent information" to be made public.

We had referred in the letter to an annexure that would examine the provisions of the Patents Act to determine what kind of information can be made public by the office. Below is a draft version of the Annexure, which we hope to finalise after inputs from our knowledgeable and more experienced readers:

WHAT CAN BE PUBLISHED: EXPLORING THE LEGALITIES

Patent information that is filed with/generated by the Indian patent office can be classified into:

1. Patent Applications as published (complete specification + drawings + claims)

2. Patent Applications as Granted (complete specification + drawings + claims)

3. Amendments to the patent application before grant

4. Amendments to the patent application, after the grant of the patent

5. Communications between patent office and applicant (prosecution history or file history)

6. Other patent related information meant to be submitted by the patent applicant/patentee (section 8 (information on corresponding applications filed abroad) + working statements)

7. Pre Grant opposition submissions (opposition filed by opponent+ reply filed by patent applicant+ rejoinder (if any) + evidence submitted by parties + all other correspondences between parties and the patent office)

8. Post Grant Opposition (same as above)

9. Reports from Examiners to Controllers

10. Patent Office Circulars (Administrative circulars + Circulars impacting patentability decisions)

11. Patent Draft Manual

A. BAR ON PUBLICATION

From a reading of the patents act, it would appear that only category no. 9 above is expressly barred from publication by the Indian patents act.

Section 144 states as below:

“The reports of examiners to the Controller under this Act shall not be open to public inspection or be published by the Controller; and such reports shall not be liable to production or inspection in any legal proceeding unless the court certifies that the production or inspection is desirable in the interest of justice, and ought to be allowed.”

The implication of section 144 is that there is no legal bar to the publishing of any of the other categories outlined above. In other words, unless there is a specific bar to the publication of any patent related information, the office ought to go ahead and publish this, by intearlia making it available electronically on its existing database. This will further transparency and accountability considerably and help ensure that only truly meritorious inventions are granted a patent.

B. POSITIVE MANDATE TO MAKE PUBLIC

As regards some of the categories outlined above, the Patents Act positively mandates publication, as detailed below.

Publication of Patent Application (as filed):

Section 11A makes clear that patent applications (specifications, drawings and claims) shall be published within 18 months of the priority date.

Rule 27 further substantiates this position by providing that:

“After the date of publication of the application under section 11 A, the application together with the complete specification and provisional specification, if any, the drawing, if any, and the abstract filed in respect of the application may be inspected at the appropriate office by making a written request to the Controller on payment of the fee in that behalf and copies thereof may be obtained on payment of fees specified in the First Schedule.”

It is commendable that the patent office is not just making this available on payment of fees, but is publishing this information online for easy access. Such a move promotes transparency and makes for easier public access to this important patent information.

It is important to note section 11A (1) states that “save as otherwise provided, no application for patent shall ordinarily be open to the public for such period as may be prescribed.”

The rules framed under section 11A make clear that in most cases, the period for publication is 18 months from the priority date of the application. Therefore the office may not publish the application before this 18 month period expires (unless a specific request is made by the patent applicant to have it so published pior to this time). But once the period expires, there is no legal bar to publication of this information.

Publication of Patent Application (as granted):

Section 43 (2) states that:

“On the grant of patent, the Controller shall publish the fact that the patent has been granted and thereupon the application, specification and other documents related thereto shall be open for public inspection.”

This makes clear that the final application as granted (and all documents related thereto) shall be made public. This is further buttressed by section 74 A which states that:

“After the date of publication of a grant of a patent, the application together with the complete specification and provisional specification, if any, the drawing if any, abstract and other documents related thereto maybe inspected at the appropriate office by making a written request to the Controller and on payment of fee and may obtain copies on payment of fee specified in the First Schedule.”

Here again, it is commendable that the patent office is not just making this available on payment of fees, but is publishing this online and enabling free public access.

Publishing of Amendments

It is a normal practice for patentees to amend their claims after the date of publication of the patent, in order to address concerns in the FER (first examination report) or in response to oppositions filed. There is no reason why such amendments should be hidden from the public. In the interests of transparency and in order to effectuate better oppositions and challenges, such amendments ought to be published.

Section 57 and 59 of the Indian patents act governs amendments.

Section 57 (1) reads as below:

“Subject to the provisions of section 59, the Controller may, upon application made under this section in the prescribed manner by an applicant for a patent or by a patentee, allow the application for the patent or the complete specification l[or any document relating thereto] to be amended subject to such conditions, if any, as the Controller thinks fit:”
Section 57 (3) then goes on to state as below:

“Any application for leave to amend an application for a patent or a complete specification or a document related thereto under this section made after the grant of patent and the nature of the proposed amendment may be published.”

Owing to the section 57 (3) which is specifically tailored towards amendments after the grant of a patent, one may argue that any claim that is amended prior to the date of grant of patent cannot be published. However, section 57(1) makes clear that any amendment (whether prior to or post the grant of a patent) can be effectuated “subjected to such conditions, as the Controller thinks fit”. The controller can therefore insist on “publication” as a condition even prior to the grant of a patent.

Further, the Act provides that in certain circumstances, a mere correction of a clerical error in a patent application ought to be published. The Act goes on to provide that a third party can even challenge such clerical correction. If such errors can be published, then amendments to a patent application, which are of a significantly higher order of magnitude than mere clerical , ought to be publishable as well.

Section 78 reads as below:

“Where a request is made under this section for the correction of any error in a patent or application for a patent or any document filed in pursuance of such an application, and it appears to the Controller that the correction would materially alter the meaning or scope of the document to which the request relates and ought not to be made without notice to persons affected thereby, he shall require notice of the nature of the proposed correction to be 1[published] in the prescribed manner.”

At a broader policy level, any amendment to a patent, whether before or after the date of grant, ought to be made public. The Act provides that no amendment can be allowed, if the effect is to add subject matter not envisaged in the earlier application filed and published. Section 59 provides as below:

“No amendment of an application for a patent or a complete specification or any document relating thereto shall be made except by way of disclaimer, correction or explanation, and no amendment thereof shall be allowed, except for the purpose of incorporation of actual fact, and no amendment of a complete specification shall be allowed, the effect of which would be that the specification as amended would claim or describe matter not in substance disclosed or shown in the specification before the amendment, or that any claim of the specification as amended would not fall wholly within the scope of a claim of the specification before the amendment.”

The goal of the opposition mechanism is to help the patent office benefit from outside input from third parties (mainly competitors) so that it may then examine applications in a more rigorous manner. The opposition regime in India (and other countries) recognises the fact that patent offices have a shortage of resources (most notably man power) and therefore need to rely on outside sources to find prior art that they might have overlooked and to gain other information/arguments that is likely to help them with their examination.

Therefore competitors must be offered an opportunity to offer inputs on amendments as well—and whether or not the said amendments extend beyond the scope of the earlier application filed.

C. "TIME" BAR TO PUBLICATION

Section 142 (4) states as below:

“Subject to the provisions of Chapter VII, an application for a patent, and any specification filed in pursuance thereof, shall not, except with the consent of the applicant, be published by the Controller before the expiration of the period prescribed under sub-section (1) of section 11A or before the same is open to public inspection in pursuance of sub-section (3) of section 11A or section 43.”

As with section 11A(1), information cannot be published prior to a certain date. However, after this date, the information in question can be published. Therefore, this is only a mere “time” bar.

D. PATENT OFFICE CIRCULARS

Patent Office Circulars can be broadly classified into “administrative” circulars and “legal” circulars.

Although administrative circulars (relating to the internal administration/management of the patent office) need not necessarily be made public, it is commendable that the present CG has opted for full transparency by publishing even administrative circulars.

It is hoped that he would do the same for legal circulars. For unlike administrative circulars, they impact the patentability of otherwise of inventions and it is therefore critical that they be published.

E. CONCLUSION: WHAT IS NOT BARRED CAN BE PUBLISHED

To conclude, since there is no specific bar on publication, the below categories ought to be published:

1. Patent Applications as published (complete specification + drawings + claims)

2. Patent Applications as Granted (complete specification + drawings + claims)

3. Amendments to the patent application before grant

4. Amendments to the patent application, after the grant of the patent

5. Communications between patent office and applicant (prosecution history or file history)

6. Other patent related information meant to be submitted by the patent applicant/patentee (section 8 (information on corresponding applications filed abroad) + working statements)

7. Pre Grant opposition submissions (opposition filed by opponent+ reply filed by patent applicant+ rejoinder (if any) + evidence submitted by parties + all other correspondences between parties and the patent office)

8. Post Grant Opposition (same as above)

9. Patent Office Circulars (Administrative circulars + Circulars impacting patentability decisions)

10. Patent Draft Manual

Are Patents a Hindrance to Low-Carbon Technology?

Looks like there will come a day when patents will be held responsible for all the evil in the world. The latest sin it is accused of is hindering access to low-carbon technology, but fortunately it so happens there are a few sensible and lucky people who manage to make their point despite the all-engulfing din. An article entitled “The Debate Surrounding Patents and Low Carbon Technology Is Heating Up” written by Tim Wilson (Director of the IP and Free Trade Unit of Australia-based Institute of Public Affairs) is the subject of attention here (I thank a close friend of mine for bringing this article to my notice).

The article is based on the recently concluded meeting of the United Nations Framework Convention on Climate Change (UNFCC) in Bonn, Germany. One of the focal points in the agenda of the meeting was discussing the role of technology in cutting down global greenhouse gas emissions. Most of us know that these meetings typically revolve around the issue of distribution of burden between developed and developing nations with the latter citing development as a reason, and a valid one at that, for not being able to do much when it comes to reducing carbon emissions. However, technology for obvious reasons could be the answer to this challenge. Who has the technology, if there is one, and is there a problem with access to such technology? Apparently, availability of technologies is not the problem but the price is, which hinders its access.

According to developing countries, low-carbon technologies require deep pockets and more so, at the scale they are required in such nations. But then what is the reason for the high cost of such technologies? Patents are the culprits, according to them and some of the countries like China and Cuba in their submissions at the UNFCC meet have proposed “policy instruments” as the solution. Now what are these policy instruments? Ah yes, Compulsory Licensing of course.

Wilson feels that these proposals are the latest salvo in what he calls "a campaign against patents on low-carbon technologies" which started with some press reports around the time of the 2007 G8 meeting which sought an “agreement on IPRs on technological efforts in developing countries paralleling the successful agreement on compulsory licensing of pharmaceuticals”. So that’s where the inspiration comes from- the pharma sector. We, on SpicyIP, have in various posts discussed the influence of seeing patents through the pharma prism on other sectors and this is precisely the kind of situation that some of us had in mind. But the issue does not end here; NGOs like Friends of Earth have called for a complete bar on patents on low-carbon technology and amending TRIPS to that end. Subsequently, during the 2007 Bali Summit, the issue of using TRIPS flexibilities towards achieving such an objective was also mooted. But does TRIPS allow for such a provision?

TRIPS makes room for compulsory licensing with regard to patented technologies in cases of “national emergency or other circumstances of extreme urgency or in cases of public non-commercial use”. There is a good chance of global warming falling under this category depending upon how seriously countries perceive this issue and importance they attach to it. But Wilson is of the opinion that the flexibility mechanisms were primarily designed for use in the case of pharmaceuticals, not low-carbon technology. Does that stop one from using these mechanisms in the case of such technologies?

The other question one needs to ask is something which has been raised over and over again in the broader context of IP protection and its role as a driver or the sole driver of innovation. In the absence of IP protection or the presence of a compulsory licensing mechanism for such technologies, will the development in this direction (i.e. research on low-carbon technologies) go dry altogether? If countries decide to seriously cut down on greenhouse emissions, one would think they would naturally look for cost-effective solutions and this may translate into a significant business opportunity for innovators in this field to invest in research.

On the other hand, one may argue that until the time nations pull their socks up on the Kyoto agreement, if the tempo of innovation on low-carbon technologies has to be sustained or increased, patents may be a good way of incentivizing the efforts of innovators and their investors. The World Bank shares this opinion (we would love to hear counter-opinions from our readers); it feels that weak IP regimes are in fact the reason for the sluggish rate of transfer of eco-friendly technologies. Professor Barton of Stanford Law School says weak IP protection is probably a greater obstacle to such transfer than presence of IP protection.

A few other commentators note that given the nascent stage at which low-carbon technologies exist, there are enough and more reasons to ensure strong IP protection. The state of the low-carbon industry has been compared to the state of biotechnology or semi-conductor industry about 25-35 years ago. According to them, the cost impact of patents on these technologies is miniscule compared to the costs of adaptation, labour and material costs involved in individual technologies. One felt that if that is the case, it means that patents do not add much to the overall cost of the technology and so do not represent a significant return to the investments made by the innovators and therefore the presence of patent protection is not the driving factor behind investment in such technologies.

Such an argument is inaccurate because the cost impact of a patent on the technology has been compared with cost impact of other factors; so it is relativistic in nature and makes sense. So what does one do to reduce the cost impact of labour and material costs? Wilson draws our attention to a 2007 World Bank report on International Trade and Climate Change which proposes reduction in or complete removal of tariff and taxes on such technologies which may result in a 7-14% annual increase in the diffusion of such technologies depending on the kind of reduction in tariff.

Wilson concludes by saying that “removing patents may appear to support the diffusion of low carbon technologies, but it will actually undermine it. Removing patents will discourage investment and undermine the tradable nature of property rights that patents confer. Undermining licensing of these technologies will discourage foreign direct investment (FDI) into developing countries to transfer technologies.”

Since an argument in a similar vein but in the context of pharma has been broached earlier, we would like to know the opinions of our readers on this issue.

Breaking News: Roche Loses Tarceva Patent Case and Faces Hefty Fine

The Appellate Bench at the Delhi High Court (consisting of Justice AP Shah and Justice Muralidhar) held in favour of Cipla and against Roche in a high profile patent litigation involving Roche's patented drug Tarceva.

Roche had sued Cipla before the Delhi high court, praying that a temporary restraining order be issued against Cipla. For a history of this case, please see our previous posts.

The appeal in question was filed against the order of Justice Ravindra Bhat who had refused to restrain Cipla from selling generic versions of Tarceva (Erlocip) on the ground of "public interest" i..e Cipla's drug cost about 1/3rd of Roche's patented drug.

Public Interest and Pricing

The Appellate court did not dwell much on this "public interest" point. Rather it rejected the appeal on the ground of lack of a "prima facie" case. As we'd noted in a previous post, Indian courts insist on 3 conditions prior to the grant of a temporary restraining order (or injunction):

i) The patentee has to establish a "prima facie" case against the defendant
ii) But for the injunction or restraining order, the patentee would face irreparable losses
iii) The balance of convenience is in favour of the defendant

While Justice Bhat had held in favour of Roche on the first point (that Roche had established a prima facie case), he held against Roche on the "balance of convenience" point, ruling that "public interest" and lower pricing of Cipla's drug tilted the "convenience" in favour of Cipla.

Lack of Prima Facie Case

The appellate court overruled Justice Bhat on this point and held that on the evidence before the court, Roche had failed to establish a prima facie case. Firstly, the validity of Roche's patent was in serious doubt. In view of the existence of Gefatinib, an earlier known molecule, the court appears to suggest that Erlotinib, Roche's patented molecule may not be inventive.

Secondly, there is a serious doubt about whether or not Cipla infringes the Roche patent at all.

Since the court ruled that Roche had not even established a prima facie case, it did not have to wade into the other factors, such as the pricing of the drug and the public interest factor, something that the trial judge, Justice Bhat had based his judgement on.

Roche Fined Rs 5 lakhs!

Interestingly, and perhaps very damagingly for Roche, the judge also imposed a cost of 5 lakhs (approximately USD 10,000) on Roche for suppressing material facts. The court appears to suggest that Roche had taken the patent office and the court for a ride by suppressing facts. Roche has around ninety days to appeal to the Supreme Court of India now. If not for anything else, it ought to appeal to reverse the finding that it suppressed material facts.

Likely Supreme Court Verdict

Even assuming the Supreme Court does overrule the High Court (division bench) on the "prima facie" issue, it is likely that since Cipla has been selling the drug since late 2007, the court may hold the "balance of convenience" to be in favour of Cipla.

Appellate Court Arguments

In a previous post, we had outlined the arguments by Cipla's counsel before the appellate bench, and the court appears to have relied substantially on these arguments:

"Continuing from our earlier post, yesterday’s hearing saw Cipla’s counsels continue arguments before an appellate bench consisting of Justice AP Shah and Justice S. Muralidhar. The key arguments advanced were:

1. That the patent in suit (covering Erlotinib) was invalid
2. That the patent, even if valid, was not infringed

The "public interest" and "pricing" argument was altogether avoided by Cipla’s counsels. It appears that they may have strategically decided to downplay the “public interest” argument. (Or perhaps they make take it up at the next hearing).

.....The patent invalidity argument ran along the same lines of what had been advanced before Justice Bhat.

i) That Erlotinib was “obvious” from an earlier patent covering a "known" substance, Gefatinib.

ii) That Erlotinib did not show any increased efficacy over and above Gefatinib. And therefore contravened section 3.d of the Indian Patents Act.

iii) That the patent office finding in favour of Roche (during the course of the pre grant oppn hearing) ought to be disregarded by the court. Counsels for Cipla advanced rather cogent and powerful arguments for why they thought the patent office ruling was suspect (on similar lines as that advanced in the trial court before Bhat J):

a. For one, the order in favour of Roche was passed by the patent office within a span of a mere 7 days, when the norm for most opposition decisions was 6 to 8 months.

b. Secondly, the date of grant of the patent in suit was unclear. As we noted in a previous post:

"Apparently, there was some problem with determining the exact date of the grant/issue of patent. The register of patents notes the date as 6th July 2007. However, the patent certificate states the date to be 23rd February 2007.

This date has direct relevance for determining the dates of the opposition proceedings. Natco filed an opposition on 10th April 2007. If the Feb 2007 date is taken to be the date of grant, then Natco's opposition is a post-grant one. However, if the 6th July 2007 date is taken, then Natco's opposition qualifies as a "pre-grant" one.

c. Most importantly, perhaps, Cipla’s counsels argued vehemently that the controller merely addressed arguments on “novelty” and did not even consider arguments on non obviousness, when the case effectively hinged on non obviousness.

d. Counsels decried the ruling of the patent office on 3 (d) observation as garbled and totally incoherent.

While this attack by counsel on the patent office decision appears persuasive, this does not automatically mean that the court will conclude that the patent is invalid. Rather, defendants will have to independently demonstrate that this is the case, since the patent is a granted one and remains in force, till invalidated. However, given this persuasive attack, the court may not defer too much to the patent office determination that the patent was indeed valid."

Caveat: Most of the above observations are based on my conversations with folks familiar with the order that was pronounced today. I will bring you more details on this case, once I have read the judgment in full.

Canadian Copyright Board's Decision on Royalty to Copyright Collectives

Early this month, the Canadian Copyright Board came out with a decision on royalties required to be paid by satellite radio services, Sirius Satellite Radio and Canadian Satellite Radio, pegging it at 6.2% of the revenues earned from the use of the repertoire of three copyright collectives namely, Society of Composers, Authors and Music Publishers of Canada (SOCAN), the Neighbouring Rights Collective of Canada (NRCC) and CMRRA/SODRAC Inc. (CSI). The decision was given following the filing of applications for proposed tariffs by the three copyright collectives. Senior officials from the Board pointed out that this was lower than the standard 7.1% usually paid by conventional radio stations.

The tariff for each of the collectives has been fixed as follows- SOCAN gets 4.26% of total revenues in respect of the communication of musical works collected by it while NRCC gets 1.18% for the communication of sound recordings. For reproduction rights in the course of programming, CSI gets 0.09%, 1.18% for reproductions "when a receiver has extended buffer and replay capabilities" and 2.81% when the receiver has MP3-like capabilities. The Board also noted that there are a few receivers with advanced capabilities.

In its 83-page decision, the Board acknowledged that satellite radio companies had a tough time establishing themselves given the fact that the investment in technology was heavy and the returns were yet to pick up. Bearing this in mind, the Board ordered a discount of 25% for the years 2005 to 2007 and 10% for 2008 and 2009. The applicable rate for 2009 was set at 5.6%. This gesture of the Board was received with a lot of enthusiasm by the satellite radios particularly XM Canada, the parent company of Canadian Satellite Radio (CSR) which felt that the decision lent a great sense of certainty to all the parties involved who had to strike a balance between providing subscribers with the very best in programming at an affordable price while fairly compensating artists for their creative work.

This decision has addressed quite a few interesting legal issues (one of which is briefly discussed in the later part of the post), but the India-relevance here is that the Canadian Board arrived at a solution after considering a host of methodologies put forward by all the parties concerned to fix tariffs. The manner in which the Board went about the issues is of particular importance to us in the light of our Hon’ble Supreme Court’s judgment in Entertainment Entertainment Network v. Super Cassettes Ltd., last May recognizing the authority of the Copyright Board to decide on royalty rates for the industry on the issue of automatic compulsory licensing. The Apex Court had further said that in determining the royalty rates, the Board has to consider whether royalties should be paid at a fixed rate or on a revenue basis. In doing so, the Board is required to take into account the interests of copyright owners and the general public (the issue of “public interest” being factored in a dispute concerning compulsory license for music recordings has been discussed at length before on SpicyIP).

As for the legal issues dealt with in the Canadian Copyright Board’s (CCB) decision, I shall deal with only one issue in as lucid a manner as I can because the sheer detail to which the CCB has gone into the matter can prove to be an overwhelming read- not best suited for a blog. Those interested in going through the entire decision can access it using the link provided earlier in the post.

Here’s a bit of the background. The matter involved the three copyright collectives, SOCAN, NRCC and CSI, on one hand and the two satellite radio services, CSR (of XM Canada) and Sirius on the other. The copyright collectives filed a proposed statement of royalties before the CCB pursuant to the provisions of the Canadian Copyright Act. Invoking the right to object to these proposed statements, the satellite radio services collectively filed an objection.

SOCAN initially SOCAN initially proposed a rate of 25 per cent of total gross income. That proposal was however revised downward substantially at close to 15 per cent, and then to about 13 per cent following the parties’ replies. NRCC in the beginning proposed a rate of 17 per cent of gross income, with a minimum fee of $1.50 per subscriber per month. NRCC later revised its rate proposal to 4.4 per cent and then 4 per cent, without specifying any minimum fees.

CSI started off with a rate of 5 per cent of gross income, with a minimum fee of $0.50 per subscriber per month. CSI’s new proposed tariff for 2008 and 2009 included rates of 5 per cent with a minimum fee of $0.50 per subscriber per month for a service that does not authorize subscribers to reproduce musical works, and 10 per cent with a minimum fee of $1 for a service that does. These rates were revised to 2.9 per cent ($0.29) and 5.8 per cent ($0.58).

To this, CSR did not propose any specific rates, although it was of the opinion that the rates should be lower than the rate paid by commercial radio stations. Sirius proposed SOCAN rates of between 2.0 and 2.6 per cent of income, NRCC rates of between 0.5 per cent and 0.7 per cent, and CSI rates of between 0.48 per cent and 1.14 per cent.

Subsequently, the all parties jointly submitted evidence regarding the amount of music aired on Sirius and CSR compared to the total amount of music on all music channels. Thereafter, CSI and NRCC jointly proposed a methodology to analyse the use of their repertoire by Sirius and CSR. In addition to this report, CSI commissioned another report to determine the amount that should be paid by the Satellite Services for the right to reproduce and authorize the reproduction of musical works in CSI’s repertoire. For their part, the radio services CSR and Sirius commissioned a team to critique the report prepared by the collectives and to propose their own tariff methodology.

Coming to the issue which seems to have taken quite a bit of attention of the CCB, all the parties agreed that SOCAN and NRCC were entitled to a royalty with there being a difference of opinion only on the rates. However, as regards CSI, the bone of contention was CSI’s claim to royalties in respect of reproductions made directly on a server located, not in Canada, but in the US. This was the first in a set of related issues. The second was whether internet-based streaming of satellite service signals constituted reproduction of substantial part of the work under section 3(1) of the Canadian Copyright Act? and third, did the extended buffer, radio replay, pause and rewind feature and sampling of programming content for promotional purposes by retail outlets involve such reproductions? I shall restrict myself only to the first one.

Reproductions Made in the US
The question here was whether the reproductions made in the U.S. by American third-parties for both Sirius and CSR as well as those made by CSR itself were subject to Canadian copyright law. Unless and until this question was answered, the issue of applicability of tariff under the Canadian Copyright law for reproduction could have never been raised. To understand the issue better, here are a few more relevant facts.

CSR creates its own programming. A digital communication link from the Canadian offices to the U.S. infrastructure allows the work stations in Canada to send instructions directly to the servers and the scheduling software sitting in U.S. headquarters in Washington. Thus, CSR programming is conceived and controlled in Canada but produced from Washington.

Unlike CSR, Sirius does not produce any programming itself; it acquires all of its Canadian content from Canadian third-party content providers. For instance, Standard Radio Inc. provides Sirius with a Canadian rock music channel called Iceberg 95 created in studios located in Toronto. The content is available in CD and DMDS Musicrypt. The music is scheduled from Toronto, loaded onto the Sirius master server where it is encoded and digitized for delivery to the server’s master control centre in New York City. Then, Sirius’ content providers use a specialized scheduling software that is part of their server complex to determine which songs and other recorded voice elements will be played and when. When it is time for a show to air, the scheduling system automatically plays it off the copies on the Canadian servers. That output is linked by communication lines to the U.S. facility, combined with the other American channels and uplinked to the satellites. The content used on the Canadian originated signals is never actually stored on the Sirius U.S. server.

In the light of these facts, the step-by-step approach used by the CCB makes for very clear reading and gives a lucid picture of the issue involved. Firstly, all parties agreed that the programming copies used by the radio services fell within the definition of “reproduction” under the Copyright Act. Secondly, they agreed that Sirius authorized the reproduction made by Canadian third-parties for the reproduction of its Canadian channels which are delivered directly to its U.S. partner. This means that these copies which were reproduced in Canada fell within the definition of “reproduction” and so were relevant so far as the issue of applicability of tariff was concerned. At this juncture, the focus narrowed only to the question of applicability of tariffs to those copies made by CSR in the US, but who reproduction was authorised by CSR in Canada.

The radio services contended that the Canadian Copyright Act did not have an extra-territorial effect since it was never intended so and supported their stance citing a fundamental principle of copyright law which is respect for territoriality. That is, the act of authorization iss relevant if the authorized act itself is violative of the Canadian Copyright law, but if the authorized act itself is not covered under the Canadian law in the first place, the factum of authorization is irrelevant. Applying this principle to the facts of this case, it becomes clear that the authorization given by CSR to reproduce copies in the US falls under the second category removing it from the applicability of the Canadian law. The CCB endorsed this argument of the satellite radio services without reservation.

Several such choice of law principles have been discussed in this decision which makes it recommended reading to understand their application. One can safely state that this decision will prove to be a source of guidance for other Copyright Boards as well when it comes to fixing the rates of royalty.