<incom> Sisule Musungu, A Look at Decision in the Novartis Case in India

[Soenke Zehle]

More on the Novartis case, Soenke

From: Sisule Musungu <sfmusungu at gmail.com>

Of Trivialities and Falling Skies: A Look at Decision in the Novartis 
Case in India
http://thoughtsincolours.blogspot.com/2007/08/of-trivialities-and-falling-skies-look.html

The skies are falling in India, literary! But that is because of the 
monsoons! However, if you have been listening to the spokespersons of 
Novartis and the IFPMA you might be forgiven to think that the skies are 
falling in India because a Madras High Court Bench rightly “laughed” 
Novartis out of court for three trivialities. First, the refusal by 
Novartis to accept that its drug Glivec could actually be a trivial 
invention per India’s law (a final affirmative finding is yet to be made 
on this). Second, the argument by Novartis that section 3(d) of the 
Indian Patent Act, 2005 violates the World Trade Organization Agreement 
on Trade-related Aspects of Intellectual Property Rights (TRIPS). And 
third, the idea that the said section is unconstitutional because it is 
arbitrary, illogical and vague since Parliament made no guidelines on 
what “enhancement of efficacy et al” means. In the media throughout the 
world no words have been spared to describe what happened, why and its 
significance. The 89 page decision is actually interesting reading, so 
if you have time read the whole thing.

Ruling in this highly publicised case, the learned High Court Justices 
dismissed, with no order as to costs, a petition by Novartis AG, the 
Basel based Swiss Company, and Novartis India Ltd, its Indian subsidiary 
to declare section 3(d) of the Indian Patent Act, 2005 non-compliant 
with TRIPS and Article 14 of the Indian Constitution. The judges clearly 
knowing they were being watched globally, delivered, not necessarily a 
classic, but a foolproof judgment. Health activists, generic companies, 
medical organisations, churches, and many others were obviously 
jubilant. But, even before reading the decision, Novartis in a press 
release posted on their website warned of falling skies. Charged the 
release: “A decision issued today in an Indian court will have long-term 
negative consequences for research and development into better medicines 
for patients in India and abroad.” The friends at IFPMA, the industry 
association, were not far behind. In their press release, IFPMA charged 
that: “The High Court in Chennai, India, has today dismissed a legal 
challenge to Section 3d in India’s 2005 Patent Law that seriously 
handicaps Indian patients, emerging research-based Indian and 
international pharmaceutical companies alike by discouraging development 
of innovative medicines.”

Novartis had argued that section 3(d) of the Indian Patent Act, 2005 did 
not comply with Article 27 of TRIPS as it was apparently discriminatory 
and was unconstitutional because it was arbitrary, illogical and vague. 
On the first ground, the Court, using basic international law 
principles, determined that in India, a dualist country in terms of its 
approach to international law, treaty law only became national law and 
capable of violation in India when specifically domesticated by the 
Indian parliament. By the same token it would follow that if the dispute 
was at the WTO India would not be permitted to argue in its defense 
simply that India’s parliament had decided to implement a TRIPS 
provision in a particular way or that its parliament had discretion. 
Indeed, in a ruling in 1998 in the India mailbox case the Panel told 
India as much.

In simple terms, the Court was telling Novartis that the TRIPS Agreement 
is not a source of law in India. You can only litigate in Indian courts 
violation of Indian law. The judges, politely and respectfully, reminded 
Novartis that if they had trouble with the Indian law vis-à-vis TRIPS 
what they needed to do was simple. Take a train or a drive or use any 
other forms of transport available in Switzerland from Basel to Bern 
(the Swiss seat of government) and convince the folks in Bern that India 
was violating the contract that the Swiss government entered into in 
1994 to protect Novartis’s and other Swiss companies’ inventions in 
India (there have been some reports from India indicating that a Swiss 
official has indicated they will not move to WTO). If the folks in Bern 
were convinced and the Indian government did not agree to change (India 
trade Minister, Kamal Nath says India law if fully TRIPS consistent), 
the folks in Bern or their lawyers were free to take a ride or send a 
cable to Geneva (the seat of WTO) and “sue the pants off” the Indian 
government.

I am at a loss how this simple, clear and reasonable message will have 
long-term negative consequences for R&D or how it will handicap Indian 
patients or discourage development of innovative medicines.

But the Novartis and IFPMA statements confirm once again a widely known 
fact. The message send by the Madras High Court speaks to many similar 
situations in developing countries. The case of Thailand and Brazil 
recently, and South Africa and others before that where TRIPS is 
brandished to threaten, scare and confuse are just few obvious examples. 
One would have thought we moved on from here, how wrong!

On the second ground, the Court held that it was reasonable and 
scientifically possible to make a determination that “a new form of a 
known substance had resulted in the enhancement of the known efficacy of 
the original substance and the derivative so derived will not be the 
same substance since the properties of the derivatives differ 
significantly with regard to efficacy.” [p.58]. In sum the judges told 
Novartis that if it was the innovative company that it claims, and in 
relevant cases has proven to be, then they should be ashamed to claim 
that they do not know what enhancement of known efficacy means. With 
emphasis, the judges therefore agreed with the Additional Solicitor 
General of India and other Counsel who argued that a company of Novartis 
stature cannot plead that “they do not know what is meant by enhancement 
of a known efficacy and they cannot show that the derivatives differ 
significantly in properties with regard to efficacy.” In essence, 
section 3(d) of the Indian Patent Law, 2005 is Constitutional and is not 
arbitrary, illogical or vague. It is a reasonable exercise of 
legislative power by the Indian parliament taking into account the 
country’s interests and, in particular, the need to prevent evergreening 
and improve access to medicines.

There is no doubt that thousands, if not more pages will be written on 
this landmark decision. What should not be lost is that other than 
settling the two basic questions in dispute, the Court also made some 
memorable observations and restatements of the law. Just a few including 
some quoted from earlier decisions:

[P.25] “When domestic law is challenged on the ground of it being in 
violation of an International Treaty, domestic courts would have no 
jurisdiction.”

[p.34] “No declaration would be given where it would serve no useful 
purpose to the petitioner…Assuming that we give a declaration as prayed 
for, namely, the amended provision is not in the discharge of India’s 
obligation under Article 27 of “TRIPS”, even then, we fail to see for 
what use the petitioner can put it.”

[P.41] “ Therefore it would be unwise to fix any specific formula to be 
applied, as a matter of static measure, to find out whether the new form 
of a known substance resulted in the enhancement of the known efficacy 
or the derivatives differ significantly in properties with regard to 
efficacy.”

[P.44] “The speeches made by the members of the House in the course of 
the debate are not admissible as extrinsic aids to the interpretation of 
statutory provisions.”

[P.52] “What the patent applicant is expected to show is, how effective 
the new discovery made would be in healing a disease/having a good 
effect on the body? In other words, the patent applicant is definitely 
aware as to what is the “therapeutic effect” of the drug for which he 
had already got a patent and what is the difference between the 
therapeutic effect of the patented drug and the drug in respect of which 
the patent is asked for.”

[P.63]: “Parliament and the State Legislatures function best when they 
concern themselves with general principles, broad objectives and 
fundamental issues…”.

[P.70] “We reiterate here at this stage that the amended section with 
it’s Explanation is capable of being understood and worked out in a 
normal manner not only by the patent applicant but also the Patent 
Controller”

[P.75] “The possibility of flagrant abuse or misuse of law has never 
been a ground for holding a provision ultra vires.”

[P.76] “The Legislature has a duty to safeguard the economic interests 
of the country.”

[P. 80] “It must be presumed that the legislature understands and 
correctly appreciates the need of its own people, that its laws are 
directed to problems made manifest by experience and that its 
discriminations are based on adequate grounds.”

[P. 81] “ Therefore from the year 1948 or so the Parliament was aware 
about the change in economic conditions of the country, which made them 
change the 1911 enactment to suit the needs of the economic conditions 
of the country. Therefore there cannot be any doubt at all that the 
Patents Act as it stood then and as it stands today, is designed to 
safeguard the economic interests of this country and if that is so, the 
amended section must be viewed with greater latitude.”

[]P.88] “We have borne in mind the object which the amending Act wanted 
to achieve namely, to prevent evergreening; to provide easy access to 
the citizens of this country to life saving drugs and to discharge their 
Constitutional obligation of providing good health care to its citizens.”


Sisule F. Musungu

Born in Kenya and educated in Kenya (Busia, Turkana and Nairobi), South 
Africa (Pretoria), Uganda (Makerere-Kampala) and Switzerland (Bern). 
Have worked in Kenya and Switzerland and I write and research on 
intellectual property, innovation, access to knowledge and international 
human rights law.