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(This article was published in the December issue of PharmaBioWorld magazine)

Hard work that leads to an important discovery or invention needs to be given rightful recognition. The story about ‘Double Helix Structure of DNA’ believed to be studied by Rosalind Elsie Franklin much before Watson and Crick fetching them Nobel Prize for the same, pushing Franklin’s name in the background, is still an unsettled issue amongst science enthusiasts.

However, in current times, individuals/companies are aware and prompt in claiming their innovations by way of patents with the same being the most important enforceable instruments presently. Patents are legislated social contracts to encourage, foster and protect innovation. They not only grant complete ownership rights but also secure commercial interests of the inventors/companies from unauthorized exploitation. Further, patents ensure inventors’ monopoly in the market with respect to his/her product for a particular period of time.

Speaking of the pharmaceutical industry, the drug discovery process is long and laborious and involves a sizeable expenditure. The risks are high and returns are uncertain. IPRs especially patents, help pharma companies make profits to recover the cost of drug discovery and also plough back some money in the already ongoing research of other drugs. Plus, a sizeable IP portfolio is always a boon for a company.

Grasping the Background:

India's colonial status brought with it the patent legislation making India's IP regime conform to the developed world status in terms of patent law1. After independence, India passed the Patents Act, 1970 which came into force in 1972.

Before becoming a member of WTO in 1995, India consciously chose to confine monopoly rights in the pharmaceutical industry by granting ‘process patents’. It granted a lenient form of patent protection wherein only a specific process by which a substance was manufactured was protected. Thus pharmaceutical companies had the freedom to formulate a non-overlapping process to manufacture an already patented drug in India. Owning to this policy, the generic manufacturers had an advantage and between 1970 and 1993, the licensed drug manufacturers grew from about 2000 to 16,000, making India a net exporter of pharmaceutical products.2

However, India underwent a major change with respect to IPRs when it shifted its attention from process patent to product patent regime. This change was in line with making the Indian industry more IPR compliant after India became a part of the TRIPS Agreement in 1995. India was given 10 years grace period to fully induct the changes in the patent regime and Indian industries had to rework their IPR strategies to reap the maximum benefits of the new regime.

The legal position with respect to patents in India:

The post-1995 changes helped India gain access to the global market but on the other hand, also incited discussions and debates at the international level, especially with regard to some contentious provisions. We touch upon some of the legal provisions that directly impact pharmaceutical companies.

Section 3 (d) of the Patents Act, 1970 - Taking a three-dimensional view of ‘Section 3d’ of the Indian Patent Act:

Let us consider an interesting example of the popular HIV drug- azidothymidine (AZT) in the United States. Long before its use for the treatment of AIDS, AZT was actually synthesized as a drug to treat cancer. However, later the researchers discovered that the drug could be used to fight viral infections too. Hence, when the causative agent for AIDS was identified, many antiviral agents were screened among which AZT proved to be most effective in the clinical trials. This new use of AZT was quickly patented and it received USFDA approval in 1987. The same scenario would be different in India since ‘new use of a known substance’ comes under the non-patentable blanket.

Delving into the detail, Chapter II of the Patents Act, 1970 on 'Inventions not patentable', section 3d reads as

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.’

Explanation-For the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance unless they differ significantly in properties with regard to efficacy.

From time to time, there has been a huge uproar and discomfort amongst the pharmaceutical industry on the application of the section. A case that has been widely discussed and in fact forms the basis of interpretation of the said section is the seven years long landmark case of Novartis versus Union of India and others3.

Novartis had filed a patent application for an anti-cancer drug- Gleevec, a beta crystalline form of imatinib mesylate. Imatinib was a drug that was earlier patented by Novartis in many countries. In India, the patent office rejected the application citing section 3d. In return, Novartis went to the court to try to invalidate section 3(d) and argued that the provision was unconstitutionally vague. To clear the confusion regarding the term ‘efficacy’ which was not clearly defined in the Act, the Supreme Court referred to the Oxford Dictionary definition and observed that ‘efficacy’ means “the ability to produce a desired or intended result”. The Supreme Court held that for medicines, the test of efficacy can only be “therapeutic efficacy”.

Out of the various affidavits, submitted by Novartis, which exhibited more beneficial flow properties, better thermodynamic stability, lower hygroscopicity, and 30 % increase in bio-availability, the Honorable Supreme Court ruled that 30% increase in bioavailability could qualify as an increase in therapeutic efficacy under section-3(d) of Patent Act, 1970 if evidence is provided for the same. However, Novartis failed to furnish adequate research data leading to the rejection of its patent application.

In the above case, the Honorable Supreme Court has defined the context of efficacy in drugs for future reference. But the terms such as ‘significant’, ‘known’, ‘enhancement’ in the given section still leave a scope of ambiguity. In fact, the phrase “enhancement of known efficacy” is a relative term.

Moreover, this judgment also suggests that the applicant is required to provide direct evidence and indirect or indirectly implied evidence would not be considered as a reflection of therapeutic efficacy. But precisely what would qualify as direct evidence is still subject to different interpretations. Also, as most of the applications are filed at an early stage of drug discovery, it might be challenging for a patent applicant to satisfy the requirements of the patent examiners. It is only after conducting clinical trials that the applicant will be able to gather the required information regarding the therapeutic efficacy of the drug.

It is important that for the sake of standardization, the Act clearly defines the following:

· Scope of therapeutic efficacy

· Quantitative details of known efficacy

· Percentage increase over the known efficacy

· The minimum percentage increased required to be considered for crossing the bar of Section 3(d)

· Permissible research data that qualify as direct evidence.

The above is important as an objective criterion is the need of the hour. For companies to invest in R&D of drugs especially lifesaving drugs, without a surety of patent protection due to a vague criterion of patentability assessment is not encouraging.

Current trends on the application of section 3d by the Patent Office indicate that the section has become a double-edged sword. As per statistics, out of every 100 pharmaceutical case rejections, 66 cases are rejected by the Patent Office under Section 3(d). An increase in this trend has been observed after the Novartis case.

If we look at the intent behind introduction of Section 3(d), India being a welfare state, intends to prevent ever-greening of patented products and in turn benefitting those who can’t afford the exorbitant prices of lifesaving medicines. It is thus be advisable that clarity on interpretation as well as application of the section is provided to eliminate the commotion around Section 3d balancing between award to the rightful inventions and availability of inexpensive drugs to people.

The ‘Inventive Step’ conundrum:

Assessment of an inventive step in an invention is one of the essential patentability criteria to be considered. Section 2(1)(ja) of the Indian Patents Act defines an inventive step to be "a feature of an invention that involves a technical advancement as compared to the existing knowledge or having economic significance or both, and that makes the invention not obvious to a person skilled in the art".

The Manual of the Patent Procedure and Practice5 states

“…the following points need to be objectively judged to ascertain whether, looking at the invention as a whole, the invention does have an inventive step or not:

•Identify the "person skilled in the art", i.e. competent craftsman or engineer as distinguished from a mere artisan;

• Identify the relevant common general knowledge of that person at the priority date;

• Identify the inventive concept of the claim in question or if that cannot readily be done, construe it;

• Identify what, if any, differences exist between the matter cited as forming part of the "state of the art" and the inventive concept of the claim or the claim as construed;

•Viewed without any knowledge of the alleged invention as claimed, do those differences constitute steps which would have been obvious to the person skilled in the art or do they require any degree of inventive ingenuity?

The above criterion laid down by the Patent Office does seem reasonable in assessment of an invention step in an invention. However, application of the same by the Patent Office is still questionable.

The Supreme Court in this landmark decision - Bishwanath Prasad Radhey Shyam v. Hindustan Metal Industrie6 - had solved the mystery back in 1978. With respect to clarifying what would qualify as an inventive step, the Honorable Court maintained “was it for practical purposes obvious to a skilled worker, in the field concerned, in the state of knowledge existing at the date of the patent to be found in the literature then available to him, that he would or should make the invention the subject of the claim concerned?

Largely, the guidelines detailed by the Patent Office follow the decades old guidelines by the Honorable Court.

Pre-grant Opposition- a boon or a bane?

Section 25(1) of the Patents Act lists grounds on which a patent application can be opposed before the grant. A pre-grant opposition can be filed any time after the publication of a patent application but before the grant of the patent. The grounds include among others invention wrongfully obtained, lack of novelty, inventive step, insufficiency of description, non-disclosure and false claim to convention priority. Pre-grant opposition was devised to check ever-greening and filing of frivolous patents.

There is an assumption that pre-grant oppositions can be used as a tool to hamper patent grant procedure, sometimes even to the extent that negligible term remains after the grant of a patent. Further, more the number of pre-grant oppositions filed against a patent application, weaker are the chances of grant of a patent.

The opponents may work in consonance with each other to plan the timelines of filing pre-grant oppositions as the Act provides a very open-ended time frame for filing of pre-grant oppositions – “Where an application for a patent has been published but a patent has not been granted…”

To curtail exploitation of the provision by competitors, it may be worthwhile that a time frame in terms of number of months or years be included for filing of a pre-grant opposition in the Act. More so because if any genuine opposition is missed from filing, the opponent can avail the post-grant opposition mechanism provided in the Act in Section 25(2) which provides 12 months from the date of patent for filing of such opposition.

While pre-grant opposition is an effective mechanism in weeding out frivolous or non-patentable inventions, strategic use of the same can cause immense damage to an applicant.

Compulsory licensing- a blessing in disguise:

While the Indian Patents Act honors granting of product and process patents relating to pharmaceutical innovations as per its international commitments, the Indian Patents Act equally balances its commitments with healthcare requirements of its State. In case of lifesaving drugs being patented in India but not reasonably available in India in quantity or price, the Act authorizes the Controller of the Patent Office to grant a compulsory license.

Defining compulsory licensing in simple terms, it is the permission granted to a third-party by the Government to make, use or sell a specific product or process without the need of the authorization of the patent owner.

As per Section 84, at any time after the expiration of three years from the date of the grant of a patent, any person interested may make an application to the Controller for grant of a compulsory license on patent on any of the following grounds, namely:-

1. the reasonable requirements of the public with respect to the patented invention have not been satisfied.

2. the patented invention is not available to the public at a reasonably affordable price.

3. the patented invention is not worked in the territory of India.

The historic Natco v. Bayer7 case is one of the most cited cases in relation to Compulsory Licensing. The case became a matter of discussion at the global level and marked the start of an endless debate. The Controller in an elaborate judgment considered all the facts of the case and issued a compulsory license to Natco for the manufacturing of anti-cancer drug Nexavar.

There have been a couple more applications for compulsory licensing filed before the Patent Office. The most recent case was that of Lee Pharma versus AstraZeneca 8, where Lee Pharma, filed a Compulsory Licensing application against the Diabetes Mellitus patented drug ‘Saxagliptin’. Lee Pharma argued that AstraZeneca had been importing the drug at a very cheap price but sold it for way higher value which is making the treatment expensive for Indian patients. They also alleged that AstraZeneca had also not made enough efforts to manufacture the drug in India. The Controller, however, rejected the application on the ground that a prima facie case could not be made for making an order under Section 84 of the Patents Act.

Thus, there is an adequate check over the misuse of this provision and only applications with merits are considered.

Patent term extension- recouping the time lost:

Patents are granted for a period of 20 years and during this period, companies enjoy a monopoly over their patented products. The patent clock starts ticking as soon as an applicant files the application for the innovation. However, due to some impediments at the Patent Office, many times, patent applications do not mature to respective patents in a reasonable time frame and take upwards of 10 years, leaving companies with lesser time to enjoy exclusive rights.

In the EU, for example, pharma companies are eligible to obtain Supplementary Protection Certificate (SPC) which grants them a five-year extension on their patent term so as to compensate for the lengthy procedural requisites of regulatory approval.

In the United States, there is a provision of Patent term adjustment (PTA) which is intended to accommodate any delays caused in the prosecution of a patent application by the US patent office. This adjustment is an addition to the 20-year lifespan of a US patent.

However, the Indian Patent System does not offer any term extension even if the lag is on the part of the Indian Patent Office. This not only dampens the spirit of innovation in the first place but also makes the applicants bear the brunt of delays caused during prosecution. The introduction of a provision for a patent term extension should be considered to compensate for the time lost.

Non-patent Exclusivity- an incentive to innovate:

Unlike other sectors, pharmaceutical companies apply for patenting a new drug even before proceeding with the clinical trials. The reason is simple. The clinical phase takes a long time to complete and maintaining the secrecy of the drug is now next to impossible.

Therefore, in some countries non-patent exclusivity is granted to drug products to compensate for the amount of patent-protected time lost to gain approval to market the drug. This time period helps the company to enjoy a monopoly in the market with respect to a particular drug and recover the R&D cost even after the official term of patent protection has expired.

Countries such as the US and members of the EU let pharma companies enjoy an extended exclusivity period.

In the US, the Hatch-Waxman Act of 1984 grants non-patent exclusivity to pharma products that fulfill some prerequisites of the Act. During this period, the US drug regulatory authority, FDA, can accept but not approve an Abbreviated New Drug Application (ANDA) application on the same drug.

EU follows an ‘8+2+1 regime’ for data exclusivity. 8-year data exclusivity when no generic company's application for marketing authorization is accepted + 2 years of market exclusivity is given to the inventor company and no generic competitor is allowed market authorization for the product +1 year of extension of market exclusivity may be granted if during the 8 year period of data exclusivity an additional authorization is taken for one or more new therapeutic indications.

The Indian Patents Act does not offer non-patent exclusivity. This being so as India being a developing country has a huge population to cater to which cannot afford expensive drugs or even basic healthcare. Lack of the aforesaid provision directly promotes the burgeoning of generic drug manufactures who after the expiry of patent protection make pocket-friendly drugs easily accessible to people.

In fact, some of the statistics in this regard are interesting. India meets over 50 percent of global requirement for vaccines and about 25 percent of all medicines in UK 9. In the US, there is a rise in Abbreviated New Drug Application (ANDA) approvals of Indian pharmaceuticals companies from the US FDA. As per data, 2,025 ANDAs were filed in the first half of 2019, of which 1,374 were approved 10.

There seems to be a rampant demand of generic medicines not only in India but outside too. The sooner such medicines are provided to patients, the more lives are saved. For now not providing extra time period to companies post term expiration may help India to cater to its population until the same tides over to a reasonable standard of living.

Patent incentives- the road ahead:

Considering the issue of disinterest in orphan drug development in India, approximately 450 rare diseases have been identified in India and statistically, about 72,611,605 people in India are suffering from rare diseases and disorders11. Drug discovery segment in India is still evolving and there is a holdup with respect to regulation and development in research related to orphan drugs (for rare diseases). There needs to be a strong evaluation of the burden of orphan diseases in India along with policies and initiatives from government and private institutions for orphan drug development. Taking the example of the US, companies involved orphan drug invention can be granted 7 years exclusivity in addition to tax benefits and research grants.

India has been taking steps to nurture the innovation culture in the country as its existing system which provided only front end incentive was not adequate to boost the patenting and innovations in India. In this regard, Section 115BBF of the Finance Bill, 201612 introduced the Patent Box Regime in India which is an effort which enables an inventor to benefit through tax concessions on the royalty income. (This bill was passed in May 2016 and led to the insertion of a new Sec. 115BBF in the Income-tax Act, 1961)

India followed the lead of many countries across the globe that have initiated such tax incentive measures to promote research & new innovations, Ireland being the first country to do so. The patent box aims to incentivize research and development. However, India still has miles to go.

Keeping in view the Indian Patent Regime, the above discussion highlights that India has a structured IP policy in place. However, the question that still persists is - whether India should make way for some changes in its Patent Policy for Pharma practices in the world market or should it continue with the existing approach to allow maximum innovation and availability of life-saving drugs at affordable prices.


3 Novartis Ag vs Union Of India & Ors on 1 April 2013

6 Biswanath Prasad Radhey Shyam vs Hindustan Metal Industries on 13 December 1978

7 Bayer Corporation vs Union Of India on 15 July 2014

8 Lee Pharma Ltd. vs. AstraZeneca AB (C. L. A. No. 1 of 2015)

9 Press Information Bureau; “Affordable Efficacious Medicines – All Roads Leads to India”, 2013 report by IDMA;

11 Mohanty R, Barick U, Gowda A, Nair A, Mittal S, Patil A. Scope of patient registries for rare diseases in India. Int J Med Res Health Sci. 2016;5:58–61.


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