Microsoft - Nokia deal: A paradigm shift in the standard essential patent licensing business model

This post discusses the recent divestment of Nokia's businesses to Microsoft and argues that this deal may change the way entities deal with standard essential patent (SEP) licensing on Fair, Reasonable, and Non-Discriminatory (FRAND) terms - and hence is a paradigm shift in the mobile phone industry.  Because of the obligation to a Standard Setting Organization (SSO), and because Microsoft has taken the position (Microsoft v. Motorola) that the SEP licensing be based on chipset value rather than end-product value, Nokia may be stuck with licensing SEP portfolio on a chipset basis. Current practice is to license the portfolio on an end-product (a handset, or a complete device).

Early Tuesday morning (03/09, India time), twitter was ablaze with the news that Microsoft would acquire the handset and services business of Nokia for about $7 Billion.  Notable is the fact that Nokia only divested it's businesses and transferred it's employees to Microsoft, but retained its patent portfolio.  Nokia in it's press release announced: As part of the transaction, Nokia will grant Microsoft a 10 year non-exclusive license to its patents as of the time of the closing..In addition, Nokia will grant Microsoft an option to extend this mutual patent agreement to perpetuity.  Of the total purchase price EUR 1.65 billion relates to the mutual patent agreement and future option. 

The retention of the patent portfolio raises significant issues: Microsoft is a mere non-exclusive licensee, and Nokia is free to license to others.  By divesting the hardware and transferring people, Nokia cannot be sued for products, yet can launch patent licensing and related actions including litigation.  In the SEP licensing field - this model is much closer to that of InterDigital, and Ericsson: both used to make handsets / devices, but shifted to a pure licensing model.

Since the deal was announced, one area that has received little attention is the future course of action vis-a-vis the licensing of the SEPs and what what end of the supply chain a patent holder should license the SEPs. In Microsoft v. Motorola case (underway at the Western District of Washington, Seattle), Microsoft made an argument that Motorola breached its [F]RAND obligations by failing to offer a [F]RAND license to Microsoft’s 802.11 chipset supplier, Marvell.  

In another instance of the same argument (chipset manufacturer), Intel in it's amicus brief supporting Apple involving a dispute between Apple and Motorola, argued that a FRAND commitment requires a SEP holder to license all comers, including component makers (or chipset makers). 

This obligation-offering a license to all prospective licensees, including chipset manufacturers stems from the IPR policy of the standard setting organization.  Under the terms on which a SEP holder (such as Nokia) signs the obligation to declare SEPs to an SSO such as ETSI, the SEP holder must grant a reasonable license to all comers—both sellers of completed products to consumers, such as handset manufacturers, and manufacturers of the components that go into those products. 

Clause § 6.1 (ETSI IPR Policy), requires owners of essential IPR to undertake to grant licenses “to at least” “MANUFACTURE”; “sell, lease, or otherwise dispose of EQUIPMENT so MANUFACTURED”; “use” “EQUIPMENT”; “and” “use METHODS.” 

Hence, it can be argued that a chipset manufacturer is entitled to a FRAND license from the SEP holder. Microsoft arguing that the license should be made applicable to Marvell,  the chipset manufacturer, and Intel (Intel supplies chipsets to integrated device manufacturers / mobile handset manufacturers) arguing that component manufacturers be licensed by a SEP holder further underscore the point.

Accordingly, even though Nokia has retained ownership of the patent portfolio, and Microsoft is a non-exclusive licensee of the Nokia's portfolio, Nokia may have to be content with the valuation of an SEP license on a chipset basis.  Additionally, as Nokia is one of the largest (if not the largest) holders of SEPs, others may have to follow suit in SEP portfolio licensing.

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Part II: IPAB revokes Allergan's patent on eye drugs Ganfort and Combigan

Patent II [ORA/21/2011/PT/KOL]

The  application was filed against  patent No.219504 “Combination of Brimonidine and Timolol” for topical Opthalmic use. The combination is commercially marketed as "Combigan." The revocation was sought for on various grounds viz., that the Patent was obtained on a false suggestion or representation, that it was obvious, that it did not sufficiently disclose and violated Section 8 of the Patents Act, 1970. The patent was successfully revoked. 

Applicant

According to the applicant, the only advantage of the ophthalmic pharmaceutical composition of the impugned patent is that the patient is exposed to lesser amount of benzalkoniuim chloride (preservative) (BAK) during daily treatment regimen.  Prior art suggested that a combination of brimonidine and timolol may have potential in the treatment of glaucoma. The only difference between the impugned patent and prior art was the combination in a single composition and combination as individual composition.   Therefore the mere fact that Brimonidine and Timolol were administered in a single installation was not indicative any inventive step. Also, it was obvious that the amount of BAK required for a combination in a single composition would be less than that required in when the two drugs are administered separately. 

Furthermore, the complete specification of the impugned patent merely disclosed the constituents of the composition and not about the prior art that lead to the proposed composition.  The invention was a mere admixture the benefit provided by the invention is additive where each of the two drugs caused the respective therapeutic effect independent of each other. The advantages of combination of two drugs were known in the state of the art.

According to the applicant, the invention was not patentable under S. 3 (d) either. There was no data in the specification to show that the invention had an enhanced efficacy. The applicant submitted that S. 3(d) included “combination” and that the respondent had only shown the advantageous effect of combination of the two active ingredients over the individual active ingredients.The respondent ought to have shown the advantages of the single composition over the serial administration of the two drugs. 

Further, the respondent also failed to disclose to the controller the information required by Section 8 of the Act, in particular, the European counterpart of the subject Patent- which was not granted by the EPO.

The applicant also cited the US  Court of Appeals judgment in respect of the US counterpart of the impugned patent Allergan Inc vs. Sandoz where the patent was invalidated:

"There is extensive evidence in the prior art showing the concomitant administration of brimonidine and timolor multiple times per day, that the combination had benefits over the administration of either alone, and that there was a motivation to combine the two achieve better patient compliance."

Respondents 

The Respondents contended that the combination of two drugs in a fixed combination was neither taught nor

suggested by the prior art. This combination was purely the result of an inventive step. Serial administration and combination were two different modes of administration. The most common form of treatment was serial or concomitant administration of two or more different medications provided in two or more separate bottles. According to the respondent the teachings and prior art were against such combination. Thus, the respondent overcame these challenges which would have discouraged the person skilled in the art from trying the invention combination. Further, BAK was known to be toxic to cells. Therefore the ingredients in the uptake were not desirable.  The combination reduced side effects, was more effective than its components and was approved by the FDA. The counsel pleaded dismissal of the revocation application for applicant's lack of evidence and failure to discharge the burden of proof. Also, according to the respondents S.8 (2) spoke of processing of the application in a country outside India and it meant that the patentee’s compliance was complete if one foreign application was filed. The Patentee could not be asked to furnish details regarding the proceedings in all countries, contrary to the statute.

Decision 

The Board examined the Canadian, US and EPO judgments on challenges of the same patent.

It held that there was definitely a reasonable expectation of success, and thus the invention was obvious. The Board stressed on the importance of adducing evidence in pharmaceutical patent revocation cases, and that it is not always sufficient to rest on prior arts. In this case the history of the state of the art showed that the two drugs were popular, and that the two drugs were combined serially, and that the serial administration showed advantages over single therapy, and that Brimonidine BID was not unknown and in fact except for USA Brimonidine was given BID elsewhere, and that composition of two drugs in one bottle was known, and the claimed preservative (it was optionally claimed in fact in Claim 3) was used, and so the invention was obvious. This may not be so clear in other cases.  Also, the respondent failed to show enhanced efficacy of 'Intra ocular pressure' lowering effect of the invention compared to the serial application of Brimonidine and Timolol. It was held that in view of non-compliance of S.8 and obviousness of the patent, it was not necessary for the Board to even delve into the issue of S. 3(e). 

The Board came down heavily on the patentee for non-compliance of S. 8 and reiterated the necessary aspects for fulfilment of S.8: 

• It must be pleaded and proved that the lapse was with regarding applications in respect of the same or substantially the same invention
• The documents to prove this must be filed at the earliest if they are filed belatedly , costs may be imposed.
• The law does not say that the failure to furnish the S.8 details must be deliberate and willful or that the failure must be in regard to material particulars.
• It has been introduced to facilitate examinations and therefore the patentee must be candid and fair.
• The Controller cannot deal with this ground casually. They must adhere to the law nor can they dilute it. 
• The Patentee has a statutory duty under S.8, he cannot say that the particulars are available on the website. Nor can the Examiner condone the non-disclosure by saying the details are on the website.
• It is not a penal provision and the object of the law is clear disclosure and there can be no dilution.
• Rule 12(3) is part of the statute and indicates why this provision has been introduced and reflects the sentiments of the Ayyangar Committee report.
• The article “a” in the law cannot be understood to mean only one. Once the S.8(1) detailed particulars are given, the Controller may ask for the details relating to ‘a’ country. This means any. The Controller May ask for the Rule 12(3) details regarding any application.

More interestingly, the Board remarked: 

"It is no response to say that standard must be more lax today because information is available on the internet. It is no defence to say that if the patent is valid otherwise then discretion should be exercised in the respondent‘s favour. In any event it has been brought to our knowledge that EPO has rejected the patent and it has become final. On appeal USA has also rejected the patent. So it is not as if the respondent held an infallible patent. Above all, it is clear that the respondent withheld information that ought to have been furnished under Section 8. The patent deserves to be revoked on this ground alone."

The patent was revoked. No order was made regarding costs. 

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Breaking News: GSK patents challenged: IPAB revokes one, upholds another

The IPAB recently decided upon revocation petitions of two GSK patents, applications for which were filed by Fresenius Kabi Oncology Limited, an Indian pharma company. The IPAB pronounced orders for both revocation petitions on the same day. 

The first revocation petition was filed for Patent No. IN221171 titled Quinazoline Ditosylate Salt Compounds[Patent 1], and the second one was for Patent No. IN221017 titled Bicyclic Heteroaromatic Compounds[Patent 2]. The IPAB revoked Patent 1, and dismissed the revocation petition for Patent 2. These decisions are a testament to a healthy Indian IP regime and snub US's repeated assertions that Indian IPR policies are detrimental to granting patents.

GSK disclosed Patent 2 as prior art in the complete specifications for Patent 1. Further, there were parallel revocation proceedings for Patent 2 also. The essential subject matter of the patents was Lapatinib and its compounds. These inventions were marketed as a product under the trademark TYKERB in the US and international markets, including India, and under the trademark TYVERB in Europe. 

Revocation petition of Patent 1

Contentions

The petitioner filed a revocation application on the grounds of of obviousness, S. 3(d) and, non-disclosure under S. 8 of the Patents Act, 1970. It argued that it did not require great skill to expect that the new crystalline form would have better stability. The invention was merely a result of routine testing. They submitted that the impugned invention was obvious to try with reasonable expectation of success in view of the combined teachings of the Exhibits read together. According to the petitioners Exhibit-B which was an admitted prior art, teaches the claimed compound (Lapotinib ditosylate salt) itself. Further, the use of tosylate salts has increased manifold( Sorafenib, the first CL drug in India is a tosylate salt). Thus, there existed a clear direction towards choice of tosylate.

Then, the petitioners raised an objection under S. 3(d) stating that the only improvement that invention had was that it provided superior moisture sorbing properties and enhanced stability. The two qualities were physicochemical and not related to therapeutic efficacy. Both these qualities can be expected by a person skilled in the art. Further, they argued that the respondents made no efforts to disclose the grants, rejection, abandonment of patent application in relation to the same subject matter in foreign jurisdictions, as required by law under S. 8. Thus, they were in clear violation of S. 8.

The respondents pointed out that the petitioners did not file any evidence to support their revocation petition, and on this ground alone the revocation application deserved to be dismissed. Further, the matter of selection of salts was very unpredictable and the choice cannot be made merely by trial and error. The invention was not the result of routine experimentation, there was an inventive step. In conclusion they submitted that the ditosylate salt of Lapatinib being thermodynamically more stable and less hygroscopic did not attract S. 3(d).

Also, the respondent’s defence was that it had complied with S.8, and that it had made divisional applications in respect of these patents in foreign jurisdictions. The records placed showed that the respondent submitted Form 3(details of only 3 applications) which were for the same/substantially the same invention.

IPAB decision

The IPAB held that regarding the S.3(d) bar, the respondent’s own statements and the expert’s affidavit demonstrated that this invention cannot be held to have enhanced therapeutic efficacy. Thus, the patent was revoked at the outset. 

However, the Board made pertinent observations on the issues of obviousness and S.8. Regarding obviousness, the Board held that the prior arts filed were clues sufficient enough for any person skilled in the art to arrive at these results. 

With respect to S.8, the Board indicated the principles behind the S.8 objection- how it should be raised, defended and decided. The Board observed that the petitioners did a shoddy job of making out a case of S.8. The petitioner's objection was rejected due to their failure to plead the facts and, state how the particular undisclosed application was for the same or substantially the same invention. It was not enough to just file the documents along with an affidavit. In the present case the IPAB rejected the S.8 objection only because the petitioner failed to make out the grounds of attack by stating the facts.

It came down heavily on the respondents for non-compliance of S.8. It observed that the object behind introducing S.8 was that the applicant should disclose all foreign applications so that the Indian examiner may know if it contained obviousness objections or any amendments and so on. The application outside India must be for the same invention or for substantially the same invention. Thus, the subject matter of the invention must be the same or almost the same. The IPAB has in its decisions clearly held that it is the duty of the Patentee to furnish the particulars under S.8.. A S.8 violation has severe consequences and may be a potential ground for a challenge to a patent grant. It cannot be said that the omission to comply with the requirement of Section 8 was not serious enough to affect the decision of the Controller to grant patents. The Board expressed its indignation at the Controller taking liberties to ignore and 'settle' non-compliance of S. 8 in this particular case( GSK and Asst. Controller settled that GSK will be required to submit the ‘prosecution‘ details of any one of the major Patent offices in respect of which Form 3 were to be submitted). Reiterating the Ayyangar Committee Report, the IPAB was of the opinion that if in any of the foreign offices the patentee had made a division or was required to make a division, in respect of the same or substantially the same invention or had amended or was required to amend in respect of the same invention or substantially the same invention such information regarding division or amendment would also be information required to be furnished under Section 8. 

Ultimately, the IPAB allowed the petition with costs of Rs. 50,000.

Revocation petition of Patent 2

In the second revocation petition, the application was made on similar grounds - S. 3(d), non-obviousness and S. 8. The Board upheld the respondent's pleadings with respect to S. 3(d) because the petitioners failed to show a known compound with equivalent therapeutic efficacy. With respect to obviousness, the Board after elaborate scientific examination of the prior arts concluded that the invention was non-obvious. Thus, the claimed New Chemical Entity was upheld as an invention. The IPAB expressed a similar opinion ( as in the petition discussed above) regarding S. 8 and held that violation of S. 8 was not proved by the petitioners, hence rejected this ground.

In this case, the IPAB noted that there were substantial discrepancies between the PCT application relating to this invention, and the complete specifications placed before the Board due to deletions made by the Controller, without specifying the reasons thereof. It observed that such sweeping and large scale deletions and changes when allowed must be cautiously done and not casually. 

The petition was dismissed with costs of Rs. 50,000.

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The ‘Statements of Working’ filed by Ericsson: How will it impact India’s first FRAND litigation?

As we had reported earlier on this blog, the Controller General has made available the ‘Statements of Working’ or Form 27s filed by all patentees, under S. 146 of the Patent Act, disclosing the extent to which their patents have been worked within the territory of India. The disclosures contained in these statements are useful not only for the purposes of judging the effectiveness of the patent system but also aids in the valuation of patents. 

Thanks to the manner in which the information has been put up on the website, it is possible to do a company wise search for the statements filed with the patent office. I did a search for Ericsson’s patents, hoping to come up with the Form 27s for the patents involved in the lawsuit filed by Ericsson against Micromax on March 6, 2013 before the Delhi High Court. (We’ve blogged about it over here and here) Unfortunately, I don’t have access to the patent numbers involved in the litigation, since the Delhi High Court nowadays issues ex-parte interim injunctions in patent infringement cases without even mentioning the patent numbers involved. But here is a random list of Form 27s filed by Ericsson for a few of its Indian patents. I’m presuming that at least some of these patents are involved in the litigation before the Delhi High Court.

Image from here

Two observations about these Form 27s filed by Ericsson for some of its 3G patents:

(i) Ericsson does not disclose any of the information required under S. 146, namely the extent to which the patent has been commercially worked – the standard submission by Ericsson in all these Form 27s is as follows: “The said patent is one among the plurality of patents associated with a single product or plurality of products sold and to some extent manufactured by Ericsson in India. It will be really hard to evaluate the financial value of the said patent in isolation because of the said situation. We will try and provide further information on the sales, as specific as we can at any time, if requested by the Controller”. 

Well isn’t a request for information under S. 146, specific enough for Ericsson to disclose information? What does Ericsson mean that it will provide the information only on a specific request by the Controller? What kind of company can’t value its own patents?

(ii) Ericsson’s commitment to FRAND licensing – the relevant portion of the Form 27 is as follows – “This patent is essential for a 3rd Generation Partnership Project (3GPP) standard and Ericsson is also, subject to reciprocity, committed to make its standard essential patents available through licensing on fair, reasonable and non-discriminatory (FRAND) terms.” How does Ericsson intend to FRAND licence its patents if it is really hard to evaluate the financial value of the said patent in isolation of the overall product? 

The Ericsson-Micromax litigation: As we had reported earlier, the Delhi High Court fixed an interim royalty rate at 2.5% for those Ericsson’s patents used by Micromax. Given the disclosure, or rather lack of disclosure, in the Form 27s filed by Ericsson, it is necessary to ask the Delhi High Court how it gave its stamp of approval to the 2.5% royalty rate proposed by Ericsson on the 19th of March, 2013. Also, please note that there is only a few days of difference in the filing of Form 27 and the lawsuit before the Delhi High Court. The Form 27s, without any information, were filed between the 22nd of March and the 29th of March, 2013 i.e. merely a week after Ericsson suggested the 2.5% royalty rate before the High Court. If Ericsson had enough information to suggest an interim royalty rate to the Delhi High Court, why did it not file the same information before the Patent Office? 

An interim injunction is an equitable remedy and in order to seek such a remedy it is of utmost importance that the plaintiff approaches the court with clean hands. Ericsson cannot make one statement to the Delhi High Court and another statement of the Patent Office. It is entirely possible that such conduct would be viewed as inequitable conduct, justifying the setting aside of an interim injunction. 

At the same time, the Patent Office must make it a point to fine entities like Ericsson for not filing the relevant information. Foreign companies do not have a right to enter Indian markets, sue Indian companies when they are violating Indian laws. The law provides for a Rs. 10 lakh fine for not filing complete Form 27s with the Patent Office and the Controller General must make it a point to fine Ericsson, for at least the 8 patents involved in the Micromax litigation. 

I would be surprised if Micromax has not already raised this issue before both the Delhi High Court and the Patent Office.

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Guest Post: A rejoinder from the IPKat

Continuing with our debate, between Darren Smyth of IPKat fame and Siva Thambisetty, on the merits of the Supreme Court's decision in the Novartis case, we have for our readers a rejoinder from Darren in response to Siva's last post on this issue.

The two previous posts on this issue can be accessed over here and here. 

A Rejoinder from the IPKat, 

by Darren Smyth 

I was very interested to read the thoughts of Siva Thambisetty. However, with the greatest of respect I think that she is also committing a category error, this time in relation to enablement. 

What a patent must enable is the invention. It most emphatically does not have to enable every possible infringement. The invention of the Zimmermann patent is (for the present purposes) Imatinib. Not the particular salts. It is imatinib which must be and was enabled. 

Consider two possible salts of imatinib (leaving aside for the time being, for the purposes of clarity of argument, the mesylate). One is the hydrochloride salt which was explicitly disclosed in Zimmermann. The other is a salt of a new acid, which I shall call thaumatic acid, because of its miraculous properties. This is not disclosed in Zimmermann. Nor in fact in any document until I came along and invented it just now. It is completely clear to me that both imatinib hydrochloride and imatinib thaumatate infringe the Zimmermann patent. In the infringement analysis, it does not matter what inventive extra features are added, the infringement test is the same. Whether the infringed patent “enables” those extra features is intrinsically irrelevant. 

I would actually put the position more boldly if pushed. The Zimmermann patent claims ended “or a pharmaceutically acceptable salt thereof”. If they had not so ended, so that the relevant claim effectively simply recited “Imatinib”, I consider that Novartis would have been quite correct to argue that it was infringed by imatinib mesylate (and imatinib hydrochloride and imatinib thaumatate). The invention, imatinib, would have been reproduced in the infringement, so why should it not be considered to infringe? But then there would have been no question of the Zimmermann patent “disclosing” the salt, because it would not have done so. 

Siva Thambisetty then refers to, and rather appears to endorse, yet another category error by the Supreme Court, this time in relation to “elastic” claims. Paragraphs 140 to 157 of the Supreme Court judgment take a passage from Terrell which is about interpreting a term in the claim one way for infringement and another way for validity, and then wrongly use this to say that the coverage (scope in relation to infringement) and the disclosure of a patent are the same. The point that Terrell is making is a quite different one – it is not permissible to construe a term (such as in the present case “salt”) one way for validity and another for infringement. But Novartis construed “salt” in relation to the Zimmerman patent at all times in only one way – to mean “salt”, no more and no less. Again by carelessly mixing up concepts (each of which is perfectly valid in itself) fundamental errors are committed. Incidentally, a much more vivid illustration of the “elastic” claim concept is the “Angora Cat” analogy. But this has nothing to do with the case before the Supreme Court. 

At the risk of alienating any sympathy that I may still have in the hearts of your readers, I really don’t accept that the problem is that “Patent lawyers live in a bizarre world where we are used to inverted categories of thought that makes little sense to external observers. Other lawyers, even other IP lawyers, often struggle to understand the pretzel shaped law that we have come to take for granted here. So we find ourselves in a position where patent law institutions huddle together seeking content-free legitimacy in mere uniformity.” I do not consider that the precepts of patent law are intrinsically any more arcane than other fields of law such as tort or contract. The problem is that generalist lawyers have not spent anywhere near as much time and effort grappling with patent law as they have with the other fields of law that they have come to feel familiarity with. So naturally they find it confusing, as no doubt they found the concept of estoppel when they first encountered it. But then they blame the law, not their own lack of understanding.

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Guest Post: A response to the IPKat's "despair" by Siva Thambisetty

Image from here

It appears that Darren's guest post has got the ball rolling with not only a healthy debate in the comments section to his post but also in the form of this guest post in response by Siva Thambisetty. Siva is an alumna of the National Law School of India University (NLSIU) and the University of Oxford. She is currently a lecturer in law at the London School of Economics (LSE), where she teaches and writes on patent law, innovation and legal institutions. She contributes to India@LSE. Follow her on @sivathambisetty  

Novartis vs UOI: Against Elastic claims

& why Specialisation May Still be for Insects

By

Siva Thambisetty

I was really stimulated by Darren Smyth’s post on the Indian Supreme Court’s decision on Novartis, since I also wrestled with this part of the court’s logic but resolved it very differently. I have also read the same author’s expressive post on IPKAT. The primary claim in both blog posts is that the Novartis decision conflates infringement, with disclosure that anticipates novelty. It’s a complex and important decision and here is how I see it at the moment:

The comparison the court is in effect making is not between infringement and anticipatory disclosure, but between sufficiency of disclosure and anticipatory disclosures both of which have to be enabling. If there is a failing in logic it is that they do not make more of ‘sufficiency’ when analyzing the significance of claim construction in the infringement action for anticipatory disclosure.

I quote from the decision: “Under the scheme of patent, a monopoly is granted to a private individual in exchange of the invention being made public so that, at the end of the patent term, the invention may belong to the people at large who may be benefited by it.”

The phrase ‘made public’ tells us that the court is implicitly relying on Novartis’ claims in UK courts to assume that they had sufficiently disclosed Imatinib Mesylate, which therefore amounts to an enabling disclosure that anticipates a future patent application. In terms of evolving jurisprudence, the UK has taken care to whittle down the breadth of claims using sufficiency as a principle; and courts here would hardly countenance effectively using two standards of disclosure – one for sufficiency and one for novelty.  It is precisely to avoid such situations that infringement and validity are addressed together in UK courts.

The present invention is fairly straightforward – it is not a complicated genus of compounds that may be claimed on broad functional terms, that could give rise to confusion about what exactly is claimed and covered. In other words there may be cases where a patent specification is not required to enable an invention that arose after the date of filing of the application, but these are rare cases, and coverage may yet be constrained by the limited application of purposive construction in the UK.

Novartis did not do themselves any favors by using US precedent in Hogan – a case that explicitly approved ‘broad claims’ and implicitly, Kitch’s prospect theory  (where early and broad disclosures are thought to stimulate innovation (see the Adams paper). Citation of Hogan was a poor choice given that its impact was virtually eliminated in subsequent cases. “Notably Since Chiron, the Federal Circuit has not referred to Hogan in any of its cases that involved claims to a genus where only a single species was enabled.” [Chiron Corp. v. Genentech, Inc F.3d 1247, 1257 (Fed. Cir. 2004)]

The point about not extending this logic to the beta crystalline form, I suggest is because the court is not at that stage in a position to judge whether the beta crystalline form incorporates an ‘additional advantage or technical effect’ and is therefore not sufficiently disclosed, by an application that discloses Imatinib Mesylate. (The court may have taken the position that the beta crystalline form is implicitly disclosed I agree, based on common general knowledge of polymorphs). To equate disclosure of Imatinib Mesylate with anticipation of the beta crystalline form would be to assume that there is no significant difference between the two forms – the very matter the court had set out to decide in the first place.

Finally, I agree that a patent application can under some circumstances be infringed by something not disclosed in the claims. I do not agree however, that you can effectively use two standards of disclosure – one for sufficiency, and a different one for novelty. And I suggest it is this that is at the heart of the ‘fallacy’ that Darren is trying to point out.

I would urge those following Darren’s posts to read in particular paragraphs 140-157 of the decision. The court is at great pains to show that they are not willing to countenance ‘elastic’ claims which has a narrow meaning in the case of validity but a wide meaning in infringement (quoting from Terrell no less). Also see Charles Adams ‘Allocating Patent Rights Between Earlier and Later Inventions’ which explains why use of Hogan under the circumstances was so obviously poor legal strategy on the part of Novartis.

I have a related comment to make on the IPKAT’s despair at senior non-specialist courts, in this case the Indian Supreme Court. Patent lawyers live in a bizarre world where we are used to inverted categories of thought that makes little sense to external observers. Other lawyers, even other IP lawyers, often struggle to understand the pretzel shaped law that we have come to take for granted here. So we find ourselves in a position where patent law institutions huddle together seeking content-free legitimacy in mere uniformity. Mimicking related jurisdictions has in itself become a test of legitimacy.

This is where generalist appellate courts can make a difference as they are not as severely subject to the categories of thought we have been socialized to accept. Take the European Court of Justices decision in Monsanto vs Cefetrafor instance – relying on Art 9 of the biotechnology directive to reject infringement and restrict the scope of the gene patent to only those cases where the gene is actually expressed – is extraordinary when compared to the sort of strict liability we are used to in the case of chemical products, but perfectly legitimate from a purposive interpretation point of view. Likewise, the Indian Supreme Court’s approach with respect to parity between what is claimed and what has been disclosed is well supported by material cited.

This is not to say that there aren’t troubling aspects of the decision. I find the lack of categorical clarity about patent eligibility and patentability, worrying. (S 3 of the Indian Patents Act in its entirety makes me long for the relative simpliclity of S 1(2) of the UK patents act in comparison!). The difference between eligibility and patentability is the difference between justifying property rights in the first place and explaining why a particular subject matter should be denied patent protection (on grounds of not being inventive or being inadequately disclosed, for instance). The former is a vehicle for substantive reasoning, the latter for the instrumental rationality of the person skilled in the art. The framing problem with S 3(d) is that it draws the person skilled in the art into the question ‘what is an invention?’. This collapse bears the hallmarks of the disastrous ‘technical contribution’ test in the context of computer-implemented inventions in Europe the perils of which are at least partly explained in Aerotel.

I am working on a longer piece on these and other issues and look forward to further discussion. I also contribute to India@LSE - see here and here for other directly relevant posts from LSE’s India pages.  

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Guest Post: The IPKat's "despair" with the Supreme Court's judgement in the Novartis-Glivec case

Last week, I read this highly critical post by Darren Smyth, on the fantastic IPKat blog, where he takes apart  some of the analysis in the Supreme Court's judgement denying Novartis a patent for Glivec. Darren's analysis had very accurately identified a significant flaw in the judgement and let's just say that he doesn't mince his words when he takes to the pen or the keyboard. Since we have had almost no critical commentary on the judgement so far, I invited him to write us a guest post on the issue. 

I do hope, some of our other readers send in such guest posts, there are a lot of problematic portions in the Novartis judgement of the Supreme Court and I understand that not many in India want to be seen criticizing the judgement but honest academic criticism never really hurt anybody. 

First a little bio about Darren: Darren Smyth is a UK and European patent attorney, specialising in chemical subject matter, particularly in the fields of food products and pharmaceuticals. He is a partner in the intellectual property law firm EIP and head of the chemistry practice EIP Elements. He contributes to the IPKat weblog, and also maintains a personal blog the IP Alchemist (www.ipalchemist.com). He holds an MA in Chemistry and DPhil from Oxford University, and conducted research at the Tokyo Institute of Technology before entering the patent profession.

More on concerns about Glivec

by Darren Smyth

Darren Smyth

Last week, I posted on the IPKat a piece that identified significant deficiencies in the decision of the Indian Supreme Court in the Glivec case.  At the kind request of the Spicy IP team, I would now like to amplify that post.  In particular, the IPKat post was directed towards a readership that would (I believed) immediately appreciate wherein lies the error in reasoning, once it was pointed out.  But perhaps the fallacy in the logic requires greater exposition.

I cannot emphasise enough that I am NOT talking about the part of the decision that refers to Section 3(d).  Nor am I particularly criticising the outcome of the decision – the refusal of the patent application – I don’t agree with it, but neither do I consider it particularly heinous.  The novelty analysis is however a dreadful piece of jurisprudence, and should not be allowed to escape criticism merely because it lies in an early part of the analysis.

What the Supreme Court did was to confuse the examination of whether a patent is infringed with the examination of what that patent, as a document, discloses.

To determine whether a patent is infringed, the comparison that is conducted is whether the alleged infringement reproduces all of the features of the claims (specifically, of the broadest independent claim).  If those features are reproduced in the alleged infringement, then it infringes.  But it is important to appreciate that this applies irrespective of what additional features the infringement may have.

So if the claim is to “imatinib or salt thereof”, then this is infringed by imatinib, or any salt (including the mesylate), in any physical form such as amorphous or crystalline, in combination with any other pharmaceutical, or any excipient, in any dosage form or packaging or whatever.

On the other hand, to determine whether the same patent document as a prior art document anticipates a later patent application, the comparison is of the claimsof the later application with the disclosure of the prior document.  If the prior document discloses all of the features of the claims of the later application, then the later application lacks novelty.

It requires a little careful thought, but it is not difficult to see from the foregoing that a patent can be infringed by something that it does not disclose.  For example, the earlier patent that claims “imatinib or salt thereof” would be infringed by a combination pill containing imatinib with another pharmaceutical, even if it had no disclosure of any such combination.  But if it had no such disclosure, it would not anticipate a later patent application with claims directed towards the combination of imatinib and another specific pharmaceutical.  (I am not necessarily saying that such a combination would be patentable – it might not involve an inventive step, or it may not be allowable under Section 3(e) of the Indian Patents Act, but it would be new).

This distinction comes from the logic of what is being compared with what:  the features of the infringement with the claims of the prior patent in the first case, and the claims of the later patent application with the disclosure of the prior patent in the second case.  It does not rely on any particular national law regarding novelty or patentability and is therefore, I suggest, universal.

But what the Indian Supreme Court did was to say [see paras 125 - 126 of the judgment; Novartis counter-arguments at 134-138, and their dismissal at 139 - 157] that because Novartis had alleged, in relation to the UK designation of the corresponding European patent, that their prior patent was infringed by imatinib mesylate (by the marketing in the UK by NATCO Pharma of a drug called VEENAT 100 containing imatinib mesylate as the active ingredient), therefore that patent disclosed imatinib mesylate.  The Supreme Court thereby committed a basic category error of the variety frequently encountered in first year trainee patent attorneys.  (The criticisms in the judgment of Novartis in relation to referring to the patent in the application for US regulatory approval for imatinib mesylate, and obtaining a US patent term extension for the patent [see paras 115-122 of the judgment], commit the same category error so for simplicity I shall refer only to the infringement one). 

I shall reproduce again one paragraph [156] of the judgment:

“However, …. , we would like to say that in this country the law of patent, after the introduction of product patent for all kinds of substances in the patent regime, is in its infancy. We certainly do not wish the law of patent in this country to develop on lines where there may be a vast gap between the coverage and the disclosure under the patent; where the scope of the patent is determined not on the intrinsic worth of the invention but by the artful drafting of its claims by skilful lawyers, and where patents are traded as a commodity not for production and marketing of the patented products but to search for someone who may be sued for infringement of the patent.”

I suspect that some readers may take issue with my analysis and say “Just because the law of other countries distinguishes between the scope of a patent for the purposes of infringement and its disclosure for the purposes of prior art, it does not follow that Indian law must do so.”  This is the view reflected in the quoted paragraph above.  But it is not a question of any particular legal theory, it is a matter of logic.  It is actually not logically possible to conflate infringement and disclosure, because the comparison being made in each case is not the same.  Put another way, the advancement of knowledge is always made within earlier generic knowledge, so if this view were taken of novelty, then nothing would ever be new.

And actually the Indian Supreme Court implicitly recognised the error of their logic, because they only applied it halfway.  They found the mesylate to lack novelty because it infringed the earlier patent, but they balked at the logical next step, of finding that the beta crystalline form, which would certainly also infringe the patent, also lacking in novelty.  The Supreme Court took the beta crystalline form to be new [158].  If the conflation of infringement and disclosure tests is valid, then in fact not only the mesylate but also any specific crystalline form should lack novelty.  The fact that this did not happen shows that the Supreme Court actually in some manner realised the flaw in the logic.

Why does it matter?  Well, first of all it is essential that courts, particularly senior courts, apply the basic law correctly, because otherwise their utterances lack credibility.  Secondly, it is particularly important that novelty be correctly determined, because it is to the new subject matter that any subsequent patentability test (inventive step, Section 3(d) etc.) is applied.  So if the novelty foundation is defective, then the whole edifice of the judgment is liable to crumble.  The Supreme Court, based on this flawed novelty argument, insisted [171] that the comparison for Section 3(d) was between the amorphous (non-crystalline) and beta crystalline forms of imatinib mesylate, rather than, as Novartis probably correctly argued, the beta crystalline form of imatinib mesylate and the free base form imatinib.  If the novelty assessment had been conducted properly, perhaps the result would have been quite different.

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The Ericsson-Micromax patent litigation: Where is India’s first FRAND litigation headed?

As our readers may be aware, Ericsson sued Micromax Informatics Ltd. and Mercury Electronics Ltd., a few months ago for allegedly infringing 8 of its telecom patents for a range of wireless technologies, including 3G, AMR and Edge. The Delhi High Court had granted an ex-parte interim injunction on the very first day even before Micromax could receive a legal notice that it had been sued. That order can be accessed over here.

Shouvik had blogged about it over here and I had written an op-ed for the Business Standard over here. My piece focussed mainly on two aspects of the case: the fact that the court had granted an ex-parte interim injunction without hearing Micromax’s defence and that the Court also issued order authorizing the seizure of documents from Micromax’s office regarding the sales and import of the mobile phones in question. (I’m not sure whether this aspect of the order was in fact executed.) I had argued that the Delhi High Court was wrong on both counts and I will not reproduce the reasoning once again in this article.

My apologies for the cheesy caption in the picture above.

Shortly thereafter, within 6 days, Micromaxfiled an appeal before a Division Bench of the Delhi High Court and the same was dismissed by the Bench the very same day with liberty to file a fresh appeal if the Single Judge did not hear Micromax’s defence within 30 days as required by the CPC. By the 19^th of March, 2013 Micromax and Ericsson approached the Single Judge informing him that they had entered into an interim arrangement pending final disposal of the lawsuit. The royalty rates for the technologies in question varied from 1.25% to 2% of the sale price. The matter was then referred for meditation and Justice A.P. Shah (Retd.) was appointed as a mediator for proceedings where both parties were to make an endeavour to arrive a consensus royalty figure. On the date of the last hearing the matter was adjourned on joint request by both parties and posted for directions on 24^thof May, 2013.

If history is any indication, there is no way in hell Ericsson-Micromax are ever going to reach an agreement on the royalty rates for all 8 patents. Going by the literature available on such disputes, even the interim royalty rates which hover between 1.25% to 2% are incredibly high in terms of overall costs for Micromax. The reason for this being the phenomenon of ‘royalty stacking’ in technologies like smart phones. It has been estimated that your average smart phone covers around 250,000 patents and if each patent was going to be licenced at 2% the net sale price, the product could very soon be unprofitable for Micromax. It is quite clear that if Ericsson succeeds in this litigation, Micromax will be sued by every other owner of an essential patent and we will have a classic case of ‘royalty stacking’. There is an excellent paper on this problem of royalty stacking by Carl Shapiro and Mark Lemley and can be accessed over here. It is a fantastic paper, published in 2006 and quite accurately predicted the wave of litigation that would hit the smart phone industry.

In the U.S. there has been considerable litigation on the ‘essential patent’, which are required to be licensed on FRAND terms – ‘Fair, reasonable and non-discriminatory’ terms (FRAND). ‘Essential patents’ are basically declared as standards for the entire industry by standard-setting organizations on the premise that they will be licensed on fair, reasonable and non-discriminatory terms to anybody ready to seek such a licence. Such an arrangement is a trade-off for the patentee because while it ensures that its patents are used by the entire industry, it will have to adhere to fair and reasonable terms and not be too gung-ho about its monopoly rights. Except, as we’ve discovered over the last few years, it is quite difficult for parties to agree on FRAND terms and the result is massive litigation, both from the perspective of patent law and competition law. You can read more about this litigation on the Patently O blog.

The first and only decision of a court actually fixing royalties for FRAND patents was delivered by a U.S. District Court, on April 29^th, 2013, in the context of the litigation between Motorola and Microsoft. Patently O has some interesting posts on this judgment. Sai Vinod will be writing on this judgment soon but let me just give you a brief summary of the conclusion. Motorola was demanding around 2.25% which translated to between $3 to $5.13 per unit. These rates were deemed to be too high by the judge because of the royalty stacking problem and the final rate for the different technologies was fixed considerably lower than Motorola’s initial offer. For the wireless networking patents involved, the FRAND rate was fixed between 0.8 cents to 19.5 cents. Similarly in the E.U. the competition regulator has recently on the 6^th of May, 2013, come to a preliminary finding that Motorola has abused competition laws by not agreeing to licence its ‘essential patents’ to Apple on reasonable and fair terms. The initial finding may lead to a massive fine against Motorola. The NYT story on this finding can be accessed over here.

At a time when the entire world is moving to sophisticated solutions for complex legal problems, we have the Delhi High Court granting an ex-parte interim injunction, which does not even refer to the patent numbers which the defendants are not supposed to be infringing. I’m serious! If you read the first day order passed by the Delhi High Court, you will notice that the order has not even mentioned the patent numbers which are the subject of the injunction order.

The Indian dispute also displays how Indian companies are remarkably lax with regard to their legal strategy. Micromax has been outmanoeuvred at every stage of this litigation by Ericsson. As if it was not bad enough being restrained without a hearing, Micromax also lost the appeal. In its appeal Micromax raised two main points: (i) That the Single Judge had not given reasons for the prima facie finding of patent infringement & (ii) That there is no presumption of validity of patent in India. Both points were good and the Division Bench has done a miserable job of evaluating them on merits but it is strange that Micromax did not make the most obvious argument and that is the lack of ‘urgency’, which is an essential pre-requisite for the grant of an ex-parte order. Why was this point not urged before the appellate court? As we have mentioned earlier on this blog, the Supreme Court has urged lower courts to be careful while granting ex-parte interim injunctions and to insist on a bond or surety from the plaintiff in cases where such ex-parte orders were being granted.

This leads us to the next question of why Micromax has not taken up this case in appeal before the Supreme Court of India. It would have been the perfect case to have the Supreme Court examine the issue of both ex-parte interim injunctions and the random ‘search & seizure’ Anton Piller orders granted by the Delhi High Court on a regular basis.

What can we expect from Micromax in the near future?  

Given that Micromax has not agitated its right to have its application for the vacation of the interim injunction decided within the statutory 30 days period, I can only presume that it is following one of the following strategies:

(i) It is actually hoping to strike an amicable deal with Ericsson on the royalties for the 8 standard-essential patents; or

(ii) It is more likely that Micromax is preparing to file 8 revocation petitions before the IPAB and/or the High Court seeking revocation of the patents in question. In all likelihood once these revocation petitions are filed, Micromax will call off the negotiations before the mediator and sue for the setting aside of the ex-parte interim injunction. Once the revocation petitions are filed, Micromax will have a much stronger bargaining position for vacation of the ex-parte interim injunction and for negotiating a more reasonable royalty rate with Ericsson. Given the fact that forums like IPAB have almost never upheld the validity of a patent, it is very likely that Ericsson could just lose all 8 patents. We have seen it happen before with other European companies. Enercon GmBH has had almost 14 patents revoked by the IPAB and another 9 are pending challenge.

It would be even more interesting, to see Micromax turn the tables on Ericsson by suing before the Competition Commission of India (CCI). It could be an action similar to one initiated in Europe against Motorola and it is possible that the CCI will reach the same conclusion as its European counterpart.

Indian companies like Micromax however lack a culture of strategic litigation and it is unlikely they will take the extra-effort to counter-attack Ericsson in a bid to pre-empt future action by other patentees. 

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The patent litigation bug bites Indian pharma companies: Symed sues Glenmark

Image from here

In a sign of yet more litigation between Indian pharmaceutical companies, the Hyderabad based Symed Labs Ltd., represented by Fidus Law Chambers has sued the Mumbai based Glenmark Pharmaceuticals Laboratories before the Delhi High Court for allegedly infringing two of its patents: 213062 & 213063. The ‘062 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”. 

Incidentally, both these patents were also the subject of two different patent infringement lawsuits filed by Symed against Optimus Pharma Pvt. Ltd on July 3, 2012 and against Sharon Bio-Medicine on July, 13, 2012. The Delhi High Court had granted interim injunctions in both cases restraining Optimus Pharma Pvt. Ltd. and Sharon Medicine from infringing the patents in question. Rajiv had written a detailed post on the Optimus lawsuit over here and I recommend reading it. 

In the present case, Glenmark had already filed caveats before the Delhi High Court in anticipation of the lawsuit and was thus present before the Court on the first day of hearing, pre-empting any interim injunction orders. Justice Rajiv Sahai Endlaw, declined to grant an ex-parte interim injunction and has posted the matter for further hearing on May 29th, 2012 after Glenmark has filed its replies to Symed’s application. 

From a reading of the order available over here, Symed has claimed to have found certain compounds in Glenmark’s product which indicate that it has used Symed’s patented process. Glenmark for its part has accused Symed of not informing the court that it was aware of Glenmark manufacturing linezolid since 2005 and that Glenmark was also purchasing the linezolid from Symed as late as 18th April, 2012. 

In this backdrop, it is interesting to note, that both Symed and Glenmark have been magnets for patent litigation in the recent past. Apart from the suit filed by Symed against Optimus and Sharon Biosciences in 2012, Symed was itself sued, in 2011, for patent infringement by Vifor International, a European company, for infringement of patent no. 221536, which was granted for “Water soluble iron carbohydrate complex and a process for producing water soluble iron carbohydrate complex”. At the time Symed had been at the receiving end of an ex-parte interim injunction from the Delhi High Court and we had blogged about the same over here. As for Glenmark, it has been at the receiving end of a patent infringement lawsuit filed by Merck for the infringement of its patents covering Januvia. Madhulika had written a post covering the case against Glenmark over here. 

Apart from these lawsuits, there was also the patent litigation between two other Indian pharmaceutical companies, Issar Pharmaceuticals and Ind-Swift, which we had blogged about over here. The increasing patent litigation between Indian pharmaceutical companies, is a sign of increasing competition between pharmaceutical companies and surprisingly it is the smaller companies which are more aggressive in suing for patent infringement. 

All in all, it’s a good time to be a patent lawyer in India.

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The salt form jinx:Delhi HC denies interim relief to Merck

The Delhi HC (Justice Rajiv Sahai Endlaw) refused to grant interim relief to Merck (plaintiff) seeking to restrain Glenmark (defendant) from launching its products Zita and Zita met. We had blogged about it here and here. The High court however kept the main petition of the US firm pending for evidence filing and other legal proceedings on July 16.The order passed on Friday can be accessed here.Following is summary of arguments presented by either side. (Long post warning!) 

Image from here

On the issue of separate patents for Sitagliptin and salt form of Sitagliptin: 

Glenmark’s arguments:

Senior counsel for the defendant alleged that plaintiffs are guilty of suppression and had failed to disclose that the patent application (probably referring to the 5948/DELNP/2005) for the product for which injunction was sought was not only declined and also abandoned. 

Glenmark’s counsel elaborated that its product comprises of three parts “S”, “PD” and “DC” (possibly referring to Sitagliptin, dihydrogenphosphate salt and crystalline form), and that Merck has separate patents for each of these parts in USA. Glenmark’s counsel further detailed that Merck holds the patent in India only for the first part and separate patents for the other two parts i.e. phosphate salt and crystalline form were denied and affirmatively abandoned. 

Glenmark’s counsel also argued that Merck in its patent application (5948/DELNP/2005) had described that the combination of S and PD i.e. (Sitagliptin and phosphate salt) as a new discovery not covered by existing Sitagliptin patent. In light of this Merck cannot allege that defendants combination of “Sitagliptin and phosphate salt” infringes Merck’s patent. Glenmark also stated that “plaintiffs patent is for Sitagliptin Hydrochloride only and not for Sitagliptin Phosphate.” Placing reliance on Paras 139 and 156 of the Supreme Court Novartis judgement, it was contended that “coverage in a patent cannot be permitted to go much beyond the disclosure made by the patentee” 

It was also argued that if Sitagliptin phosphate and Sitagliptin weren’t distinct products, then Merck wouldn’t have applied for separate patents for each of those in US and India. 

Merck’s arguments:

It was argued that Sitagliptin was the invention and Sitagliptin phosphate was merely a derivative and therefore wasn't eligible for patent protection under Section 3(d).The separate patent application for Sitagliptin phosphate filed by Merck was due to some misconception, which is why they affirmatively abandoned the same. It was also stated that, separate patent for Sitagliptin phosphate was applied for since the US has no Section 3(d) equivalent patent law. 

On the issue of Infringement 

Glenmark’s arguments:

Analogy was drawn to the Roche vs. Cipla (2012) judgement in which the plaintiff sought to injunct the product version for which the patent application was rejected. On the basis of Roche vs. Cipla judgement it was argued that when the role of the variant (in this particular case Sitagliptin phosphate) outweighs the patented claim (Sitagliptin only), there can be no infringement. Shamnad’s posts on Roche vs. Cipla judgement are available here and here. 

Merck’s arguments:

Merck’s counsel argued that the package insert information reveals that the pharmaceutical composition of plaintiff’s product is similar to composition of Glenmark’s product Zita and hence the infringement is obvious. Merck’s counsels also emphasized that “there is no price difference in the product of the plaintiffs and defendant” to allay the influence of Novartis supreme court decision. 

On the presence of other infringers in the market 

Glenmark’s arguments:

Glenmark’s counsel also stated that since there are other (about 8-10) infringers in the market selling the same product for which injunction is sought, the ingredients of irreparable injury and balance of convenience are not in favour of the plaintiffs. 

It was also argued that grant of patent does not automatically create any presumptive validity (section 10 and 13(4) of Indian patent act) and since there are others in the market using the same formulation for which injunction was sought “there was no new invention.” 

Merck’s arguments:

The response of the plaintiff to the plea of the defendant that at least 9 to 10 other persons were also marketing Sitagliptin Phosphate was that instructions on that aspect will have to be taken once duly supported documents were handed over. 

DECISION :Observations of the Court 

Whether Glenmark’s product using a combination of Sitagliptin with its phosphate salt will have a material effect upon the working of Sitagliptin per se? 

The learned judge agreed that Merck’s granted patent includes within its ambit “pharmaceutically acceptable salt of Sitagliptin” which may of course include Sitagliptin phosphate (Glenmark’s product). 

The judge also reasoned that plaintiff should have shown that, defendant’s product inspite of combining phosphate salt with plaintiff’s patented Sitagliptin remained equivalent to Sitagliptin and that the role of phosphate was inconsequential in treatment of the disease. 

The judge also noted that Merck has had made a separate patent application for Phosphate salt form of Sitagliptin, considering it to be a new invention worthy of a separate patent. Plaintiff (Merck) has not satisfactorily pleaded the circumstances for obtaining a separate patent application. 

Justice Endlaw also elaborated that the defendant had also pointed out that there were at least 9-10 infringers marketing Sitagliptin phosphate. “Though, ordinarily infringement by others does not constitute a ground for denial of the relief of injunction against an infringer but it can be a consideration in the grant of interim injunction.” 

“I therefore do not find the plaintiffs to have made out a case for grant of interim relief” 

Conclusion: 

I may be oversimplifying things here, but claim 15 of Merck’s granted patent on Sitagliptin IN209816 clearly states “The compound as claimed in claim 1 (referring to markush structure of gliptins) selected from the group consisting of <structure of sitagliptin> or a pharmaceutically acceptable salt thereof.” 

Also the specification of the patent defines salt forms as “When the compound of the present invention is basic, salts may be prepared from pharmaceutical acceptable non-toxic acids, including inorganic and organic acids. Such acids include acetic, benzenesulfonic, benzoic, camphorsuifonic, citric, clhanesulfonic, fumaric, gluconic, glutamic, hydrobromic, hydrochloric, isclhionic, lactic, maleic, malic, mandclic, methanesulfonic, mucic, nitric, pamoic, pantothenic, phosphoric, succinic, sulfuric, tartaric, p-toluenesulfonic acid, and the like. Particularly preferred are citric, hydrobromic, hydrochloric, maleic, phosphoric, sulfuric, fumaric, and tartaric acids.” 

So,wouldn’t it be reasonable to conclude that anyone who markets the disclosed salt forms of Sitagliptin infringes the patent claims? So how does it matter that Merck tried and failed to patent the salt form separately in another patent in India. Hope our readers can help me out here!

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Deconstructing the judgment of the Supreme Court in the Novartis-Glivec patent case

As promised in our last post, here is a more detailed analysis of the Supreme Court’s judgement in the Novartis case rejecting the patent application for the beta-crystalline form of imatinib mesylate (known as Glivec – “claimed invention”). 

But first, here are some links to the coverage of the case by some of the top blogs in the U.S. and the U.K.: Patently O which featured two posts, one by Professor Dennis Crouch and the second post on the same blog by Prof. Srividya Raghavan. Here’s a link to the post on IPKat by Stefano Barazza. The Indian Express and DNA published op-eds by Shamnad. A number of other newspapers published an op-ed by Mr. Anand Grover, who appeared as the Senior Counsel for the Cancer Patient Aid Association in this case. Finally, here is an editorial of the New York Times on the judgment and its verdict. The NYT, rightly classifies the judgement as a 'limited precedent'.

I have covered the basic timeline of the case in my earlier post over here and in the interests of brevity, I’ll jump directly to the main points in contention. 

(i) What was the invention in question?

There appears to be confusion in some quarters, as to the exact invention in question. Just to clarify, the patent specification in question, can be accessed over here (Sai had put it up some months ago) and Claim 1 on page 23 of the specification informs us that subject of the invention was only the beta-crystalline form of imatinib mesylate. 

The subject of the invention was therefore only the beta-crystalline form of imatnib mesylate and not imatinib mesylate itself. 

(ii) Was the claimed invention found to be anticipated or lacking in novelty? 

A claimed invention is said to be ‘anticipated’, or lacking in novelty, in patent law when the entire invention is disclosed, as is, in a single piece of prior art. The policy reason for this is simple: patents are granted for something new and if the claimed invention has already been described there is no reason to give it a patent. Section 64(1)(e) of the Patent Act allows for a patent to be revoked in case it was anticipated by a piece of prior art. 

In the present case, the sequence of events with crucial prior art was as follows: 

(i) The Zimmerman patent in ’93, which disclosed the imatinib free base – this patent was not granted in India because India did not provide for pharmaceutical patents prior to 1995; 

(ii) A publication in 1996, which referenced imatinib mesylate; 

(iii) The 1998 patent application before the Indian Patent Office which claimed the beta-crystalline form of imatinib mesylate. 

For a finding of ‘anticipation’, the Court would have to be provided with evidence that the ‘beta-crystalline’ form of imatinib mesylate had already been in use in India or published in single document, anywhere in the world. 

The Supreme Court however does not find any evidence that the beta-crystalline form of imatinib mesylate is anticipated. In fact in para 158, it states “This leaves us with the beta crystal form of Imatinib Mesylate, which, for the sake of argument, may be accepted to be new, in the sense that it is not known from the Zimmermann patent.” 

The Court however spend a significant portion of the judgement explaining that imatinib mesylate is anticipated. This analysis was a necessary precursor to the Section 3(d) analysis because the provision requires the beta-crystalline form of imatinib mesylate to be compared with a “known substance” from which it is derived. 

Novartis had tried to argue that the beta-crystalline form of imatinib mesylate should be compared with imatinib. However, the generics wanted the comparison to be with imatinib mesylate, since that would make it more difficult for Novartis to prove a significant increase in efficacy. 

In order to establish this argument, the generics had to first establish that imatinib mesylate was “known” in the period intervening the ’93 Zimmerman patent for imatinib and the beta-crystalline form of imatinib mesylate. 

There Court accepted the argument that there was significant prior art, including a judgement from the U.S. Board of Patent Appeals, which reportedly held that imatinib mesylate was directly anticipated from the ’93 patent. 

The court thus came to the conclusion that at least imatinib mesylate was anticipated by the prior art documents. 

(iii) Section 3(d) Analysis: The court then moves to evaluate the patentability of the beta-crystalline form of “imatinib mesylate” as per the requirements of Section 3(d). 

(a) Does Section 3(d) even apply? 

The first argument put forth by Novartis, was that Section 3(d) would not even apply, since it required a comparison of the claimed invention with a ‘known substance’ having known ‘efficacy’ and that neither imatinib nor imatinib mesylate had any known efficacy. 

The Supreme Court dismissed this argument on the following grounds: 

(i) That the Zimmerman patent of 1993, had identified the tumour treating potential of the imatinib free base and its derivatives, such as imatinib mesylate. 

(ii) That prior art documents like the article published in Cancer Research clearly identified the in-vivo experiments carried out with imatinib mesylate. 

(b) What is the “known substance” for the purpose of Section 3(d)? 

As explained above, Section 3(d) requires the claimed invention to be more efficacious than the ‘known substance’ from which the claimed invention was derived. 

In this case, Novartis was keen to have the imatinib free base identified as the ‘known substance’ instead of imatinib mesylate since it would be easier to prove greater efficacy vis-à-vis the imatinib free base. In support of such an argument, Novartis tried to reason that the beta crystalline form of imatinib mesylate was derived directly from imatinib and not imatinib mesylate. 

The following is the relevant extract from para 170 of the judgment: 

“The whole case of the appellant, as made out in the subject application and the affidavits, is that the subject product, the beta crystalline form of Imatinib Mesylate, is derived from Imatinib, and that the substance immediately preceding the beta crystalline form is not Imatinib Mesylate but Imatinib in free base form. This position is sought to be canvassed in the subject application and the affidavits on the premise that the Zimmermann patent ended at Imatinib in free base and did not go beyond to Imatinib Mesylate.” 

The Supreme Court shot down this argument on the following grounds: 

(i) That imatinib mesylate was anticipated by prior art as already discussed above and that it existed before the claimed invention and was hence a known substance; 

(ii) That Novartis had allegedly described imatinib mesylate as a necessary step to produce the beta crystalline form of the drug from imatinib. Following is the relevant extract from para 170: 

“Not only is this premise unfounded as shown earlier, but the appellant itself appears to take a somewhat different stand, as before this Court it was contended that the subject product, in terms of invention, is two stages removed from Imatinib in free base, and the substance immediately preceding the subject product is Imatinib Mesylate (non-crystalline).” 

Therefore for the purposes of this case, imatinib mesylate was presumed to be the known substance. The court then proceeds to define the scope of efficacy, for the purpose of comparing the known substance with the claimed invention. 

(c) What is the meaning of “efficacy” in Section 3(d)? 

The most important limb of the judgement is the interpretation of ‘efficacy’ in Section 3(d). While the generics, the patient groups and Shamnad were arguing for interpreting efficacy as only therapeutic efficacy, Novartis was arguing for a broader interpretation which would include other beneficial properties such as increased stability etc., even though such properties would not lead to an increase in efficacy. 

The Supreme Court however makes it crystal clear that ‘efficacy’ in Section 3(d) means only therapeutic efficacy. 

In para 180, the Court states “What is evident, therefore, is that not all advantageous or beneficial properties are relevant, but only such properties that directly relate to efficacy, which in case of medicine, as seen above, is its therapeutic efficacy.” 

The Court therefore clearly rejects the arguments by Novartis for a more broad based interpretation of efficacy which would have included even non-therapeutic efficacy such as properties which contribute to better storage and ease of administration. 

The Court bases its conclusion on the manner in which the word ‘efficacy’ has been used in main text of Section 3(d) and the explanation. Given the context in which the phrase ‘efficacy’ is used, the court reasons “that not all advantageous or beneficial properties are relevant, but only such properties that directly relate to efficacy, which in case of medicine, as seen above, is its therapeutic efficacy.” This was quite similar to the arguments put forth by Shamnad in his intervention application, which can be accessed over here. 

On the exact scope of therapeutic efficacy itself, as discussed in the earlier post, the Court refused to rule on the differing interpretations put forth by Mr. Grover and Shamnad. The scope of therapeutic efficacy is therefore an open issue. 

(d) Does an increase in bioavailability qualify as increase in therapeutic efficacy under Section 3(d)? 

One of the main points of contention, was whether or not the 30% increase in bioavailability of the beta-crystalline form of imatinib mesylate when compared with imatinib, would qualify as an increase in therapeutic ‘efficacy’ as required by Supreme Court’s interpretation of Section 3(d)? 

Bioavailability is basically the increased ability of the drug to dissolve into the bloodstream of the patient. 

On this point, the Court, depending on an authority provided by Shamnad, ruled that such an increase in bioavailability can qualify for protection under 3(d), if evidence is provided to establish that such an increase leads to greater therapeutic efficacy. Thus patent applicants will have to establish a link between the increased bioavailability to the increase in therapeutic efficacy of a drug. 

(e) Was the claimed invention by Novartis more efficacious than the substance that it was derived from? 

In the final limb, the Court had to compare the efficacy of the claimed invention with the known substance. 

Very confusingly, the Court compares the claimed invention with not only imatinib mesylate which was identified, earlier in the judgment, as the ‘known substance’ for the purposes of Section 3(d) but also with the imatinib free base, despite having earlier rejected Novartis’s plea to consider the imatinib free base as the ‘known substance’ for the purpose of a Section 3(d) analysis. 

Both comparisons are as described below: 

(1) Comparison with imatinib mesylate: When compared with imatinib mesylate flow properties, better thermodynamic stability and lower hygroscopicity. 

The Court then comes to the conclusion that none of the three properties identified above would qualify under a Section 3(d) analysis since they would not contribute to an increased therapeutic efficacy. The relevant extract of the judgment is as follows: 

“173. The aforesaid properties, (“physical attributes”according to Manley), would give the subject product improved processability and better and longer storability but, as we shall see presently, on the basis of those properties alone, the beta crystalline form of Imatinib Mesylate certainly cannot be said to possess enhanced efficacy over Imatinib Mesylate, the known substance immediately preceding it, within the meaning of section 3(d) of the Act.” 

(2) The comparison with the imatinib free base: The court then concludes that, even if it were to indulge Novartis by comparing the imatinib free base and beta crystalline form of imatinib, it could not possibly rule on such a comparison because Novartis did not provide suitable evidence to this effect. 

The judgement holds in para 189 “In this case, there is absolutely nothing on this score apart from the adroit submissions of the counsel. No material has been offered to indicate that the beta crystalline form of Imatinib Mesylate will produce an enhanced or superior efficacy (therapeutic) on molecular basis than what could be achieved with Imatinib free base in vivo animal model.” 

Conclusion 

I think it is safe to conclude that the judgement was well reasoned, for the most part. It would have helped if the judges used some sub-headings in the judgement. Like I've always said, the hallmark of good judges like Justice S.B. Sinha or Justice Ravindra Bhat is the use of sub-headings. 

It is also safe to conclude that the judgement will act as only a limited precedent because it was very fact specific. Of course, the debate on the interpretation of efficacy is now a settled topic since the Supreme Court has unequivocally interpreted the term to mean only ‘therapeutic efficacy’. The Court has however left open the question of how exactly to interpret ‘therapeutic efficacy’. 

Some aspects towards the end of the judgement appear to be poorly reasoned, such as the point on whether or not Novartis was selling imatinib mesylate or the beta-crystalline form of imatinib mesylate. The Court concludes that Novartis was selling the former and not the latter and comes to this conclusion on the basis of the packaging of Glivec. This is a shaky conclusion since, the Drugs and Cosmetics Act specifies certain norms on labelling and the Court should not have come to any such conclusion without referencing the law on the point. More importantly, it makes no sense to raise such issues in the context of a patent validity case. If anything the Court should have referred the matter to the DCGI for relevant action. 

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