Novartis AG v. Union of India

(2007) 4 MLJ 1153
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This case has been reviewed by the Supreme Court, which upheld this court’s verdict.

The Petitioner, Novartis, had its patent application rejected by the relevant statutory authority, the Controller General of Patents and Designs (Patent Controller) because did not comply with the requirements of section 3(d) of the Indian Patent (Amendment) Act, 2005 (the Act). The rejection was, amongst other things, on the grounds that the drug in question “did not result in the enhancement of the known efficacy of that substance,” as required by section 3(d).

The Petitioner moved the High Court to challenge section 3(d) on the ground that it was incompatible with India’s obligation under the World Trade Organization’s Trade-Related Aspect of Intellectual Property Rights Agreement (TRIPS), which provides for the right to have an invention patented. The Petitioner also argued that section 3(d) was vague, arbitrary and gave uncontrolled discretion to the Patent Controller and was therefore a violation of article 14 of the Constitution, which guarantees equality before the law and equal protection of the laws.

The Court declined to decide whether section 3(d) was compatible TRIPS. It reasoned that since a comprehensive dispute settlement mechanism existed under TRIPS, a binding international treaty, deference must be paid to such mechanism and Indian courts should not interfere.

The Court also declined to grant declaratory relief to the Petitioner because its challenge to section 3(d)’s compatibility with TRIPS was not made on the ground that it infringed upon a fundamental right, and because such relief would not have been “a stepping stone to claim relief at some other stage.” The Court held that even if it were to declare that section 3(d) was incompatible with India’s obligations under TRIPS, the Petitioner would be unable to use such a declaration, as Parliament could not be forced to pass a law.

On the question of constitutionality of section 3(d), the Court held that the section was neither arbitrary nor vague and therefore did not violate article 14 of the Constitution. According to the Court, the Patent Controller would be guided by the relevant details that every patent applicant is required to disclose, i.e., the materials in section 3(d) and its explanation. The Court noted that the Petitioner is not a novice in the pharmacology field and is capable of determining, through scientific research, any enhancement in the efficacy of the known drug and illustrating the same to the Patent Controller. The Court defined efficacy as used in section 3(d) as “the ability of a drug to produce the desired therapeutic effect.” The Court reasoned that the patent applicant would know the difference between the therapeutic effect of the patented drug and the drug in respect of which the patent was sought, and it was only a matter of putting it on record. The Patent Controller, therefore, did not have unguided discretion in deciding the application.

The Court held that section 3(d) could not be struck down solely on the grounds that there was a possibility of an arbitrary exercise of discretionary power. It also noted that the Act had a hierarchy of forums to review decisions taken by the Patent Controller.

The Court held that article 14 could only be invoked when it is shown that “in the exercise of a discretionary power there is a possibility of a real and substantial discrimination and such exercise interferes with the fundamental right guaranteed by the Constitution.” The Court did not find that any of the fundamental rights of the Petitioner had been violated.

The Court agreed with counsel that Parliamentary debates could be looked at to determine the legislative intent behind the section. It noted with approval counsel’s argument that the Parliament had passed section 3(d) in its current form to prevent evergreening and facilitate easy access to life saving drugs, thus discharging its welfare obligations under the Constitution to provide good health care to its citizens.

“[D]ue to the advanced technology in all fields of science, it is possible to show by giving necessary comparative details based on such science that the discovery of a new form a of known substance had resulted in the enhancement of the known efficacy of the original substance and the derivative so derived will not be the same substance, since the properties of the derivatives differ significantly with regard to efficacy.” Para. 53.

“[T]here cannot be any doubt at all that the Patents Act . . . is designed to safeguard the economic interests of this country and if that is so, the amended section must be viewed with greater latitude.” Para. 17.

“We have borne in mind the object which the Amending Act wanted to achieve namely, to prevent evergreening; to provide easy access to the citizens of this country to life saving drugs and to discharge their Constitutional obligation of providing good health care to its citizens.” Para. 18.

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