Intellectual Property Rights Project Cipla Vs Novartis

Patent Case

Submitted By Submitted to Twinkle - 20IB345 Prof. Arunaditya Sahay

Table of Contents
Acknowledgement .................................................................................................................................
2 Evolution of Indian Patent System
........................................................................................................3 Current Scenario of Indian Patent
System ............................................................................................6 Process patent, Its characteristics
and consequences..........................................................................7 Product patent, Its characteristics
and consequences..........................................................................8 Loopholes In the New Regime
of.........................................................................................................10 Patent System in India
.........................................................................................................................10 What Can be
Considered as Patentenable in India.............................................................................11 Patent
Infringement.............................................................................................................................13 Patent
Infringement Types ..................................................................................................................14
Measures for resolving patent infringement......................................................................................16
Patent Data Key- India
.........................................................................................................................17 Cipla Vs Novartis –
Patent Case ...........................................................................................................18 Conclusion
............................................................................................................................................20
References............................................................................................................................................21

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 Acknowledgement

To begin with, “I would like to offer my sincere thanks to Prof. Arunaditya Sahay,
professor at BIMTECH, for giving me the opportunity to work on this project.
Without his guidance, support and valuable suggestions during the research, the
project would not have been accomplished.”

Evolution of Indian Patent System

In 1856 the first legislation relating to patent (Act VI) in India came into existence. “The goal
of this legislation was to foster the development of innovative and beneficial products, as
well as to persuade innovators to reveal their innovations' secrets. Because the Act was
passed without the authority of the British Crown, it was revoked by Act IX of 1857. Act XV
of 1859, a new piece of law for awarding exclusive privileges, was introduced in 1859. This
legislation made certain changes to the previous legislation, such as granting exclusive
benefits to valuable discoveries alone and extending the priority period from six to twelve
months. Importers were not included in the definition of inventor under this law. This Act
was modelled after the United Kingdom Act of 1852, with a few exceptions, such as
permitting assignees to apply in India and requiring prior public usage or publishing in India
or the United Kingdom to determine uniqueness.”

For protection of design the act of 1859 was thereafter consolidated in 1872. “Under Act XIII
of 1872, it was called The Patterns and Designs Protection Act. The Act of 1872 was revised
again in 1883 (XVI of 1883) to include a provision to safeguard the uniqueness of inventions
that were disclosed in the Indian Exhibition prior to filing an application for protection. This
Act remained in existence for about 30 years without amendment, but in 1883, changes to
the patent law in the United Kingdom were enacted, and it was decided that those changes
should be integrated into Indian law as well. In 1888, an Act was acquainted with merge and
change the law connecting with creation and plans in similarity with the corrections made in
the regulation of the United Kingdom. The Indian Patents and Designs Act, which was
enacted in 1911, This Act was revised again in 1920, and again in 1930, to include provisions
dealing to the issuance of secret patents, patents of addition, government use of inventions,
the Controller's authority to rectify patent registers, and the extension of the patent period
from fourteen to sixteen years.”

In 1957, “the Government of India convened the Justice N. Rajagopalan Ayyangar

Committee to review the Patent Law and make recommendations to the government. The
Committee's report, which was divided into two parts, was submitted in September 1959.
The first section dealt with broad principles of the Patent Law, while the second part went
into the many clauses of the failed legislation from 1953 in great depth. The first section

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also discussed the flaws in the patent system and offered solutions as well as legal advice.
Despite its flaws, the committee recommended that the Patent System be kept. The Patents
Bill, 1965, was introduced as a result of this report's recommendations for fundamental
changes in the law. In 1967, a revised bill was proposed, which was referred to a Joint
Parliamentary Committee, and the Patents Act of 1970 was approved on the Committee's
final recommendation. When it came to patent law, this Act abolished and replaced the
1911 Act. This Act was in effect for over 24 years, until December 1994, when it was
repealed. On December 31, 1994, an ordinance was adopted that made certain revisions to
the Act, however it only lasted six months. After that, in 1999, a new ordinance was passed.
This ordinance was later repealed and replaced by the Patents (Amendment) Act, 1999,
which went into effect on January 1, 1995. The modified Act allowed for the submission of
product patent applications in the fields of medications, pharmaceuticals, and agricultural
chemicals, even though such patents were not permitted. However, such petitions were
only to be considered after December 31, 2004.”

“The Office of the Controller General of Patents, Designs & Trade Marks” is in charge of
the Indian patent system (CGPDTM). “The Indian Patent Office is a department of the Indian
government that is governed by the Indian Patent Act of 1970. Patent offices in India are
located in Delhi, Kolkata, Chennai, and Mumbai. The Indian Patent Act has undergone
several revisions. However, India's responsibility under the TRIPS agreement forced
modifications to the Patent Acts and Rules in 1999, 2002, 2005, and 2006. TRIPS stands for
Trade Related Aspects of Intellectual Property Rights, and it allows product patents in the
chemical and pharmaceutical fields.”

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Current Scenario of Indian Patent System

Except for the portions made relevant by the Government of India's Gazette Notification,
the previous Acts, namely the Patent Act of 1970 and the Patent Rules of 2003, are still in
effect. “Any invention in the field of commodities is eligible for a patent. Any new and useful
technique, process, method, or way of production, machine, equipment, or other object, or
substance created by manufacture, as well as any new and useful improvement in any of
these, is referred to as an innovation.”

Patents are not awarded for claims relating to substances; nevertheless, claims relating to
manufacturing techniques or processes are patentable. “However, India has been allowed
time to implement product patents by the year 2005, in accordance with its TRIPS pledge.
Patent applications can be filed in India by both Indian citizens and foreigners. However, if a
foreigner applies for a patent in India, the applicant's home country must also grant
reciprocal rights to Indian citizens. Any individual claiming to be the actual and first inventor
of an invention, or his assignee or legal agent, can file a patent application. Any of these
individuals can file a patent application on their own or in collaboration with others. As
assignees, two or more firms may file a joint application. Except for the restriction on
product patents in the case of food and drugs, the TRIPs Amendment of 2002 has enabled
India to comply with the TRIPs Agreement's criteria. India retains the option of adding this
clause prior to January 1, 2005. Many positive changes have occurred in patents as a result
of the amendment of 2002, including a reduction in certain fees payable under the Act, an
extension of the term of protection for all types of patents, a simplified procedure for filing
patent applications, recognition of international applications, protection of traditional
knowledge, and a more clear and crisp definition of invention. As a result, the current
Patent (Amendment) Act of 2002 encompasses all features and clauses of TRIPS, the Paris
Convention, and other agreements, as well as the Doha Declaration. India has succeeded in
resolving ambiguities in the Act and utilizing the flexibilities provided by the Agreement to
suit the nation's best interests.”

The Patent Amendment 2005, passed by the Indian government, established various patent
regimes. “According to the Act, there are two categories of patents available in India:
product patents and process patents.”

Process patent, Its characteristics and

consequences
Patent protection is awarded exclusively to a certain method employed in the manufacture
of a product, not to the finished product, under a process patent. “Because the product
created by the specified method is well known, there is no innovation in such a product, a
process patent can only contain claims for the process and not for the result. Although the
topic of whether a product or a method is superior is no longer relevant because the Indian
Patents Act now protects both processes and products as long as they meet the
patentability standards, it is still important to grasp the distinction. Only in the case of
chemical inventions is the problem of product and process protection highly significant, and
we will be examining it in depth with the topic chosen for this study.”

Only process patents were authorized under India's 1970 Patent Act. “The Patent Act is
largely based on the suggestions of the Ayyangar Committee, chaired by Rajagopalan
Iyengar, in their report Justice Ann. Allowing process patents for inventions linked to
pharmaceuticals, medications, food, and chemicals was one of the recommendations. It was
changed in 2005 to conform to the WTO's TRIPs requirements, which only allow for product
patents. In 1995, India, along with many other nations, agreed to issue 20-year patents on
pharmaceutical items beginning January 1, 2005, as part of the World Trade Organization's
(WTO) Trade-related Intellectual Property Rights (TRIPS) agreement in Marrakesh, Morocco.
The new WTO rules essentially prohibited the manufacture of new generic drugs.”

It is often believed that a process patent provides a limited level of protection. “The reason
for this is that it does not prohibit or restrict others from producing or making the same
thing using a different method. As a result, it's feasible that a single product might receive
several method patents. As a result, the inventor's monopoly is gradually eroded, allowing
more competition to emerge. Anyone may make the same product by altering the individual
parameters in a different process. Because of the potential of diverse production processes,
this implies that there will be more than one manufacturer for the same product.
Competitors are prone to reengineering the original idea by devising a different method
that requires less effort and money. Process patents have the advantage of reducing the
element of monopoly.”

Product patent, Its characteristics and

consequences
A product patent is a legal document that protects a product. “It provides the original
creator with extensive protection in order to prevent competition for the identical product.
The patent is issued to the product's original creator under this system. It provides greater
protection for the inventor's invention by lowering the degree of competition for the same
product. When a product patent is issued, no one else is allowed to create the same product
using the same or a similar procedure as the inventor. True Monopoly right belongs to the
creator of a product patent. TRIPs follow the product patent regime. Product patents are
regarded to give a higher level of protection than process patents.”

While industrialized nations recognize the value of product patents as comprehensive

protection, “emerging countries have yet to acknowledge the value of product patents.
Because both product and process protection safeguard patents at separate levels, this
paradox has hampered product protection on a worldwide scale. Since India is a member of
the WTO, it has committed to bind itself to the TRIPS Agreement, which went into force in
1999. The Indian Patents Act was amended in 2005, and the notion of a product patent was
accepted. With the implementation of India's product patent system, only products that are
new on the day of filing a patent application for that product will be patentable, not others.
The WTO applications (those claiming novel pharmaceutical/agricultural chemical goods)
that have been filed from 1-1-1995 are an exception to this rule. In other words, goods that
were already known prior to December 31, 2004 (save for the WTO applications mentioned
above) cannot be patented since their originality has been lost.”
There were several issues that emerged at the time when product patents were formally
introduced in the year 2005: “A profit-driven model is patenting a product. Due to product
patents, other manufacturers were unable to sell or utilize the product. This led in a
monopoly in the economy and, to some extent, price inflation. As a result of this regime, the
market's overall dynamics changed. Implementing a product patent regime in India, on the
other hand, was perceived as financially beneficial, and the country has witnessed an influx
of multinational firms. By modifying crucial process factors, anybody, at any moment, can

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create the same product using a different way, and no restrictions bound him. As a developing
country, it supports the issuance of both process and product patents, with a bias for process
patents. The reason for this is because, rather than just following the lead of industrialized
countries, the government must develop legislation only after properly researching and
appreciating the country's condition. The only reliance on process patents results in a diminution
of an inventor's entitlement to protection. It leads to the development of the same product
using diverse methods.”

Loopholes In the New Regime of

Patent System in India

Two connected dynamics drove these policy improvements on a broad scale. “First, the
continual adaptation of IPR instruments has been necessitated by the introduction of new
technologies. Integrated circuits, computer software, and biotechnology breakthroughs are
all examples of fields where technical advancements have produced new intellectual
property issues. Because digital material can be properly duplicated at low expense, the
internet has offered unique challenges to the printing, publishing, and entertainment
businesses. Second, the trend of economic globalisation has made it easier for intellectual
property to go across international borders. Indeed, for many wealthy nations, IPR-intensive
goods and services account for a growing portion of the revenue generated by their
presence in international markets. As a result, it's not unexpected to find political economic
factors at work in these nations, prompting governments to make intellectual property
protection a priority negotiation point in international trade deals. From the standpoint of
access to pharmaceuticals, India's full-scale TRIPS compliance presents numerous key
challenges.”

• While taking into account the generics manufacturer can apply to imitate a patented
medication under the new rule, “but only after it has been on the market for three
years. The generic's manufacturer, on the other hand, must pay a reasonable royalties.
The new law makes no distinction between what is fair and what is not. This can lead to
unnecessarily complicated situations and unnecessary lawsuits.”

• The main problem is really a provision—"Section 107A(b) of the Indian patent

legislation, which was revised in 2005—that permits local firms to import copycat or
generic medications made in LDCs like Bangladesh, Nepal, and numerous African
countries without the permission of the patent owners.”

• For at least three years, “the new law prohibits the government from overriding any
patent — a clause not necessary under the TRIPS Agreement. Furthermore, the new
legislation specifies that the Controller of Patents has broad discretionary powers to
select criteria such as fair affordability, appropriate price, and reasonable royalties,
among others, giving the appearance that royalty rates is determined subjectively.”

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What Can be Considered as Patentenable in India

In order to secure a patent in India, “various requirements must be met. They are as
follows:”

1. Patent Subject: “The most critical factor to evaluate is whether or not the invention
pertains to a patent subject matter. Non-patentable subject matter is included in
Sections 3 and 4 of the Patents Act. Unless the invention falls under one of the
 provisions of Sections 3 or 4, it is a patentable topic.”
2. Novelty: “An essential element in establishing the patentability of an invention is its
novelty. A novelty or new invention is defined as no innovation or technique
published in any document before the date of filing of a patent application,
wherever in the nation or the world, according to Section 2(l) of the Patent Act. To
put it another way, the uniqueness criterion stipulates that an innovation should
never have been made public. It has to be the most recent, with no previous arts
that are identical or comparable.”
3. Inventive steps: “An innovative step is defined as the feature of an invention that
incorporates scientific development or is of economic relevance or both, as
compared to existing knowledge, and innovation not evident to a person competent
in the art, according to Section 2(ja) of the Patents Act. This implies that a person
knowledgeable in the same profession as the innovation should not be able to figure
out what it is. For someone with experience in the same field, it should not be novel
or clear.”
4. Capable of Industrial application: Industrial applicability is defined as "the invention
is capable of being manufactured or employed in an industry" under Section 2(ac) of
the Patents Act. “This basically says that the innovation isn't possible in the abstract.
It must be applicable to any industry, implying that the innovation must have
practical utility in order to be patentable.”

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Patent Infringement

In general scenarious patent infringement occurs when a patentee's right to a particular

invention/ inventions is violated. “When a third party infringes on a patent holder's rights or
claims without the patent holder's approval or licence, the third party is said to have
infringed on the patent holder's patent rights. Understanding the categories of patent
infringements is crucial when doing a patent infringement risk analysis to guarantee that the
innovation will not infringe on any of the existing patent rights. Patent infringement occurs
when someone uses, produces, sells, or offers to sell the subject matter or invention of
another person's patent without their permission. Patents come in a variety of forms,
including utility patents, design patents, and plant patents. Patent infringement is based on
the principle that unauthorised parties are not permitted to utilise patents without the
owner's consent. When a court determines that a patent has been infringed, the court
compares the patent's subject matter to the subject matter utilised by the
infringer.Infringement occurs when the infringer uses patent material in its precise form.
Any unlawful manufacturing, sale, or use of a patented invention is considered patent
infringement. Patent infringement might take place either directly or indirectly.
Unauthorized claims to patent rights are punishable under Section 120 of the Act. Any
person who fraudulently claims that a product sold by him is patented in India or is the
subject of a patent application in India is liable to a fine of up to one lakh rupees.

If the court determines that the patent infringing is inflicting harm before or during the
lawsuit, the court may issue a preliminary injunction, preventing the infringer from
continuing his or her acts. To get a preliminary injunction, the party asking it must
demonstrate the following:”

• “If the injunction is granted, there will be no harm to the public interest.” •
“The case has a lot of merit and is quite likely to be successful.”

• “If the infringer is permitted to continue using the patent during the litigation, the
patent holder may face further hardship.”

However, “Preliminary injunctions are difficult to obtain and are seldom issued unless the
patent has already been adjudicated and validated.”

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Patent Infringement Types

Direct Infrigement: “The most obvious and widespread sort of infringement is direct
infringement. Marketing, sale, or commercial use of a comparable patented object or
innovation that performs essentially equivalent functions is considered an infringement.
There are two kinds of literal and nonliteral direct infringement. When every component of
a patent specification is employed in the allegedly infringing product, gadget, or method, it
is referred to as literal infringement. Non-literal infringement occurs when the infringing
device or method performs essentially the same function, in substantially the same manner,
and to produce substantially the same result as the claimed invention.”
 • Literal: “The infringement is known as literal infringement when the accused
product/process comes within the scope of patent claims. One such case is Polaroid
Corp v. Eastman Kodak Co., in which Eastman Kodak was found to have infringed on
Polaroid's Instant camera technology patent.”

• Equivalence Doctrine/Nonliteral: “Nonliteral infringement is another name for this.

When a component or gadget performs the same function and produces comparable
or identical outcomes, this is referred to as infringement. This infringement offers an
additional layer of protection for a patentee's patent. During a recent Indian case,
Ravi Kamal Bali v. Kala Tech 8, the idea was introduced into the Indian judicial
system. The defendants were accused of infringing on a patent for a tamper-proof
lock/seal for containers in this case. The defence was that the product differed in
substantial details from the patented invention, but the court determined that the
differences were insignificant and so applied the doctrine.”

Indirect infringement: “It happens when an infringement occurs but is made by someone
else. There are two kinds of indirect infringements:”

• Induced infringement: “It occurs when one person deliberately encourages, assists,
aids, or induces another to infringe on a patent. In most cases, patent infringement via
inducement implies that the inducer voluntarily and consciously assisted in the
infringement, but the inducer may or may not have meant to infringe on a patent.
Selling parts that can only be used realistically for a patented innovation, selling an

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invention with instructions to use in a given technique that infringes on a method
patent, or licencing an invention that is covered by another's patent are examples of
this. The inducer must aid willful infringement, but it is not required that the
infringer have the intent to infringe the patent.”

• Contributory infringement: “It occurs when one party intentionally participates in or

assists in an act of infringement against the other, rendering them vicariously
accountable for the infringer's actions. It's a sort of indirect infringement in which a
person or company is held accountable for infringement while not actively
participating in infringing actions. As a result, it occurs when a party offers a product
 that is known to be utilised in an infringing product. In most circumstances, the use
of this product in the infringing product will have little commercial value.
Contributory infringement occurs when a seller sells a part or component that,
although not infringing on its own, has a specific application as part of a patent
protected machine or mixture. Although there is some overlap with indicators,
contributor infractions need a large amount of time. The seller's violations must be
made with the intent to infringe. A direct violation must also be an indirect conduct
to be an obligation for indirect violations.”

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Measures for resolving patent infringement If we

look into the different lawsuit cases, the patient infrigement cases are considered to be
significantly costly. “Plaintiffs can obtain damages under several statutes, including the
Patent Act. Patent infringement is defined as the unauthorised manufacturing or use of an
innovation or improvement of someone else's invention or subject matter who holds a
patent issued by the government without the owner's authorization, which can be obtained
by consent, licencing, or waiver. In the case that a patent is infringed, the patent owner has
a number of options. Monetary remedy, equal relief and costs, and lawyers' fees are some
of the remedies offered in patent infringement cases and lets us look into these remedial in
details.”

1. “Monetary relief: To avoid patent infringement, monetary remedies in the form of

compensatory damages is available:”

• Indemnity compensation - When determining the patent's worth, a patent owner

may have lost income due to infringement.

• Compensation charges might be increased by up to three times in situations of will

or breach of will.

• The time limit for filing a claim for damages - Only 6 years after the patent is issued
and only after the infringement claim is filed may the entitlement to damages be
asserted.
2. “Equitable relief: A court may impose an order prohibiting a person from behaving
or acting in a certain way. There are two types of injections:”

• “Preliminary injunctions are orders issued in the early stages of litigation or

lawsuits to prevent parties from engaging in a disputed act (such as making a
patent product).”
• “A permanent injunction is a court ruling that stops certain acts or takes other
actions indefinitely.”

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Patent Data Key- India

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7

Cipla Vs Novartis – Patent Case

The Delhi High Court's Division Bench maintained a single judge's ruling prohibiting Cipla, an
Indian pharmaceutical company, “from selling medicines containing any type of Indacaterol,
a respiratory medication for which Novartis holds a patent. Novartis offered Indacaterol in
India under the brand name ONBREZ to treat chronic obstructive pulmonary disease
(COPD). Indacaterol was not manufactured by Novartis in India; instead, it was made in
Switzerland and imported into India by Lupin, another pharmaceutical business.”

Cipla's main“defence was that Indacaterol was not made in India and was imported in
limited amounts by Lupin, therefore it didn't fulfil patient demand there; that Novartis'
medicine was five times more expensive than Cipla's. Because Novartis was not enforcing
the patent in India, Cipla argued that it should be permitted to market Indacaterol. Cipla
argued that the public interest would be served if an injunction against it was permitted to
remain in place while patients' pleas in India were ignored.”

In response to Cipla's arguments, “Novartis stated that the fact that the product was not
manufactured in India did not mean that the patent was not being worked in India, because
sufficient quantities of the drug were imported into India to meet the needs of COPD
patients, and the imported drugs met local requirements. Novartis refuted Cipla's COPD
patient figures in India, claiming that COPD patients did not include asthma-like respiratory
symptoms or chronic bronchitis and as a result, there were fewer COPD patients in India
than Cipla reported. The court, however, did not look into the disparities in numbers, stating
that the patients may be deemed many. Cipla had also sought to pass off Novartis'
trademark ONBERZ with its own mark, UNIBREZ, in another litigation brought by Novartis,
which Novartis said was in bad faith. Cipla agreed not to use the UNIBREZ mark in the future
as part of the settlement.””

After hearing the parties' arguments, “the court decided that patents are awarded to
stimulate the development of ideas on a commercial scale and to the utmost degree
practically possible. Another point to examine was that patents should not obstruct the
preservation of public health and nutrition, and that they should be used to foster public
interest in areas critical to India's socioeconomic and technical growth. The crucial

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component was that sufficient quantities of the medicine were made available through
imports, and that drug manufacturing was not required for the patent to work in India; this
could also be accomplished if the medication in issue was imported into India. However, in
the issue at hand, the court decided that whether the volume of imports was sufficient to
address the needs of COPD patients in India would be a question of trial evidence. Most
crucially, the court ruled that a patent that operated in India did not need to be
manufactured in India. Cipla had also failed to make its argument that issuing the injunction
would be against the public interest, and had failed to adequately dispute the patent's
validity, according to the court. As a result, the Division Bench confirmed the single judge's
decision and dismissed Cipla's appeal.This decision is another step toward safeguarding
pharma businesses' intellectual property in India, as well as the patentee's rights, so that
they are not neglected in the name of public interest. It went on to say that working a
patent in India via manufacturing isn't essential since imports might also be deemed
working a patent in India.

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Conclusion

One of the most crucuial and powerful intellectual property right is a patent, “because
inventions have enormous industrial applications and hence the potential to make a lot of
money. Every country will have an intellectual property system, which will consist of laws
and organisations that make innovations and other intellectual works easier to produce.
Individuals and businesses may get a lot of bang for their buck when it comes to developing
new technology thanks to patents. In the quest for how, where, and when to patent, an
intelligent strategy should be used that matches corporate interests to adopt the
technology with a wide variety of possibilities. For example, by focusing on international
concerns and rules in certain countries, a corporation might save money and strengthen the
rights it has obtained through patents. While many nations must migrate from a process to
a product patent system, there is no systematic examination of the legislation that must be
considered. When compared to process patents, compulsory licencing can help to reduce
the welfare-reducing effect of product patents. The TRIPs' profit-driven paradigm is
unsuitable for the health requirements of developing and underdeveloped nations. The
modified Patents Act of 1970, in its current form, is a profit-driven legislation. Perhaps
emerging nations haven't fully embraced product patents since it will ultimately harm their
country and consumers who aren't yet financially secure on a global scale. Granting process
patents will aid such nations in increasing innovation and promoting healthy and effective
product pricing. As a developing country, India supports the awarding of both process and
product patents, but not product patents. The rationale for this is because, at the end of the
day, the government should only enact laws after thoroughly analysing and comprehending
the country's situation, rather than just following the lead of industrialised countries.”

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References
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2. http://www.jstor.org/stable/4407881 “Dasgupta, Biplab. “Patent Lies and

Latent Danger: A Study of the Political Economy of Patent in India. Economic and
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979–93,” 3. https://patentsrewind.wordpress.com/tag/novartis-vs
cipla/#:~:text=The%20entire%20controversy%20is%20respect,Novartis
%20hold s%20a%20patent%20for.&text=An%20order%20was%20passed
%20by,the%20o rder%20of%20January%202015.
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6. http://www.livemint.com/2008/07/09215015/
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