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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IP Research Assistant position at IIT, Madras

Feroz Ali Khader, MHRD IP Chair at the Indian Institute of Technology (IIT) Madras, is looking for research assistants to work on various issues related to patent law. Those interested can send their application to fak[at]iitm.ac.in, along with the following:  

(a) Latest CV

(b) Writing sample (preferably a published piece) 

Short Bio of Feroz Ali Khader

Feroz Ali Khader is the Ministry of Human Resources Development (MHRD) Chair on Intellectual Property Rights (IPR) at the Indian Institute of Technology (IIT) Madras. He was the founder of Ali Associates, a law and technology firm which specialized in contentious patent proceedings.

Feroz is the author of two books on Patent Law. His first book, The Law of Patents-With a Special Focus on Pharmaceuticals in India (LexisNexis Butterworths, Hardback, 2007; Paperback 2009) is a legal treatise on the law of patents. His second book, The Touchstone Effect: The Impact of Pre-grant Opposition on Patents (LexisNexis Butterworths, 2009) is business book which helps knowledge-based companies to develop a strategy on opposition of patents.

Feroz was matriculated as an SJD candidate at the Duke Law School. Feroz is an alumnus of Trinity College, University of Cambridge, National Law School of India University and Government Law College, University of Calicut. 

He is a visiting faculty at National Law School of India University, Bangalore.

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Patent Hypocrisy and the Paradox of Indian IP

In an earlier email message to the SpicyIP subscribers, I'd linked to an article on Apple vs Samsung and noted as below:

"For those following the Apple vs Samsung patent wars, this latest move by the US government to veto an ITC decision favouring Samsung once again reflects the well known truth that "national" interest trumps all else. 

But then unfortunately, national interest is to be read narrowly as only "US" national interest. For when other countries such as India rely on "national interest" considerations to protect the health and well being of their citizens', they are labelled pirates, outliers and what not.

If there is one consistent take home lesson from the IP and trade wars, it is that of "hypocrisy"!"

I expanded on this sentiment in a recent edit in the Hindu, which I reproduce below.  I begin by noting that the Novartis patent would have been axed in any other jurisdiction had it been as vigorously contested. I then reflect on the paradox of India IP, where there is as much over protection as there is under-protection. Lastly, I take issue with mainstream media coverage of IP issues, where the patent axes are lauded over and the patent wins ignored. For those interested, here is the full text of the Hindu editorial.

Patent Lies and Convenient Truths

Even as the campaign by U.S. drug majors to paint India as a haven for intellectual property pirates intensifies, the government has swung into action to stem the false propaganda. In a potent piece in The Hill’sCongress blog, India’s Ambassador to the U.S. Nirupama Rao argued that India is not on a kamikaze mission to kill all patents. Rather, it has only invalidated those undeserving of protection under India’s stringent statutory standards. And it did so through transparent judicial processes and not through executive fiat as did the U.S. recently, when it overturned a patent ruling from a specialised trade court, the International Trade Commission (ITC), to favour home-grown Apple at the cost of foreign Samsung.

It is difficult to take issue with Ms Rao’s piece, not least because she makes fair and reasonable points; but then again, the qualifier is “reasonable.” In pertinent part, she notes: “The Indian Supreme Court, in a landmark judgment in April, turned down a request by the pharmaceutical company Novartis to retain the patent on a cancer drug because it judged the drug to be an extension of existing medications, not a groundbreaking advancement. In other words, the court reinforced the premium that should rightly be placed on truly valid patents, strengthening, not weakening, their sanctity.”

Problem in perception

I have previously argued that Novartis’ Glivec patent would have got the axe in any other jurisdiction, had it been contested as vigorously. In fact, a U.S. court invalidated a Pfizer patent covering a blood pressure medication (Norvasc) on grounds very similar to the Novartis decision, i.e. mere physical advantages cited for the salt form such as increased stability and solubility were not good enough to merit patent protection.

The problem perhaps is one of perception. Our mainstream media continues to paint a rather harrowing picture of India’s patent ethos, lauding over patent axes and ignoring patent wins. Illustratively, when two of Glaxo’s patents covering a breast cancer drug (Tykerb) were challenged before India’s specialised IP tribunal, IPAB (Intellectual Property Appellate Board), the main patent covering the basic compound was upheld and the secondary patent covering the salt invalidated. While our media hailed the death of the secondary salt patent, they all but ignored the more important primary patent that had been upheld. This creates a rather one-sided perception.

Overprotection

No doubt, India’s IP tribunal has liquidated more patents than its counterparts in other parts of the world, but a dispassionate look at the overall patent numbers will indicate that the situation is not as grim as it is made out to be. Between 2005 and 2011, more than 4,000 patents for pharmaceutical inventions were issued by the Patent Office. Of these, more than 85 per cent were awarded to multinational drug companies. A study done by me in 2009 showed that of all the pharmaceutical patent applications filed, only 0.3 per cent had been challenged. While this percentage may have increased in the last couple of years, I would wager that it has not crossed two per cent!

In fact, if one were to dig deep, one realises that India is as guilty of overprotection as it is of under-protection. I was at a government meeting recently when a representative from a well known copyright collecting society proudly proclaimed that music copyright enforcement had never been better. Courts were issuing extraordinary orders to prevent copyright infringement including orders to block entire websites; orders never known to have been issued anywhere else in the world. What a telling paradox! The so-called developed world looks upon us as an IP deficit nation, little realising that we’re equally guilty of “IP excess.” The sheer number of ex parte restraining orders doled out in patent cases is also testament to this paradox; orders unheard of in any other country and passed without so much as hearing the defendant.

These ex parte orders are severely problematic and one hopes that the Supreme Court puts an end to it. For one, in patent infringement cases, the validity of the patent is almost always challenged. This being so, courts simply cannot afford to issue injunctions without hearing the other side. More egregiously, once issued, it is often difficult and time consuming to reverse such injunctions, and defendants are forced to settle at gunpoint.

As Shashi Tharoor rightly noted in a recent address at IIM Kolkata, everything said about India can be equally true and false. And that is the paradox of this plural nation: there is as much over-protection in intellectual property as there is under-protection!

Speaking of India’s contentious compulsory licensing order in Natco v. Bayer, where after a severely contested quasi-judicial proceeding, the Patent Office issued a licence for a life-saving cancer drug on the grounds of its exorbitant price, Ambassador Rao goes on to note: “Compulsory licensing has been an integral part of the patent regime of many countries for years. Fifteen countries, both developed and developing countries alike, have issued more than 35 compulsory licences.”

Protectionism

What she forgot to mention is that the United States routinely issues such licences, albeit through their courts which refuse to grant patent injunctions on grounds of public interest. In fact, more than a decade ago, the U.S. Secretary of Health threatened to issue a licence against German major Bayer when faced with the Anthrax crisis, forcing it to drop its drug prices. When the U.S. admonishes India on this count asking it to refrain from destroying global innovation imperatives, it strikes one as a classic case of the pot calling the kettle black!

All of which leaves one wondering: why do we continue to reason with a government that has become so adept at playing the Janusian game; resorting to protectionist and public interest measures on its own soil, but lambasting others in the name of free trade and haloed IP rights, when they do so. If there is one consistent theme in the global intellectual property and trade wars, it is that of “hypocrisy”!

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SpicyIP Tidbit: Zanjeer- Salim/Javed Settle with Producers

After having suffered defeat before the Single Bench of the Bombay High Court on 2nd September (here), scriptwriters Salim Khan and Javed Akhtar appealed to a Division Bench. As reported, the Division Bench advised the parties to amicably settle their dispute. Agreeing to this, the scriptwriters withdrew their suit and arrived at a financial settlement with the producers. The settlement was arrived at in the judges’ chamber so that the settlement amount was not divulged to the public at large. This has paved way for the release of the remake Zanjeer on 6th September.

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Delhi HC rejects the "Hot News" Doctrine: A Summary

The applicability of the Hot News doctrine was rejected recently in a landmark ruling delivered by Justice Bhat of the Delhi HC. This post is a summary of the decision. Shamnad discussed the crux of this decision here. The judgment is extremely well written and researched, employing a multitude of cases from several foreign jurisdictions. Read the decision in full here. Long post follows.

Background

In 2012, by an Agreement, BCCI granted exclusive broadcasting rights to Star TV to disseminate the information/content emanating from the cricket matches; other copyrights emanating from recording of the live match too were assigned which included the right to record, reproduce, broadcast , etc. Sometime later, Cricbuzz, Idea Cellular and ONMOBILE started SMS services providing contemporaneous ball-by ball coverage of live cricket matches. Star TV India(plaintiff/Respondents) filed three suits against Piyush Agarwal (Cricbuzz), Idea Cellular and ONMOBILE(Appellants/Defendants). The “mobile distribution” rights were the bone of contention in the proceedings. The BCCI was arrayed as the common defendant in all the three cases. BCCI, however, supported Star, claiming paramount rights over all information emanating from cricketing events as the organizer and promoter of that sport in India. Star alleged that the defendants had violated those rights and consequently filed a suit for permanent injunction and damages. The Single Judge of the Delhi HC rejected the defendants’ contentions and the ad-interim injunction sought was granted:

A. A limited interim injunction restraining the defendants from disseminating contemporaneous match information in the form of ball-by-ball or minute-by-minute score updates/match alerts for a premium, without obtaining a license from the plaintiff

B. There shall be no restriction upon the defendants to report “noteworthy information” or “news” from cricket matches , as and when they arise, because “stale news is no news”.

C. There shall be no requirement for the license if the defendants do it gratuitously or after a time lag of 15 minutes.

A Division Bench of the Delhi HC overturned the decision in the present judgment.

Contentions

The Appellants' contentions broadly were:

1. The appellants submitted that no statute created a proprietary right in scores. Facts cannot be ‘owned’ under statute or common law. Further, the appellants highlighted unique nature of the right claimed by the respondents- a quasi property right, not enumerated under any statute. The Court cannot deem cricket scores as property of a person owing to the ambiguous nature of such a right. The appellants cited the opinion of Justice Brandeis in International News Service vs. Associated Press (INS case) which raised concerns about the dangers of creating ill-defined rights. Other case-laws were cited to submit that giving ‘relief’ on the basis of ‘created rights’ would amount to ‘judicial legislation.’ Owing to the non-existence of the respondents' claimed rights, the Appellants argued that Star's claims were barred by Section 16 of the Copyright Act which precluded it from claiming copyright or other similar un-enumerated, rights. 

2. Only certain aspects or features of an event may be capable of ownership. The sporting event as a whole is incapable of ownership. The mere expending of money or effort would not render the underlying facts relating to sporting events property, capable of protection. 

3. There was an inherent contradiction in the rights claimed by the respondents. Property rights are in rem, yet those rights were self professedly are not asserted against the world at large, which therefore was contrary to the in rem principle underlying property rights. It was admitted by the respondents that there was no exclusive property right against persons who carry on the same activities gratuitously.

4. They relied on a Delhi HC decision( New Delhi Television Limited v. ICC Development Limited and Anr.) and submitted that the limited protection by way of injunction of a finite duration granted to preserve the sanctity of “hot news” on the basis of the “unfair competition” and “unjust enrichment” doctrine was warranted by the facts and circumstances of the case.

The Respondents' contentions broadly were:

1. The respondents submitted the definition of the right asserted as: "It is a unique property right, which stems out of a negative obligation of the appellants, who secure match related information contemporaneously, not to use it commercially for a short duration." Whereas the right of the members of the public – who witness the event, having paid for the tickets or millions of television viewers who subscribe and watch paid channels, which cover the event, to share it on a non-commercial basis cannot be denied, yet there was an obligation on a third party not to commercially exploit SMS updates. The respondents maintained that the right asserted was neither an intellectual property right, nor a copyright. Counsel submitted that the rights claimed and sought to be enforced are not absolute, in that not all factual information is the subject matter of protection, but only a limited property right – the right to generate revenue by monetizing Match Information through the new platform / medium of Mobile services.

2. Match information had commercial value and was time sensitive, thus constituted Hot News. The Court's authority to injunct its misappropriation was recognized by in Marksman Marketing Services Private Limited v. Bharti Televentures Limited [Mad HC].

3. An organizer is entitled to appropriate newsworthy content from its events. The BCCI claimed that that it owned property rights in the match information, subject only to public interest considerations like gratuitous dissemination by public, Mandatory Sharing of Feed, etc.It was also argued that denial of property rights in respect of match information is inconsistent with grant of the entire structure of rights in sports event, including broadcasting rights, audio rights, internet rights, stadium rights, etc. Further, if ownership is was partially or fully conceded even for one of the rights, then all incidents and insignia of ownership must follow in respect of the entire bundle of rights vesting in the BCCI.

4. The counsel contended that he rights claimed flowed out of broadcasting rights, not copyright. Further, Section 16 stood excluded in respect of broadcasting rights. Relying on the ESPN case, it was submitted that if Parliament had did not intend Section 16 to apply in respect of broadcasting rights since it was not mentioned in Section 39A.

Decision

The reasoning of the judgment was based on the following four questions:

1. Was the Respondents’ claim precluded by Section 16 of the Copyright Act

The Court decided this issue by a twofold approach and held: The respondent’s claims were precluded by Section 16 of the Copyrights Act; they were also precluded because of the provisions of Chapter VIII of the said Act. If Parliament had intended such rights to exist, they would have been enacted, with suitable mechanisms for their enforcement and effectuation.

The respondents’s argument of Section 16 excluding the rights claimed was based on a reading of Section 39A of the Act which stated applicability of certain sections to broadcasting rights. Section 39 A is titled: Other provisions applying to broadcast reproduction right and performer’s right. Since section 16 is not included, the respondents contended that the claimed rights neither constituted copyright nor ‘other similar rights.'

Firstly, the Court held that by Section 16, “copyright or any similar right” (in a work) apart from what is created by the Act is precluded. The expression “work” limits the exclusion. However, equally, while the text of the Copyright Act does not prescribe what the rights referred to in the words “other similar rights” – other than copyright – are, this must necessarily allude to broadcasting rights. This is exemplified from the applicability of Section 63( which creates offences)  to broadcasting rights, in spite of not being included in Section 39 A.

Secondly, the Court observed that Chapter VIII (Rights of broadcasting organisation and performers) was introduced due to a felt need to give limited protections to broadcast rights akin to copyright. If the Parliament had intended to give protection to facts, “time sensitive information” or events (such as match information), there would have been conscious protection of those rights by express provision. Therefore, the exhaustive nature of the regime in Chapter VIII precluded, by its very nature, any claim for protection over and above what was expressly granted by its provisions. Such rights providing protection of facts underlying the broadcast had long been held to be barred as they were “similar” to copyright protection (Donaldson v Beckett 1 ER 837 (1774) and UK statutes) .

In other words, though there is no express reference to Section 16 in Section 39A, its underlying premise, i.e. preclusion of rights other than those spelt out in Chapter VIII, by common law, would apply.

2. The “Hot News” doctrine and its application in India

The Court discussed the Hot News doctrine as propounded in the INS case, and traversed through several cases to arrive at the doctrine’s present ‘ghostly’ avatar : The present avatar ( as in The Flyonthewall.com Inc v Barclays Capital Inc) has been narrowed to injunct time sensitive news where both parties are “direct competitors” and not merely where the plaintiff's primary service or product is not hot news dissemination, but match organisation or broadcasting of those events. This critical aspect of 'Hot News' was absent in the present case, as neither Star, nor BCCI engaged themselves primarily in match news dissemination through SMS.

Thus, the respondents failed to to show to the court, how it had proprietary rights over the facts and information it sought to protect – even for a limited duration. For the reasons discussed above, it was held that the plaintiff could not claim any exclusive property or other such rights to injunct the publication of match information, or hot-news, as claimed by it, irrespective of whether the object of such third party was to publish such information for commercial gain or without any such motive.

3. Respondents’ claim for injunction based on unfair competition

The Court held that upholding the 'hot news' doctrine or the unfair competition doctrine in the present case would imply grant of protection to match information, which in turn would be in conflict with the Copyright Act. It observed that the present claims in essence requested to injunct unauthorized copying of facts. It highlighted the issue by stating: 

“To say, now, that the doctrine of unfair competition prohibits the misappropriation of match information would either mean that misappropriation under common law can supplant the Copyright Act (which cannot be the case, as discussed above), or that copying and misappropriation refer to two distinct acts, which would be a distinction without a difference.”

It was held that unless a qualitatively different element is purported to be included in the doctrine of “unfair competition” as compared to a copyright claim, the pre-emption under Section 16 would apply to such claims. 

4. Respondent’s claim for injunction based on unjust enrichment

The Court held that the claim for interim injunction would not survive for three reasons:

Firstly, the claim of unjust enrichment here was similarly pre-empted as the doctrine of “unfair competition”.  

Secondly, the Court must see whether the respondent alleged any misconduct incorporating elements other than those subsumed within the claim of copyright infringement. In the present case, the respondents reported no such facts. Also,even if the claim of unjust enrichment is to be seen on merits, (assuming that it is not pre-empted by Section 16), such a claim cannot – by definition (with limited exceptions) –injunct or prohibit the appellants from disseminating match information, but rather, only be the basis for a restitutionary award.

Thirdly, in this case, the appellant's dissemination resulted purely from resources invested by them , and in no way resulted from Star's conduct or any expense incurred by it. Thus, as the benefit gained by the appellants could not be said to be at the expense of Star, the claim for unjust enrichment was not tenable. Given this, the Court did not even consider the question of whether there existed an unjust factor in the retention of such benefit by the appellants. 

The claims were considered to be pre-empted by Section 16, amounting to (in essence) copyright claims though dressed up under alternate heads of common law.

Furthermore, the Appellants had argued that their right to freedom of speech and expression and their right to freedom of trade under Article 19 (1) (a) and (g) could not be interfered with in the absence of any law. Expressing its wariness about using common law doctrines to encroach functions of the legislature, the Court held:

"Recognizing the doctrine of unfair competition would inevitably restrict the appellants'  ability to disseminate information, undoubtedly a crucial component of Article 19(1)(a). This is not to say that the doctrine of 'unfair competition‟ is to be rejected in Indian law on account of an Article 19(1)(a) violation, nor to say that the appellant's freedom of speech cannot be curtailed by the doctrine under any circumstance, but only to make the limited, but crucial, point that Courts must be cautious in creating doctrines and rights that have such clear implications for constitutional rights, better leaving such matters to the lawmaking domain of the legislative branch, that may result in a coherent legislation that creates a framework within which any curtailment of Constitutional rights is to take place."

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Bombay HC: Remake Zanjeer to be released

Image from here

The remake ‘Zanjeer’ is set to be released on 6th September, as the Bombay High Court refused to grant an injunction against its release (here). We have tracked the development of this case here, here, here, here and here. 

To briefly recap, the Plaintiffs Salim Khan and Javed Akhtar had alleged copyright infringement of the script they had written for the original ‘Zanjeer’ produced by Prakash Mehra in 1973. They prayed for a permanent order of injunction restraining Sumeet Mehra and others (heirs of Prakash Mehra, the Defendants in this case) from in any manner exhibiting, releasing, displaying, communicating to the public anywhere in the world the remake film “Zanjeer” in Hindi and Telugu languages or any other language. 

The Plaintiffs contended that they were the authors of the script of the original Zanjeer. According to them, this literary work was never commissioned by Prakash Mehra and it was in existence even before Prakash Mehra had approached the Plaintiffs for the same. Moreover, Prakash Mehra was granted a one time permission to make the said film in 1973. Therefore, Prakash Mehra’s rights were restricted only to the cinematographic film “Zanjeer” made in the year 1973 and did not extend to the underlying “literary work” since there was no authorization from the Plaintiffs to this effect. All the rights including the right to remake a cinematographic film based on the literary work, in any language in the absence of any assignment under Sections 18 and 19 of the Copyright Act continues to remain with the Plaintiffs and no remake film can be made based on the said literary work by the Defendants, without the written consent of the Plaintiffs. 

However, the Court came to the conclusion that Prakash Mehra had commissioned the work from the Plaintiffs for a consideration of Rs. 55, 000 each and was therefore the first owner of the underlying works of the film which included the literary work. The turning point of the case was the following sequence of events: (i) Plaintiff No.1 narrated the “ story idea” of “Zanjeer” to Dharmendra; (ii) Dharmendra paid valuable consideration for that story, although it will be a matter of evidence whether the payment was to purchase the story (as stated by Plaintiff No.1 in his interview to ETC network) or as token blessing money as alleged in the rejoinder of Plaintiff No. 1; (iii) Dharmendra narrated the story to Prakash Mehra and asked him to take a script from the Plaintiffs based on the said story; and (iv) Dharmendra then commissioned the Plaintiffs to write a script on behalf of Prakash Mehra based on the said story. 

Several interviews of Prakash Mehra and Salim Khan were examined and the court found clear statements that showed that the script had been bought by Dharmendra and later by Prakash Mehra from Salim Khan and it was not a case of mere licensing. The assessment order of the relevant year along with the profit and loss account and the breakup of the costs of the movie were also produced where it was shown that Rs. 55,000 was paid to each author as a consideration for ‘script and screenplay’. The court disregarded a letter written by Dharmendra that the Plaintiffs produced to prove that the script was not bought because the letter was produced at a very belated stage. 

The Plaintiffs had also contended that they had licensed the “remake rights” of the literary work in respect of all South Indian languages, in favour of Mr. S.V.S. Manian. The Plaintiffs produced an affidavit of the wife of Shri S.V.S. Manian dated 31st December, 2012, confirming that her husband had bought the story rights in the Hindi film “Zanjeer” from the Plaintiffs for a period of 25 years for the making of the Tamil film “Sirithu Vazha Vendum”. But no written license was produced. The court disregarded the affidavit and left its authenticity to be checked at the stage of cross examination. 

On the basis of these facts and based on the decision in the IPRS case, the court came to a prima facie conclusion that it is the producer i.e. Prakash Mehra who became the first owner of the copyright in the underlying work (the script) and therefore had a right to remake the same (this right now vests with his heirs (the Defendants). Moreover, the court found that the Plaintiffs had unduly delayed in bringing the case to court. They were closely associated with the Film Industry and therefore could not take the plea that they were not aware that the Defendants were in the process of remaking Zanjeer, which was widely publicized. 

Also, since the Plaintiffs had quantified their claims in monetary terms at Rs. 6 crores, the court found that they were not entitled to a mandatory injunction. This was because even if the Court would have come to the conclusion that the Plaintiffs are the owners of the copyright since the Plaintiffs’ claim falls within the provisions of Section 38 (3) (c) and not under Section 38 (3) (b) of the Specific Relief Act,1963, their claims would be satisfied by payment of monetary compensation and not by an injunction.

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IPAB revocation of Allergan’s Combigan patent: Viewing it through the lens of American patent doctrines

Recently Anubha had blogged about the IPAB decision revoking Allergan’s patent for Combigan. Combigan refers to a combination eye-drop product used for treating glaucoma comprising combination of Brimonidine tartarate and Timolol maleate. Media reports termed this decision as the latest in a series of intellectual property setbacks suffered by Western drugmakers. These skewed reports also portray this revocation decision as one of many tactics by India to remove an inconvenient patent out of the way to introduce affordable generic versions. What these reports failed to highlight was that several claims of patents covering Combigan were invalidated as being obvious even in major jurisdictions like US and EU. Also it wasn’t as though the Indian patent was invalidated by applying one of those sections (eg. Section 3) which is unique to Indian patent law. An analysis of US CAFC decisions and IPAB decision for Combigan is presented below. Longish post, but hope to make it worth your while.

Image from here

Combigan US patents: Background

The patents in question are 4 OB listed patents related to Combigan viz: the ’463 patent, the ’258 patent, the ’976 patent and the’149 patent. The claims of '463, ‘258, and '976 patents with the exception of claim 4 of ‘149 patent were generally treated as a single group.

Claim 1 of ‘463 patent was considered representative and it states: 1. A composition comprising about 0.2% timolol by weight and about 0.5% brimonidine by weight as the sole active agents, in a single composition.
Sandoz sought to market a generic version of Combigan thus triggering litigation under Hatch Waxman framework. The district court rejected allegations that claim 1 of ‘463 patent was invalid as obvious over prior art. On appeal, the Fed circuit reversed the district court's finding that the claims of the '463 patent were non-obvious.The CAFC decision can be found here

Prior art: what was known at the time of invention?

Both timolol and brimonidine were commercially available drugs in their claimed concentrations used for ophthalmic conditions at the time of the invention. At the time of the invention, it was known that the serial administration of brimonidine and timolol reduced intraocular pressure greater than either timolol or brimonidine alone. Moreover, DeSantis (US 5502052), the primary prior art reference, expressly provided a motivation to formulate fixed combinations of alpha2-agonists and beta blockers, including timolol, in order to increase patient compliance.

District court findings:Summary

• The court found that there would be no motivation to create the combination product because the FDA did not view patient compliance as a factor for approval.
• Second, the court found that the formulation arts are unpredictable.
• There were some teachings in the prior art that taught away from the claimed invention.
• Finally, the court observed that there were secondary considerations that support the finding of non-obviousness including long-felt need and unexpected results.

Federal circuit: Do secondary considerations outweigh motivation to combine?

The CAFC addressed each of the findings of district court as follows:

• Fed circuit opined that there is no requirement in the patent law that the person skilled in the art should be motivated to combine based on the rationale that forms basis for FDA approval. Motivation to combine may be found in many different places and forms; it cannot be limited to those reasons the FDA sees fit to consider in approving drug applications.
• While agreeing that formulation sciences inherently contain a certain degree of unpredictability, the opinion stated that “obviousness cannot be avoided simply by a showing of some degree of unpredictability in the art so long as there was a reasonable probability of success.”
• It also agreed that the prior art as a whole taught away from the invention.
• Previous attempts to treat patients twice per day with brimonidine resulted in a loss of efficacy eight to nine hours post administration. This loss of efficacy is referred to as the “afternoon trough.” The court found that a twice per day dosage regimen of Combigan® unexpectedly did not suffer from the afternoon trough issue. The Fed circuit concurred with district courts findings that that this result was unexpected. However the CAFC maintained that there was a motivation to achieve better patient compliance. Whether or not that combination also solved problems associated with the afternoon trough, we find the motivation to make the combination was real.

Thus the CAFC opined that unexpected results and prior art teaching away were NOT sufficient to outweigh the other evidence of obviousness with respect to these formulation claims.

Claim 4 of ‘149 patent: A different conclusion?

As mentioned above, claim 4 of ‘149 patent was analyzed separately by Federal Circuit. Claim 4 of the ’149 patent is directed to reducing the daily number of doses of brimonidine without loss of efficacy by administering fixed combination and reads as follows:

4. A method of reducing the number of daily topical ophthalmic doses of brimonidine administered topically to an eye of a person in need thereof for the treatment of glaucoma or ocular hypertension from 3 to 2 times a day without loss of efficacy, wherein the concentration of brimonidine is 0.2% by weight, said method comprising administering said 0.2% brimonidine by weight and 0.5% timolol by weight in a single composition

While the federal circuit held that the formulation of 0.2%wt brimonidine and 0.5%wt timolol was obvious, it came to a different conclusion with respect to claim 4 of the '149 patent. The CAFC reasoned that although the prior art shows concomitant administration of brimonidine and timolol, it does not establish that switching from 3 times a day to 2 times a day does not result in loss of efficacy. Hence it concluded that claim 4 was NOT obvious in light of prior art.

Avoiding loss of efficacy an inherent result of the formulation?: Judge Dyk’s dissent

Dissenting from the majority’s opinion holding that claim 4 of the ’149 patent is not invalid as obvious Judge Dyk observed that avoiding loss of efficacy is an inherent result of the claimed method. Since the formulation was held obvious, inherent result /property of the formulation is also obvious. Judge Dyk reasoned a newly-discovered result or property of an existing (or obvious) method of use is not patentable.

The majority differed and observed that the prior art evidence does not conclusively establish that dose reduction “from 3 to 2 times a day without loss of efficacy” limitation is an inherent property or a necessary result of the administration.

IPAB decision:

The IPAB concluded “We too are of the opinion like the Federal Court that there was a reasonable expectation of success in view of the DeSantis. Therefore for the above reason, we find that the invention is obvious."

With regard to non-compliance of Section 8, the IPAB noted that the applicant had failed to inform the Controller regarding refusal of corresponding EU patent and various stages of prosecution in the US counterpart patents (non-final rejections etc.). Curiously, Allergan tried to argue that Therasense like inequitable conduct standards should be set for Section 8. In Therasense, Inc. vs. Becton, Dickinson and Co (Fed. Cir. 2011) an en banc decision, the Federal Circuit held that inequitable conduct must be shown with clear and convincing evidence and that there was intent to withhold or misrepresent information and that the information was material. However, the IPAB reasoned that our law does not make any qualification regarding the failure to disclose nor does it say that the failure to furnish the S.8 details must be deliberate and willful. The IPAB opined that even if it was to assume Therasense like standards for the present case but for that the fact that the EP office action and/or US office action were kept away from the Controller, the patent may not have been granted. The IPAB decision itself can be found here and Anubha’s post on the same can be accessed here.

What was different in the Indian decision?

In India, Combigan was protected by only one patent viz IN219504. Since method of treatment claims are precluded from patentability in India, claim 4 of ‘149 wasn’t patented. Since the claims of IN219504 were invalidated by IPAB, it paved way for generic entry (read Ajanta pharma).

On the other hand in US, as discussed earlier Combigan was protected by several patents (patent thicket). Even though Sandoz succeeded in establishing that claims of ‘463 patent were invalid as obvious, the Fed circuit ruled that claim 4 of 149 as not obvious. Thus market entry for generics (Sandoz) in US is barred until expiry of ‘149 patent i.e. April 19, 2022. 

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