India - Novartis Case Hearing Update - 23.2.07

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Novartis Case Hearing Update - 23.2.07

The Novartis matter resumed today in the Madras High Court. Anand Grover,

appearing for the Cancer Patients Aid Association, continued with his argument

that unless a treaty provides for rights to private individuals in domestic

courts, no declaration can be given by a domestic court for an alleged violation

of an international treaty.

Then he pointed out the factors in Articles 1, 7, 8, and 27 of TRIPS which have

to be considered and which allow for flexibility in enacting TRIPS. He also

pointed to 4bis of the Paris Convention, which provides for independence of

patent determinations, which was incorporated by reference into TRIPS.

He then discussed the WTO case involving the Canadian Bolar provision, in which

the WTO dispute panel held that Article 27 does not prohibit bona fide

exceptions to patentability for problems that exist only in certain product

areas. He also pointed out that the WTO held that the fact that the legislation

in question was targeted towards a specific area of technology did not render

the statute in violation of the antidiscrimination provision in article 27 as

long as the statute was broadly applicable in scope. He then argued that 3d was

enacted to deal with the specific problem of evergreening, and that because it

was facially neutral and applicable to all fields of technology, it was

perfectly valid under Article 27 and the WTO’s interpretation of its

requirements.

He then pointed out that Parliament, when amending the Patents Act in 2005, was

bound to consider not only its obligations under TRIPS, but it’s constitutional

and international human rights obligations to protect and promote the right to

health. In this context, he referred to Article 21 of the Indian Constitution,

which guarantees the right to life, and subsequent judgments that had held that

the right to health is incorporated into the fundamental right to life. He also

pointed to numerous international human rights conventions, as well as the

Protection of Human Rights Act, which placed upon Parliament the duty to achieve

the highest attainable standard of health for its citizens. Therefore, read in

light of these competing interests, section 3d could be read as a perfectly

valid balance between India’s TRIPS obligations and its obligation to protect

the health of its people.

In discussing the objects and purposes of enacting section 3(d), he asserted

that one of the primary purposes was to prevent evergreening. He argued that

the problem of evergreening was a globally recognised problem. He cited the

recent Canadian Supreme Court case, Apotex v. Astra Zeneca, which had restricted

the ability of patent holding pharmaceutical companies to prevent generic

competition by adding “bells and whistles” to already existing products. He

then pointed to a study by the US Federal Trade Commission, which had studied

the outcome of patent litigation between patent holding companies and their

generic competitors. The study had found that in the vast majority of cases, it

had been determined that the patent was ultimately found to be either invalid or

not infringed. He submitted that this was an indication that many patents on

derivates of known products served very little purpose other than to delay the

entry of affordable generic competition.

He then introduced Indian caselaw to show that it was permissible to look into

Parliamentary debates to ascertain the objectives of a law. He then pointed to

the statements by Commerce Minister Kamal Nath in Parliament, which indicated

that section 3(d) was being enacted to combat evergreening. Therefore, in light

of the problem that Parliament was seeking to solve, section 3(d) was a

perfectly valid exercise with a rational relation to the objective of the

statute. Therefore, there existed a rational nexus, and section 3(d) was not in

violation of Article 14.

He then addressed Novartis’ contention that because “efficacy” and “significant”

were left undefined by Parliament, it was thus vague, arbitrary and invalid. He

pointed to several authorities, which expressly held that in cases where

legislation had to deal with a myriad of factual circumstances, the use of

general, undefined expressions was perfectly appropriate, and was commonplace in

the law.

Next, he read closely the requirements of Article 27 of TRIPS, and contended

that the exclusions specifically enumerated in paras 2 and 3 of Article 27 were

not necessarily an exhaustive list of valid exclusions. He pointed out that the

prohibition of a “new use of a known substance”, which Novartis itself had

admitted was perfectly valid, could not be found under Article 27.2 or 27.3.

Additionally, he listed many countries that excluded various categories form

patentability, including business methods, forms of presentation, computer

programs, and aesthetic creations. Thus, he concluded that paras 2 and 3 of

Article 27 do not form an exhaustive list, that there was no generally accepted

international practice on such matters, and that therefore section 3(d) was

equally valid.

Finally, he pointed out that it was a requirement under Indian law to clearly

and unambiguously state in the substantive writ petition the facts upon which

the constitutional challenge under Article 14 was based. Because Novartis

failed to do so, its challenge on Article 14 was defective.

Mr. Thyagarajan, appearing for the Indian Pharmaceutical Alliance, pointed to

two other uses of the word “efficacy” in other Indian statutes, and observed

that these words were not defined in these statutes either. Therefore, he

concluded, Novartis’ complaint that “efficacy” was vague because it lacked a

definition was misplaced.

Mr. Vijayan, appearing for Sun Pharma, argued that because section 3(d) does not

discriminate on the basis of nationality, it does not violate Article 14. He

argued that the dispute settlement mechanisms under the WTO were exclusive, and

thus Novartis could not seek a remedy in the Indian courts.

Lastly, Mr. Bharat Raman, appearing for Natco Pharma, characterised the dispute

as involving five questions: 1. Whether section 3(d) was TRIPS compliant; 2. If

not TRIPS compliant, then could the law be struck down? 3. What was the

rationale and justification for section 3(d)? 4. Is section 3(d) vague or

ambiguous? 5. Even if ambiguous, could it be struck down as violative of

Article 14?

On the first issue, he adopted the arguments of Grover and Lakshmikumaran.

Referring to the UNCTAD handbook on TRIPS, he pointed out that implementing

legislation was presumed to be TRIPS compliant, and that the discretion to adopt

measures to protect human health were in-built.

On the second issue, he again asserted that the WTO dispute panel was the sole

and exclusive forum for determining TRIPS compliance, and questioned why

Novartis was pursuing the current action in an Indian court. He wondered

whether Novartis had failed in persuading Switzerland to take India to the WTO

dispute panel. If Novartis’ own home country would refuse to question the

validity of India’s implementation of TRIPS, then he said that it would be

doubly inappropriate for an Indian court to hold section 3(d) as incompatible

with TRIPS.

He then pointed to further authority to support the contention that in the case

of a conflict between domestic and international law, domestic law will prevail,

and therefore the law could not be struck down.

On the third issue, Bharat claimed that section 3(d) was nothing more than a

statutory recognition of the doctrine of equivalents, and was aimed at

encouraging innovation while preventing evergreening. The doctrine of

equivalents states that where a product is technically non-infringing, but

nevertheless serves a similar purpose in a similar manner as that of a patented

product, courts nonetheless may hold under the doctrine of equivalents that the

product infringes the patent. Section 3(d), he argued, implicitly recognised

this doctrine, and stated that a patent could be granted for similar products

that were significantly different.

He argued that Novartis used section 3(d) as an anchor during the examination

phase, and even argued in terms of enhancement of efficacy, and only challenged

section 3(d) when it was not granted a patent by the patent controller.

He then cited to the Philippines bill, which reproduced, almost verbatim, the

provision of section 3(d), claiming that imitation was the sincerest form of

flattery. Unlike the Philippines bill, which was limited to drugs and

medicines, he pointed out that section 3(d) was applicable to all fields of

technology.

On the fourth issue, he questioned whether the terms “efficacy” and “significant

enhancement” were vague and arbitrary. He claimed that the concepts were not

unknown in patent law, and many applicants, including Novartis, had compared the

efficacy of its product to those already existing to justify its grounds for

being granted a patent. He then stated that it would not be possible for

Parliament to define every word used in every statute. He pointed to several

differing concepts in the Patents Act that could feasibly be open to more than

one interpretation but were left undefined by Parliament. He claimed that it

was precisely the duty of the Court to give meaning and effect to broad terms

used in a statute by ascertaining to the best of its abilities the object and

purpose behind the legislation, and to adopt an interpretation that would best

fulfil those purposes.

He pointed out that the term “efficacy” was not an unknown term, even to

Novartis. During the patent examination stage, Novartis had submitted an

affidavit which claimed that its product “differed significantly in properties

with respect to efficacy” from an earlier product.

Finally, on the fifth issue, he claimed that even if the undefined terms in

section 3(d) were in fact vague or ambiguous, it would not provide a basis for

striking down the statute. Rather, he asserted that it was the duty of the

Court to construe the vague terms in harmony with the aims and objects of the

statue to give meaning to them.

The next date of the case is 5th of March when the lawyers for Novartis will

have an opportunity to counter the arguments of the Government, CPAA and the

generic companies.

In solidarity,

The Lawyers Collective HIV/AIDS Unit Team,

Anand

Chan

Ramya

Kajal Bhardwaj

e-mail: <k0b0@...>