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Facts:-

y On 17th May 2006, Swiss pharma company Novartis Ltd. filed two cases challenging therejection of the Gleevec patent application and the Indian Patent Law.

y Gleevec is produced and marketed internationally by Novartisy Various Indiangeneric producers like Cipla, Ran baxy, Natco also manufactured it and

sell it in India & other developing countries.

y Novartis sells Gleevec at Rs. 1.44 million (US$ 26'000) per patient per year and itsGeneric versions in the Indian market are priced at about Rs. 96'000 (US$ 2100) per

patient per year.

y Novartis is charging high prices for Gleevec worldwide and it is not affordable in manycountries as one has to take it for his whole life.

y As there is very few buyers in India, Novartis started a drug donation program to promotethe drug & to see the market capabilities.

y In 1998 Novartis filed an application in the Chennai Patent Office for a patent onGleevec & in November 2003 obtained exclusive marketing rights (EMR) till patent was

grantedincase the patent was rejected the EMR would be cancelled.

y The EMR prevented Indian pharmaceutical companies from producing & sellingaffordable generic versions of the drug.

y People depended ongeneric version had suffered lot.y In 2005 India changed its patent law to become TRIPS compliant.y Thus the Indian patent law allows for any person orgroup to oppose a patent application.y Thus Cancer Patients Aid Association filed an opposition on behalf of cancer patients in

the Chennai patent office where the application of Novartis was pending.y In January 2006 the Chennai Patent office rejected Novartis patent application on the

ground that the application claimed 'only a new form of an old drug'.

y The second case filed by Novartis challenges the constitutionality of section 3(d) of theIndian Patents Act, claiming that the section is not in compliance with the TRIPS

agreement and hence should be declared unconstitutional.

INDIA & TRIPS AGREEMENT:-

When India became fully compliant with the TRIPS Agreement and introduced a productpatent regime in 2005, it coupled its law with a critical safeguard of refusing patents on

discoveries of new forms or new uses of known substances. The Indian patent law does not

consider such discoveries as inventions, unless an enhancement in efficacy is proven, and

therefore patents should not be granted. This is in accordance with the TRIPS Agreement which

does not define what an invention is and allows WTO countries to freely determine the

appropriate method of implementing the provisions ofTRIPS. Indeed the Doha declaration

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requires that the TRIPS Agreement is implemented in such a manner that it allows for measures

to ensure access to medicines for all. Section 3 (d) is an example of such a provision.

The TRIPS Agreement requires Member countries to make patents available for any

inventions, whether products or processes, in all fields of technology without discrimination,

subject to the normal tests of novelty, inventiveness and industrial applicability. It is alsorequired that patents be available and patent rights en joyable without discrimination as to the

place of invention and whether products are imported or locally produced (Article 27.1).

ANALYSIS:-

In January 2004, the court granted Novartis an injunction, restraining companies such as Cipla,

Ranbaxy and Sun from manufacturing, selling, distributing or exporting the drug. The injunction

was later made absolute by a single Judge of the High Court.

Once the generic manufacturers stopped producing Glivec, the price of the drug jumped from

approximately Rs.10, 000 for a month's requirement to around Rs.1, 20,000.

Indian drug companies went in appeal, which was heard by a Division Bench of the Madras High

Court. They contended that Novartis had obtained a patent in the U.S. and Canada in respect of

'pyramadine derivatives and processes for preparation thereof'. They argued that no patent was

filed in India for imatinib mesylate. The EMR has been fiercely challenged in courts by generic

producers of the drug on the grounds that the compound being a derivative of a molecule known

prior to 1995 did not satisfy the novelty criterion in the Patents Act.

Novartis said that the EMR was conferred for a period of five years, or until an order was passed

on the patent claim in India, whichever was earlier. Novartis in 1997 applied forgrant of patent

for the drugglivec in the patent office in Chennai.

In 2005, the patent act was amended. The Amendment Act 2005 granting product patent,

provides that EMRs would either be replaced by patents (ifgranted) or cancelled (if patents were

rejected).

By way of opposition, Cipla Limited along with othergeneric producers filed their representation

under the Patents Act, 1970 sec. 25(1) as amended by Patents (Amendment) Act, 2005 and thePatents Rules, 2003, r. 55 as amended by Patents (Amendment) Rules, 2005. The following two

issues will be argued.

Whether the product applied for patents qualified to be an invention as the product was

anticipated by prior publication and obviousness

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Whether the Patent Specification brought out any improvement in the efficacy of the beta

crystals over the known substance as required by Sec.3(d) of the Patents Act, 1970 as amended

by Patents (Amendment) Act, 2005

The Assistant Controller held imatinib mesylate is already known from prior publications

because the claims 6 to 23 of the US Patent claim a pharmaceutically acceptable salt of the basecompound and the patent term extension certificate, specifically mentions imatinib mesylate as

the product. Further the US Patent discloses methanesulphonic acid as one of the salt forming

groups and the patent specification clearly states that the required acid addition salts are obtained

in a customary manner. Also that imatinib mesylate normally exist in the beta crystals form,

which is thermodynamically most stable product and thus the invention is obvious and

anticipated by prior publication; hence not an invention under the Patents Act.

The Controller agreed with the contention of the opponent that a difference of 30% on

comparing the relative bioavailability of the freebase with that of the beta crystal form of

imatinib mesylate which could be due to difference in their solubility in water, did not bring outany improvement in the efficacy of the beta crystals over the known substance and thus could not

be patnetable under Sec. 3(d) of the Patents Act. Mr.V.Rengaswamy, Asst. Controller of Patents

& Designs, the learned judge in the present case refused to proceed with the application for

Patent.

Aggrieved by the decision of the Indian Patent Office in Chennai, Novartis has filed a Writ

Petition before the Chennai High Court in Jan 2006 challenging the constitutional validity of

Section 3 (d) ofThe Patents Act and also for quashing of the order of the Patent Office for its

refusal to grant product patent. It asked the court to declare s3(d) as beingnon compliant with

TRIPS and arbitrary and in violation ofAr14 of the constitution.

OnAug 7 2007 the Madras HC dismissed the petition filed by the Swiss pharma. The court held

that s3 (d) of the Patents Act as amended in 2005 along with its explanation is valid. This

decision has stymied Novartis move to challenge the rejection of patent application by the patent

office.

The appeal against the rejection of patent has to be decided by the IPAB. The court transferred

the case to IPAB after the government announced the setting up of IPAB and declared the

transfer of all pending IP related appeals to it The IPAB has appointed former Patent Controller

General S Chandresekaran to hear the appeal. Novartis filed a petition in the IPA

B to appointnew member in place of S Chandresekaran on the ground that he was responsible for the patent

application rejection. IPAN dismissed the petition.

OnAug 1 2007 Novartis filed an appeal in the Madras HC challenging IPAB s decision.

The appeal is pending for hearing in the HC. Also the appeal against decision of patent office

rejecting the patent for Glivec is pending. The decision of the Madras HC is a landmark decision

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after the amendment act of 2005. The decision makes the appeal for rejection of patent weak;

thus drugs being available at economic rates throughout the county