SPICY IP

Continuing from our earlier post, yesterday’s hearing saw Cipla’s counsels continue arguments before an appellate bench consisting of Justice AP Shah and Justice S. Muralidhar. The key arguments advanced were:

1. That the patent in suit (covering Erlotinib) was invalid
2. That the patent, even if valid, was not infringed

The “public interest” and “pricing” argument was altogether avoided by Cipla’s counsels. It appears that they may have strategically decided to downplay the “public interest” argument. (Or perhaps they make take it up at the next hearing). Recall that in an earlier post, we noted that Justice Shah’s query to Jaitley went unanswered:

“Interestingly, Judge Shah asked Jaitley point blank: if the Roche patent was finally held valid, could the court still deny an injunction to Roche on the ground that the patented price is higher than the generic version? In other words, ought the court to establish an automatic judicially created compulsory licensing ground? Jaitley cleverly ducked this issue, stating that he would address it later. Clearly, this will be a major point on which the appellate court ruling is likely to hinge.”

I, for one, am a fan of such automatic compulsory licensing norms in the context of pharma patents (which some scholars prefer to label as “liability rules”). I think its high time that IP regimes such as ours experimented with such “liability rules”. But whether the appellate court would necessarily endorse such norms remains to be seen. Particularly when there already allegedly exists a compulsory licensing authroty and a price control authority. I hope to explore this issue in further detail in an article that we are doing for EIPR titled “Roche vs Cipla: The “Price” of a Patent Injunction in India”. I look forward to sharing a draft of this paper with our readers when this is done (hopefully in the next week or so).

Interestingly, Cipla’s counsel, Arun Jaitley was joined by S Majumdar of Majumdar and Co. Majumdar was the counsel for Natco in the pre-grant opposition before the patent office.

The patent invalidity argument ran along the same lines of what had been advanced before Justice Bhat.

i) That Erlotinib was “obvious” from an earlier patent covering a “known” substance, Gefatinib.

ii) That Erlotinib did not show any increased efficacy over and above Gefatinib. And therefore contravened section 3.d of the Indian Patents Act.

iii) That the patent office finding in favour of Roche (during the course of the pre grant oppn hearing) ought to be disregarded by the court. Counsels for Cipla advanced rather cogent and powerful arguments for why they thought the patent office ruling was suspect (on similar lines as that advanced in the trial court before Bhat J):

a. For one, the order in favour of Roche was passed by the patent office within a span of a mere 7 days, when the norm for most opposition decisions was 6 to 8 months.

b. Secondly, the date of grant of the patent in suit was unclear. As we noted in a previous post:

“Apparently, there was some problem with determining the exact date of the grant/issue of patent. The register of patents notes the date as 6th July 2007. However, the patent certificate states the date to be 23rd February 2007.

This date has direct relevance for determining the dates of the opposition proceedings. Natco filed an opposition on 10th April 2007. If the Feb 2007 date is taken to be the date of grant, then NATCO’s opposition is a post-grant one. However, if the 6th July 2007 date is taken, then Natco’s opposition qualifies as a “pre-grant” one.

c. Most importantly, perhaps, Cipla’s counsels argued vehemently that the controller merely addressed arguments on “novelty” and did not even consider arguments on non obviousness, when the case effectively hinged on non obviousness.

d. Counsels decried the ruling of the patent office on 3 (d) observation as garbled and totally incoherent.

While this attack by counsel on the patent office decision appears persuasive, this does not automatically mean that the court will conclude that the patent is invalid. Rather, defendants will have to independently demonstrate that this is the case, since the patent is a granted one and remains in force, till invalidated. However, given this persuasive attack, the court may not defer too much to the patent office determination that the patent was indeed valid.

On the issue of section 3(d), I’m not too sure which way the court is likely to hold. The key issue here is likely to be: Is Erlotinib a derivative of Gefatinib? As noted in a previous post:

“Now, in Roche vs CIPLA, the earlier known substance is Gefatinib. Roche then claims a structurally similar compound, Erlotinib. The question essentially is: is Erlotinib a derivative of Gefatinib? If it is a “derivative”, then under the explanation to section 3(d), unless such
derivative demonstrates “a significant difference in property with regard to efficacy”, it will be construed as the “same substance” as Gefatinib.

As a colleague of mine who wishes to remain anonymous and whom I deeply respect for his knowledge on both the Indian pharmaceutical industry and patent law writes and tells me:

“Structurally, they both have the common 4-quinazolinamine nucleus but the substitution patterns are quite different. They both are derivatives of 4-quinazolinamine, but are not really derivatives of each other (though it could be tenuously argued that any two compounds that have even the slightest of similarities could be interconverted.)

Such an argument could then be reduced ad absurdum to say that only one compound in any series of compounds having some structural similarity and acting by the same mechansim whould e patentable. That’ll truly be absurd.”

Non Infringement:

The non infringement argument is a rather interesting one and goes something like this:

The patent in suit (IN196774) effectively claims a combination of Polymorph A and B. However, Tarceva (and Cipla’s generic Erlocip) consists of only Polymorph B. Therefore, Erlocip which is an exact cophy of Tarceva does not infringe. From a brief perusal of the claims. I’m not entirely sure that the ’74 patent can be limited to a combination of polymorphs, as suggested by Cipla. Surprisingly during the course of arguments, the claims were never referred to even once.

The above non infringement argument had been seriously advanced before Justice Bhat as well, but he did not give it much weightage. As to whether an appellate court is likely to buy this argument remains to be seen. In relation to the hearings before the trial court (Bhat J), we noted in a previous post that:

“Most interestingly perhaps, Jaitley sprung a total surprise when he alleged that the patent in issue was very different than what was being argued in the case for more than 3 days!! To understand his argument better, let’s go back to our previous post, where we listed particulars of the alleged patent under dispute:

1. Details of Roche patent involved in Litigation:

Granted patent: IN196774 (’774)
Grant Date: 23 Feb 2007 or 6 July 2007 (we’re not sure)
Application Number: 537/DEL/1996
Corresponding US patent: US 5747498 (’498)

2. Second Patent Application for Erlotinib: A later patent application for Erlotinib was filed in India (IN/PCT/2002/00507/DEL). This corresponds with US patent 6900221 (the ‘221 patent).

Jaitley argued that CIPLA’s product implicates the latter patent by Roche (US patent ‘221) and not the patent in dispute (US patent ‘498 and Indian patent ‘774)!! Now if this is true, then there can be no “infringement”, as the US patent ‘221 is still not issued in India. It is pending as Application No IN/PCT/2002/00507/DEL.

I am not entirely clear on the exact nature of arguments here, but perhaps we’ll have more light shed on this when we get the final ruling from the court. Till then, I remain as much intrigued by this as you…..”

To get a sense of how tenable this argument is, we’ll wait to hear more from counsels on this at the next hearing.

If I were to bet on the outcome of this case….

The case is likely to hinge on two factors, namely:

i) Invalidity:

Whether or not the patent is invalid? If a clear and convincing case of invalidity is made out, then the appellate court will have to necessarily hold that Roche had not established the existence of a prima facie case. This is not a simple case of one piece of prior art that clearly anticipates the patent in suit. Rather, the validity of the patent in suit will hinge on complex issues of non obviousness.

Recall that Justice Bhat, though somewhat skeptical of the patent’s validity had held in favour of Roche on the “prima facie” count. I’m therefore not entirely sure that the appellate court will disturb the findings of Bhat J in this regard. Particularly when the prima facie assessment is more of a factual assessment and an appellate court is likely to defer more to the trial court on this count (as opposed to a pure queston of law, on which a de novo review is possible). The appellate judges already seem to be quite perplexed with the range of technical issues thrown up; therefore, the likelihood of deferring to Bhat J on the prima facie count is a strong one.

ii) Pricing and Public Interest:

As mentioned earlier, counsels now seem to be downplaying the “public interest” part of Bhat J’s judgment. I’m not entirely sure which way the court will go on this. Unless we have more arguments from counsels on the merits or otherwise of importing the public interest and pricing factor into India’s injunction jurisprudence (Singhvi is likely resurrect this during this rebuttal), it is difficult to gauge which way the courts might turn on this.

The hearings were meant to resume today–but since one of the judges was not feeling well, they did not take up the matter. The matter will be heard again after a week on the 19th of September. (next Tuesday).

Readers may remember that a couple of months ago Aysha had blogged on Malyasia granting a domestic company a trademark for the name ‘Ponni‘. ‘Ponni’ is actually a variety of rice grown in parts of Tamil Nadu, Andhra Pradesh and Karnataka. The rice is unique for its low starch and carbohydrates content which means that it can be safely consumed even by people suffering from diabetes.

Well Harish Damodaran reports in the Hindu Business Line that the Indian Government has finally appointed leading IP firm K&S Partners as its legal representative in order to join the ongoing litigation in Malaysia. The government will be trying to argue that the ‘Ponni’ trademark should never have been granted in the first place. As Damodaran reports the matter has assumed significant importance in light of the fact that India has banned all non-basmati rice exports.

However there is still very little information as to whether or not the Government has proceeded with granting Ponni GI protection. Ideally speaking this is a fit case for granting GI protection since the rice in question has unique properties as a result of the locations that it is grown in. Hopefully India will be able to do a better job in protecting this brand than it did in the case of basmati rice.

What is of interest to SpicyIP is this news report, that says the FFI will “actively research, through its Research and Analysis Cell, and commission studies to bring forth various aspects of the fashion industry. It will also set up a legal cell to assist the design houses in matters including IPR, licensing, contracts, and arbitration”.

Indian fashion has bred many a copycat, as allegations over the years lead us to believe, and surely, several “victims” in the industry will be breathing a sigh of relief. What will be interesting to see is whether this initiative will be sufficient to attract a large enough body of designers to the FFI. The Times of India is cynical of the new organisation, suggesting that the FFI may be little else than a group of designers displeased with the functionings of the existing Fashion Design Council of India (FDCI); and that it may be beset with similar bureaucratic trappings. We can only wait in the wings to see the form and degree of support the legal cell of the FFI will provide its members, and whether the system actually proceeds beyond rhetoric.

At the same time, I draw your attention to an excellent post that Shamnad had done a little under a year ago on the piracy paradox in fashion design. The post quotes an academic article by Professors Rausiala and Springman, paraphrased by NYT thus (as quoted in the post):

“Copying enables designs and styles to move quickly from early adopters to the masses. And since no one cool wants to keep wearing something after everybody else is wearing it, the copying of designs helps fuel the incessant demand for something new. The situation is not necessarily easy on designers, who have to keep coming up with new ideas rather than being able to milk a trend for years. But it means that in the industry as a whole there is more innovation, more competition, and probably more sales than there otherwise would be.”

Do read the post and the article for a fascinating exploration of this thesis. Maybe this will also give the Indian designers an opportunity to rethink any attempts towards excessive protectionism.

In relation to our last post detailing out the various arguments by counsels in the Roche vs Cipla matter, I was a little disturbed to learn that some of our sources (who were kind enough to speak to us about the hearings) were approached by Cipla’s counsel and castigated for their alleged role in our post.

Firstly, I wish to draw the attention of this aggrieved counsel to the last sentence in our post:

“Needless to state, they are not responsible for any of the contents of this post.”

In other words, while I may have taken their inputs on the various “facts” that transpired during the course of this hearing, all opinions and conclusions based on the facts are solely mine. The sources are in no way responsible for what I’ve stated in the post. In fact, we named only some sources–a large number of them went unnamed, as they wished to remain anonymous.

Secondly, this very same counsel had taken the pains to call me during the course of our reporting at the earlier stage (when Justice Bhat was deciding the matter) to congratulate me on the reporting and analysis. At that stage, our reporting had pointed out flaws in Roche’s legal strategy and opined that Justice Bhat’s judgment should not be seen as “patent busting”.
Clearly, our opinions at that stage suited this particular counsel. Now, when we’ve made certain statements that do not appear to suit this particular counsel, she appears terribly upset.

We wish to reiterate our motto which is very visible on our home page: “WE AIM TO INCREASE TRANSPARENCY IN INDIAN INTELLECTUAL PROPERTY POLICY/INSTITUTIONS. WE ALSO STAND FOR FAIR, OBJECTIVE AND ACCURATE REPORTING/REVIEW OF INTELLECTUAL PROPERTY AND INNOVATION POLICY NEWS FROM INDIA.”

Court proceedings in the Roche vs Cipla matter are “public” in nature and the public have a right to know what is going on. We are of the humble opinion that our public service aids “transparency” in some way. Naturally, we will not take too kindly to any individual who subtly attempts to influence our sources with a view to furthering their vested interests in a particular case. If they have a specific grievance and think that there has been any misreporting from our end, they ought to let us know directly, rather than sneakily approaching our sources.

This incident has caused us to change one of our policies. We’ve always believed that credit must be given where it is due and sources acknowledged, wherever possible. However, in the light of this incident, where sources are targeted and subtly intimidated, we will not revealing our sources in future. A bad thing for transparency no doubt, but sadly, there is no other way out. We’ve also made some slight changes to our earlier post, so that this particular counsel does not use it against our sources in future litigations. I wish to state again that the contents of the last post are my sole responsibility (in my individual capacity), and if this counsel wishes, she should proceed against me directly.

Today was yet another momentous day in the big ticket Roche vs Cipla litigation. Abhishek Manu Singhvi, counsel for Roche (along with Parag Tripathi) closed arguments on behalf of Roche. And immediately thereafter, Arun Jaitley opened arguments on behalf of Cipla.

As our readers are aware, in the first instance, a single judge of the Delhi High Court, Justice S Ravindra Bhat denied an injunction to Roche in relation to its anticancer drug “Tarceva” and permitted Cipla to continue manufacturing generic versions. Thereafter an appeal was filed by Cipla before a division bench of the Delhi High Court, consisting of the Chief Justice, AP Shah and Justice S Muralidhar. For those who came in late, we have about 25 earlier posts tracking this litigation. See here.

Roche Arguments:

Roche’s counsels (Abhishek Manu Singhvi, assisted by Parag Tripathi) closed their arguments after a good 5-6 hearings. And I believe the last hearing went on for a good 5 hours! Their main thrust seemed to be that “public interest” and “pricing” ought to not form part of India’s injunction jurisprudence. Particularly since the Patents Act already provided for extensive compulsory licensing provisions (and one of the grounds was that a license could be granted if patented product was expensive and not affordable). Therefore, Singhvi contended that the court should not operate as a defacto compulsory licensing authority.

As we noted in an earlier post, the “public interest” and “pricing” logic of Justice Bhat could be transposed to the final stage, –i.e. even if the patent were held valid, a judge could deny an injunction to Roche since its drug was more expensive (and therefore less affordable) than Cipla’s. Since in most pharma patent cases, this would always be the case (innovators who incur an R&D cost would almost always charge more than generics), no patentee would ever get an injunction. In short, such a ruling would amount to a de facto judge made automatic compulsory licensing rule.

Roche’s counsels also argued that Justice Bhat ought not to have second-guessed the patent office ruling (in the pre-grant opposition proceeding) in favour of Roche. Particularly when the patent office possesses more expertise to assess technical issues (such as non-obviousness of a chemical compound), when compared with Justice Bhat, who was merely examining the matter at a peripheral “interim” level. A plethora of cases from India and abroad suggests that one cannot undertake a mini trial to assess the relative weight of each party’s case at the stage of an interim injunction. This line of argument appears to have impressed the judges, particularly Justice Shah.

However, I’m not entirely sure what the impact of this impression will be on the final decision. Particularly when Justice Bhat cleverly held in favour of a “prima facie” case. In other words, although he seemed suitably impressed by the validity attack by Cipla’s counsel, he was careful enough to ensure that this did not impact his finding that Roche had established the existence of a “prima facie” case in its favour. As we noted earlier in several posts, the traditional three step test for the grant of a temporary injunction demands that the plaintiff demonstrate that:

1. There is a “prima facie” case in favour of the plaintiff
2. The plaintiff would suffer “irreparable injury”, if injunction not granted
3. The “balance of convenience” is in favour of the plaintiff.

While Justice Bhat held in favour of Roche on the first ground (prima facie case), he held against them on the other two. And most controversially perhaps, he imported “public interest” as a factor to be considered while assessing the third ground, namely “balance of convenience”.

By holding in favour of Roche on the first ground, Justice Bhat appeared to suggest that he was wary of second guessing a more thorough assessment of “validity” by the patent office. Had he second guessed the patent office and held against the existence of a “prima facie” case, his ruling might have come under attack. But then, one might ask: why did he venture to make statements questioning the validity of the patent and casting aspersions on the patent office ruling? Perhaps, this suspicion of the validity caused him to move to the second and third factors (irreparable injury and balance of convenience) and weigh against Roche while assessing those factors.

Cipla Arguments:

Jaitley attempted to rebut most of hte arguments advanced by Singhvi and team. In short, some of the arguments that he raised were as below:

1. He reiterated his argument before the lower court that there is no statutory presumption of validity in favour of a patent (unlike the trademarks act, which presumes a registered trademark to be valid). One wonders as to what effect this argument would have at the appellate level, given that the trial court had already held in favour of a “prima facie’ case, despite casting aspersions on the validity of the patent. Given that an appellate court only reviews questions of law de novo, it is doubtful if it will overturn Bhat’s ruling that a prima facie case had been established. In fact, if anythying at all, Justice Shah seemed to be concerned that Justice Bhat had even ventured to cast aspersions on the patent office (oppn) ruling, without the benefit of more evidence and hearing on the point.

2. Jaitley appeared to suggest that there were two Roche patents in issue here. While the first patent was a granted one, the second one was merely a pending application. And that Cipla’s product, Erlocip merely implicated the second patent application. Since the second application was still pending and not yet granted, there could be no “infringement”. From the facts of the case, I doubt very much if this argument is likely to fly. In the lower court, Bhat J does not seem to have given much weightage to this argument. In fact, if this argument were a strong one and a finding of “non infringement” were likely, Justice Bhat would not have found in favour of a “prima facie” case at all.

3. In reply to Singhvi’s contention that there was already a compulsory licensing scheme to address pricing and public health issues, Jaitley argued that such a scheme would come into effect only 3 years after the date of the grant of a patent. While this is true in the case of section 84 (which is a ground to be invoked by private parties such as Cipla), it is not true in the case of Cl grounds invocable by the government (there is no minimum time period for this).

Interestingly, Judge Shah asked Jaitley point blank: if the Roche patent was finally held valid, could the court still deny an injunction to Roche on the ground that the patented price is higher than the generic version? In other words, ought the court to establish an automatic judicially created compulsory licensing ground? Jaitley cleverly ducked this issue, stating that he would address it later. Clearly, this will be a major point on which the appellate court ruling is likely to hinge.

5. Jaitley also pointed to section 92A of the Indian patents act as endorsing public health concerns. And mentioned that “epidemic” as used in this section would include even “cancer” .

Jaitley will continue his arguments on Monday.

Conclusion:

At the appellate stage, the case will likely hinge on whether or not pricing and public interest can be part of the “interim injunction” calculus. And whether or not “judge made compulsory licensing norms” can form part of Indian patent jurisprudence. We’ll bring you more updates as this case proceeds.

The oft-criticized DIPP has new reason to rejoice. The brainchild of the FICCI Working Group on the Patent Office (that we had blogged about earlier), the system of e-filing of patents has received tremendous response! While the e-filing method does not reduce the fees for filing at the moment, they have made filing more convenient, and the public obviously agrees, with several thousand applications already filed. Elated with this, the Ministry of Commerce and Industry has come up with new plans:

1. Apart from Patents and Trademarks, by December 2008 to allow the filing of Geographical Indications and Industrial Designs by December this year.

2. Furthermore, keeping in mind the number of patents filed online this year, the DIPP has chosen to encourage such a move and is considering the reduction of fees for all persons choosing to go the e-filing way.

3. Last but not the least, the DIPP has also decided to approach more banks to start gateway facilities for patent applicants, including PNB, Canara Bank and ICICI Bank (this facility currently is available only with the SBI and Axis Bank) and completely shift all filing to the electronic form.

We had last reported to you about the initiatives of the Patent Office to go interactive and answer queries online. We hope the DIPP continues to come up with initiatives such as these, that help simplify procedures. SpicyIP would definitely appreciate our readers to comment on this development as well as provide feedback as to the practical implementation of this wonderful e-filing method.

The Federation of Indian Chambers of Commerce and Industry (FICCI) in association with World Intellectual Property Organization (WIPO) and Department of Industrial Policy and Promotion (DIPP), Government of India is organizing a WIPO Conference on Development and Intellectual Property (IP): Building Synergies with Policy Makers and Industry at Taj Exotica, Goa from September 1 to 3, 2008.

The aim of the Conference is to assemble selected parties involved in the IP system in different countries of Asia, namely, policy makers and industry, to gauge the impact of IP on select industries, and the manner in which companies in these sectors have been making use of the different elements of IP to leverage their competitiveness, promote trade and create jobs.

The details of the conference, participation fees, boarding & lodging in Goa have been provided in the attached Brochure. This is the tentative Programme copy and the registration form. For further information you can touch base with Sheetal Chopra (sheetal.chopra@ficci.com), Senior Assistant Director – FICCI IPR Division or P L Sharma (plsharma@ficci.com), Executive Assistant (Ph: 23738760-70 Extn. 212, Direct: 23736306).