TRIALS AND TRIPS-ULATIONS: INDIAN PATENT

LAW AND NOVARTIS AG V. UNION OF INDIA

By Linda L. Lee

I. INTRODUCTION
When pharmaceutical company Novartis challenged the rejection of its
patent application for the leukemia drug Gleevec in Novartis AG v. Union
of India,1 it became the first major legal challenge to India’s newly
amended patent law. In 2005, India purportedly made the final changes
required to bring its intellectual property laws in compliance with the
Trade-Related Aspects of Intellectual Property Rights (TRIPS), the World
Trade Organization’s (WTO) minimum standards for intellectual property
protection,2 but its patent law is still fraught with a number of controver-
sial provisions. The ability of pharmaceutical companies such as Novartis
to secure patent protection in India not only is important in creating incen-
tives for pharmaceutical research, but also greatly affects the Indian ge-
neric drug industry, and therefore the price of medicine available to pa-
tients. India is the world’s second most populous country3 and the second-
fastest growing major economy,4 but has 70% of its population living on
less than $2 per day,5 making Novartis AG of paramount importance.

© 2008 Linda L. Lee.

1. Novartis AG v. Union of India, (2007) 4 MADRAS L.J. 1153, available at
http://www.scribd.com/doc/456550/High-Court-order-Novartis-Union-of-India.
2. Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15,
1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, Le-
gal Instruments—Results of the Uruguay Round, 33 I.L.M. 81 (1994) [hereinafter
TRIPS], arts. 27-38 (setting forth obligations for patent protection). The WTO granted
developing countries and least developed countries (LDC) transitional periods to comply
with all the provisions of TRIPS. See TRIPS, art. 65.4 (“To the extent that a developing
country Member is obliged by this Agreement to extend product patent protection to ar-
eas of technology not so protectable in its territory on the general date of application of
this Agreement for that Member, . . . it may delay the application of the provisions on
product patents of Section 5 of Part II to such areas of technology for an additional period
of five years.”). Under this provision, India had a January 1, 2005 deadline to fully com-
ply with TRIPS. See infra Part II.D.3.
3. Central Intelligence Agency, Rank Order—Population, https://www.cia.gov/-
librarypublications/the-world-factbook/rankorder/2119rank.html (last visited Apr. 5,
2008). See also CENTRAL INTELLIGENCE AGENCY, THE 2007 WORLD FACTBOOK 261
(2006).
4. U.S. Dept. of Agriculture, Economic Research Service, Briefing Room—India,
http://www.ers.usda.gov/Briefing/India/ (last visited Oct. 28, 2007).
5. Fareed Zakaria, India Rising, NEWSWEEK, Mar. 6, 2006, at 38.
282 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 23:281

India joined the WTO at the end of the twentieth century,6 marking In-
dia’s entry into the global economy, but also requiring compliance with
international standards for its intellectual property regime. Under TRIPS
obligations, developing countries such as India must strengthen its intel-
lectual property rights (IPRs) to conform to the stronger intellectual prop-
erty regimes prevalent in developed countries in order to be members of
the WTO.7 Changes in Indian intellectual property law would undoubtedly
affect many different sectors,8 but its influence on public health is of par-
ticular concern.9 Like many developing countries prior to joining the
WTO, India’s patent law only allowed for process, but not product, patents
for pharmaceutical inventions.10 Inventors generally prefer to have
stronger patent protection through product rather than process patents,11
and the patent regimes of developed countries predominately protect end
products.12 In contrast, developing nations prefer regimes that only recog-

6. India and the WTO: Member Information, http://www.wto.org/english/-

thewto_e/countries_e/india_e.htm (last visited Oct. 28, 2007).
7. Some scholars see TRIPS as a product of unequal bargaining between developed
and developing countries, or as a result of coercion by developed countries. Developing
countries were unsatisfied with the imposition of strong IPRs, but had to agree to the de-
mands of developed countries in order to enjoy the benefits of international trade. See
Peter K. Yu, TRIPS and Its Discontents, 10 MARQ. INTELL. PROP. L. REV. 369, 370-79
(2006).
8. Id. at 383. (“[I]t is no surprise that less developed countries have been concerned
about the heightened protection required by the TRIPs Agreement and its deleterious
impact in the areas of agriculture, health, environment, education, and culture.”).
9. Carlos M. Correa, Public Health and Patent Legislation in Developing Coun-
tries, 3 TUL. J. TECH. & INTELL. PROP. 1, 3 (2001) (contending that IPRs and their impact
on access to medicines can have “life-or-death consequences”).
10. The 1970 Patents Act, § 5, stated:
In the case of inventions—(a) claiming substances intended for use, or
capable of being used, as food or as medicine or drug, or (b) relating to
substances prepared or produced by chemical processes (including al-
loys, optical class, semi-conductors and inter-metallic compounds), no
patent shall be granted in respect of claims for the substances them-
selves, but claims for the methods or processes of manufacture shall be
patentable.
The Patents Act, 1970, Act No. 39 of 1970, 27 India A.I.R. Manual 450, available at
http://www.wipo.int/clea/docs_new/pdf/en/in/in004en.pdf [hereinafter 1970 Act] (em-
phasis added).
11. Process patents often pose enforcement problems such as difficulty in detecting
infringement (patentee may be unable to obtain evidence regarding the ultimate use of a
product). Furthermore, process patents are subservient to product patents because a proc-
ess patent cannot be obtained when a patent on the composition is still in effect. ROBERT
P. MERGES & JOHN F. DUFFY, PATENT LAW AND POLICY: CASES AND MATERIALS 387-92
(4th ed. 2007).
12. See infra note 100.
2008] INDIAN PATENT LAW AND NOVARTIS AG v. UNION OF INDIA 283

nize process patents such that their domestic industries can benefit by in-
venting cheaper methods of making expensive patented products.13 Thus,
India’s former patent regime favored domestic generic manufacturers who
had been able to produce drugs for a fraction of the prices in the United
States and Europe.14
Under the 2005 amendments to the Indian patent law, one of the most
significant changes was the extension of product patents to pharmaceutical
substances,15 creating an intellectual property regime that shifts the bal-
ance from domestic generic manufacturers in favor of multinational phar-
maceutical companies. On one hand, given the high cost of health-related
innovation, strong intellectual property rights are crucial in providing in-
centives for the private sector to engage in costly and risky research and
development in the fields of pharmaceuticals and biotechnology.16 Patents
motivate companies to engage in capital-intensive and inherently risky
biomedical research because of the possibility of charging monopoly
prices and reaping high profits.17 On the other hand, that very monopoly
prevents generic manufacturing and affects the price and availability of the
finished medicine to consumers.18 A successful intellectual property re-
gime must strike a balance between creating incentives for innovation and
protecting consumers’ access to essential medicine.19 Developing coun-
tries argue that because the needs and interests of their countries are dif-
ferent than those of developed countries, they should have flexibility in
enacting intellectual property regimes that offer the proper balance for
their individual situations.20
The debate about balancing strong IPRs and access to essential medi-
cine is especially important to India. Historically, India has possessed a

13. Srividhya Ragavan, A “Patent” Restriction in Research & Development: In-

fringers or Innovators?, 2004 U. ILL. J.L. TECH. & POL’Y 73, 76 (2004).
14. Rishi Gupta, TRIPS Compliance: Dealing With the Consequences of Drug Pat-
ents in India, 26 HOUS. J. INT’L L. 599, 602 (2004).
15. The Patents (Amendment) Act, 2005, No. 15, Acts of Parliament, 2005, avail-
able at http://www.wipo.int/clea/docs_new/pdf/en/in/in018en.pdf. Section 5 of the origi-
nal India Patents Act, 1970, was deleted.
16. Correa, supra note 9, at 3.
17. Rebecca S. Eisenberg, Patents, Product Exclusivity, and Information Dissemina-
tion: How Law Directs Biopharmaceutical Research and Development, 72 FORDHAM L.
REV. 477, 479 (2003).
18. Correa, supra note 9, at 3.
19. Id.
20. For example, less developed countries may prefer to promote the transfer of
technologies needed for development, rather than create strong monopolies. See id. at 4-
6.
284 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 23:281

thriving generic drug manufacturing industry21 that provided affordable

medicine to the Indian population and other developing countries.22 More
recently, India is becoming known as a science and technology innovator,
rather than just an imitator,23 which has stimulated a need for stronger
IPRs. The 2005 amendments to the Indian patent law have the potential to
considerably upset the existing state of affairs. In this context, it is not
surprising that the TRIPS-imposed changes to India’s patent law and their
effects on public health prompted many constituencies to voice concerns,
including those from multinational pharmaceutical companies,24 domestic
Indian pharmaceutical manufacturers,25 Western governments,26 groups

21. Janice Mueller, The Tiger Awakens: The Tumultuous Transformation of India’s
Patent System and the Rise of Indian Pharmaceutical Innovation, 68 U. PITT. L. REV.
491, 495 [hereinafter Mueller, The Tiger Awakens].
22. India exports two-thirds of its generic drug production to other developing coun-
tries, most of which lack any domestic manufacturing capability. Id. See also Vijay Ya-
lamanchili, State of India’s TRIPS-compliant Patent Regime, 26 BIOTECH. L. REP. 211,
211 (2007) (explaining that India generic manufacturers supply over 50% of all antiretro-
viral drugs used to treat AIDS patients in developing countries, at 5% the price of what
US and European pharmaceutical companies charge).
23. Mueller, The Tiger Awakens, supra note 21, at 500 (explaining that while India
has been well-known for its contributions in information technology and software, India
is starting to innovate in other industries as well).
24. See Press Release, Pharmaceutical Research and Manufacturers of America
(PhRMA), PhRMA Welcomes Passage of Patent Bill in India (Mar. 23, 2005),
http://www.phrma.org/news_room/press_releases/phrma_welcomes_passage_of_patent_
bill_in_india (last visited Dec. 20, 2007) (applauding India’s Patents (Amendment) Act
of 2005, but remaining concerned that particular sections of the Act rendered India non-
compliant with minimum TRIPS obligations). See also The Organisation of Pharmaceuti-
cal Producers of India’s (OPPI) Position on Trade Related Aspects of Intellectual Prop-
erty Rights (TRIPS) (on file with Berkeley Technology Law Journal),
http://www.indiaoppi.com/pharmindindia.htm (last visited Dec. 20, 2007) (stating that
Indian’s patent law does not recognize incremental innovations and such patents for in-
cremental innovations would hinder long-term research and development). PhRMA
represents the interests of leading U.S. pharmaceutical and biotechnology companies, and
OPPI is an Indian trade group representing MNCs’ interests in India.
25. See Indian Drug Manufacturer’s Association (IDMA), http://www.idma-
assn.org/Patents.html (last visited Dec. 20, 2007) (taking the position that the 2005
Amendment would have adverse effects on public health and the Indian pharmaceutical
industry because generic companies can no longer reverse engineer, resulting in multina-
tional firms monopolizing the pharmaceutical industry in India). IDMA has a member-
ship of over 600 wholly-Indian large, medium and small companies.
26. Letter from Representative Henry A. Waxman, 30th District of California, to
Daniel Vasella, Chairman and CEO of Novartis, available at http://oversight.house.gov/-
Documents/20070213183300-13686.pdf (last visited Dec. 20, 2007) (urging Novartis’s
CEO to reconsider Novartis’s position in India). See also Letter from Five Members of
the European Parliament to Novartis CEO Daniel Vasella, available at
2008] INDIAN PATENT LAW AND NOVARTIS AG v. UNION OF INDIA 285

concerned with access to medicine,27 and lawyers and commentators from

around the world.28 Finding a practical balance between long-term invest-
ment in the pharmaceutical industry and keeping essential medicines af-
fordable is therefore a continuing point of tension.
Novartis AG came amidst these competing concerns. It is a challenge
to one of the most controversial provisions introduced by the 2005
amendments, Section 3(d), which protects against patenting trivial im-
provements of known molecules.29 This provision is widely regarded as a
“public health safeguard”30 that aims to prevent “evergreening,” a practice
by which pharmaceutical companies attempt to extend patent protection
by filing new patents over the process, dosage form, or method of admini-
stration, rather than the active ingredient itself.31 Section 3(d) attempts to
regulate the granting of such patents by limiting the scope of protection
available for derivatives of known substances and new uses of known sub-
stance.32 After the Indian patent office rejected Novartis’s patent applica-
tion for Gleevec on Section 3(d) grounds, Novartis sued the Government
of India on a number of claims, including a challenge on the TRIPS-
compliance of Section 3(d).33
Part II of this Note places Novartis AG in context of the historical de-
velopment of patent law in India (including India’s recent and final steps
in bringing its patent law in compliance with TRIPS) and the expansion of
the pharmaceutical industry in India. Part III reports on Novartis’s current

http://www.cptech.org/ip/health/c/india/meps02092007.html (last visited Dec. 20, 2007)

(reaffirming European Parliament’s support of India’s implementation of pro-public
health patent laws).
27. See NGO statement on Novartis challenge to Indian Patents Act,
http://www.cptech.org/ip/health/c/india/meps02092007.html (last visited Dec. 20, 2007)
(expressing the joint views of several NGOs and urging Novartis to drop its case in In-
dia).
28. See, e.g., Janice Mueller, Taking TRIPS to India—Novartis, Patent Law, and
Access to Medicines, 356 NEW ENGL. J. MED. 541 (2007) [hereinafter Mueller, Taking
TRIPS to India].
29. Vijay, supra note 22, at 223. Other commentators contend that Section 3(d) is a
codified nonobviousness standard for pharmaceutical substances. Essentially, Section
3(d) requires a higher nonobviousness standard for pharmaceutical and chemical sub-
stances. See Posting of Shamnad Basheer to Spicy IP, India Patent Act Faces TRIPS
Challenge, http://spicyipindia.blogspot.com/2006/09/indian-patent-act-faces-trips.html
(Oct. 1, 2006). See infra note 212 and surrounding text.
30. Vijay, supra note 22, at 223.
31. See Mueller, The Tiger Awakens, supra note 21, at 550-51.
32. Derivatives of known substances must show “enhancement of . . . known effi-
cacy” and new uses of known substances must “[result] in a new product or [employ] a
new reactant.” See infra Part IV.
33. See infra Section III.C.
286 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 23:281

litigation in India, including the role of the newly formed Intellectual

Property Appellate Board (IPAB). Part IV describes the elements of Sec-
tion 3(d) and argues that Section 3(d) is not a radical departure from the
approaches taken by developed countries to limit the patentability of de-
rivatives and new uses of existing pharmaceutical compounds. Finally,
this Note concludes with some recommendations on how India should bal-
ance protecting access to affordable medicine and creating incentives for
increased innovation.

II. INDIA’S LEGAL SYSTEM, PATENT LAW, AND

PHARMACEUTICAL INDUSTRY
A. Basics of Indian Legal System and Intellectual Property
Regime
The modern Indian legal system is based primarily on the British
common law model.34 After gaining independence from the British em-
pire, India passed a national constitution in 1950.35 The main sources of
law in India include the constitution, statutory laws, customary laws and
case law.36 Hindu and Muslim law are still prevalent for some matters
such as family law.37
The types of intellectual property that are protected by law in India in-
clude patents, trademarks, copyrights, geographic indications, industrial
designs, designs of integrated circuits, and plant varieties.38 India is a
member of several international organizations and a signatory of several
treaties, including the World Intellectual Property Organization (WIPO),
the Paris Convention for the Protection of Industrial Property, the Berne
Convention for the Protection of Literary and Artistic Works, and the Pat-
ent Cooperation Treaty (PCT).39
B. Administrative Regulation of Patent Regime
The Office of the Controller General of Patents, Designs and Trade-
marks (CGPDTM), a subordinate office under the Department of Indus-
trial Policy and Promotion (DIPP), administers laws relating to patents,

34. Jayanth K. Krishnan, India, in LEGAL SYSTEMS OF THE WORLD : A POLITICAL,

SOCIAL, AND CULTURAL ENCYCLOPEDIA 693-95 (Herbert M. Kritzer ed., 2003).
35. Id.
36. Id.
37. Id.
38. India Department of Industrial Policy & Promotion, Intellectual Property,
http://dipp.nic.in/ipr.htm (last visited Dec. 20, 2007).
39. Id.
2008] INDIAN PATENT LAW AND NOVARTIS AG v. UNION OF INDIA 287

trademarks, industrial designs, and geographic indications.40 The

CGPDTM oversees the functioning of the Indian Patent Office, based in
Kolkata with branches in Chennai, New Delhi, and Mumbai.41 The central
government appoints the Controller of Patents, patent examiners, and
various officers.42 The Patent Act vests most powers in the Controller of
Patents and stipulates that the Controller may delegate powers to subordi-
nate officers.43
C. Indian Judiciary and the IPAB
A unique feature of the Indian judicial system is that although its fed-
eral system is composed of autonomous states united by a federal govern-
ment, India has a single integrated system of courts characterized by a
high degree of uniformity.44 The Supreme Court sits at the top, followed
by High Courts for each state, followed by a hierarchy of subordinate
courts.45 The Supreme Court of India hears appeals from subordinate
courts and public-interest cases; it has original jurisdiction over disputes
either between the central government and individual states, or between
the states.46 Each state and union territory has a High Court that has appel-
late and some original jurisdiction.47
The Indian judicial system also comprises specialized tribunals, in-
cluding the Intellectual Property Appellate Board (IPAB).48 The Indian

40. India Controller General of Patents, Designs and Trademarks,

http://www.ipindia.nic.in/ (last visited Dec. 20, 2007). Other governmental departments
administer laws relating to other forms of intellectual property. For example, the Depart-
ment of Higher Education administers copyright laws. India Department of Industrial
Policy & Promotion, Intellectual Property, supra note 38.
41. Addresses and Names of the Contact Persons of the Intellectual Property Of-
fices, http://ipindia.nic.in/ipr/patent/ipo_office_add.htm (last visited Dec. 20, 2007).
42. Shamnad Basheer, “Policy Style” Reasoning at the Indian Patent Office, 3 IN-
TELLECTUAL PROPERTY QUARTERLY 309, 319 (2005), available at
http://ssrn.com/abstract=829464. See also Posting of Shamnad Basheer to Spicy IP, A
Bureaucratic Babu as IP Chief!!, http://spicyipindia.blogspot.com/2005/12/bureaucratic-
babu-as-ip-chief.html (Dec. 16, 2005) (criticizing the Indian government for appointing
Controller of Patents without appropriate technical and legal qualifications).
43. See Basheer, “Policy Style” Reasoning at the Indian Patent Office, supra note
42, at 319.
44. Krishnan, supra note 34 at 693.
45. Id. at 698.
46. Id. at 696.
47. Id. at 697. There are twenty-one High Courts in India. Three of them have juris-
diction over more than one state.
48. See Intellectual Property Appellate Board, http://www.ipab.tn.nic.in/ [hereinaf-
ter IPAB] (last visited Dec. 20, 2007).
288 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 23:281

government established the IPAB on September 15, 200349 to hear appeals

from the decisions of the Registrar of Trademarks and Geographic Indica-
tions, and as of April 2007, from the Controller of Patents.50 The IPAB is
headquartered in Chennai and has additional branches in Mumbai, New
Delhi, Kolkata, and Ahmedabab.51 A key difference between the IPAB
and other judicial tribunals is that the composition of the IPAB must in-
clude at least one “technical” member in the board in addition to at least
one “legal” member.52 The Indian government appoints all members of the
IPAB.53 Before the creation of the IPAB, the High Courts heard appeals
from the various intellectual property administrative offices.54 Following
the creation of the IPAB, cases pending before the High Courts that fell
under the jurisdiction of the IPAB were transferred to the IPAB.55 While
the IPAB now has jurisdiction over administrative patent challenges, the
District Courts still have original jurisdiction over patent infringement
disputes.56 The High Courts have jurisdiction over infringement suits in-
volving a challenge on the validity of the patent.57
In the past, the IPAB was active in adjudicating trademark cases58 but
not patent matters because the government had not appointed to the board
a “technical” member familiar with patent law until April 2007.59 Thus,

49. Id.
50. When the IPAB was established in 2003, it had jurisdiction only over appeals
against the Registrar of Trademarks and Geographic Indications. The Indian government
added jurisdiction over appeals against the Controller of Patents through a notification
promulgated on April 3, 2007, available at http://ipindia.nic.in/ipr/patent/gazetteofindia-
_apr2007.pdf [hereinafter April 3, 2007 Gazette] (last visited Dec. 20, 2007).
51. IPAB, supra note 48.
52. Id.
53. Novartis: Frequently Asked Questions, http://www.novartis.com/newsroom/-
india-glivec-patent-case/faq.shtml#9 (last visited Dec. 20, 2007).
54. Posting of Shamnad Basheer to Spicy IP, Novartis Case Before the IPAB?,
http://spicyipindia.blogspot.com/2007/04/novartis-case-before-ipab.html (Apr. 3, 2007).
55. However, infringement and criminal proceedings would be continued in the
High Courts. IPAB, supra note 48.
56. Tarun Mathur, Patent Litigation Trend in India, June 22, 2007,
http://ssrn.com/abstract=995994, 14. Administrative challenges are cases that involve the
Patent Office as the defendant, including disputes on grant of a patent, patent invalida-
tion, and compulsory licensing.
57. Id.
58. Even though the IPAB technically has jurisdiction over patent cases, the official
IPAB website frequently only mentions trademark law and disputes. See IPAB, supra
note 48.
59. Novartis Case Before the IPAB?, supra note 54.
2008] INDIAN PATENT LAW AND NOVARTIS AG v. UNION OF INDIA 289

until Novartis AG, the patent division of the IPAB existed in theory but
was not in operation with functioning board members.60
Given that the IPAB is newly established, the outcome of having a
dedicated tribunal to hear appeals of intellectual property cases in India is
uncertain. For example, there is no provision for any further appeals from
a decision of the IPAB, and it appears that further appeals would make
their way back to the High Courts.61 Furthermore, all patent infringement
proceedings are heard by the District and High Courts, even if the pro-
ceedings involve a challenge to revoke a patent issued by the Controller of
Patents.62 Will the IPAB lead to more speedy and fair resolution of
cases?63 Or will the relative inexperience of the IPAB, in particular with
patent cases, mean that adjudication within the state and federal court sys-
tem would be more prudent at this stage?64
D. Development of Patent Law in India
The historical development of India’s patent regime can be divided
into three stages.65
1. India’s Colonial Era to 1970: Recognition of Need to Reform
Indian Patent Law to Increase Patent Filing and Stimulate
Innovation
The first stage covers India’s colonial era through 1970. During colo-
nial India, the British administration implemented India’s first patent stat-
ute, India’s Act VI of 1856, which was based on British patent law of
1852.66 The law provided certain exclusive privileges to inventors of new
manufacturers for a fourteen-year term.67 In 1911, the British enacted the
Indian Patents and Designs Act, which created a Controller of Patents to

60. Id. S. Chandrasekharan, former Controller of the Madras Patent Office, was ap-
pointed as the technical member in June 2007. See infra Section III.D.
61. Novartis Case Before the IPAB?, supra note 54.
62. Mathur, Patent Litigation Trend in India, supra note 56. In contrast, the Federal
Circuit in the United States has exclusive jurisdiction over appeals from all cases arising
in part from the patent laws, including patent validity and infringement. 4 JOHN GLAD-
STONE MILLS III ET AL., PAT. L. FUNDAMENTALS § 20:110 (2d ed. 2002).
63. India’s judicial system is notoriously slow. Some sources have described a back-
log of 18 million pending cases, of which 16 million cases are criminal ones. See, e.g.,
India to set up fast track courts, http://news.bbc.co.uk/2/hi/south_asia/5227038.stm (last
visited Dec. 20, 2007).
64. See Novartis Case Before the IPAB?, supra note 54 (describing that practicing
attorneys in India are skeptical of the IPAB).
65. See Mueller, The Tiger Awakens, supra note 21, at 504-31.
66. Id. at 506.
67. Id.
290 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 23:281

oversee patent administration in India.68 Despite these developments and

the emergence of an industrialized economy,69 patent filing in India re-
mained low.70
Shortly after India gained independence from Great Britain in 1947,
the new government appointed a committee to review and revamp the pat-
ent law.71 Recovering from the oppressive colonial rule, the Indian gov-
ernment wanted a “patent system [that] was more conducive to national
interests.”72 In 1950, the committee issued the Chand Report, which re-
vealed the need to “stimulate invention and encourage exploitation of new
inventions for industrial purposes” and recommended changes such as in-
troducing compulsory licensing provisions.73
The government commissioned a second report, the Ayyangar Report,
in 1959.74 The Ayyangar Committee found that multinational companies
were exploiting India’s patent system to achieve monopolistic control;
foreigners held about 80-90% of Indian patents, but practiced less than
10% of those patents in India.75 The report recommended “radical” modi-
fications to India’s patent law and became the foundation of the modern
Indian patent system.76 Reform, however, would not come until 1970, af-
ter more than a decade of long negotiations and debates in the Indian par-
liament.77
2. 1970 to 1986: The India Patents Act of 1970 Prohibits Patents
on Pharmaceutical Products, Stimulating India’s Generic
Drug Manufacturing Industry
The second stage of Indian patent law began when India enacted its
first independently drafted patent law, the India Patents Act of 1970 (1970
Act), which repealed the 1911 Act.78 The 1970 Act expressly revoked the

68. Id. at 507.

69. Id. By World War I, India was ranked fourteenth among industrialized nations
of the world. Production of textiles, food processing, and metals were among the domi-
nant industries. Id.
70. Id. at 508 (noting that by India’s independence, in 1947, the Indian Patent Office
received only 2,610 annual filings despite a population of about 400 million).
71. Id. at 510-11.
72. Id. at 511.
73. Id.
74. Id. at 511-12.
75. Shamnad Basheer, India’s Tryst with TRIPS: The Patents (Amendment) Act
2005, 1 INDIAN J.L. & TECH. 15, 18 (2005), available at http://ssrn.com/abstract=764066.
76. Mueller, The Tiger Awakens, supra note 21, at 511-12.
77. Id. at 512.
78. Id.
2008] INDIAN PATENT LAW AND NOVARTIS AG v. UNION OF INDIA 291

patentability of pharmaceutical products.79 The 1970 Act prohibited pat-

ents on “substances intended for use, or capable of being used as food or
medicine or drug, or . . . relating to substances prepared or produced by
chemical processes (including alloys, optical glass, semi-conductors and
inter-metallic compounds).”80 However, the 1970 Act permitted patents on
processes for making pharmaceutical compounds.81 Through the 1970 Act,
the Indian government made a deliberate choice to stimulate the lagging
Indian economy by promoting domestic drug manufacturing.82 Over the
ensuing years, India developed a worldwide reputation as a producer of
low-price generic drugs.83 India is currently the biggest producer of ge-
neric drugs by volume84 and the leading exporter of medicine to develop-
ing countries,85 and it supplies a large percentage of AIDS medicines used
in developing countries.86

79. 1970 Act, supra note 10, §5. Both the 1856 and 1911 Acts permitted patenting
of pharmaceutical products, even though the domestic pharmaceutical industry was a
minor sector at that time. Mueller, The Tiger Awakens, supra note 21, at 508.
80. 1970 Act, supra note 10, § 5(a)-(b).
81. 1970 Act, supra note 10, § 5. The patent term of process patents for pharmaceu-
tical compounds was shorter than the term of other types of patents:
[I]n respect of an invention claiming the method or process of manufac-
ture of a substance, where the substance is intended for use, or is capa-
ble of being used, as food or as a medicine or drug, be five years from
the date of sealing of the patent, or seven years from the date of the
patent whichever period is shorter; . . .
Id. § 53(a).
82. Mueller, The Tiger Awakens, supra note 21, at 514.
83. Id.
84. MÉDECINS SANS FRONTIÈRES (DOCTORS WITHOUT BORDERS), UNTANGLING THE
WEB OF PRICE REDUCTIONS: A PRICING GUIDE FOR THE PURCHASE OF ARVS FOR DEVEL-
OPING COUNTRIES 4 (8th ed. 2005), available at http://www.doctorswithoutborders.org/-
publications/reports/2005/untanglingthewebv8.pdf (last visited Dec. 20, 2007).
85. Press Release, Oxfam, Oxfam Targeted with Email Campaign as Novartis’ Le-
gal Action against India Approaches Climax (Feb. 15, 2007), http://www.oxfam.org/en/-
news/2007/pr070215_novartis (last visited Dec. 20, 2007).
86. See Press Release, Médecins Sans Frontières (Doctors Without Borders), Patent
Application For AIDS Drug Opposed For First Time in India: Patents in India Endanger
Global Access to Affordable Medicines and Treatment Scale-up (Mar. 30, 2006), avail-
able at http://www.doctorswithoutborders.org/pr/2006/03-30-2006_1.cfm (last visited
Mar. 28, 2008) (“Of the over 60,000 patients in nearly 30 countries in MSF projects, 84
percent receive generic AIDS medicines made in India.”).
292 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 23:281

3. 1986 to Present: An Uncertain Future for Generic Drug-

manufacturing After India Reforms Patent Law to be TRIPS-
Compliant.
The third stage encompasses the period from India’s participation in
the GATT (and later the WTO) to the present.87 India was one of the
original 140 member nations who became WTO members on January 1,
1995.88 Like many other developing countries at the time, India first op-
posed the inclusion of intellectual property rights in an international trade
agreement.89 However, in light of India’s declining economy in the 1980s
and fearing that it would be cut off from valuable western markets, India
agreed to conduct more serious negotiations on intellectual property provi-
sions in the WTO.90 Throughout the negotiations, India maintained the
position that patent protection should be tailored to the level of an individ-
ual country’s economic development.91
In order to belong to the WTO, India was required to comply with
TRIPS, which set out minimum standards of intellectual property protec-
tion.92 The basic provision of TRIPS delineating the scope of patentability,
Article 27.1, states that all member nations must make patents “available
for any inventions, whether products or processes, in all fields of technol-
ogy,” subject to standard requirements of novelty, utility, and nonobvious-
ness.93 Under the broad language of Article 27, all members must provide
full patent protection to pharmaceuticals.94

87. Mueller, The Tiger Awakens, supra note 21, at 505.

88. India and the WTO: Member Information, supra note 6.
89. Brazil, Argentina and Mexico were among the other countries initially opposed
to TRIPS. Mueller, The Tiger Awakens, supra note 21, at 517.
90. Id. at 517-18.
91. Id. at 518.
92. See TRIPS, supra note 2, arts. 27-38.
93. Article 27.1 is known as the “non-discrimination” clause. It states:
Subject to the provisions of paragraphs 2 and 3, patents shall be avail-
able for any inventions, whether products or processes, in all fields of
technology, provided that they are new, involve an inventive step and
are capable of industrial application. Subject to paragraph 4 of Arti-
cle 65, paragraph 8 of Article 70 and paragraph 3 of this Article, pat-
ents shall be available and patent rights enjoyable without discrimina-
tion as to the place of invention, the field of technology and whether
products are imported or locally produced.
TRIPS, supra note 2, art. 27.1. Article 27.2 provides for an “ordre public” exception:
Members may exclude from patentability inventions, the prevention
within their territory of the commercial exploitation of which is neces-
sary to protect ordre public or morality, including to protect human,
animal or plant life or health or to avoid serious prejudice to the envi-
2008] INDIAN PATENT LAW AND NOVARTIS AG v. UNION OF INDIA 293

The WTO granted India, as a developing country, a transition period to

bring its domestic intellectual property laws in compliance with TRIPS.95
Most notably, India had to amend its patent law to make patents available
for pharmaceutical products by January 1, 2005.96 In the interim, the 1970
Act underwent three amendments. The first amendment implemented the
“mailbox” rule, which stipulated that (a) India must provide a system so
that patent applications could be filed during the transition period, and (b)
the Indian Patent Office would examine those applications when India
started to grant pharmaceutical product patents.97 The second amendment

ronment, provided that such exclusion is not made merely because the
exploitation is prohibited by their law.
Id. art. 27.2. Article 27.3 provides further exception. Of relevance to pharmaceuticals and
health is clause (a), which exempts diagnostic, therapeutic and surgical methods:
Members may also exclude from patentability:
(a) diagnostic, therapeutic and surgical methods for the treatment of
humans or animals;
(b) plants and animals other than micro-organisms, and essentially bio-
logical processes for the production of plants or animals other than non-
biological and microbiological processes. However, Members shall
provide for the protection of plant varieties either by patents or by an
effective sui generis system or by any combination thereof. The provi-
sions of this subparagraph shall be reviewed four years after the date of
entry into force of the WTO Agreement.
Id. art. 27.3.
94. Notwithstanding the broad language of Article 27.1, TRIPS also contains certain
provisions to moderate Article 27.1’s coverage with regard to public health. For example,
Article 31 sets out specific provisions that member countries should follow under a com-
pulsory license, which enables a government to license of the use of a patented invention
to a third party or government agency without the consent of the patent holder. See id. art.
31. Article 6 and footnote 6 addresses parallel importation, stating that patentees may not
challenge the importation of a patented product marketed in another country because their
rights have been exhausted upon sale of the product. See id. art. 6. Furthermore, the Doha
Declaration on the TRIPS agreement and public health, adopted by the WTO Ministerial
Conference in Doha in 2001, reaffirmed that TRIPS does not prevent member countries
from “taking measures to protect public health.” World Trade Organization, Ministerial
Declaration on the TRIPS Agreement and Public Health, WT/MIN(01)/DEC/2, 41 ILM
755, 755 (2002), available at http://www.wto.org/english/thewto_e/minist_e/min01_e/-
mindecl_trips_e.pdf (last visited Dec. 20, 2007).
95. See generally TRIPS, supra note 2, art. 65.
96. See id. art. 65.4.
97. See id. art. 70.8. Patent applications for pharmaceutical products would be ac-
cepted and put away in a “mailbox” until 2005. Applications would be judged for “nov-
elty” on the basis of the filing date and not with reference to 2005, the year in which
pharmaceutical product patents were first incorporated into the patent regime. Id. In
1997, the US complained to WTO’s Dispute Settlement Body (DSB) that India’s patent
system was noncompliant with respect to its lack of a mailbox system as required by Ar-
294 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 23:281

lengthened the patent term to twenty years and modified the compulsory
licensing requirements and the burdens of proof for patent infringement.98
Finally, in 2005, the Indian government took its latest (and purportedly
last) step towards achieving TRIPS compliance by making pharmaceutical
products patentable.99 The availability of patent protection for pharmaceu-
tical products, as required by TRIPS Article 27.1’s broad nondiscrimina-
tion provision, has been a key difference between the patent regimes of
developed and developing countries.100
The Patents (Amendment) Act of 2005 (2005 Amendment) removed
the prohibition of product patents for pharmaceutical compounds, allow-
ing any company to seek both product and process patents in India.101
However, other provisions in the 2005 Amendment could potentially limit
the reach of product patent protection. One of the newly introduced provi-
sions, Section 3(d), which is the subject of the Novartis litigation, states
that the following are not patentable inventions:
The mere discovery of a new form of a known substance which
does not result in the enhancement of the known efficacy of that
substance or the mere discovery of any new property or new use
for a known substance or of the mere use of a known process,
machine or apparatus unless such known process results in a new
product or employs at least one new reactant.

ticle 70.8. The DSB held that India failed to meet its TRIPS obligations. Appellate Body
Report, India—Patent Protection for Pharmaceutical and Agricultural Chemical Prod-
ucts, ¶ 97, WT/DS50/AB/R (Dec. 19, 1997), available at http://www.wto.org/english/-
tratop_e/dispu_e/tripab.pdf (last visited Dec. 20, 2007).
98. Mueller, The Tiger Awakens, supra note 21, at 519, 526-28.
99. Mueller, Taking TRIPS to India, supra note 28, at 542; see also Mueller, The
Tiger Awakens, supra note 21 529-31.
100. Before TRIPS, most developing countries did not have pharmaceutical patents.
Correa, supra note 9, at 2. Surprisingly, many industrialized countries excluded pharma-
ceutical products from patentability in early phases of their development. Pharmaceutical
patents were first authorized in Japan in 1976, Switzerland in 1977 and Italy in 1978, and
were unavailable in Finland, Greece, Iceland, Monaco, Norway, Portugal and Spain as
late as 1988. MERGES & DUFFY, supra note 11, at 186-87.
101. Many commentators contend that the 2005 Amendment illustrates a compromise
between the obligation to recognize pharmaceutical product patents and the desire to re-
strain overbroad IPRs. The 2005 Amendment began as the Patents (Amendment Bill) of
2003, but the Bill lapsed due to a change in government. Legislators feared that India
would not meet its 2005 TRIPS deadline and instead passed the Bill as a temporary
Presidential Ordinance in 2004. Due to intense public debate and pressure from the
“Left” (Communist) party (representing the interest of India’s poor), the final version of
the Patents (Amendment) Act of 2005 was significantly different from the 2004 Ordi-
nance. See, e.g., Mueller, The Tiger Awakens, supra note 21, at 529-531.
2008] INDIAN PATENT LAW AND NOVARTIS AG v. UNION OF INDIA 295

Explanation—For the purposes of this clause, salts, esters,

ethers, polymorphs, metabolites, pure form, particle size isomers,
mixtures of isomers, complexes, combinations and other deriva-
tives of known substance shall be considered to be the same sub-
stance, unless they differ significantly in properties with regard
to efficacy.
This controversial amendment is aimed at preventing frivolous patents
that are only trivial modifications of existing inventions. Some commenta-
tors have alleged that the objective of Section 3(d) is to prevent “ever-
greening.”102
E. Development of the Indian Pharmaceutical Industry
The changes in India’s patent regime should be viewed in the context
of the development of the Indian pharmaceutical industry. Much of the
debate and many of the changes in the patent law were directly related to
the demands of both multinational pharmaceutical companies and domes-
tic pharmaceutical manufacturers.
India had virtually no domestic pharmaceutical industry during the
British colonial rule.103 As India began to industrialize during the first half
of the twentieth century, that industry failed to develop.104 Although both
the 1856 and 1911 Acts technically allowed patents for pharmaceutical
products, other policies, which favored British pharmaceutical company’s
interests with little regard for India’s welfare, hindered the growth of a
domestic pharmaceutical industry.105
By the time of India’s independence, India’s healthcare system was in
disarray.106 While India was then one of the world’s poorest countries, it
imported medicines and sold them to Indian patients at some of the highest
prices in the world, often exceeding the prices in Western countries.107
Multinational pharmaceutical companies dominated what little drug manu-
facturing that existed in India.108 In this context, both the Chand Report of

102. See supra note 31 and surrounding text.

103. Mueller, The Tiger Awakens, supra note 21, at 507-08.
104. Id. at 507-08.
105. Id. The 1911 Act established an intra-British Empire priority system where Brit-
ish applicants for Indian patents that had filed within the U.K. for the same invention
benefited from the earlier filing date. Foreign corporations reportedly used the 1911 Act
to prevent Indian manufacturers from producing drugs invented abroad. Id.
106. Id. at 508-10.
107. Id. at 509-10.
108. Id.
296 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 23:281

1950 and the Ayyangar Report of 1959 called for the need to encourage
innovation and prevent foreign monopolization.109
By explicitly abolishing patents for pharmaceutical products, the 1970
Act generated immediate and dramatic results. Within a decade, the num-
ber of foreign-owned patent applications filed decreased sharply.110 Be-
cause pharmaceutical products patented outside of India could be reverse
engineered and manufactured, India developed a capable generic drug
manufacturing industry reputed for producing generic versions of branded
drugs at low cost.111
Today, India still has a thriving domestic generic drug industry that
competes directly with brand-name drug manufacturers from the U.S. and
Europe.112 Indeed, India and Japan are the only two countries where ge-
neric drug manufacturers dominate over multinational corporations.113 The
domestic industry is itself divided between several large companies (such
as Ranbaxy, Cipla, and Dr. Reddy’s Laboratories), which engage in some
original research and development in addition to generic drug production,
and hundreds of smaller companies, which exclusively reverse engineer
and manufacture generics.114 Both segments rely heavily on export mar-
kets.115 Meanwhile, a growing Indian middle class and an expanding
health insurance system have increased the demand for medicines within
India. Annual sales have been predicted to triple to $20 billion by 2015.116
The landscape of the multinational pharmaceutical industry in India is
also changing. Multinational companies traditionally manufactured drugs
outside of India and then exported them into India.117 Recently, multina-
tionals are leveraging India’s low labor costs and skilled workforce to

109. Id. at 510-12.

110. Id. at 513-14 (noting 4,248 non-Indian applications in 1968 compared to 1,010 a
decade later).
111. Id. at 514-15.
112. Aaron Smith, Report: Indian Drug Market to Reach $20B, CNNMONEY.COM,
Aug. 22, 2007, http://money.cnn.com/2007/08/22/news/companies/india_pharma/index. -
htm (last visited Dec. 20, 2007).
113. In 2004, multinational firms held only a 23% share of the Indian pharmaceutical
market as compared to domestic companies’ 77% market share. Mueller, The Tiger
Awakens, supra note 21, at 532-33.
114. Id. at 537.
115. Id. at 537-40. Larger companies export to regulated markets such as with higher
entry barriers, such as the US, Western Europe, Japan, Australia and New Zealand.
Smaller drug manufacturers tend to export to markets characterized as “unregulated,”
such as Vietnam, Syria, Jordan, Brazil, China, Korea, Taiwan and Egypt.
116. Smith, supra note 112.
117. Mueller, The Tiger Awakens, supra note 21, at 533.
2008] INDIAN PATENT LAW AND NOVARTIS AG v. UNION OF INDIA 297

conduct manufacturing, R&D, and clinical testing in India.118 Yet, India

must compete with countries such as Singapore or China for foreign inves-
tors who prefer more stringent patent rights.119
The fragmented Indian pharmaceutical industry has led to a wide dis-
parity of interests with respect to patent protection. Not only do multina-
tional drug companies want enhanced patent protection, but some domes-
tic companies—primarily those who have significant research and devel-
opment operations—also want a stronger patent regime.120 Other domestic
companies, however, fervently oppose patent law reform, fearing that it
would lead to patent-based monopolies and destroy their imitation-based
business models.121

III. GLEEVEC PATENT REJECTION AND NOVARTIS AG

A. Background: Novartis’s Patent Application
Gleevec is used for the treatment of chronic myeloid leukemia (CML),
a disease that afflicts nearly 5,000 new patients in the United States each
year.122 Studies have shown that Gleevec, which targets specific cancer
proteins, is almost ten times more effective than traditional interferon
therapy.123 In 1993, Novartis filed patents worldwide for the active mole-
cule imatinib.124 Novartis did not patent imatinib in India because the 1970
Act did not allow patenting of pharmaceutical products at that time.125 Af-
ter India’s entry into the WTO in 1995, Novartis filed a “mailbox” patent
application126 in the Madras Patent Office for imatinib mesylate, a beta

118. Id. at 533-35.

119. See generally Hitesh Gajaria, Protecting IP for Prosperity, ECONOMIC TIMES
(India) (Aug. 3, 2007), available at http://economictimes.indiatimes.com/Guest_Writer/-
Protecting_IP_for_prospertity/articleshow/2251915.cms (expressing need for IP protec-
tions to compete in the region).
120. Mueller, The Tiger Awakens, supra note 21, at 540.
121. Id. at 539-40.
122. American Cancer Society, How Many People Get Chronic Myeloid Leukemia?
(Aug. 14, 2007), http://www.cancer.org/docroot/CRI/content/CRI_2_2_1X_How_many-
_people_get_chronic_leukemia_62.asp (last visited Dec. 20, 2007).
123. American Cancer Society, Gleevec’s New Successes Show Growing Promise of
Targeted Therapies (May 22, 2002), http://www.cancer.org/docroot/NWS/content/-
NWS_1_1x_Gleevec_s_New_Successes_Show_Growing_Promise_of_Targeted_Therapi
es.asp (last visited Dec. 20, 2007).
124. Novartis, History of Glivec in India, http://www.novartis.com/downloads/about-
novartis/glivec-history-india.pdf (last visited Dec. 20, 2007).
125. Id.
126. See supra note 97 and surrounding text.
298 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 23:281

crystalline form of the free base imatinib.127 In 2002, Novartis started its
Gleevec donation program in India to provide Gleevec to patients who
were unable to afford the medicine, but halted that program after Indian
drug manufacturers began to produce a generic version of Gleevec.128 In
2003, the Patent Office granted Novartis Exclusive Marketing Rights
(EMR)129 in India, which allowed Novartis to enjoin generic Gleevec
manufacturers and raise the price of Gleevec almost ten-fold.130 When the
Gleevec mailbox application came up for examination in 2006, some
commentators suspected that the application was fast-tracked due to con-
troversies over the donation program and the divisive rise in price.131
In January 2006, the Madras Patent Office refused to grant Novartis a
patent for imatinib mesylate.132 The first major ground for rejection was
that because imatinib mesylate was a salt form of the free base imatinib,133
and Novartis claimed all pharmaceutical salt forms of imatinib in its 1993
patents, the Indian application therefore lacked novelty and inventive-
ness.134 The second major ground for rejection was based on Section 3(d)

127. Posting of Shamnad Basheer to Spicy IP, First Mailbox Opposition (Gleevec)
Decided in India (Mar. 11, 2007), http://spicyipindia.blogspot.com/2006/03/first-
mailbox-opposition-gleevec.html.
128. Stephanie Strom & Matt Fleischer-Black, Drug Maker's Vow to Donate Cancer
Medicine Falls Short, N.Y. TIMES, June 5, 2003, at A1. Novartis started the donation
program in India with the warning that it would be halted should any Indian company
launch a generic version.
129. See TRIPS, supra note 2, art. 70.9. During a member country’s transition period,
it must grant patent applicants “exclusive marketing rights” (EMRs) which last for five
years or until the issuance or rejection of a patent. Id.
130. Ganapati Murdur, Indian Patients Go to Court Over Cancer Drug, 329 BRIT.
MED. J. 419 (2004), available at http://www.pubmedcentral.nih.gov/articlerender.fcgi? -
tool=pubmed&pubmedid=15321889. One month’s dose of Gleevec costs $2,600, roughly
ten times more than the generic versions.
131. Basheer, First Mailbox Opposition (Gleevec) Decided in India, supra note 127.
132. Id.
133. A free base is converted a salt form by adding acid, in this case, methanesulfonic
acid to the free base imatinib. The beta crystalline form of the salt is allegedly the most
stable form of the salt. Posting of Shamnad Basheer to Spicy IP, US Enablement Case:
Relevance for the Novartis Patent Case in India, http://spicyipindia.blogspot.com/-
2007/10/us-enablement-case-relevance-for.html (Oct. 29, 2007).
134. In the Matter of an Application for Patent No. 1602/MAS/98 (Jan. 26, 2006),
available at http://www.scribd.com/doc/416824/Patent-office-Order-India-Glivec. The
Patent Controller wrote:
I do not agree with the contention of the Applicant that the 1993 patent
discloses only the free base. The 1993 patent discloses mathanesul-
phonic acid as one of the salt forming groups and also the 1993 patent
specification states that the required acid additions salts are obtained in
a customary manner. Further, claims 6 to 23 of the 1993 patent claim a
2008] INDIAN PATENT LAW AND NOVARTIS AG v. UNION OF INDIA 299

of the 2005 Amendment, which required that new forms of a known sub-
stance could only be patented as a product if they demonstrated “enhanced
efficacy.”135 Although Novartis disclosed information that imatinib mesy-
late had a 30% increase in bioavailability (the percentage of the drug ab-
sorbed into the bloodstream) as compared with imatinib, the Patent Office
found this insufficient to meet the “enhanced efficacy” requirement of
Section 3(d).136
B. Procedural History of Novartis’s Appeal
In May 2006, Novartis petitioned the Madras High Court, opposed by
the Indian Government, the Patent Office, several Indian generic drug
manufacturers137 and an Indian public interest group.138 Novartis claimed
that the Patent Controller erred in rejecting the Gleevec patent application,
that Section 3(d) was not compliant with TRIPS, and that Section 3(d) was
vague, ambiguous and in violation of Article 14 of the Constitution of In-
dia139 because it was discriminatory against Novartis. The case was bifur-
cated between the Madras High Court and the Intellectual Property Appel-
late Board (IPAB). The challenges on TRIPS compliance and constitu-
tionality of Section 3(d) were heard by the Madras High Court, which is-
sued a judgment against Novartis on August 8, 2007.140 The IPAB pro-

pharmaceutically acceptable salt of the base compound. The patent

term extension certificate for the 1993 patent issued by the US Patent
Office specifically mentions imatinib mesylate (GleevecR) as the prod-
uct. All these points clearly prove that imatinib mesylate is already
known from the prior art publications.
Id. (quoted in Basheer, First Mailbox Opposition (Gleevec) Decided in India, supra note
127).
135. Id. See also Basheer, First Mailbox Opposition (Gleevec) Decided in India, su-
pra note 127 (discussing ruling)
136. The Patent Controller wrote, “As per the affidavit the technical expert has con-
ducted studies to compare the relative bioavailability of the free base with that of crystal
form of imatinib mesylate and has said that the difference in bioavailability is only 30%
and also the difference in bioavailability may be due to the difference in their solubility in
water.” Basheer, First Mailbox Opposition (Gleevec) Decided in India, supra note 127.
137. These manufacturers are Natco Pharma, Cipla, Hetro Drugs, Ranbaxy, Sun
Pharmaceuticals. See Novartis AG v. Union of India, (2007) 4 MADRAS L.J. 1153, § 1.
138. Cancer Patient Aid Association. Id.
139. Article 14 states, “The State shall not deny to any person equality before the law
or the equal protection of the laws within the territory of India.” INDIA CONST. art. 14.
140. Posting of Shamnad Basheer to Spicy IP, Novartis Loses at the High Court: Fo-
cus Now Shifts to IPAB, http://spicyipindia.blogspot.com/2007/08/novartis-loses-at-high-
court-focus-now.html (Aug. 7, 2007).
300 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 23:281

ceedings on the merits of Novartis’s appeal on the rejection of the Gleevec

patent are currently pending.141
C. Issues at the Madras High Court
The Madras High Court entertained three issues: First, whether courts
in India have jurisdiction to review if Section 3(d) of the 2005 Amend-
ment is compliant with Article 27 of TRIPS, and alternatively, whether
courts in India can grant declaratory relief that Section 3(d) is not compli-
ant with TRIPS. Second, if courts do have jurisdiction, whether Section
3(d) complies with Article 27 of TRIPS. Third, whether Section 3(d) vio-
lates Article 14 of the Constitution of India because it is vague, arbitrary
and confers uncontrolled discretion to the Patent Controller.142 This Sec-
tion will review the Madras High Court’s holding on each issue.
1. Jurisdiction
The Madras High Court held that it did not have jurisdiction to decide
a case concerning the compliance of a domestic Indian law with an inter-
national treaty.143 In support of its arguments, Novartis relied on a case
from the United Kingdom, Equal Opportunities Commission & Another v.
Secretary of State for Employment, in which the court held that British
courts had jurisdiction to decide a case concerning the compatibility of a
British law with the European Community Law.144 The Madras High
Court distinguished the facts of the Novartis dispute with those under
Equal Opportunities Commission, because the European Community Law
had been “domesticated” as the domestic law of England through the
European Communities Act, whereas the Indian government had not “do-
mesticated” TRIPS.145 Furthermore, the Madras High Court asserted that
the nature of an international treaty is contractual, and accordingly con-
tains provisions for dispute settlement.146 Since Article 64 of TRIPS ex-
pressly provides that disputes should be taken to the Dispute Settlement
Body of the WTO, the Madras High Court held that Novartis should seek
to enforce TRIPS though that mechanism and not an Indian court.147
Concerning the alternative argument of granting of declaratory relief,
the Madras High Court asserted that courts have broad discretionary
power to grant declaratory relief under Article 32 of the Constitution of

141. See infra Section III.D.

142. Novartis AG, § 5.
143. Id. § 7.
144. Id. § 6.
145. Id.
146. Id.
147. Id.
2008] INDIAN PATENT LAW AND NOVARTIS AG v. UNION OF INDIA 301

India.148 The court held, however, that declaratory relief should not be
given where it would serve no useful purpose to the petitioner.149 Because
Novartis could not compel the Indian parliament to enact or amend a law
even if Novartis were to get a declaration that Section 3(d) was noncom-
pliant with TRIPS, the court held that Novartis was not entitled to declara-
tory relief.150
2. Compliance with TRIPS
Because the Madras High Court held that it did not have jurisdiction to
decide whether a domestic law violated an international treaty, it refused
to decide whether Section 3(d) is compliant with TRIPS.151 Nevertheless,
the court opined that TRIPS allows flexibility for the individual needs and
situations of every member country.152 In complying with the TRIPS obli-
gations, India has a constitutional duty to provide good health care to its
citizens, including giving them access to affordable drugs.153 Thus, the
court opined that the validity of Section 3(d) should be analyzed with con-
sideration of its objectives of preventing evergreening and making generic
drugs available.154
3. Constitutionality
The court held that Section 3(d) did not violate Article 14 of the Con-
stitution of India and was not vague or arbitrary, and did not confer uncon-
trolled discretion to the Patent Controller.155 The court rejected Novartis’s
arguments that Section 3(d), which denies patents to new uses of known
substances unless the patentee can show “enhancement of the known effi-
cacy” or “differing significantly in properties with regard to efficacy,” was
ambiguous and unclear.156 While these two phrases are not explicitly de-
fined, the court held that it was common practice for the legislature to use
general language and leave the courts to interpret the language based on
the context and facts of each case.157 Moreover, the court held that Novar-

148. Id. § 9.
149. Id.
150. Id.
151. Id. § 8.
152. Id. § 15. The Madras High Court interpreted TRIPS as granting member coun-
tries enough flexibility to comply with TRIPS, but at the same time enacting laws bene-
fiting the social and economic welfare of each country. See id.
153. Id.
154. Id.
155. Id. § 19.
156. Id. § 11.
157. Id. § 14.
302 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 23:281

tis was a sophisticated party who had the technological expertise to com-
prehend the enhanced efficacy requirement.158
The court also rejected Novartis’s argument that Section 3(d) was arbi-
trarily enacted.159 Novartis argued that the actual amended Section 3(d)
was not the same as the one originally proposed to the Parliament, which
made no mention of an efficacy requirement, and was substituted in the
current form of Section 3(d) without explanation.160 The court held that
Section 3(d) was not arbitrarily enacted, referring to the parliamentary de-
bates leading to the 2005 Amendment.161 The debates revealed that there
was widespread fear that the earlier proposed amendments would deny
Indian citizens of access to affordable medicines and open up the possibil-
ity of evergreening.162 Thus, the court found that the legislature did not
arbitrarily enact Section 3(d) in its final form.163
Finally, the court held that Section 3(d) did not confer unlimited dis-
cretionary power to the Patent Controller and was not discriminatory.164
The court emphasized that discretionary power did not necessarily mean
that it would be discriminatory.165 The Patent Controller’s discretionary
power under Section 3(d) in deciding whether a known substance has en-
hanced efficacy did not automatically lead to an arbitrary exercise of dis-
cretionary power or discrimination against Novartis.166 Furthermore, the
court opined that the judiciary should be more deferential to the legislature
in the field of economic regulation.167 Because the Patent Act was de-
signed to encourage the economic interests of India, the courts should be
especially cautious before overruling the legislature.168

158. Id. § 13 (“The writ petitioner is not a novice to the pharmacology field but it,
being pharmaceutical giant in the whole of the world, cannot plead that they do not know
what is meant by enhancement of a known efficacy and they cannot snow [sic] that the
derivatives differ significantly in properties with regard to efficacy.”).
159. Id. § 12.
160. Id.
161. Id.
162. Id.
163. Id.
164. Id. § 16.
165. Id. § 17 (quoting Selvi. J. Jayalalitha v. The Union of India, 2007-1-LW, at 724:
“We cannot presume that the authorities will administer the law ‘with an evil eye and an
unequal hand.’”).
166. Id. § 16.
167. Id. § 17.
168. Id.
2008] INDIAN PATENT LAW AND NOVARTIS AG v. UNION OF INDIA 303

D. Issue at the IPAB

In April 2007, while the case was still pending before the Madras High
Court, the Indian government put into operation the patent division of the
IPAB169 and transferred the challenge on the merits of the denial of Novar-
tis’s patent application to the Chennai-based IPAB.170 The government
appointed S. Chandrasekharan, a former Controller of the Madras Patent
Office, as the “technical member.”171 Subsequently, Novartis objected to
the appointment of S. Chandrasekharan on the ground that he was the
Controller, although not the examining officer, when Novartis’s Gleevec
patent application was rejected.172 The IPAB dismissed this objection, and
Novartis appealed to the Madras High Court to remove Chandrasekha-
ran.173 The Madras High Court heard the appeal on October 9, 2007, when
the Indian government proposed revising the composition of the board to
hear the Novartis dispute by removing altogether the “technical mem-
ber.”174 Even though Novartis agreed to this proposal, Hyderabad-based
generic drug manufacturer Natco Pharma Ltd, the main corporate oppo-
nent to Novartis in the case, argued that the board should not hear the case
without a technical member present.175 After the Madras High Court ruled
that the case could proceed at the IPAB without a technical member,
Natco appealed to the Supreme Court of India.176 On January 28, 2008, the
Supreme Court issued a stay order on the Madras High Court judgment.177
As this Note went into publication, it is unclear if and when the IPAB pro-
ceedings will continue.

169. See April 3, 2007 Gazette, supra note 50.

170. Basheer, Novartis Case Before IPAB?, supra note 54.
171. Patents: Appellate Board Becomes Functional, MEDINDIA.COM, Apr. 10, 2007,
http://www.medindia.net/news/view_news_main.asp?x=19886 (last visited Dec. 20,
2007).
172. Posting of Shamnad Basheer to Spicy IP, Novartis Case at IPAB Stayed,
http://spicyipindia.blogspot.com/2007/08/novartis-case-at-ipab-stayed.html (Aug. 10,
2007).
173. Id.
174. C. H. Unnikrishnan, Order Deferred in Glivec Case, LIVEMINT.COM, Oct. 23,
2007, http://www.livemint.com/2007/10/23234424/Order-deferred-in-Glivec-case.html.
175. Id. (quoting Natco company secretary Adi Narayana: “Our argument is that
since the points to be raised in the IPAB hearing are highly technical in nature, it will be
almost impossible for the board to take a balanced view unless it heard by an expert in
this subject.”).
176. Bhuma Shrivastava & C. H. Unnikrishnan, SC Issues Stay Order Against Appeal
Hearing, LIVEMINT.COM, Jan. 29, 2008, http://www.livemint.com/2008/01/29001921/-
SC-issues-stay-order-against-a.html.
177. Id.
304 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 23:281

IV. ANALYSIS OF SECTION 3(D)

As previously discussed, the Indian government introduced Section
3(d) to prevent multinational pharmaceutical companies from extending
the life of a patent. Because pharmaceutical inventions rarely relate to new
chemical entities or novel active ingredients that have never before been
available for therapeutic use, pharmaceutical companies often prolong
patent protection by obtaining separate patents on multiple attributes of a
single product.178
This Part will describe how Section 3(d) regulates the granting of
pharmaceutical product patents by limiting the scope of protection avail-
able for derivatives and new uses of a known substance. Section 3(d) es-
sentially codifies distinct patentability criteria for pharmaceutical and
chemical substances to prevent patents on trivial modifications of known
substances. This Part argues that because other countries have taken more
indirect routes to achieve similar objectives, Section 3(d) is not a radical
departure from international practices.
A. Derivatives of Known Substances
1. India
The first clause of Section 3(d), “the mere discovery of a new form of
a known substance which does not result in the enhancement of the known
efficacy of that substance,”179 prohibits patents of derivatives of known
substances, unless such derivatives display “enhanced efficacy.” The ex-
planation following the rule clarifies which substances will be considered
derivatives of known substances and further requires that efficacy must
“differ significantly.”180
Pharmaceutical companies often file independent patent applications
on variations of known substances to extend their protection on known
active ingredients.181 For example, some therapeutically active ingredients
are present in polymorphic forms (crystallization in different forms) that
may have different therapeutic properties.182 Pharmaceutical companies
often file composition patents protecting the formulated product contain-

178. These attributes include processes of manufacture, formulations, systems of de-

livery, new uses and different chemical forms of a known product such as salts, isomers,
metabolites and polymorphic forms. Correa, supra note 9, at 14, 29-32.
179. The Patents (Amendment) Act, 2005, supra note 15, § 3(d).
180. Id. (emphasis added).
181. Correa, supra note 9, at 30.
182. Id.
2008] INDIAN PATENT LAW AND NOVARTIS AG v. UNION OF INDIA 305

ing active ingredients and appropriate additives.183 They also seek patents
on the active metabolite, the compound that forms in the patient’s body
after the drug is ingested and produces the desired therapeutic effect in the
body.184
2. Other Countries
The efficacy requirement is controversial because it has no explicit
parallel in any other patent regime in the world.185 Efficacy of pharmaceu-
tical substances is usually addressed through drug safety regulation, and
has no effect on the patentability of substances.186 The language of Section
3(d) seems to have been taken directly from a European legislative direc-
tive dealing with drug safety regulation.187 Furthermore, Section 3(d)
raises questions as to what kind of data is required to establish efficacy
and how much an improvement results in significantly enhanced effi-
cacy.188
While Section 3(d) has no direct counterpart in other patent laws, other
countries such as the United States have myriad indirect ways to deal with

183. Id. (discussing composition patents, combinations of previously known prod-

ucts, allowing the patentee to extend the term of protection granted under the basic pat-
ent).
184. Id.
185. Basheer, India’s Tryst with TRIPS: The Patents (Amendment) Act 2005, supra
note 75, at 24.
186. Id.
187. Id. Article 10(2)(b) of Council Directive 2004/27/EC defines a “generic medici-
nal product” as:
a medicinal product which has the same qualitative and quantitative
composition in active substances and the same pharmaceutical form as
the reference medicinal product, and whose bioequivalence with the
reference medicinal product has been demonstrated by appropriate
bioavailability studies. The different salts, esters, ethers, isomers, mix-
ture of isomers, complexes or derivatives of an active substance shall
be considered to be the same active substance, unless they differ sig-
nificantly in properties with regard to safety and/or efficacy. In such
cases, additional information providing proof of the safety and/or effi-
cacy of the various salts, esters or derivatives of an authorised active
substance must be supplied by the applicant. The various immediate-
release oral pharmaceutical forms shall be considered to be one and the
same pharmaceutical form. Bioavailability studies need not be required
of the applicant if he can demonstrate that the generic medicinal prod-
uct meets the relevant criteria as defined in the appropriate detailed
guidelines.
Council Directive 2004/27, art. 10(2)(b), 2004 O.J. (L 136) 39 (EC).
188. Mueller, The Tiger Awakens, supra note 21, at 553 (describing questions as both
qualitative and quantitative).
306 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 23:281

patents on insubstantial modifications of known active ingredients. For

example, U.S. courts have invalidated patents on derivatives of known
substances under the doctrine of inherent anticipation. In Schering Corp.
v. Geneva Pharmaceuticals, Inc., the Federal Circuit invalidated a patent
on the metabolite of antihistamine drug because the metabolite “necessar-
ily and inevitably” formed upon ingestion of previously patented antihis-
tamine under normal conditions.189
In addition, U.S. courts prevent the patenting of derivatives under the
complex doctrine of double patenting, which aims to prevent a patentee
from holding more than one patent with claims to the same invention or
obvious modifications or variations of the same invention.190 In the United
States, prohibition against double patenting has both a statutory basis,
which prohibits a patentee from holding more than one patent with identi-
cal claims,191 and a judicially-created equitable doctrine, which provides
that a patentee may not have a later-issued patent with claims directed to
an obvious variation of the subject matter of claims in an earlier-issued
patent.192
Another approach in the United States is the patent misuse doctrine,
which prevents pharmaceutical companies from extending patent rights by
obtaining multiple patents covering essentially the same invention.193 Fi-
nally, U.S. courts draw upon the 35 U.S.C. § 103 nonobviousness doc-
trine194 when invalidating certain pharmaceutical patents. In Pfizer, Inc. v.

189. 339 F.3d 1373, 1378 (Fed. Cir. 2003).

190. See generally Emily Evans, Double Patenting Recapitulated, 87 J. PAT. &
TRADEMARK OFF. SOC’Y 625 (2005) (examining the doctrine in detail); see, e.g., In re
Longi, 759 F.2d 887, 892-97 (Fed. Cir. 1985) (affirming rejection of a patent application
upon a holding of obviousness-type double patenting over the claims of three commonly-
owned patent applications).
191. Evans, supra note 190, at 625. The statutory basis is 35 U.S.C. § 101, which
states, “[w]hoever invents or discovers any new and useful process, machine, manufac-
ture, or composition of matter or any new and useful improvement thereof, may obtain a
patent therefor . . .” The word “a” has been interpreted to mean that a patentee may have
only a single patent covering a claimed invention. Id.
192. Evans, supra note 190, at 625-26. See also Dan Burk & Mark Lemley, Biotech-
nology’s Uncertainty Principle, 54 CASE W. RES. L. REV. 691, 741 n.214 (2004) (sug-
gesting that strengthening the obviousness standard will deter pharmaceutical companies
from unjustifiably extending the effective patent life). For a more detailed discussion of
the doctrine of double patenting, see 4 DONALD CHISUM, PATENTS: A TREATISE ON THE
LAW OF PATENTABILITY, VALIDITY AND INFRINGEMENT ON PATENTS § 9.01 (2007).
193. Burk & Lemley, supra note 192, at 742.
194. 35 U.S.C. § 103(a) states, “A patent may not be obtained . . . if the differences
between the subject matter sought to be patented and the prior art are such that the subject
matter as a whole would have been obvious at the time the invention was made to a per-
son having ordinary skill in the art to which said subject matter pertains.”
2008] INDIAN PATENT LAW AND NOVARTIS AG v. UNION OF INDIA 307

Apotex, Inc., the Federal Circuit invalidated Pfizer’s patent on a hyperten-

sion drug on nonobviousness grounds because the active ingredient of the
drug was merely a salt form of a known substance.195
B. New Uses of Known Substances
1. India
The second clause of Section 3(d), “any new property or new use for a
known substance or of the mere use of a known process, machine or appa-
ratus unless such known process results in a new product or employs at
least one new reactant,”196 regulates the granting of “new use” patents.197
Patents are frequently issued for new therapeutic uses of known prod-
ucts.198 New use patents are critical to the patent strategy of pharmaceuti-
cal companies, who rely on new use patents to extend the commercial life
of product patents.199

195. 480 F.3d 1348, 1364 (Fed. Cir. 2007). Pfizer argued there was no easy way to
predict, and therefore rendering the invention nonobvious, the influence of a different salt
form on the active part of the drug. The court opined, “[A] rule of law equating unpre-
dictability to patentability, applied in this case, would mean that any new salt . . . would
be separately patentable, simply because the formation and properties of each salt must
be verified through testing. This cannot be the proper standard since the expectation of
success need only be reasonable, not absolute.” Id.
196. The Patents (Amendment) Act, 2005, Section 3(d), supra note 15.
197. Mueller, The Tiger Awakens, supra note 21, at 557-59.
198. Edson B. Rodrigues Jr. & Brian Murphy, Brazil’s Prior Consent Law: A Dia-
logue Between Brazil and the United States Over Where the TRIPS Agreement Currently
Sets the Balance Between the Protection of Pharmaceutical Patents and Access to Medi-
cines, 16 ALB. L.J. SCI. & TECH. 423, 430 (2006). Rodrigues and Murphy point to a 2002
study done by the National Institute of Health Care Management (NIHCM) Research and
Education Foundation found that in 1989-2000, only 35% of the 1035 new drugs ap-
proved by the US FDA entailed a new active principle. Id. (citing THE NATIONAL INSTI-
TUTE FOR HEALTH CARE MANAGEMENT RESEARCH AND EDUCATIONAL FOUNDATION,
CHANGING PATTERNS OF PHARMACEUTICAL INNOVATION (2002), available at
www.nihcm.org/~nihcmor/pdf/innovations.pdf).
199. Rodrigues & Murphy, supra note 198. This procedure is known is “evergreen-
ing” and may have anticompetitive effects. However, some scholars believe patent pro-
tection for drugs, which has an “effective patent life” between product launch and patent
expiration of only about 11 years, is too short for firms to capture the value of its research
and development investment. Process patents on new therapeutic uses developed as a
way for firms to capture more value by extending the commercial life of the patent. See
Rebecca Eisenberg, The Problem of New Uses, 5 YALE J. HEALTH POL'Y, L. & ETHICS
717, 722-25 (2005).
308 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 23:281

2. Other Countries
The patentability of new uses of known substances is controversial and
is often treated inconsistently by other countries.200 In the United STates, a
new use of an existing product can be protected by a process patent.201 The
patent is confined to the particular method of use and does not encompass
protection of the product.202 Patent holders do not prefer process patents,
which are not easily enforceable and cannot be used to stop competitors
from selling the same product for other uses.203
Europe has a more expansive approach to new use patents.204 In
Europe, a new use can either be a product claim or a process claim, de-
pending on whether the product had previous pharmaceutical use. A new
therapeutic use of a known product having no previous pharmaceutical
use, known as a “first indication” or “first medical use,” can be protected
by a product patent.205 This specialized form of product patent claim is
known as “purpose-limited-product” claim, which limits the scope of the
patent protection to the particular purpose or use of the product.206 How-
ever, a new use for a product that already has an existing pharmaceutical
use, known as a “second indication” or “second medical use,” is protected
by a process patent.207 The claim format is known as a “Swiss claim” and
is merely limited to the new use of the known compound or composi-
tion.208
C. Section 3(d) and TRIPS
The above discussion indicates that the objective of India’s Section
3(d) is not a radical departure from international practices to regulate the

200. Jean Lanjouw, A New Global Patent Regime for Diseases: U.S. and Interna-
tional Legal Issues, 16 HARV. J.L. & TECH. 85, 95 (2002).
201. Eisenberg, The Problem of New Uses, supra note 199, at 724. A case often cited
for the proposition that a new use for an existing product should be covered by a process
patent is Rohm & Haas Co. v. Roberts Chemicals, Inc., 245 F.2d 693, 699 (4th Cir.
1957).
202. Eisenberg, The Problem of New Uses, supra note 199, at 724.
203. Id. Enforcement is not easy because patent holders would have to enforce the
use claim against patients taking the drug for the patented use, doctors prescribing it for
such use, or pharmacists who fill the prescriptions. Enforcement against drug manufac-
turers who produce the drug would be difficult because they would be liable for contribu-
tory infringement, and there may be substantial non-infringing uses of the product.
204. Correa, supra note 9, at 14-15.
205. Id.
206. Ragavan, supra note 13, at 83-84.
207. Id.
208. Id. Thus, third party inventing a new use of a patented or known product can get
patent protection limited to the marketing the product for the new use.
2008] INDIAN PATENT LAW AND NOVARTIS AG v. UNION OF INDIA 309

patenting of derivatives and new uses. Nevertheless, Novartis claimed that

Section 3(d) was not compliant with TRIPS Article 27. Assuming that the
patent laws of other countries are TRIPS-compliant and absent WTO rul-
ing on the contrary, Novartis has likely overstated the noncompliance of
Section 3(d).209
TRIPS Article 27.1 states, “patents shall be available for any inven-
tions, whether products or processes, in all fields of technology, provided
that they are new, involve an inventive step and are capable of industrial
application.” This provision obliges member countries to grant product
and process patents in all fields of technology and sets up three criteria,
novelty, inventive step, and industrial applicability, for patentability. In-
ventive step and industrial applicability correlate to the concepts of
nonobviousness and utility in the United States.210
The 2005 Amendment extended product patent protection to pharma-
ceutical substances in order to fulfill Article 27.1’s requirements. How-
ever, “novelty,” “inventive step” and “industrial application” are not de-
fined in TRIPS; member countries arguably have considerable flexibility
in applying these three criteria.211 One perspective is that Section 3(d) is
merely a codified nonobviousness standard in the context of pharmaceuti-
cal substances, and therefore permissible under TRIPS.212 India has lim-
ited discretion under TRIPS to decide the subject matter entitled to patent
protection, but it has greater discretion to fine tune its patent regime by
limiting the scope of protection available for derivatives and new uses by
adjusting the inventive step criteria.213

209. Treaty interpretation principles are beyond the scope of this Note. This Section
discusses generally requirements under TRIPS and presents viewpoints on the interpreta-
tion of TRIPS Article 27. However, it is interesting to note that the Swiss government has
declined to take Novartis’s challenge of the noncompliance of India’s patent law to the
WTO. Swiss Government Not to Take Novartis Case to WTO—Reports,
http://www.forbes.com/markets/feeds/afx/2007/08/08/afx3997818.html (last visited Dec.
20, 2007).
210. UNCTAD-ICTSD, RESOURCE BOOK ON TRIPS AND DEVELOPMENT, 359-61
(2005). Footnote 5 to Article 27.1 states that “inventive step” and “capable of industrial
application” is synonymous with “non-obvious” and “useful.”
211. Id. at 358. This is the view taken by many academic commentators and NGOs.
While member countries must apply those three criteria, the WTO Dispute Settlement
Board (DSB) has never directly addressed how member countries must implement them.
In one of the few WTO cases concerning Article 27, the Dispute Settlement Board (DSB)
opined that member countries can adopt different rules for particular product areas, as
long as those differences represent bona fide purposes. Id. at 370-71.
212. Basheer, India Patent Act Faces TRIPS Challenge, supra note 29.
213. One early view expressed by academics after TRIPS was promulgated is that the
WTO should be more deferent to developing countries with respect to inventive step than
310 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 23:281

TRIPS is also silent on the issue of whether new medical uses, which
itself is controversial and inconsistently treated by developed countries, is
patentable.214 Some commentators assert that new use patents lack novelty
because they are mere discoveries of new properties of existing products.
The EU approach sidesteps this obstacle by recognizing it as a “legal fic-
tion” in which an invention can draw novelty from a new use.215 Further-
more, since new use patents frequently refer to new medical uses of
known pharmaceutical substances, they may fall under the TRIPS excep-
tion on patenting of a therapeutic method.216
D. The Novartis Dispute Should Encourage Clarity in Indian
Patent Law
India’s patent law needs to be clear and reliable in order to effectuate
the purpose of advancing innovation. The 2005 Amendment and Section
3(d) introduced considerable uncertainty into Indian patent law. Therefore,
India must be cautious in interpreting the provisions of Section 3(d).217 For
example, as previously described, although Section 3(d)’s limitation on
patenting derivatives of known substances is not without parallels in other
patent regimes, the problem stems from uncertainty about how the India
patent office and judiciary will interpret “enhanced efficacy.” The 2005

to subject matter issues. See Rochelle C. Dreyfuss & Andreas F. Lowenfeld, Two
Achievements of the Uruguay Round: Putting TRIPS and Dispute Settlement Together, 37
VA. J. INT’L L. 275, 282-304 (1997). However, the issue of permissible nonobviousness
standards under TRIPS is widely debated on both sides. Some commentators have con-
tended that nonobviousness is the most problematic issue in international harmonization
of intellectual property protection. See J. H. Reichman, From Free Riders to Fair Fol-
lowers: Global Competition Under the TRIPS Agreement, 29 N.Y.U. J. INT’L L. & POL.
11, n.62 and surrounding text.
214. Rodrigues & Murphy, supra note 198, at 430.
215. Furthermore, this “legal fiction” is not universally accepted. The British Patents
Office took the position that this is an indefensible legal fiction and avoided these patents
for injustifiably extending the period of protection of the invention, regardless of the exis-
tence of a genuine inventive activity. See id. at 432.
216. Id. TRIPS Article 27.2(a) reads: “Members may also exclude from patentability:
(a) diagnostic, therapeutic and surgical methods for the treatment of humans or animals.”
TRIPS, supra note 2, art. 27.2.
217. Recent cases confirm that Section 3(d) will be a continuing issue in patent litiga-
tion in India. Closely following behind the Novartis litigation, F Hoffman-La Roche sued
to enjoin Indian generic manufacturer Cipla in January 2008 after Cipla launched a ge-
neric version of Roche’s lung cancer drug Tarceva. Cipla asked the Delhi High Court to
revoke the Tarceva patent, claiming that the patent was invalid under Section 3(d) be-
cause Tarceva was a mere derivative of an older drug. At the time of writing, the case is
currently pending at the Delhi High Court. See Bhuma Shrivastava, Roche-Cipla Row
Test Case for Balancing Health Issues, Patents, LIVEMINT.COM, Feb. 9, 2008,
http://www.livemint.com/2008/02/08230319/RocheCipla-row-test-case-for.html.
2008] INDIAN PATENT LAW AND NOVARTIS AG v. UNION OF INDIA 311

Amendment does not define “efficacy.” Nor is it defined in the Indian

Manual of Patent Practice and Procedure (MPPP), a publication of the In-
dian Patent Office.218 Novartis AG suggests that a 30% bioavailability en-
hancement is not sufficient for the Patent Office to grant a patent. While
the Madras High Court did not directly address the issue of what kind of
data would establish enhanced efficacy, the court relied on a medical dic-
tionary definition to opine that “efficacy” means “therapeutic” efficacy.219
Some commentators have noted that efficacy should not be limited to
merely therapeutic efficacy because a broader definition of efficacy, for
example, one that includes practical efficiencies such as enhanced heat
stability of drugs, would actually reward genuine advances.220 But until
IPAB settles the pending case, there is no conclusive statement on how
efficacy in Section 3(d) will be interpreted.
Although TRIPS sets out minimum requirements for intellectual prop-
erty protection, it is dubious that member countries are obliged to expand
beyond that.221 On the other hand, a patent system should provide incen-
tives for technical progress, and India may benefit from stronger patent
protection. India is technologically more advanced than many other devel-
oping countries, and more and more of its domestic pharmaceutical com-
panies are engaging in original research.222 For example, some of these
domestic companies may have the technological capacity to develop new
medical uses, and therefore would benefit from a regime that recognizes
new use patents.

218. Mueller, The Tiger Awakens, supra note 21, at 554 (discussing INDIAN PATENT
OFFICE, MANUAL OF PATENT PRACTICE AND PROCEDURE (2005), available at
http://patentoffice.nic.in/ipr/patent/manual-2052005.pdf (last visited Dec. 20, 2007)).
219. Novartis AG v. Union of India, (2007) 4 MADRAS L.J. 1153, § 13 (“Darland’s
Medical Dictionary defines the expression ‘efficacy’ in the field of Pharmacology as ‘the
ability of a drug to produce the desired therapeutic effect.’ . . . Dictionary meaning of
‘therapeutic’ is healing of disease—having a good effect on the body’”).
220. Posting of Shamnad Basheer to Spicy IP, Novartis Patent Dispute: Of Spins and
Empty Rhetoric, http://spicyipindia.blogspot.com/2007/08/novartis-patent-dispute-of-
spins-and.html (Aug. 11, 2007).
221. Id. Other commentators note that availability of new use patents are negotiated
under “TRIPS-plus” agreements, bilateral or regional free trade agreements. If new use
patents were obligated under TRIPS, then TRIPS-plus agreements would be redundant.
See Frederick M. Abbott, Toward a New Era of Objective Assessment in the Field of
TRIPS and Variable Geometry for the Preservation of Multilateralism, 8 J. INT’L ECON.
L. 77, 88-89, n.44 (2005).
222. See supra Section II.E.
312 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 23:281

While Section 3(d) aims to prevent trivial patents, incremental inven-

tions can often embody considerable innovation.223 In particular, in the
pharmaceutical industry, patents rarely involve new chemical entities but
rather incremental improvements over prior inventions. If the nonobvious-
ness standard is set so high that it effectively bars patentability of most
incremental pharmaceutical innovations, that rule may contravene
TRIPS224 and be detrimental to the Indian pharmaceutical industry by fail-
ing to provide proper incentives for research and development for the long
term.

V. CONCLUSION
In the short term, the outcome of the Novartis litigation will guide the
Indian patent offices and judiciary in interpreting the scope of patentability
under Indian’s new patent law. However, Novartis AG is also a small
piece in a much larger puzzle: how developing countries can fashion intel-
lectual property regimes to deliver better healthcare to their citizens. India
is a noteworthy case study because its immense population is rapidly
transforming into a global force. Its vast generic drugs industry, which
supplies drugs to both developing and developed nations around the
world, is also beginning to have the capacity to leverage India’s skilled
workforce and conduct original R&D. Other countries are also keeping a
close eye on how India’s patent law is developing; more than ten countries

223. This is the view taken by Shamnad Basheer, Visiting Associate Professor of
Law at George Washington University Law School and a prominent commentator on
India’s IP regime. He also keeps the blog, Spicy IP. In the face of the Novartis litigation,
the government of India commissioned a group of experts, widely known as the
“Mashelkar Committee,” to comment on whether the recent amendments to India’s patent
law was TRIPS compliant. The Intellectual Property Institute (IPI), a think tank located
in England, commissioned Basheer to write a paper to submit to the Mashelkar Commit-
tee. Both Basheer and the final Mashelkar Committee Report contend that limiting phar-
maceutical patents to “new chemical entities” would not be TRIPS compliant. However,
it is important to note that the Mashelkar Committee Report does not directly address
Section 3(d). The Mashelkar Committee Report was later withdrawn after allegations that
the Committee plagiarized from Basheer. On his blog, Basheer states that these allega-
tions are unfounded. Posting of Shamnad Basheer to Spicy IP, Deconstructing the
Mashelkar Committee Report Controversy: Part I, http://spicyipindia.blogspot.com/2007-
/02/deconstructing-mashelkar-committee.html (Feb. 26, 2007).
224. India would be in breach of Article 27.1 if its nonobviousness standards were so
rigid such that an invention would require an “inventive leap” rather than an “inventive
step.” See Dreyfuss & Lowenfeld, supra note 213, at 298.
2008] INDIAN PATENT LAW AND NOVARTIS AG v. UNION OF INDIA 313

in the Asia-Pacific region are actively considering adopting provisions

similar to Section 3(d) in their own patent laws.225
The effects of a country’s patent system on the domestic industries and
public health are evident, and India should be cautious in going forth with
any decisions that would alter India’s traditionally conservative approach
to patent policy. For example, after Italy introduced pharmaceutical pat-
ents in 1978, multinational companies took over many local companies,
and exports of generic drugs declined while imports of patented drugs in-
creased.226 The history of India’s patent system demonstrates that India’s
generic drugs industry was built because of a deliberate move by the In-
dian government in shaping a conservative patent policy in 1970. But In-
dia’s pharmaceutical industry today is far different than what it was in
1970. Stronger IPRs, such as new use patents or patents on derivatives of
known substances, while likely not obligated under TRIPS, may benefit
India’s pharmaceutical companies by encouraging path-breaking research
and development.

225. Gireesh Chandra Prasad, Copycats Popping Patent Law Pill, ECONOMIC TIMES
(India), August 13, 2007, http://economictimes.indiatimes.com/News/News_By-
_Industry/Healthcare_Biotech/Pharmaceuticals/Copycats_popping_patent_law_pill/-
articleshow/2276358.cms (last visited Dec. 20, 2007).
226. COMM’N ON INTELL. PROP. RIGHTS, INTELLECTUAL PROPERTY RIGHTS AND DE-
VELOPMENT POLICY 37 (2002), available at http://www.iprcommission.org/graphic/-
documents/final_report.htm.