F Hoffmann-La Roche v Cipla (2008)

Summary

“This order disposes of IA 642/2008, an application seeking ad-interim injunction, restraining the defendant from manufacturing, offering for sale, selling and exporting the drug Erlotinib, for which the plaintiff holds a patent.” (p 1) The Controller “granted a certificate bearing Patent No. 196774 dated 23.02.2007” (para 3), and “In December 2007 and January 2008, various news reports appeared in the print as well as the electronic media about the defendant’s plans to launch a generic version of Erlotinib in India” (para 4). The defendant “has consequently filed a counter claim for the revocation of the patent in question” (para 9), contending that “The patented compound of the Plaintiffs is a quinazolin derivative used for the treatment of cancer therefore, a derivative of a known compound and hence not patentable under Section 3(d) of the Act.” (para 10), and that “The plaintiff’s capsule costs Rs. 4,800/- per tablet and the equivalent tablet of the defendant costs Rs. 1,600/-.” (para 14)

The Court held that “the test of non-obviousness of an invention and discovery of existence of significant enhancement in the known efficacy of a substance are pre-requisites of patentability” (para 58), and that the six-year rule “has to be seen as a rule of caution and prudence rather than a rigid, ritualistic formula of mathematical application.” (para 63) It found that “the plaintiff’s case though arguable and though disclosing prima facie merit, has to answer a credible challenge to the patent, raised by the defendant.” (para 78) It held that “as between the two competing public interests, that is, the public interest in granting an injunction to affirm a patent during the pendency of an infringement action, as opposed to the public interest in access for the people to a life saving drug, the balance has to be tilted in favor of the latter.” (para 86) “The result of the above discussion is that the plaintiff is not entitled to claim an ad-interim injunction, in the terms sought.” (para 87) “IA 642/2008 is accordingly dismissed, subject to the directions in the preceding paragraph.” (para 88)

What the court decided

1. Section 3(d) and its Explanation. “In view of the above discussion, and the settled position regarding statutory interpretation, it is not possible” ... “to accept the Plaintiff’s contention that Section 3(d) and its explanation are merely clarificatory of the pre-existing law. The Parliament consciously enacted the standard of non- obviousness as a condition for patentability; it also excluded some matter, i.e., derivatives of substances which are known to exist, unless they differ in properties, significantly, in the known efficacy. Thus, it has to be concluded that the test of non-obviousness of an invention and discovery of existence of significant enhancement in the known efficacy of a substance are pre-requisites of patentability.” (para 58)
2. The six-year rule. “One must confess bafflement at the ‘six-year’ rule preventing courts in India from granting interim injunction. No provision of law or rule was brought to the notice of the court in support of this practice.” “It has to be seen as a rule of caution and prudence rather than a rigid, ritualistic formula of mathematical application. In the context of the amended Act, where no less than five layers of scrutiny are inbuilt, what can be said is that the courts should examine the claim for interlocutory injunction with some degree of circumspection, even while applying all the tests that normally have to be satisfied when granting (or refusing) such relief.” (para 63)
3. A genuine challenge to validity. “What then is the correct approach where a defendant challenges the validity of a patent” ... “At the stage of considering an application for interlocutory injunction, the defendant has to show that its challenge is a genuine one and not vexatious or set up to merely play for time” (para 64)
4. Interlocutory injunctions summarised. “To summarize, on the issue of interlocutory injunctions:” “(i) In patent infringement actions, the courts should follow the approach indicated in American Cyanamid, by applying all factors;” “(ii) The courts should follow a rule of caution, and not always presume that patents are valid, especially if the defendant challenges it;” “(iii) The standard applicable for a defendant challenging the patent is whether it is a genuine one, as opposed to a vexatious defense. Only in the case of the former will the court hold that the defendant has an arguable case.” (para 65)
5. Efficacy of a derivative. Of the Controller’s order the Court held that it, “besides not examining the objection about obviousness, as presented, appears to have mixed up the aspect of efficacy, a vital component required to be satisfied after the 2005 amendment” and that “In the facts of this case, the plaintiff also had to establish that the product is one differing significantly in properties with regard to efficacy. This was necessary since the compound is a derivative, and deemed to be part of a known compound.” (para 76)
6. The test of obviousness. “The test of obviousness cannot be that the material or formula was published, but that having regard to the existing state of prior art or the published material, was it possible to a normal but unimaginative person skilled in the art to discern the step on the basis of the general common knowledge of the art at the priority date. The other deciding factor is whether the differences between the prior art would, without knowledge of the alleged invention, constitute steps which could have been obvious to the skilled man or whether they required any degree of invention.” (para 77)
7. Anticipation and obviousness answered. “There is something to be said in the argument that this is a response to an anticipation argument, which is different from the objection of obviousness. There is also some merit in the plea that comparative data regarding efficacy of the plaintiff’s drug, with existing drugs, was not independently shown at the time of examination of the claim, to establish difference, significantly in regard to its efficacy from the known substance or derivative.” (para 77)
8. Grants in other countries. “Likewise, the argument that the plaintiff’s products have been patented in several countries, and have remained unchallenged, the present action being the exception, is not of much consequence. The patent regimes of each country differ; crucially, the municipal laws of the respective legal systems would determine the timing and scope of challenge.” (para 77)
9. A credible challenge. “On a conspectus of all the factors, the defendant’s contention does not appear implausible. This is not to say that there is merit in its contentions; it is, not also meant to be reflective of the strength of such contentions.” “The court should refrain from conducting a mini trial as to the strength of the parties, at the interlocutory stage. All that can be therefore said is that the plaintiff’s case though arguable and though disclosing prima facie merit, has to answer a credible challenge to the patent, raised by the defendant.” (para 78)
10. Balance of convenience. “The application of the American Cyanamid principles would then, at this stage, mean that the court should, in such cases, proceed to decide on the question of balance of convenience.” Among the factors: “The extent to which disadvantages to each party would be incapable of being compensated in damages in the event of his succeeding at the trial;” “The nature of the product and its use” “The timing of the action” “If the balance is approximately equal, the court may consider the relative strength of each party’s case only where it is apparent by undisputed evidence that the strength of one party’s case is disproportionate to that of the other party.” (para 79)
11. Life-saving drugs and price. “Thus, unlike in cases involving infringement of other products, the Courts have to tread with care whether pharmaceutical products and more specifically life saving drugs are involved. In such cases, the balancing would have to factor in imponderables such as the likelihood of injury to unknown parties and the potentialities of risk of denial of remedies.” (para 81) “As noticed with reference to the two judgments cited above, price differential in the case of a life saving drug” “or even a life improving drug in the case of a life threatening situation, is an important and critical factor which cannot be ignored by the court.” (paras 81, 84)
12. Public access and Article 21. “In this background the Court cannot be unmindful of the right of the general public to access life saving drugs which are available and for which such access would be denied if the injunction were granted.” “Another way of viewing it is that if the injunction in the case of a life saving drug were to be granted, the Court would in effect be stifling Article 21 so far as those would have or could have access to Erloticip are concerned.” (para 85)
13. Irreparable injury. “As discussed earlier, in the section concerning balance of convenience, irreparable hardship is a separate distinct head which the Court of necessity has to examine and be satisfied about, while considering interlocutory applications for injunction.” “The damage or injury that would occur to the plaintiff in such case is capable of assessment in monetary terms. However, the injury to the public which would be deprived of the defendant’s product, which may lead to shortening of lives of several unknown persons, who are not parties to the suit, and which damage cannot be restituted in monetary terms, is not only uncompensatable, it is irreparable.” (para 86)
14. Procedure. Undertaking and accounts. Of the risk that “if no equitable balancing order protecting its interest is made at this stage, there is a likelihood of the plaintiff being prejudiced at the final stage”, the defendant was directed to furnish an undertaking “within two weeks, to pay damages in the event of the suit being decreed”, to “maintain faithful accounts of its sale of the product Erlocip and file quarterly accounts”, and to “File an annual statement of the sales figures, of Erlocip, duly authenticated by its chartered accountants” (para 87). “IA 642/2008 is accordingly dismissed, subject to the directions in the preceding paragraph.” (paras 87–88)

What the court did not decide

“Though the defendants made a strong argument about the non application of mind by the Controller, since the patent certificate was issued on 23-2-2007, yet, the pre-grant order was made on 4-7- 2007 (also imputing that the pre-grant application was not maintainable) however, the court will not go into that aspect at this stage.” (para 76)

Subsequent treatment

• Appealed — In F Hoffmann-La Roche v Cipla (2009) the Division Bench of the Delhi High Court dismissed Roche’s appeal against this order on 24 April 2009, and the special leave petition against that judgment was dismissed by the Supreme Court on 28 September 2009.
• Explained — In Cipla v F Hoffmann-La Roche (2015) the Division Bench recorded that “Roche’s plea for interim injunction against Cipla was dismissed by a learned Single Judge of this Court on March 19, 2008” (para 5), and after trial held the patent valid and infringed.