Patently Confusing: Same Problem, Differing Verdicts

This article was co-authored with Rishi Kumar M. Dugar, Advocate, Madras High Court.
It was published in The Economic Times on 11th December, 2005.

At a time when the world is anxiously watching the pharmaceutical scene in India as to how the Asian Tiger is complying with its obligations under the WTO, any anomaly in implementing these obligations can have the effect of sending the wrong signals. The recent amendments to the Patents Act, 1970 (“the Act”) has been in the thick of controversies thanks to the last-minute hustle in bringing the law in conformity with the WTO obligations. At the backdrop of all the hue and cry, two recent decisions of the Madras and Bombay High Courts, which have gone largely unnoticed, has turned the spotlight to the challenges in implementing the provision of the Act.

In November 2003, the Controller of Patents granted Exclusive Marketing Rights (a right to exclusively sell and distribute a product - EMR for short) to Novartis, a Swiss pharma giant, for its patented anti-cancer drug, ‘Glivec’ used in the treatment of Chronic Myeloid Leukaemia (CML) and stomach cancer. The drug containing Imatinib Mesylate did not enjoy patent protection in India, though it was patented in various countries. However, under Chapter IV A of the Act, (which has been omitted by the recent amendment since it was of a transitory nature) Novartis was able to obtain an EMR for Imatinib Mesylate.This move affected many Indian pharmaceutical companies who have been manufacturing the same drug, Imatinib Mesylate, under different trade names and selling them at a lesser price.

The preconditions stipulated under section 24 B of the Act for grant of an EMR were: (i) an application for the same invention should have been filed in a convention country on or after 1 January 1995, (ii) the patent and approval to sell and distribute the invention should have been granted in that country on or after the date of making a claim in India, and (iii)the approval to sell or distribute the invention should have been granted by the concerned authority.Upon the satisfaction of these conditions, the EMR is granted from the date of approval till a period of five years or till the date of grant of patent or the date of rejection of application for the grant of patents whichever is shorter. The grant of EMR assures a patent-like protection to be extended to the product even before the patent application is processed.

Section 24 E of the Act provides that all suits for infringement of a right under section 24 B shall be dealt with in the same manner as if they were suits concerning infringement of patents (Chapter XVIII). Exercising its right, pursuant to the grant of an EMR for its patented drug “Glivec”, Novartis initiated infringement action against various Indian manufacturers who were manufacturing the similar drug, in various courts, including the Madras High Court and the Bombay High Court.

The Madras High Court in Novartis AG v. Adarsh Pharma [2004 (29) PTC 108 (Mad)] granted an interim injunction in favour of Novartis, restraining the various Indian manufacturers from manufacturing drugs similar to ‘Glivec’. Though having the benefit of the Madras decision, the Bombay High Court in Novartis AG v. Mehar Pharma [2005 (30) PTC 160 (Bom)] differed with the finding of the Madras High Court and refused to grant an interim injunction. The Bombay High Court held, that the Madras High Court has not properly considered the settled law in the matter of grant of temporary injunction in relation to a patent of “recent origin”.

At the heart of the controversy is the applicability of a long-standing rule, that whether an interim injunction can be granted for a patent of “recent origin”? In the arguments canvassed before both the High Courts, a plethora of decisions on the aforesaid issue were referred and relied upon before the Madras High Court.

It was submitted before the Madras High Court that since the EMR was of a “recent origin” and once a challenge to the validity of the same is made, the Court should not ordinarily grant an injunction. Reliance was placed on the decision of the same Court in Manicka Thevar v. Star Plough Works AIR 1965 Mad 327, where it was held that an injunction will not be granted if the patent is a recent one and where the defendant disputes the validity of the grant. With regard to the criterion for determining the recent origin of a patent, the court formulated a proposition that any patent less than 6 years old was regarded as a recent one. The above ruling was followed by the Calcutta High Court in Hindustan Lever Ltd v. Godrej Soaps Ltd AIR 1996 Cal 367. A Division Bench of the Calcutta High Court in an earlier decision, Boots Pure Drug Co. v. May & Baker 52 CWN 253 also held similarly.

The Madras High Court distinguished the decision of Manicka Thevar by concluding that, since the validity of the EMR is for a period less than six years, then, a fortiori, the 6-year rule of “recent origin” will not apply.

It is submitted that the aforesaid finding is incorrect on two accounts. First, a rigid reading of the 6-year rule (to mean nothing but 6 full years) contributed to the finding that the EMR was for a shorter period than 6 years and hence the rule will not apply. The 6-year rule, which was formulated many decades ago, had its emphasis on the existing state of art; by which an invention would be open to challenge in its initial years.

Secondly, it was erroneous to hold that the EMR is of recent origin when the rule requires that the patent should be of recent origin. Keeping in mind the nature of the EMR which is a right granted on the basis of an earlier patent (foreign patent) granted in another country, it would not serve any purpose to compare the term of the EMR and conclude that the recent origin rule will not apply. Rather, the term of the patent (foreign patent) and the date of its grant should be the relevant factors. In the instant case, the patent based on which the EMR was granted came into force in August 2002 and would qualify for an invention of recent origin by any measure.

It is a settled law that the grant of an interlocutory injunction is a matter of discretion and depends on the facts and circumstances of each case and that there are no fixed rules as to when an injunction should or should not be granted. But when two High Courts, on similar set of facts, take diametrically opposite views on the issue of the grant of interim injunction, the trend is disturbing. For cases dealing with transitory rights like EMR, an interim order rendered by the court can be very critical and can have the effect of conclusively deciding the case.

The war between the big pharmaceutical giants and the generic pharmaceutical companies will soon be fought in new terrains. With India’s emergence as a key player in the pharmaceutical sector, judicial rulings on the Act must be tempered with clarity and sound reasoning. Ironically the Novartis case was the first ever decision involving the application of the new patent regime. If the above decisions by the High Courts are any indication of the things to come, then one shudders to think of the confusion in store.