A Study on Patentability of Drugs in India

I. Introduction

Patent is an exclusive right which confers a monopoly upon the inventor to allow him exploit his invention subject to the provisions of Patents Act, 1970 for some period of time. During the period, the inventor can exclude anyone from commercially exploiting his own invention. The expression “Patent” defines a right granted to anyone who invents or discovers a new and useful product or process, article or machine³ of manufacture, or composition of matter, or any new and useful improvement. According to sec 2(1)(m⁴), “Patent” means a patent for any invention granted under Patents Act, 1970. “Invention” means a new product or process involving an inventive step and capable of industrial application. The Patents Act, 1970 mandates that an invention to be new in the strict sense that on the date of filing of an application, it should not be part of the public domain.

This implied that in order to be patentable, an invention should not be found in any manner or available to the public anywhere either by the written form or visual or oral description. India, like any other developed country have started granting patent on pharmaceutical products. However, sec3 (d) of the Patents Act, 1970 limits grant of “secondary” pharmaceutical patents, i.e patents on new form of existing molecules and drugs. Since then, sec 3 (d) has been a controversial provision in Patents Act, 1970. India’s obligation under the World Trade Organization on Trade Related Aspects of Intellectual Property Rights (TRIPS). This provision has triggered a heated discussion on views regarding the patentability of drugs or pharmaceutical products in India. Legal scholars however, cited that sec 3 (d) was a part of a policy by India to comply the international obligation.

The Indian pharmaceutical industry is about 120 years old. India became a signatory of World Trade Organization in 1995 and signed an agreement under TRIPS. The production of modern medicines was initiated through the establishment of Bengal Medicine and Pharmaceutical works in Calcutta in the year 1892 which was followed by the establishment of Alembic Chemicals Work and Baroda (1907) & Bengal Community in 1919. At this point of time, Patents Act of 1911 was in force. The indigenous firms were strictly prohibited to produce a new drug since the patented invention was under protection for 16 years which extension of 10 years. ⁵Also, the domestic firms were also restricted from production of already patented drugs in the market. During the period of 1947-1957, 97% of the available drugs in the market was manufactured and marketed by foreign multinational corporations and the prevailing drugs prices was estimated by them.

However, the period of 1995-2008 saw a fast development of the Indian pharmaceutical industry on several parts. The pharmaceutical industry in India witnessed a drastic change after the implementation of changes in the legal framework of intellectual property rights in the year 2005. The amendment of 2005 bought changes that motivated the pharmaceutical companies for more and more innovations.

What are patentable subject matter?

According to Patents Act, 1970 sec 3 and sec 4 specifically mentions about what can be patented. There is no definite list of all the patentable subject matters in India. However, sec3 stated the non-patentable subject matter. There are few criteria to be fulfilled to be qualified as patentable subject matter. The patentability of a particular invention is determined by its ability of being eligible under all the criteria. It is pertinent to mention from a basic understanding of the concept of “Invention”. The term “invention” has been defined under sec2 (j) of the Patents Act, 1970, an invention means “a new product or process involving an inventive step and capable of industrial application”, such invention protected under the patent law refers to patented.

The following are the essential criteria to be a patentable subject matter-

1. Patentable subject matter- The first and foremost criteria is whether the subject matter is not excluded from patentable subject matter mentioned as in sec 3 of the Act. So far as the invention doesn’t fall under the non – patentable subject matter, will mean that it has patentable subject matter.

2. Novelty- It is the most essential criteria for patentability⁶. Novelty or new invention is defined under section 2 (l) of the Patents Act, 1970 as “any invention or technology which has not been anticipated in any document or used in the country or elsewhere in the world before the date of filing the patent application with complete specification i. e the subject matter has not fallen in public domain or that it does not form part of the state of the art.”⁷ It simple terms it means that an invention should not have been published and it had no prior use, neither people have any prior knowledge of the invention.

3. Inventive Step- The term “inventive step” has been defined under sec 2 ( ac) of the Patents Act, 1970 as a “feature of an invention that involves technical advance as compared to a person skilled in the art”.

4. Capable of Industrial application- The word “industrial application” is defined as “the invention is capable of being made or used in an industry”. No invention can exist in vaccum or in the form of abstract. It must be useful and applicable in the industry for further reasonable use and help get benefit attached with the invention.

During the process of patent filing, it is necessary to disclose everything about the invention, which is also known as the enabling patent. An enabling patent disclosure means a patent draft specification must be sufficiently be able to disclose the invention without external effort.

II. GATT

The GATT has been refined since its initial introduction which led to the creation of the World Trade Organization. It is a multilateral agreement aimed at the abolition of quotas and the reduction of tariff duties among the contracting nations.⁸ When GATT was concluded, it was the most effective instrument of world trade in the second half of the 20^th century. It contains numerous provisions which various agencies of the federal government are required to implement. One of these provisions, affects the term of U.S. patents. Under the pre-GATT/TRIPS system, the term of a patent ran for 17 years from the time a patent was granted. Under the Uruguay Round Agreements Act of the GATT/TRIPS, the term of a patent, based on an application filed on or after June 8, 1995, will end 20 years from the earliest effective filing date claimed in the application. ⁹For many inventors, this new system will increase the term of their patent since the average pendency is 19.4 months from the filing of the application to grant.

In anticipation of an increase in applications due to this deadline, the Patent and Trademark Office had, several months ago, prepared a series of contingency plans to effectively respond to a variety of different scenarios. The actual increase of approximately 45,000 applications above what normally would have been filed during the period, represents almost one quarter of the years projected filings in only nine days. The walk-up window where applicants can file in person normally receives about 250 applications per day.

Patentability criteria under TRIPS Agreement, 1994

Trade related aspects to Intellectual property popularly known as TRIPS is an agreement under WTO which has been debated by developed and under developed countries. The TRIPS patent system is based on salient features of the TRIPS namely that TRIPS provides patent protection for both products and processes in all fields of all technology that involve an inventive step and capable of industrial application. India is a member of World Trade Organization, therefore is obligates to comply with the provisions and rules laid down under TRIPS. Therefore, the enactment of Patents (Amendment) Act, 2005 was the end result of the amendment of the Patents Act, 1970 to bring the necessary changes on the provisions so as to bring the provisions at the same foot as laid down under ¹⁰TRIPS agreement.

The adoption of TRIPS agreement has made a huge contribution towards the development of International intellectual property law. The agreement mandated few principles to be followed by the member countries with respect to enforcement and minimum standard protection. The TRIPS agreement is the global constitution to regulate laws related to intellectual property. According to a general understanding of TRIPS agreement, the nations are bound to abide by the TRIPS standards or risk sanctions under the WTO system¹¹. The most controversial intellectual property has been the patents. However, when comes to subject matter, the TRIPS has specified the criteria under Article 27 of the TRIPS agreement.

Article 27 of the TRIPS agreement says “patentable subject matter”. The provisions is read as – Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. Subject to [ the transitional provisions relating to developing countries and patent protection for pharmaceutical and agricultural products]¹², patent shall be available and patents right enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.

The following elements may be excluded from patentability by WTO members under TRIPs:

• (...) inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by their law.(paragraph 2)
• diagnostic, therapeutic and surgical methods for the treatment of humans or animals; (paragraph 3(a)) and
• plants and animals other than micro-organisms, and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. (...) (paragraph 3(b)).

Article 27 of the TRIPS agreement codified the alternative substantive standards of patentability derived from the United States patent law and the European Patent Convention. Article 29(1) of the TRIPS agreement, provides that members shall require that an applicant for a patent shall disclose that invention in a manner sufficiently clear and complete for the invention to be carried out by a person skilled in the art”.¹³ The TRIPS agreement thus incorporates standards of patentability as applicable to the United States and Europe for the purpose of their own laws. But however, the requirements of patentability, subject matter coverage which also pharmaceutical products and the term of protection.

III. Amendment of Patents act, 1970

TRIPS has helped accelerate the patent law in India. The most known reform was done through the introduction of mailbox facility that allowed the applicant to file a pharmaceutical product patent application. Applicants were rewarded with exclusive marketing rights, provided it was subject to certain conditions to market the period up to five years from the date of grant. The second amendment was done in the year 2002. The amendment of 2002 provided with twenty year protection period, reversal of burden of proof in the case of process patent infringement cases. It bought into force other changes aimed at bringing India’s patent laws in tune with the TRIPS Agreement, including the new definitions of inventions and inventive step and new exclusions from patentable subject matter like business methods, algorithms and traditional knowledge.

By the third amendment in 2005, the Patent Act,1970 offered patent protection to pharmaceutical products and in the process became substantially complaint with TRIPS. The 2002 amendment¹⁴ brought into force other changes aimed at bringing India’s patents law in tune with the TRIPS Agreement, including new definitions of invention and inventive step, and new exclusions from patentable subject matter like business methods, algorithms and traditional knowledge. The amendment also reversed the burden of proof provision involving cases of process patent infringement and streamlined the compulsory licensing framework. The 2002 amendment also paved the way for patentability of microorganisms. The 2002 amendment provides three grounds for seeking a compulsory patent license. First, the law provides the broadest grounds for seeking a compulsory patent license in the case of non-working of patented inventions.

Such a license can be sought only three years¹⁵ after the sealing of the concerned patent. Second, there is another provision for grant of compulsory licenses on notification of the Indian government in circumstances of national emergency or extreme urgency like the breakout of epidemics. Third, there is a provision for compulsory licenses in the case of certain patents that are essential to the efficient working of other patented inventions. The 2002 amendment abolished the concept of Licenses of Right.

Flexibilities in Law of Patents

Sec 3 (d) of the Patents Act, 1970 has led to a controversial debate amongst multinational and Indian companies. Section 3(d) states that the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine ¹⁶or apparatus cannot be considered as an invention. It further clarifies that “salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy. The main aspect of the amendment was to curb the spread of frivolous patent applications and grant of patents on such inventions.

Scholars point out that Section 3(d) is a “bold legislative move” that has the potential to curb the illegitimate “evergreening” of patents and may compel other countries to imitate India’s example in attempting to curb such practices. The Pharmaceutical industry is one of the most intense “knowledge driven” sectors. Pharmaceutical research is very costly and unpredictable in nature¹⁷. Outcome of the research can be in the form of a new, inventive and useful product or process. In this highly competitive market, it is imperative for the pharmaceutical companies to protect their inventions from any unauthorized commercial use by acquiring patent rights over the invented product or process.

Novartis v. Union of India

In 1997, Novartis, a Swiss based pharmaceutical giant filed an application to grant patent to an anticancer drug Glivec which is used to treat Chronic Myeloid Leukemia (CML) and Gastrointestinal Stromal Tumours (GIST) on the basis that it invented the beta crystalline salt form (imatinib mesylate) of the free base, Imatinib. However during those days, India did not grant patent to pharmaceutical products and agrochemical products. It was in the year 2005 in India; the drug products became the subject of patent in compliance with the TRIPS agreement. India thereon revised its patent law and started granting patents on pharmaceutical drugs. Subsequently in 2006, the Madras Patent Office refused the patent application of Novartis for its drug Glivec stating that the said drug did not exhibit any major changes in therapeutic effectiveness over its pre-existing form, which was already patented outside India.

The said decision was based on Section 3(d) of the Indian Patents (Amendment) Act, 2005 which provides a known substance can only be patented if its new forms exhibit “enhanced efficacy”. The Patent Office did not find any enhanced efficacy in the drug Glivec ¹⁸and, therefore, considered it incapable of patentable under Section 3(d) of 2005 Act. In May 2006, Novartis filed two writ petitions under Article 226 of the Indian Constitution before the High Court of Madras – one appealing against the order of Madras Patent Office rejecting its patent request and the other contesting that Section 3(d) of the Indian Patents Act is not in compliance with TRIPS¹⁹.

The Madras High Court refused the writ petitions of novartis holding that it did not have jurisdiction to determine whether a domestic law²⁰ is in contrary to international treaty, so it cannot decide whether Section 3(d) is in compliance with TRIPS. As far as Section 3(d) is considered, the objective of the Amending Act was to prevent evergreening and to make easy the access to life-saving drugs to the citizens. Therefore, it cannot be considered to be vague and arbitrary.²¹

The new phase of litigation started in Intellectual Property Appellate Board, which is an appellate body of patent controller. IPAB considered the beta-crystalline form of Imatinib mesylate as new and an inventive step but refused to grant a patent to the drug of Novartis since it was hit by Section 3(d) of the Act. Novartis challenged the said order by filing Special Leave Petition before the Supreme Court.

The Supreme Court adopted the following approach-

1. Court observed that the product was one of the new forms of the substance and not the whole substance. It has always existed in the original amorphous form. The product thus has to qualify the test laid down in Section 3(d) of the Patent Act.

2. The Section clearly specifies that a new form of the substance in not patentable under Indian law unless it enhances its “known efficacy”.²²

3. Novartis contended that the physico-chemical properties of the polymorph form of the imatinib molecule, i.e. better flow properties, better thermodynamic stability and lower hygroscopicity, resulted in improved efficacy and hence is patentable under Indian law.

The Apex Court rejected this contention stating that in the case of medicines, efficacy means “therapeutic efficacy” and these properties while they may be beneficial to some patients do not meet this standard. The Supreme Court also held that patent applicants must prove the increase in therapeutic efficacy based on research data in vivo in animals.

The Supreme Court held that the true intention to enact section 3(d) was to prevent the concept of evergreening and thus if the invention does not fulfil the test of Section 3(d), it cannot be granted a patent. The court further specified that this case should not be interpreted to mean that Section 3(d) bars all incremental inventions. It is with regard to the field of medicine especially in cases of life-saving drugs, a great acre and caution needs to be taken so as to protect the right to life of the masses.

The decision came as a relief for millions of people around the world to have access to medicines at a low cost, thus preventing the pharmaceutical industries from “evergreening” their patents. While the judgement is seen as a means to ensure the availability of life-saving drugs at an affordable price to people in India and elsewhere, at the same time the decision defined the scope of Section 3(d) of the Indian Patents (Amendment) Act, 2005. In the said matter, the Supreme Court refused to grant a patent to a drug of Novartis AG on the basis that the said drug did not involve an invention which is capable of being patentable under Indian law.

IV. Conclusion

The India patent law is an exemplary piece of patent legislation that is aimed to balance the interests of both the common man and the inventors. After the introduction of product patent regime a wide range of pharmaceutical products can be patented in India. Before applying for the patent the researchers shall carefully take into consideration the criteria of patentability and advice of a patent expert is highly desirable in this respect. Once acquired patent rights can be transferred through assignment or licensing to other persons or companies. ²³Organizations such as academic institutions and universities not having sufficient manufacturing or marketing capacities can use patents as an effective tool for the technology transfer. These organizations can outsource their patented products/ processes to third parties and in return they can earn revenues to recoup the investments made in the development of such products/ processes. Compulsory license provide an opportunity to market the patented products under certain conditions.

More than fifteen years have passed since India implemented its new pharmaceutical product patents regime. During this period, patent application filings have increased dramatically. The jury is still out on the long-term implications of patent protection on drug pricing in India. However, this article has demonstrated that the Indian government holds a number of tools to deal with that concern. It should also be noted that India’s generic drug makers,²⁴ along with various social action/public interest groups, have managed to put up a strong challenge to multi-national companies holding pharmaceutical patents. Instead of taking the situation lying down, they are proactively making full use of the available statutory flexibilities to challenge pharmaceutical product patents.

The Indian Patent Office and courts face significant challenges in interpreting and applying the new Patent Act’s provisions. While India’s patent system emerges as a unique model, there will be greater demands from stakeholders to make the system more transparent. In the past two years, some significant measures have been taken to increase transparency and it is expected that more steps will follow. In the short-term, opponents of stronger patent protection may be able to take advantage of ambiguities in the interpretation of various provisions of the patent law. But this can have serious long-term consequences, as a lack of confidence in the patent system could adversely impact indigenous innovation to a large extent and foreign direct investment to a small extent. Since India’s pharmaceutical industry today is completely different than what it was in 1970, stronger IPRs ²⁵may help them by supporting path breaking research and development. The entire world is looking at India to see how its unique patent system is evolving, and only time will tell whether that evolution takes the form of a smooth transition or a bumpy ride.

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