Category Archives: IP Practice in India

Effect of Union Budget, 2017 on the R&D/ Intellectual Property Practices in India

Union budget that was highly waited for (after demonetization) had gained more attention also due to preponing to February 01, 2017.

As a matter of fact, every year budget has certain impact on various industries including IP industry and R&D sectors. In this article, we will try to analyze possible effects of 2017 budget on R&D/Intellectual Property (IP) Practices in India. Though there were no special funds/incentives proposed for R&D, budget did have certain announcements for indirect effect on the IP practices.

  1. With intent made clear in budget 2015 itself, in 2017 Hon’ble Finance Minister Arun Jaitley proposed that corporate income tax for smaller companies with annual turnover upto INR 50 CR be reduced to 25%.

In 2016, FM had proposed that companies with turnover less than INR 5 CR would have to pay tax less by 1% and new manufacturing companies who do not avail of any exemption would be charged only 25%.

 This move will make sure that medium size companies do not pay more tax as compared to larger companies as observed in 2015-2016, wherein 2.85 lakh companies making profit of less than INR 1 CR had to pay effective tax rate of 30.26% while 298 companies making profit of more than 500 CR paid effective tax rate of 25.90%.

This reduction in tax rate is likely to give smaller companies flexibility to invest saved 5% in R&D activities.


  1. FM also believes pushing digital transactions further would enable small and micro enterprises to access formal credit. He also made clear that Small Industries Development Bank of India (SIDBI) will be encouraged by government to refinance credit institutions which provide unsecured loans at reasonable interest rates to borrowers based on their transaction history. This is likely to give higher chances of eligibility to IP driven companies not having strong collateral.

  2. Focus on startups in 2016 seems to be continued in 2017 as well. Among the schemes announced for start-ups, eligibility for start-ups for expedited examination of Patent Applications was a great move. In 2017, government aiming to heavily utilize technology for pushing initiatives such as SWAYAM (providing opportunities for a life-long learning) and DIGIGAON (providing telemedicines, education and skills through digital technology), start-ups would never want to miss an opportunity to contribute through innovative ideas for the facilitation of implementation of schemes.

  3. In another move to encourage start-ups, in 2016 it was announced that 100% deduction would be available for any 3 consecutive assessment years out of 5 years beginning from the year in which the eligible start-up is incorporated with the condition that total turnover of eligible start-up should not exceed Rs. 25 Crore in any of the previous years beginning on or after the 1st day of April, 2016 and ending on the 31st day of March, 2021. In 2017 budget, period of 5 years has been changed to 7 years.

  4. Research and Development Cess Act, 1986 is proposed to be repealed. Reduction in tax cost to the extent of 5% (R&D cess) on technology imports. Subsequently, service tax at 15% to be paid in full.

  5. On a disappointing note, there seems to be no separate incentive for R&D.

All in all, though there seem to be some encouraging proposals nothing substantial is coming to the way of IP fraternity as was provided in last year budget in the light of Make in India Regime. But this is not totally surprising as on all fronts, budget seems to be a cautious approach (understandable in light of other measures such as demonetization and GST being radical).

Compulsory Licensing Application against the Patented Drug SAXAGLIPTIN by Lee Pharma

Lee Pharma, a Hyderabad based Indian pharma company, has filed a Compulsory Licensing (CL) Application (in accordance with Section 84(1) of the Indian Patents Act) against one of the patented drug Saxagliptin for treating Diabetes Mellitus. The Patent on Saxagliptin was granted to Bristol Myers Squibb (BMS) in India on 30th April 2007 having number IN 206543 having title “A Cyclopropyl-fused pyrrolidine-based compound” which was assigned to AstraZeneca by way of Deed of Assignment. This is the third instance in India where a compulsory licence has been asked for. Earlier, Natco got its first CL against Bayer’s patented drug Sorafenib while the CL application from BDR against Bristol Myers Squibb (BMS)’s patented drug Dasatinib was rejected by IPO. The application for compulsory licensing against Saxagliptin drug was filed by Lee Pharma dated 29.06.2015 and can be seen here.

Grounds Relied by Lee Pharma for Compulsory Licensing:

  1. That the reasonable requirements of the public with respect to the patented invention have not been satisfied” (Section 84 (1) (a))

The Applicant- Lee Pharma has stated in its CL Application that Saxagliptin is not manufactured in India even after 8 years of grant of the Indian patent by BMS, rather is being imported to India by BMS or AstraZeneca and marketed by Astrazeneca. By citing form 27 filed by BMS with respect to working of patent India for the year 2013, Lee pharma stated in his application that the total number of tablets imported to India was 823,855 and total value was Rs. 654,629/-. Based on above, cost for importing one tablet in India is only Rs 0.80 per tablet whereas the same is being sold at market price of Rs. 41-45/- per tablet.

In an interesting fact, the applicant has further stated that Saxagliptin is one of the four main medicines which are used for the treatment of Type-II Diabetes Mellitus (DM). Further, the applicant has showed that the quantity of the imported tablets is too less to meet the requirements of Indian patients suffering from Type-II DM. They state that there are around 60 million diabetes type II patients, and that ‘even if’ only 1 million out of the 60.1 million were to be prescribed Saxagliptin, 823,855 units (as per Form-27) fall far short of the required amount which is about 0.23% of the total number of tablets required for a year. So there is more than 99% shortage of Saxagliptin in Indian market.

  1. That the patented invention is not available to the public at a reasonably affordable price (Section 84 (1) (b))

As discussed above, the cost of importing one tablet of Onglyza in India is only about Rs 0.80/ per tablet whereas the same tablet is being sold in Indian market by BMS and Astrazeneca at a market price of about Rs. 41-45/- per tablet.  Citing income per capita of an Indian, the applicant showed that the cost of one tablet of patentee’s medicine is more than the whole day earning. Therefore, according to the Applicant, excessive high price of the medicines is a barrier to access of Saxagliptin for the poor patients in India. Thereby the reasonable requirement of public is not being met in terms of reasonably affordable price.

  1. That the patented invention is not worked in the territory of India (Section 84 (1) (c))

The applicant further stated that even after passing a long period of eight years from the date of grant, the patentee has not taken adequate steps to manufacture Saxagliptin in India and make full use of the invention. Pertinently, in earlier Nexavar CL case, the same contention was raised and it was concluded by the Controller that the “worked in the territory of India” means “manufactured to a reasonable extent in India”.

  1. Efforts made by applicant for Voluntary licence (VL): (Section 84(6) (iv))

The applicant earlier requested the patentee to obtain Voluntary License to manufacture and sell the drug in India by writing to them on 02.05.2014. In response to said request for licence, the patentee asked for certain clarifications about the Lee pharma and at the same time disagreed to the applicant’s submission that “the Saxagliptin tablets (ONGLYZA) are not available to the general public at reasonably affordable price and thereby the reasonable requirements of the general public is not being met”. Further, the applicant received a reply from Patentee’s counsel asking for clarifications, manufacturing and marketing details, R&D status and other relevant details for which according to the Applicant, they replied promptly. Applicant sent reminder request to the counsel but did not receive any reply neither from the patentee nor from their counsel.

Another important factor, on which the applicant relied for considering a CL application, is the ability and capability of Lee Pharma to manufacture and cater to the needs of the entire public. Lee Pharma has stated in the Application that it can manufacture 10,00,000 tablets  a day with a price of Rs. 27/- per tablet. Also, the applicant stated that they had already asked for licence from State Government to manufacture Saxagliptin tablets.

Conclusion:

It would be interesting to see the fate of the CL application filed by the Lee Pharma, in view of the fact that this CL application is the third instance prior to which one CL has been granted and one has been rejected. However, it is pertinent to note that the prior two CL applications were for anti cancer drugs (life threatening diseases) while the present application is for Diabetes Mellitus (life management disease). Hence the decision would be noteworthy irrespective of the outcome of CL application which will have a great impact on the Industry regarding Compulsory Licensing practice/filing in India.

About the Author: Mr. Sitanshu Singh, Patent Associate at Khurana & Khurana, Advocates and IP Attorneys and can be reached at: sitanshu@khuranaandkhurana.com.

Recent Patent Litigation Cases (2014-15): India

Patent Litigation in India has steadily increased over last 2-3 years. Dramatic swift has been observed in the innovator’s perspective from the mere aspect of invention to gaining patent protection for their respective invention. Patent owners have adopted aggressive approach towards their patent protection and enforcing their proprietary rights as businesses, are now well-positioned in the realm of patent litigation.  The patent owners are not at all hesitant to challenge the validity of patent rights of their rivals. There has also been gradual increase in the understanding of the complex patent infringement and validity issues.

We will now deal with some of the recent and important patent litigation cases in India.

Merck vs. Glenmark over “Sitagliptin”

In an interesting note, Hon’ble Supreme Court of India on Special Leave Petition filed by Glenmark stayed the Delhi High Court order which passed injunction against Glenmark for the generic drug Sitagliptin till 28th April 2015. Merck Sharp & Dohme filed an application for an ad interim injunction restraining the respondent/defendant Glenmark Pharmaceuticals from using its patented product Sitagliptin (Indian Patent No. 209816) at the Supreme Court. The Delhi high court conclusively held that all the three ingredients (Prima facie, Irreparable injury and balance of convenience) for passing the order of injunction were established by MSD and hence injuncted Glenmark from manufacturing and selling of Zita and Zitamet.

Ericsson vs. Xiaomi

In December 2014, Ericsson had filed a suit against Xiaomi in India for the alleged infringement of the 8 standard-essential patents. The Delhi High Court granted an ex-parte injunction on the sale, manufacture, advertisement, and import of Xiaomi’s devices.

Xiaomi claimed that its latest devices in the Indian market (as of December 2014), the Mi3, Redmi1S and Redmi Note 4G, contained Qualcomm chipsets, which implemented technologies licensed by Ericsson. Xiaomi subsequently challenged the injunction before a Division Bench of the Delhi High Court, which issued temporary orders to allow Xiaomi to resume the sale, import, manufacture, and advertisement of its mobile devices subject to the following conditions:

  • Xiaomi would only sell devices having Qualcomm chips.
  • Xiaomi would deposit Rs. 100 towards royalty for every device it imported to India from the date of the launch of the device in India toJanuary 5, 2015. This amount was to be kept in a fixed deposit for three months during the proceeding of the case.

Novartis vs. Cipla

In another patent litigation case, Delhi High court barred Indian generic drugmaker Cipla from making or selling generic copy of Novartis’s “Onbrez” by giving temporary injunction to Novartis. Citing famous Roche vs Cipla case, the court observed that Novartis has a strong prima facia case and as the validity of the patent is not seriously questioned, there is a clear way out to grant injunction. Further, the court observed that Cipla did not provide any figures about the “inadequacy or shortfall in the supply of the drug.” Earlier Cipla lunched its generic version of Indacarterol in October claiming “urgent unmet need” for the drug in india.

Without going conventional way, Cipla, also approached the Department of Industrial Policy and Promotion (DIPP) to exercise its statutory powers under Section 66 and Section 92 (3) to revoke Indian Patents IN222346, IN230049, IN210047, IN230312 and IN214320 granted to Novartis AG for the drug Indacaterol. Cipla argued on the basis of 3 main points i.e. “epidemic” or a “public health crisis” of COPD, unable to manufacture the same in India by Patentee and high cost of patented drug.

Vringo Vs. ZTE

In January 2014, Vringo and Vringo Infrastructure filed a patent infringement suit in the Delhi High Court against ZTE, over the alleged infringement of its patent IN200572.

In February 2014, the Delhi High court granted an ad-interim ex-parte injunction restraining ZTE from importing, selling, advertising, installing or operating devices that comprise the infringing components. The High court also appointed local commissioners to inspect ZTE’s premises and instructed customs authorities to detain ZTE’s shipments that may contain such devices and to notify Vringo. In March 2014, ZTE appealed against the injunction, which was vacated on August 5 the same year with ZTE being ordered to deposit Rs. 17.85 crore to the court.

The suit is sub judice now. As of August 2014, ZTE had filed for the revocation of IN200572 on grounds of it not being innovative as well as for violating some statutory provisions under Section 64 of the Indian Patents Act.

Reference: http://inpublic.globenewswire.com/2014/09/02/VRINGO+PROVIDES+UPDATE+TO+SHAREHOLDERS+HUG1853040.html

Vringo vs. Asus

In April 2014, Vringo filed a patent infringement suit against AsusTek Computer Inc. in Delhi High Court. As per public updates issued by Vringo to its shareholders, Vringo has alleged the infringement of patent IN223183 entitled “Method and system for providing wireless communication using a context for message compression” by Asus in India.

Asus had claimed that in the context of IN 223183 it was using technology licensed to it by Google. In August 2014, Google filed a request to become a party to the proceedings.

Vringo had requested for an injunction on Asus’ use of the technology in India. The injunction has not been granted yet. No further information about the lawsuit is publicly available.

Reference: http://inpublic.globenewswire.com/2014/09/02/VRINGO+PROVIDES+UPDATE+TO+SHAREHOLDERS+HUG1853040.html

SYMED Labs vs. Glenmark Pharmaceuticals

In another case of SYMED Labs vs. Glenmark Pharmaceuticals, Symed Labs Ltd. had sued Glenmark Pharmaceuticals Laboratories before the Delhi High Court for allegedly infringing two of its patents: IN213062 & 213063. First patent was granted for “Novel intermediates for Linezolid and related compounds” while the ‘063 patent was granted for “A novel process for the preparation of linezolid and related compounds. While declaring the judgment on 9th Jan 2015, the judge convinced that the Plaintiff has got good prima facie case in favour of SYMED. Further the judge decided that protection to the patent processes ought to be granted to the Plaintiff as damages will not be an efficacious remedy. Thus, there will be irreparable loss and injury because of the long uninterrupted use of patents, the balance of convenience also lies in favour of the Plaintiff. Thus the judge granted an ad interim injunction restraining Glenmark from manufacturing, selling, offering for sale, advertising or directly or indirectly dealing in the production of Linezolid manufactured in a manner so as to result in infringement of the Plaintiff’s registered Patents.

Maj. (Retd.) Sukesh Behl & Anr. vs Koninklijke Phillips

In this litigation case, Sukesh Behl made a counter claim for revocation of the suit Patent No. 218255 under Section 64(1)(m) of the Patents Act, 1970 (for short “the Patents Act”) for non-compliance of the provisions of Section 8. Earlier in another suit Koninklijke Phillips sought for permanent injunction restraining Sukesh Behl from infringing its patent and for other incidental reliefs. While delivering the judgement, the judge answered the question of whether the failure to comply with the requirement of Section 8 of the Patents Act would invariably lead to the revocation of the suit patent under Section 64(1)(m) of the Patents Act, the word “may” employed in Section 64(1) indicates that the provision is directory and raises a presumption that the power of revocation of patents conferred under Section 64(1) is discretionary. Citing Chemtura case, the judge hold that the power to revoke a patent under Section 64(1) is discretionary and consequently it is necessary for the Court to consider the question as to whether the omission on the part of the plaintiff was intentional or whether it was a mere clerical and bonafide error. Finally, the judge dismiss the plea of Sukesh Behl for revocation of said patent under section 64 (1)(m).

Enercon vs. Dr. Aloys Wobben

In this land mark decision, Hon’ble Supreme Court of India addressed the multiplicity of patent proceeding cases with respect to Invalidation, opposition and revocation. Dr.Aloys Wobben has filed around 19 infringement suits before the High Court and Enercon India Limited have filed around 23 “revocation petitions” before the Appellate Board, praying for the revocation of the patents held in the name of the Dr. Wobben. The respondents had also filed “counter claims” to the “patent infringement suits” filed by the appellant.  Even though some revocation petitions have been settled by the IPAB, the same issues were being re-agitated by Enercon before the High Court. The Supreme Court of India following rules – firstly, if “any person interested” has filed proceedings under Section 25(2) of the Patents Act, the same would eclipse all similar rights available to the very same person under Section 64(1) of the Patents Act. This would include the right to file a “revocation petition” in the capacity of “any person interested” (under Section 64(1) of the Patents Act), as also, the right to seek the revocation of a patent in the capacity of a defendant through a “counter-claim” (also under Section 64(1) of the Patents Act). Secondly, if a “revocation petition” is filed by “any person interested” in exercise of the liberty vested in him under Section 64(1) of the Patents Act, prior to the institution of an “infringement suit” against him, he would be disentitled in law from seeking the revocation of the patent (on the basis whereof an “infringement suit” has been filed against him) through a “counter-claim”.  Clearly, this judgement laid a smooth road for complex patent litigation practices in India.

It would be interesting to note the developments that would take place in the Patent protection scenario in India and the gradual increase in the patent litigation cases in India.

About the Author: Mr Sitanshu Singh, Patent Associate at Khurana & Khurana, Advocates and IP Attorneys and can be reached at:Sitanshu@khuranaandkhurana.com

Supreme Court stayed the Delhi High Court order of injunction against Glenmark over the Generic drug “Sitagliptin”

Reportedly, Hon’ble Supreme Court of India on Special Leave Petition filed by Glenmark stayed the Delhi High Court order which passed injunction against Glenmark for the generic drug Sitagliptin till 28th April 2015. The Delhi high court on dated 20th March 2015 set aside an order of single judge bench of Delhi High Court which rejected the injunction application by MSD against Glenmark. This article aims to analyze the Delhi High Court judgment by the Division bench in detail. The detailed judgment can be found here.

Facts of the case:

Merck Sharp & Dohme (hereafter “MSD”) aggrieved by the dismissal of its application for an ad interim injunction restraining the respondent/defendant Glenmark Pharmaceuticals (hereafter “Glenmark”) from using its patented product Sitagliptin (Indian Patent No. 209816) filed an appeal. MSD filed an application before single bench Delhi High Court for permanent injunction, restraining infringement of the patent, damages, rendition of accounts and delivery up. The suit patent relates to a drug which lowers blood sugar levels in Type 2 Diabetes Mellitus (“T2DM”) patients. Glenmark opposed the application for ad interim injunction and relied on documents produced during the hearing. The learned Single Judge rejected the injunction application. Aggrieved by the dismissal of interim injunction Merck sought to obtain an interim injunction against Glenmark seeking to restrain Glenmark from selling its Generic products Zita (generic version of Januvia) and Zitamet (generic version of Janumet, combination of sitagliptin+metmorphin).

Argument advanced by the Appellant (MSD): 

The learned Senior Counsel, Mr. T.R. Andhyarujina for MSD argues, that its drug Sitagliptin is the first in its class of compounds that inhibits the enzyme Di Peptidyl Peptidase-IV (“DPP-IV”). The learned counsel argued that the suit patent is infringed because Sitagliptin and any of its acceptable salts are covered by its claims, thus resulting in the making, using or offering for sale, importing into India etc. of Sitagliptin or any of its salts or any form amounting to infringement of the suit patent. It was further argued that Glenmark, by manufacturing, selling, offering for sale and advertising the pharmaceutical combinations Sitagliptin Phosphate Monohydrate under the brand Zita and Sitagliptin Phosphate Monohydrate and Metformin Hydrochloride under the brand name Zitamet infringes the suit patent and all its claims. It was underlined that Sitagliptin Phosphate Monohydrate cannot be prepared without manufacturing the active ingredient Sitagliptin molecule. Therefore, the use of Sitagliptin claimed by IN 209816 to prepare Sitagliptin Phosphate Monohydrate by Glenmark infringes the suit patent. MSD argued that its non-disclosure of applications (which were not pursued by it) was an inessential detail which should not have clouded the debate on whether Glenmark infringed its suit patent. It was submitted that the subject of the European Patent, and the application No. 5948/DELNP/2005 (filed on 18.06.2004 – in respect of the Phosphoric Acid Salt of a DPP-IV inhibitor that claimed Dihydrogenphosphate salt of Sitagliptin and was abandoned under Section 21(1) on 23.08.2010) could not have been the basis for refusing ad interim injunction. In India, on account of Section 3(d) and the interpretation of the expression “efficacy” by courts, MSD abandoned the phosphate salt application.

The learned counsel for MSD argued that Glenmark’s US Process Patent No. US8334385 is for “Process for the preparation of R. Sitagliptin and its pharmaceutical salts”. It was further contended that this patent clearly admits that Sitagliptin is developed for the treatment of T2DM and is the active free base. It also gives the full description of the process for preparing Sitagliptin freebase in the patent specification which is Scheme 6 in Merck’s patent. The claim of Glenmark’s patent is for a crystalline salt of Sitagliptin. The learned counsel relied upon the disclosures made to the suit patent IN 209816 to state that the basic invention for which patent protection was sought was Sitagliptin “with pharmaceutically acceptable salts thereof”. It is submitted that this is clearly stated in claims 1, 15, 17 and 19. Thus learned counsel stressed that Glenmark”s ZITA (Sitagliptin Phosphate Monohydrate) and ZITA-MET (Sitagliptin Phosphate Monohydrate and Metformin) infringe the suit patent because Sitagliptin is made and used by Glenmark in ZITA and ZITA-MET when it makes salt Sitagliptin Phosphate Monohydrate. It was underlined that the phosphoric acid salt of Sitagliptin was disclosed in the suit patent itself as one of the pharmaceutically acceptable salts.

Arguments advanced by the Respondent:

 The counsel for the respondent argued that the suit patent is obvious and does not involve an inventive step over and above previous disclosures in the prior art. It was further argued that the suit patent is anticipated by prior arts European Patent 1406622 and WO/01/34594.

Further it was argued by the Counsel for the respondent that the suit patent drug Sitagliptin as well as Sitagliptin Hydrochloride are unstable compounds possessing incapability of commercial production and industrial use.

The respondent argued that the claim goes much beyond the limited disclosures in the specification, and thus the claim is overbroad or an impermissible Markush claim that creates a false monopoly. It was also contended that the patent monopoly is too broad to be workable as it includes possibly 4.9 billion compounds and such elastic claims cannot be sustained.

It was argued that the complete specification of the suit patent does not sufficiently and fairly describe the invention and the method by which it is to be performed, since the patent does not describe the preparation of the Sitagliptin free base or Sitagliptin phosphate monohydrate, but only its hydrochloride salt.

Further it was argued that MSD did not comply with its obligation under Section 8 of the Act to disclose patent applications made for the “same or substantially the same invention” – it did not disclose 5948/DELNP/2005 (for Sitagliptin Phosphate Monohydrate), 1130/DELNP/2006 (Sitagliptin Phosphate Anhydrate), 2710/DELNP/2008 (Sitagliptin plus Metformin) or subsequent international applications for these compounds either. It was also argued that such suppression and concealment – contrary to statutory obligations – results in the invalidity of the patent, and at any rate, militates against the grant of an interim injunction that is premised on good faith and complete disclosure.

It was argued by the respondent that the suit patent by the plaintiff’s own admission is different from its product. The only exemplified salt being Sitagliptin Hydrochloride, no other salt can be claimed or covered in the impugned salt patent and the plaintiff, by its own admission equivocally, through several documents admitted that the suit patent is distinct and different from the Sitagliptin Phosphate Monohydrate (SPM) as well as its combinations with Metformin Hydrochloride. Urging that the latter two products are the subjects of separate patents, Glenmark highlighted that this is clear admission that they are not covered by the suit patent. In this respect, the details of the plaintiff’s application, i.e. 5148/DELNP/2005, especially, Claim no.1 and International Patent US 2004027983, again claim no.1 are relied upon. The said salt, i.e. SPM was also claimed to possess tremendous advantages over free base and previously disclosed hydrochloride salt. MSD‟s said patent application no. 5948/DELNP/2005 for SPM was specifically abandoned.

Conclusion:

Considering the arguments advanced by both the parties, the court evaluated the three grounds Prima facie case, irreparable injury and balance of convenience for passing interim injunction as below:

1) The court on the first ingredient held that prima facie case had been established by MSD for the fact that Glenmark uses Sitagliptin free base as the active component in its chemical formulation.

2) The court on the issue of whether the claimant would suffer irreparable injury in the absence of interim injunction or not, held in affirmative. The court rejected the argument of Glenmark that injunction should not be granted as the monetary compensation may be granted. On the contrary court opined that prices may not recover after the patentee ultimately prevails, even if it is able to survive the financial setback (or “hit”) during the interim, which may take some time.

3) On the issue of balance of convenience the court held in favor of MSD. On the issue of price difference between the commercial products by MSD and Glenmark is not so startling as to compel the court to infer that allowing Glenmark to sell the drug, at lower prices would result in increased access. However, the court observed that Permitting Glenmark to operate would not necessarily result in lowering of market prices. Hence according to court the balance of convenience lies in favor of MSD.

The court conclusively held that all the three ingredients for passing the order of injunction were established by MSD and hence injuncted Glenmark from manufacturing and selling of Zita and Zitamet.

About the Author: Meenakshi Khurana, Partner at Khurana & Khurana, Advocates and IP Attorneys and can be reached at: meenakshi@khuranaandkhurana.com

Recent decision of Delhi High Court in the case of GILEAD PHARMASSET, LLC V. UNION OF INDIA & ANR

Recently, the Delhi high court on dated 30th January 2015 set aside an order of the Deputy Controller of Patents and Designs. The impugned order rejected a patent to US drug maker Gilead for its hepatitis C drug “Sovaldi” on dated 13th January 2015. The detailed judgment can be found here.

Facts of the case:

M/S GILEAD PHARMASSET, INC, USA, filed a patent application on 30/05/2003 in USA and the corresponding application was filed in India through PCT on 27/12/2005 vide application no. 6087/DELNP/2005 (“A (2’R)-2′-DEOXY-2’FLUORO-2′-C-METHYL NUCLEOSIDE”). Two Entities, NATCO Pharma Ltd. and Delhi Network of Positive People +IMAK filed applications for pre-grant opposition, under Section 25 of the Act on dated 13 March 2014 and 17 March 2014 respectively. On 13th January 2015, the Patent Office rejected Gilead’s Hepatitis C drug, sofosbuvir (Sovaldi) on the basis of it failing to clear Section 3(d) of Indian patent act 1970 which prevents evergreening of patents and provides that no new form of an existing substance shall be patented unless the new form is more effective than the old one. The copy of the decision made by Controller General of Patents can be accessed here.  Being aggrieved by the order, the GILEAD filed the present writ petition under Article 226 of the Constitution of India.

Arguments advanced by the petitioner:

It was argued by the Counsel for the applicant that while passing the impugned order, Indian Patent Office (IPO) had taken recourse to the material and objections, which were placed on record by the applicants, who had filed their applications to oppose the grant of patent to the petitioner, under Section 25 of the Act. Further it was submitted that this aspect, was clearly demonstrable from the fact that, not only the grounds taken in opposition and documents cited were considered, while passing the impugned order, but even, the typographical errors contained in the applications, filed under Section 25 of the Act, got incorporated in the said order.

It was further contended that the once notice was issued to the petitioner for a hearing under Section 14 of the Act, to consider, whether to grant a patent as requested, IPO should also have heard the petitioner regarding objections raised in the application, under Section 25 of the Act. The learned counsel contended that, while documents in opposition filed by the entities, which had preferred applications under Section 25 of the Act were supplied, no opportunity, was given, to meet the objections raised by them.

Further it was submitted that the impugned order, had created a peculiar situation whereby, while it had returned a finding that the claims presented by the petitioner represented “novelty and inventive steps”, it sustained, the challenge, under Section 3 (d) of the Act, though the applicants, which had opposed grant of patent, had raised objections, on both counts.

Arguments advanced by the Respondent

On the other hand, the opponent contended that the exercise carried out by IPO under Section 14 and 15 of the Indian Patent Act, is quite different, from that, which IPO carries out while hearing applications filed under Section 25 of the Act. Further it was submitted that, while the material and/or objections filed by opponents, which had preferred applications under Section 25 of the Act, was supplied to the petitioner, IPO did not rely upon the same, while passing the impugned order.

Decision of the Hon’ble Court:

The hon’ble court observed that while petitioner’s request for a hearing under Section 14 of the Act was pending, two pre-grant oppositions were filed. Though, the documents filed by the opponents were supplied to the petitioner, no notice was issued to the petitioner with regard to the applications filed under Section 25 of the Act. Therefore, when hearing under Section 14 was finally granted to the petitioner on 24.07.2014, there was no clarity as to the extent and scope of objections, which it was required to meet while pressing ahead with its request for grant of patent. The petitioner, at best, would have prepared itself to rebut the objections raised in the FER. Further the court observed that combining S. 25 and the S. 14 proceedings, if Gilead would have been given an opportunity to be heard on both counts, it could have save not only time, effort but also have avoided the allegation of bias.

 The court accepted the Gilead’s claim and set aside the impugned order given by IPO and remanded for a fresh decision. The court also ordered IPO to fix a date of hearing both for Sections 14 and 25 proceedings and asked to send written communication to all concerned parties including the petitioner.

 Thus it would be interesting to see the decision by IPO after fresh consideration to the facts and circumstances in view of the fact that Gilead has already entered into license agreements with Generic companies of India for the drug “Sovaldi” as per the reported news in September 2014.

About the Author: Mr Sitanshu Singh, Patent Associate at Khurana & Khurana, Advocates and IP Attorneys and can be reached at:Sitanshu@khuranaandkhurana.com

‘Pro Tem’ Relief to Xiaomi for importing and selling of Qualcomm based Handsets in India

Reportedly, a bench of Delhi High Court temporarily allowed Xiaomi to sell few of its devices in India about a week after the suspension of its sales in the third largest smart phone market of the world.

Xiaomi as well as online seller Flipkarthave been injuncted by Delhi High Court in its order dated 8th December 2014 from selling its line of smart phones for it has been prima-facie found to be infringing patents of Swedish technology company Telefonaktiebolaget LM Ericsson. We have reported on Xiomi injunction which can be found here.

Being aggrieved by the order passed by Single judge of Delhi High Court dated 8th December 2014, Xiaomi filed appeal challenging the order. Xiaomi had contended that Ericsson suppressed the fact that the Chinese mobile maker has also used chipsets of Qualcomm which has a license to use patents of the Swedish company. The bench was also told by Senior Advocate KapilSibal and Advocate AjitWarrier, appearing for Xiaomi, that on each Tuesday around one lakh units are expected to be sold on the site. Xiaomi has contended that it did not infringe Ericsson’s patents as Qualcomm has obtained a license from the Swedish company for its patented technology.

Therefore, reportedly on Tuesday 16th December 2014, the Hon’ble High Court granted permission to Xiaomi to continue importing smart phones which comprises of Qualcomm chipsets in them until the next scheduled date for the matter on 8th January 2015 subject to the condition that Xiaomi shall deposit 100 Indian Rupees for each device sold by them towards royalty in favor of the Registrar General of the Delhi High Court and the amount so deposited be kept in a fixed deposit.

Further, the court has also directed Xiaomi to furnish an affidavit, prior to the next date of hearing before the single judge, which shall disclose the number of devices sold by it till then along with the particulars of the invoices of the Qualcomm chipsets purchased by it.

As reported, an Ericsson spokesman said in an email to Reuters that “Xiaomi needs a license from Ericsson for all their phones imported to India, which will be clarified in the upcoming hearing” whereas Xiaomi said company would not comment on the developments.

As per the company’s website, Xiaomi Mi3 and Redmi 1S use Qualcomm chips while Redmi Note device uses a processor from MediaTek Inc.

Sources: Reuters and NDTV

About the Author: Mr. Abhijeet Deshmukh, Trade Mark Attorney, Khurana & Khurana, Advocates and IP Attorneys and can be reached at: Abhijeet@khuranaandkhurana.com

News Snippet: Novartis sues Cipla for infringement of patents covering “Onbrez”

In a latest update, Novartis has sued Cipla for infringing its patents on “Onbrez” (Indacaterol) after Cipla lunched its generic version for Indacaterol in October claiming “urgent unmet need” for the drug in India.

Earlier, as we have reported here, Cipla approached Govt. of India to exercise its statutory powers to revoke the five patents covering Indacaterol granted to Novartis, which is yet to be decided.

Novartis requested high court to permanently restrain Cipla from manufacturing Indacaterol in any form and selling it in India. It also sought damages for infringing the five Indian patents covering Onbrez.. In reply, Cipla contended that “Onbrez” sold by Novartis is too expensive and is not easily available to the public. Delhi High Court has reserved its verdict on January 9 after hearing detailed arguments by both parties.

CIPLA’s plea for revocation of Novartis Patents for Onbrez may face major set back by the Government

As reported in TOI, the Indian Government has found very little merit in Cipla’s plea for waiver and cancellation of Patent rights for chronic obstructive pulmonary disease (COPD) drug over which Novartis has exclusive rights. We have reported on Cipla’s plea here.

Background:

Cipla, previously approached the Department of Industrial Policy and Promotion (DIPP) to exercise its statutory powers under Section 66 and Section 92 (3) to revoke Indian Patents IN222346, IN230049, IN210047, IN230312 and IN214320 granted to Novartis AG for the drug Indacaterol and is currently selling under the brand name Onbrez. The said drug is one of the preferred medications for COPD.

The relevant sections 66 and 92 of the Indian Patents Act are as follows:

  1. Revocation under section 66:

Section 66 states “Where the Central Government is of opinion that a patent or the mode in which it is exercised is mischievous to the State or generally prejudicial to the public, it may, after giving the patentee an opportunity to be heard, make a declaration to that effect in the Official Gazette and thereupon the patent shall be deemed to be revoked”.

  1. Special provision for compulsory licences on notifications by Central Government

Section 92 (3) states Notwithstanding anything contained in sub-section (2), where the Controller is satisfied on consideration of the application referred to in clause (i) of sub-section (1) that it is necessary in—

(i) a circumstance of national emergency; or

(ii) a circumstance of extreme urgency; or

(iii) a case of public non-commercial use,

which may arise or is required, as the case may be, including public health crises, relating to Acquired Immuno Deficiency Syndrome, Human Immuno Deficiency Virus, tuberculosis, malaria or other epidemics, he shall not apply any procedure specified in section 87 in relation to that application for grant of licence under this section:

 Provided that the Controller shall, as soon as may be practicable, inform the patentee of the patent relating to the application for such non-application of section 87.”

Cipla’s Contention in the Representation:

  • Cipla argued that the causes of COPD are several and the sheer magnitude of the disease as per the publicly available data which is sufficient for the Central Government to invoke the provisions of Section 92 and to treat it as an “epidemic” or a “public health crisis”. Such exercise of power in the present case would be in consonance with the avowed purpose for which Section 92 has been enacted.
  • Cipla also contended that Novartis has been granted these patents since 2008-09 but has chosen not to manufacture the same in India. However, Novartis merely imports a negligible quantity of these products manufactured in Switzerland through its licensee Lupin Pharma as per its own data filed before the Patent office. As submitted by Novartis in IPO in Form 27, the import for the year 2013 is a meagre 53,844 units which do not satisfy even 4,500 patients annually which is a shortage is more than 99.97 percent.
  • Further Cipla contended that cost of the drug is also very high for a patient in India. The estimated cost of the drug Indacaterol as imported and sold by Lupin Limited, under the trademark Onbrez is about Rs.2000/- per month per patient. On the contrary, the proposed drug of Cipla under name UNIBREZ would be costing approximately Rs. 400 per month.

 It is pertinent to note that Section 66 has been invoked only on two occasions earlier. Firstly it was invoked for the case of a process patent granted to Agracetus, an American company for genetically engineered cotton cell lines. The said patent was revoked by the Central Government in the year 1994 keeping in mind public interest and the fact that genetically engineered cotton, being a product of concern for the national economy, particularly for agriculturists, ought not to be the subject matter of a patent monopoly. Secondly in 2012, a patent granted to Avesthagan Limited for a “synergistic ayurvedic/ functional food bioactive composition” i.e. the composition consisting of Jamun, Lavangpatti and Chandan to be used for treatment of Diabetes. In light of the public interest in using traditional knowledge for curing and treating Diabetes, the said patent was also revoked under Section 66 of the Act. However pertinently, both the patents were revoked due to cloud over patentable subject matter.

It would be prejudiced to comment on the fate of the matter at this stage. However as per TOI the Govt. may turn down the plea of Cipla for revocation of Novartis patent.

About the Author: Mr Sitanshu Singh, Patent Associate, Khurana & Khurana, Advocates and IP Attorneys and can be reached at: sitanshu@khuranaandkhurana.com

Xiaomi Injunction: Yet another injunction given too soon?

In CS(OS)  3775/2014, as we understand from multiple sources, Xiaomi has been injuncted from manufacturing its line of smart phones for it has been prima-facie found to be infringing on certain standard essential patents of Ericsson. Although the order is not uploaded as yet, we understand that the patents used against Xiaomi, by Ericsson, are the same essential patents on which Ericsson had also earlier filed an infringement suit against Micromax, not too long back ago. The question being examined is if it was actually necessary to issue the order ex-parte or whether a short date could have been given to Xiaomi to be served the plaint and summoned for the hearing. Also, we surely would expect Xiaomi to file an appeal to vacate the order quite soon.

                We also understand from sources (such as Spicy IP) that the ex-parte order injuncts Xiaomi from selling, advertising, manufacturing or importing devices that infringe the SEPs in question. The judge also directed the Customs officials to stop the imports under the IPR Rules, 2007. Moreover, local commissioners have been appointed to visit Xiaomi officers to ensure the implementation of these orders. There are presumed to be around eight valid Ericsson declared standard patents in context, based on which interim injunction/Custom enforcement/IPR enforcement rules were also issued against Micromax. During the appeal in the Micromax case as well, it was argued by the counsel appearing for the appellant that there is no presumption in favour of a patent holder on the strength of a patent being registered, and had also urged that normally the rule of law is not to grant injunction when issues pertaining to violation of patents arises for consideration before the Courts for the reason damages would be a good measure. We earnestly believe the same to a very strong argument keeping in context that damages/accounting of profits can always be retrospectively granted/ordered to be paid for, and moreover to a company as huge as Ericsson, how can the loss be irreparable, as the same can always be regained even if the defendant is given an opportunity to present its arguments. Furthermore, even in the Micromax case (CS(OS) 442/2013)), if just within a span of around 10 days, an initial licensing arrangement could be agreed to between the parties (Ericsson and Micromax) through an initial royalty rate of 1.25% of sale price for GSM phones, 1.75% of sale price for GPRS + GSM phones, 2% of sale price for EDGE + GPRS + GSM phones, and 2% for WCDMA/HSPA, couldn’t the same have been taken as a precedent and Xiaomi been ordered to start paying the same royalty instead of simply granting a blanket injunction against the company, which makes it even harder to impose on the existing set of products/devices out there in the market, and making it a hazy picture even for the current distributors/vendors/suppliers. In fact, in the same case (CS(OS) 442/2013)), a recent order on 12’th Nov 2014 further revised/lowered the royalty rates, which would be applicable retrospectively from the date of the suit, wherein the rates have now come down to .8% for GSM and GPRS and GSM devices, and around 1% for other devices. Furthermore, in the same very case, in the order of 14’th Oct 2014, the plaintiff (Ericsson) agreed to produce six agreements with different operators  containing the terms and conditions, in a sealed cover, which according to them are somewhat similarly placed as the current Defendant company. The question in context that comes in mind is then why couldn’t a similar arrangement been asked for, having already had such a strong precedent, wherein the same plaintiff (Ericsson) could have been asked to submit agreements/arrangements with few other similar Indian parties, and then an initial royalty rate could have been imposed on Xiaomi till the next hearing.

                Having seen a growing number of ex-parte interim injunctions being issued by the High Courts, it gives visibility to a disturbed atmosphere where no opportunity whatsoever is being given to the Defendant to make an argument and try to arrive at a settlement, and instead a strong push back is created against the Defendant that makes it much harder for them to file an appeal, get the interim vacated, and in the meanwhile, although for a short period, comply with the harsh interim orders, which may have a long term impact on its hard-built reputation/sales, all especially in cases where the only injury to the plaintiff is monetary in nature and not actual products/services/customers being disturbed. We earnestly hope that the Micromax case could have been taken as a strong precedent and anticipating an appeal, a higher royalty rate could have been imposed.

About the Author: Mr Paras Khurana, Patent Associate at Khurana and Khurana, Advocates and IP Attorneys and can be reached at: paras@khuranaandkhurana.com

Cipla Files Representation with Govt. Seeking Revocation of Novartis’ Patents

It has been recently reported in Economic times that Cipla has filed representation with the government (Department of Industrial Policy & Promotion) seeking revocation of five patents of Novartis on indacaterol, a respiratory drug for the treatment of chronic obstructive pulmonary disease (COPD) and marketed as Onbrez by Novartis. The central government, under section 66 of the Indian Patent Act, has the power to revoke patent in public interest, after giving patentee an opportunity to be heard.

According to section 66,

“Where the Central Government is of opinion that a patent or the mode in which it is exercised is mischievous to the State or generally prejudicial to the public, it may, after giving the patentee an opportunity to be heard, make a declaration to that effect in the Official Gazette and thereupon the patent shall be deemed to be revoked.”

Cipla has launched its generic version of indacaterol and alleged that Novartis held patents on indacaterol since 2008-09 without manufacturing in India and importing only in negligible amounts, as a result of which there is an urgent and unmet need to provide this drug to patients at affordable prices. According to Cipla, it has potential to manufacture adequate quantities of the drug to make available in the country.  Cipla’s launched generic version of indaceterol is reported to be 1/5th of the price of Novartis’ Onbrez.

This is the first time that an Indian generic company has asked the government to revoke patents on the ground of public interest under section 66. Otherwise, the revocation has always been sought on grounds under section 64 (for example obviousness, anticipation, insufficient disclosure, violation of section 8, 3d etc.), whether an Indian company has filed a revocation petition or a counter claim in an infringement suit. However, public health and drug price play significant role in deciding a patent’s fate in India especially in context of Compulsory Licensing of patent as it happened in Natco’s case. Even in Roche v. Cipla, public health and pricing issues were considered by the India courts, although the decision at the High Court was based on merits of the case and not in public interest.

It is highly expected that Novartis will take a legal course to challenge Cipla’s launch. Novartis has been very active to protect patents for its one of the blockbuster anti-diabetic drugs vildaglipton in India. Novartis has sought, just a few months ago, quia timet interim injunctions against several Indian generic companies including Glenmark generics, Bajaj healthcare, Cadila healthcare, Alembic pharmaceuticals against alleged patent infringement of vildaglipton even before they actually launched their generic versions and after they obtained marketing approvals from DCGI.

Thus Novartis will most likely file patent infringement suits seeking interim/permanent injunctions restraining Cipla from manufacturing and selling generic version of indacaterol in India.

On another note, Cipla could also have applied to obtain a compulsory license to manufacture and sell indacaterol before launching the drug. All three grounds of granting compulsory license under section 84(1) viz. reasonable requirements of public not being met, drug non-affordability and non-working of patent in India could have been proved by Cipla. According to Cipla, Novartis declared import of meagre 53,844 units for the year 2013 which do not satisfy even 4500 patients annually where there are more than 1.5 crore patients in need of the drug. Cipla also urged the government to consider COPD as an epidemic worthy of being qualified as a “public health crisis” as it claims 50 lakh lives annually in India, which is more than the toll from HIV-AIDS, malaria, cancer and tuberculosis.

Till now, we are not aware of any case in India wherein the government has revoked the patent in public interest under section 66. The outcome of government opinion to revoke said patents is thus eagerly awaited. This would act as precedent for all similar future cases. And if the government decides to revoke the patent under this section, the ongoing conflict between multinational innovator companies and Indian generic companies is going to intensify. Innovator companies criticize that India has weak patent laws not in compliance with international standards, whereas Indian government takes a stand that its patent laws are in compliance with TRIPs standards and are designed to meet the objectives of drug availability, affordability and accessibility.

 About the Author: Meenakshi Khurana, Partner at Khurana & Khurana, Advocates and IP Attorneys and can be reached at: meenakshi@khuranaandkhurana.com