INTELLECTUAL

PROPERTY
RIGHTS(CASE
STUDY)

SUBMITTED BY-
PRAKASH OCHWANI
C-17
BBA LLB 5th YEAR
 Novartis AG V. Union of India
Introduction

Intellectual property is an intangible form of property while a 'Patent' is a subset

of intellectual property. Granting of a patent provides a statutory right by the
state to the inventor of the invention to exclude others from making, using, or
selling their invention for the limited duration of 20 years. The judgment given
by the two judge bench of the Hon'ble Supreme Court of India in the case of
Novartis AG V. Union of India is one the landmark judgments in India. In this case
Novartis challenged the rejection of its patent application by IPAB for Beta
crystalline form of "Imatinib mesylate" wherein such challenge was rejected by
the Supreme Court of India on the ground that the said drug did not produce an
enhanced or superior therapeutic efficacy as compared to the known substance
i.e., "Imatinib mesylate" means that the said drug did not involve an inventive
step. One of the major reasons for rejecting the patent application of Novartis
was to avoid ever-greening of already patented products by introducing minor
changes.

Facts: -

In 1998, one of the largest international pharmaceutical companies i.e. Novartis

International AG filed an application as per the TRIPS agreement before the
Chennai Indian patent office for the grant of a patent for an anticancer drug
'Glivec' which is used to treat Chronic Myeloid Leukemia (CML) and
Gastrointestinal Stromal Tumours (GIST) invented from Beta crystalline form of
"Imatinib mesylate". This drug is famously used in the treatment of cancer and
the same is patented in more than 35 countries.

When Novartis filed its patent application, the grant used to be restricted to
methods or processes and not for products in India, as defined under section-5
of Patent Act, 1970. After the Patent (Amendment) Act, 2005 section-5 was
repealed and patents came to be granted for methods or processes but also for
products.

In 2005 patent application of Novartis for the drug Glivec was taken into
consideration and the same was rejected by Madras Patent Office on the ground
that the drug was anticipated by prior publication and failed to satisfy the
requirement of novelty and non-obviousness, further stating the alleged
invention as un-patentable under the provision of section-3(d) of Patent Act,
1970 as the said drug did not exhibit any major changes in therapeutic efficacy
over its pre-existing form i.e. Zimmermann patent.

After that Novartis filed two writ petitions in Madras High Court in the year 2006
under Article-226 of Constitution of India. The appeals subsequently stated that
the section-3(d) of Patent Act, 1970 is unconstitutional because it is not in
compliance with TRIPS agreement and also violates Article-14 of Constitution of
India and the other against the order passed by Madras Patent Office. Madras
High Court transferred the case to IPAB (Intellectual Property Appellant
Tribunal) in 2007. This appeal was finally heard and dismissed by IPAB stating
that the invention satisfied the tests of novelty and non-obviousness but the
patentability of the product was hit by section-3(d) of the Patent Act, 1970. The
judgment given by IPAB is to prevent ever-greening of already patented product
by introducing minor changes and to provide easy access to the citizens of India
to life saving drugs.

After that Novartis filed SLP (Special Leave Petition) in 2009 before the Supreme
Court of India against the order passed by IPAB under Article-136 of Constitution
of India.

ISSUES

1. According to the provision of section-3(d) of Patent Act, 1970 what is a known

substance?

2. According to section-3(d) of Patent Act, 1970 what is the meaning of Efficacy?

3. According to section-3(d) of Patent Act, 1970 whether increase in

bioavailability qualify as increase in therapeutic efficacy?

4. Whether the invention "Beta crystalline form of imatinib mesylate" claimed

by Novartis is more efficacious than the substance that it was derived from i.e.
"Imatinib mesylate"?

Judgement: -

In April 2013, the two-judge bench of Supreme Court of India rejected the appeal
filed by Novartis and upheld that the beta crystalline form of Imatinib Mesylate
is a new form of the known substance i.e., Imatinib Mesylate, wherein the
efficacy was well known. Supreme Court made it crystal clear that in the case of
medicine "Efficacy" in section-3(d) only means "Therapeutic Efficacy" and states
that all properties of drug are not relevant, the properties which directly relate
to efficacy in case of medicine is its therapeutic efficacy. Supreme Court in third
issue ruled that about 30% increase in bioavailability qualifies as increase in
therapeutic efficacy under section-3(d) of Patent Act, 1970 if evidence is
provided for the same. Supreme Court compared the efficacy of "Beta
Crystalline form of Imatinib Mesylate" with "Imatinib Mesylate" with reference
to its flow properties, better thermodynamic stability and lower hygroscopicity,
and held that none of these properties contribute to increase in therapeutic
efficacy according to section-3(d) of Patent Act, 1970 and Novartis not provided
any document that shows that the efficacy of "Beta Crystalline form of Imatinib
Mesylate" is more as compared to the efficacy of "Imatinib Mesylate".

Conclusion: -

The judgment given by the Hon'ble Supreme Court is to prevent the ever-
greening of patented products and gives relief to those who can't afford the
lifesaving drug as these pharmaceutical companies sell such lifesaving drugs at
a very high price hence unaffordable for the common man. Supreme Court in its
judgement made clear that India is a developing country and the availability of
medicines at a cheaper rate is necessary for the lives of 1 billion people. Section-
3(d) of Patent Act, 1970 prevents by obtaining secondary patent by introducing
minor changes in existing technology from these big pharmaceutical companies.
Novartis failed to prove that the therapeutic efficacy of "Beta Crystalline form
of Imatinib Mesylate" is more as compared to the therapeutic efficacy of
"Imatinib Mesylate". So that the application of Novartis for patent rejected by
Supreme Court.
 YAHOO INC. V. AKASH ARORA
Introduction: -

The present case presented an important question of law which pertained to

the issue of passing off under Trademark law in India. The matter involved the
copying off a well-known mark which was unregistered in India and hence laid
down an important precedent for many subsequent cases of passing off.
In the case of Yahoo INC. V. Akash Arora, the plaintiff Yahoo Inc. was the owner
of the trademark Yahoo and the domain Yahoo.com which are both well-known
marks and have a distinctive repute throughout the world. They were a
registered company since 1995 and had their trademark registered in 69
countries, India not being one of them. The defendant started a company with
the domain name of Yahoo India which offered internet services similar to Yahoo
Inc. Aggrieved by this, Yahoo Inc. filed a suit seeking permanent injunction to
restrain the defendants to continue their business under the impugned domain
name of ‘Yahooindia.com’ or any other similar name. An application for an ad
interim temporary injunction was also filed under Order 39 Rules 1 and 2 of CPC
by the plaintiff to restrain the defendants from using the domain name
‘Yahooindia.com’

Arguments by Plaintiff: -
The counsel representing the plaintiff contended that the trademark “Yahoo’
and the domain “yahoo.com” that belonged to the plaintiff were both well-
known marks and had gathered ‘distinctive reputation’ and ‘goodwill’ and hence
the defendants by using the domain name of ‘Yahooindia’ were passing off their
goods and services as that of the plaintiff as the ‘yahooindia’ was a ‘identical and
deceptively similar’ to the plaintiff’s trademark. The counsel submitted that a
domain name or trademark of the plaintiff was protected equally against a
passing off action as it would be in the case of a trademark infringement. By
taking a deceptively similar trademark and copying the general overlay of the
plaintiff’s domain name, the defendant was trying to pass of his service as that
of the plaintiff. To substantiate this, the counsel contended that users were
aware that companies adopt the same domain name over the internet as their
trademark and have the country’s name in the domain as well and thus while
intending to use the services of the plaintiff, the users can easily end up on the
domain of the defendant. Lastly, the counsel submitted that the fact that
defendants are operating in the same line of service as that of the plaintiff’s
shows that adoption of a deceptively similar name was done with dishonest
intention.
Arguments by Defendant: -
The counsel for the defendants, played down the allegations of the plaintiff and
contended that the application of provisions of Trademark Merchandise Act was
limited to goods and hence was not applicable in the present case. The counsel
stated that the trademark/domain name ‘Yahoo!’ that belonged to the plaintiff
was not registered in India and hence no infringement action can be brought by
them. Further, it was contended that an action of passing cannot be brought
because the services that were provided by the defendant and plaintiff could
not be termed as ‘goods’ as under the Indian Trademarks Act. The Counsel also
submitted that the impugned word, ‘Yahoo’ was could be found in a dictionary
and hence lacked any distinctiveness. The counsel continued that defendant had
used a disclaimer and there was no probability of deception which implied that
it did not amount to passing off. The Counsel also refuted the plaintiff’s
argument by submitting that people who used Internet were literate and
‘technically educated’ and thus no user would reach the defendant’s site when
he intended to visit the domain of the plaintiff.

Judgement: -
In the judgment, the Court, having established that domain name of companies
was their way of creating their presence on the Internet, noted that Yahoo.com
was the domain of the plaintiff which was not registered in India but was popular
in India for being one of the first to provide web directory services. The Court
then moved on to discuss the first submission of the defendants which was
centred on the point that the domain name ‘Yahoo’ of the plaintiff is in context
of a service and not goods whereas Section 27(2)and 29 of the Trade and
Merchandise Marks Act (Act hereinafter). The Court accepted the defendant’s
submission that the present case was not an action for infringement but differed
from the counsel’s views that there was no passing off. The Court relied on
various judgments and the Commentary of P. Narayan to define the law of
passing off as the principle which restricts anyone to use a name which can
deceive people into believing that he is related to the business of another person
in some way. The principle of passing off has also been recognised in Section
27(2)and Section 106 of the Act. The Court then referred to the cases of Montari
overseas V. Montari Industries and Neev Industiies and trading Pvt Ltd and
Trading Pvt. Ltd. Vs Sasia Express Couriers. In both of these cases, it had been
held that services are also a part of the scope of passing off and thus the Court
found the defendant’s claim in this regard to be unsubstantiated. Then the Court
proceeded to discuss the elements of passing off and whether they were
satisfied in the present case or not. Relying on the case of Ellora Industries vs.
Banarsi Dass & Ors., the Court found that to prove passing off, the plaintiff
needed to show existence their business reputation or goodwill. Further, the
Court also relied on the Ellora Industries case and Lord Green M.R.’s
observation, to state that the existence of goods was not necessary to show
passing off. If both the parties were involved in the same line of business,
damage was possible if the impugned trademarks/domain names were
deceptively similar.
The Court, further cited Card Service International Inc. vs. McGee in which it was
held that the domain name of a company fulfilled the same purpose as a
trademark and thus, was entitled to be protected as a trademark. In the same
case, it was held that domain name is not just an internet address but also the
identification device of the company for its users. In the case of Marks & Spencer
vs. One-in-a-Million, it was held that if a name only has value because of its
similarity to another trademark or domain name, it will normally be assumed
that deception was intended. In light of these cases and opinions, the Court
came to the conclusion that even though the word ‘services’ has not been
included in the said sections of the Act, it has been recognised to fall under the
common law principle of passing off. The Court, after having established that
services can be the subject matter of passing off, went on to note that the
plaintiff’s domain name ‘Yahoo!’ had gained immense popularity around the
world and because the services of the plaintiff were provided over the internet
to users who accessed them through the domain name, it was important to
protect the domain name from being copied. In the present case, the
defendant’s name was almost identical to the plaintiff’s domain name and thus
there was immense possibility of confusion and deception of an Internet user.
The Court also refused to accept the defendant’s submission that Internet users
were sophisticated and hence would not be deceived. The Court said in this
regard that even if an individual was educated about the internet, they may be
misled because the information provided on the defendant’s site was similar to
that provided by the plaintiff.
Moving on the argument of the defendant that they had issued a disclaimer, the
Court relied on Jews for Jesus Vs. Brodsky in which it was held that the defendant
cannot remedy infringement of the plaintiff’s trademark by using a mere
disclaimer. The next submission of the defendant was that there was ‘sufficient
added matter’ i.e. the word ‘India’ that distinguished the two domain names.
The Court rejected this argument by relying on the case of Ruston and Hornby
Ltd. Vs. Zamindara Engineering Co. in which the Supreme Court had held that if
two marks were deceptively similar, addition of the word ‘India’ would not
amount to significant distinguishing. Further, the Court also noted that the
plaintiff was using regional names such as Yahoo. FR (France) and Yahoo.CA
(Canada). Thus, the usage of the name “yahooindia” by the defendant is bound
to create confusion. Lastly, the Court also refused to accept the defendant’s
submission that the word ‘Yahoo’ was a dictionary word and hence commonly
used by other companies. The Court reasoned that ‘Yahoo!’ had acquired
‘distinctiveness’ and ‘uniqueness’ and most people associated the word with the
plaintiff. In light of these authorities, the Court accepted the prima facie case
made by the plaintiff and passed an ad interim injunction against the
defendants, restraining them from operating under the name of
‘Yahooindia.com’ or any other deceptively similar name to ‘yahoo!’

Conclusion: -
In the case of Yahoo! Vs. Akash Arora, the Court held that the principle of passing
off under the Trade and Merchandise Marks Act meant that if a defendant was
conducting his business under a name that was similar to the ‘well-reputed’ and
‘distinctive’ domain name of plaintiff, and both the parties were in the same line
of business, the similarity in two names could mislead the public into believing
that the defendant’s good or service belonged to the plaintiff.
The plaintiff, Yahoo Inc had established credibility and goodwill around the
name ‘Yahoo!’ and the Court found that the defendant was attempting to
misuse this goodwill and pass off his services as that of the plaintiff’s. This case,
thus, made the common law principle of passing off applicable in cases of
domain names as well and thereby making the judgment an important
precedent for other internet-based trademark related cases in India.
Further, the judgment in this case is succinct in stating the law of passing off for
infringing trademarks and domain names in cases of services as well. Most
importantly, this case highlighted the concept of cybersquatting and laid down
the remedies available to plaintiffs in such cases. The case is also considered a
landmark judgment as it was the first time a domain name was equated to a
trademark and provided equal protection from passing off in India. The court by
upholding the aforementioned points established lucidly that domain names, on
passing the test of distinctiveness, are entitled to protection from passing off
and infringement.