Novartis AG v Cipla (2015)

Summary

“The plaintiffs have filed a suit for permanent injunction restraining infringement of patent no.222346 granted under The Patents Act, 1970” ... “By this order I propose to decide the application under Order XXXIX Rule 1 and 2 read with Section 151 CPC.” (para 1) “The suit patent no. IN 222346 was applied by Plaintiff No.1 as international application” ... “No pre-grant opposition was filed by any one of public under Section 25(1) of the Act. The patent was granted on 05.08.2008.” (para 33) The defendant “has launched the same on 24th October, 2014” (para 45), and “The defendant in its representation filed on 22nd October, 2014 under Section 66 and 92(3) of the Act petition before DIPP has acknowledged the efficacy” of the drug (para 46). “It appears from the submissions of the defendant that its main argument is rests upon all the grounds available under Section 83 of the Act as well as on the issue of public interest.” (para 56)

The Court held that “prima facie, suit patent is a valid patent. No credible defence is made. The defendant has infringed the suit patent.” (para 53) It held that the grounds for compulsory licensing “cannot be imported as a matter of defence to the suit for infringement” (para 99), while “The said well-established principles include weighing the case of the plaintiffs on the threshold of the larger public interest which is facet of the balance of the convenience.” (para 102) It found “no material on record suggesting the demand of the said patented product outstripping the supplies” (para 130), and that “Merely the grounds and conditions stipulated under section 83 and 84 of the Act do not absolve the defendant to infringe the registered patent.” (para 131) The defendant was “restrained” from dealing in the patented compound “until the determination of the pleas raised by the defendant for seeking the compulsory licensing if so filed” (para 132).

What the court decided

1. Particulars of invalidity. “It is settled law that the allegation to challenge the suit patent must be specifically pleaded. The defendant must deliver the particulars of objection on every ground on which its validity is challenged and must include such particulars which will clearly define every issue.” (para 48) “The defendant in order to show prior art has merely filed certain documents without explaining as to how they invalidate the suit patent. There is no required pleadings and argument advanced by the defendant.” (paras 48, 53)
2. Admitted efficacy. “In view of aforesaid reasons and admission made, it is apparently evident that the Defendant itself has acknowledged the efficacy and inventive steps of the suit patent.” (para 45) “This is due to the reason that once the distinction in the properties of the patented compound coupled will high level of the efficacy would come into play, then for prima facie purposes the argument of the workshop improvement and section 3 (d) will be withered away due to the reason that the efficacious and distinction in properties would take away the plea of evergreening or derivative of known compound.” (paras 45, 51)
3. Validity and infringement. “Rather the statement was made at the bar by the learned senior counsel on behalf of the defendant that in case it is valid patent, the case of infringement is made out. Thus, from the entire facts and material placed on record, it is clear that prima facie, suit patent is a valid patent. No credible defence is made. The defendant has infringed the suit patent.” (para 53) “As per expert opinion, the inhalation powder in the Defendant’s product contains INDACATEROL which confirms infringement.” (paras 53, 55)
4. Working without local manufacture. “With regard to the argument of the Defendant that the Plaintiff is not manufacturing the drug in India is concerned, the requirement of law is limited to working the patent in India so that the same is available to public at large. It is not essential that the patent must be worked by manufacturing the patented product in India. Reliance is placed on Telemecanique vs Schneider” (para 71). “The Act does not mandate that no patent protection would be granted to a patentee unless the local manufacture is undertaken.” (paras 71–72)
5. Section 48 and section 83. “From the plain reading of the opening words of the Section 83 of the Act” ... “it is clear that the general principles stated in the said chapter are operative for the purposes of the exercise of the powers under the Chapter XVI” (para 98(a)). “Accordingly, It does not follow that merely because section 48 rights are subject to other provisions of the Act and section 83 provides general principles which are applicable to working of the patented inventions which are applicable to exercise of the powers under chapter XVI would equally be applicable to the proceedings for infringement of the patent and/ or the counter claim challenging the validity of the patent which are governed by the distinct provisions under section 104 and section 107 of the Patents Act.” (para 98)
6. Compulsory licensing grounds as defence. “In view of the aforementioned discussion, It is clear that the grounds which are available for the person interested while seeking an application for the compulsory licensing or revocation of the patent on the ground of non working of the patent could be urged before the relevant authority which will consider the matter and cannot be imported as a matter of defence to the suit for infringement” (para 99). “Therefore, this court while hearing the application seeking the grant of the interim injunction may not refuse the injunction by forming any opinion solely on the ground as to whether the patented invention is sufficiently worked upon in India or whether the same is available to the public in reasonably affordable prices” (paras 99–100)
7. A compulsory licence presupposes validity. “Any party who intends to obtain compulsory license under these provisions obviously has to acknowledge the validity of patent” (para 81). “It has neither approached the Plaintiff for seeking any voluntary license nor has it approached the Controller for seeking compulsory license.” (paras 81–82)
8. Public interest and balance of convenience. “This Court is of the view that on the sole ground of public interest is the one which can be said to be an offshoot of balance of convenience and the comparative damage” (para 57). “However, that does not by itself would mean that the court is precluded from weighing the case of the parties on the touchstone of the well established principles of law governing the field of the patent. The said well-established principles include weighing the case of the plaintiffs on the threshold of the larger public interest which is facet of the balance of the convenience.” (paras 57, 102)
9. Life-saving drugs. “The public interest doctrine guide the cases of the patents as well especially in the cases wherein the innovations involve the life saving drugs or pharmaceutical preparations” ... “Thus, the balanced approach is adopted by the courts by imposition of the terms in the form of royalty to be paid by the third party to the patentee than to absolutely prevent the making of the patented product in the form of injunction” (para 104). “Thus, whether the public interest exists or nor in a case involving infringement of Patents is essentially a question of fact which has to be determined on case-to-case basis and no straight jacket formula can be devised” (paras 104, 108)
10. Public interest without a credible challenge. “Unless there is a credible challenge to the validity of the patent itself, the Courts will not include any alleged public interest as a factor to exercise discretion.” (para 74) Of F Hoffmann-La Roche v Cipla (2008), “the interim order was not passed as one of the reasons, both the Courts found, was that the suit patent was under cloud and the defendant was able to satisfy the Court by raising the credible defence” and “However, in the present case, both elements are missing as this Court prima facie has come to the conclusion that it is a valid patent.” (paras 74, 111)
11. Valid and clouded patents. “It is necessary to draw a fine distinction between the cases relating to patent infringement wherein there exists plausible ground of the invalidity of the patent coupled with the outweighing public interest enabling the court to refuse the injunction on all these grounds collectively vis a vis the cases where the patents are otherwise valid and there exists no plausible ground of the invalidity” (para 119). “This is due to the reason that the statutory rights granted by sovereign to exclude others can equally not be disrespected and the inventor cannot be rendered rewardless by returning the finding of the public interest when it is not the plaintiff to blame for enforcing its rights which are legally perfect otherwise.” (paras 119–120)
12. Royalty in lieu of injunction. “I agree with the proposition that the outweighing public interest can be a compelling circumstance to consider the court to adopt alternative approach by moulding the relief and thereby fixing up royalty as against the grant of the injunction in the patent infringement cases involving medicinal preparations.” (para 117) Of the defendant’s offer of a deposit, “I find this approach again to be inequitable.” (para 121(b)) “Furthermore, the said fixation of the royalty by this court on the monthly basis would be against the scheme of the Act when there exists a mechanism under the Act to seek compulsory license” (para 121(c)), and “these alternatives proposed by the parties are inadequate and insufficient at least at the prima facie stage to fix the interim royalty.” (paras 117, 121, 123)
13. Demand and supply. “There is a force in the submission of Mr.Subramanium that the plaintiffs are not expected to flood the market with INDACATEROL without reasonable demand.” (para 66) “I find that there is no material on record suggesting the demand of the said patented product outstripping the supplies on the basis of the public interest. Rather, there exists a contra material on record wherein the plaintiff is stated to have a surplus medicines available and agrees to further accelerate the supplies if need be.” (paras 66, 130)
14. Article 21. “The reliance of the Defendant on Article 21 is misplaced in as much as the legislature, in furtherance of Article 21 has provided protection under Sections 48 of the Patents Act. Article 21 cannot be pressed into service by an infringer seeking to justify the infringement of a valid patent and the statutory rights conferred by the statute.” (para 89)
15. No licence, no defence. “The main question in the present case before Court is whether the Court will allow a party to infringe the registered patent which is prima facie held to be valid, the infringement is established and there is no credible defence raised by the other side. The answer of this question is” “NO” (para 131). “In the present case, the compulsory licence has not been granted by the authority to the defendant. Even its application for the same is not pending. Merely the grounds and conditions stipulated under section 83 and 84 of the Act do not absolve the defendant to infringe the registered patent.” (para 131)
16. Procedure. Injunction and directions. The defendant was “restrained” from dealing in “INDACATEROL, specifically its Maleate salt” “as may amount to infringement of Indian Patent No.222346 of the Plaintiff No.1 until the determination of the pleas raised by the defendant for seeking the compulsory licensing if so filed shall be determined on merit and after hearing of parties in favour of defendant, otherwise, it would continue during the pendency of the suit.” (para 132(a)) “If such an application is filed by the defendant, under those circumstances, the directions are issued to the controller or to the relevant authority to decide the application for seeking compulsory licensing within the period of six months” (para 132)

What the court did not decide

Of the parties’ rival positions on the incidence of the disease and the supply of the drug, the Court held that “These are all disputed question of facts and there are two rival stands which are existing at this stage before the court and no conclusive opinion as to the correctness of either of them can be formed by this court at this stage.” (para 116) “It is clarified that all the findings arrived by this Court are tentative which shall have no bearing at the final stage of the suit as well as at the time of deciding the application for compulsory licence, if filed by the defendant.” (para 132)

Subsequent treatment

• Appealed — Cipla’s appeal against this order was dismissed by a Division Bench of the Delhi High Court (Badar Durrez Ahmed and Sanjeev Sachdeva JJ) on 9 March 2017.
• Followed — In Telefonaktiebolaget LM Ericsson v Lava International (2024) the Delhi High Court held that in this case “a Coordinate bench of this Court has held that a challenge based on prior art has to be specifically pleaded by the defendant” (para 79).