SHAMNAD BASHEER

THE GLIVEC PATENT SAGA: A 3-D PERSPECTIVE ON INDIAN PATENT POLICY AND TRIPS COMPLIANCE
This work is dedicated by a humble native of Flatland In the hope that Even as he was initiated into the mysteries of Three Dimensions Having been previously conversant with only two So the citizens of that celestial region May aspire yet higher and higher To the secrets of four or five or even six dimensions Thereby contributing to the enlargement of the imagination1

INTRODUCTION Indian patent law recently landed itself in the eye of a TRIPS2 storm on account of the rejection of a patent application covering Novartiss famed anticancer drug, Glivec.3 The rejection stemmed, inter-alia from a unique section in the Indian patent regime (section 3(d))4 that prohibits the patenting of new forms of existing pharmaceutical substances that do not demonstrate significantly enhanced efficacy. Not only did Novartis appeal the patent office decision, but in a rather controversial move, it challenged the TRIPS compatibility and constitutionality of section 3(d). The Madras High Court recently ruled that section 3(d) was constitutional.5 More importantly, it also stated that it did not have jurisdiction to rule on the TRIPS issue. As one can appreciate, this does not settle the TRIPS issue but only shifts the jurisdictional venue. With the sword of Damocles hanging over India, it is an opportune moment to examine section 3(d), its contours and context and the broader implications for Indian intellectual property policy and TRIPS.
Edwin A Abbott, Flatland: A Romance of Many Dimensions (Dover Publications, 2007) The Agreement on Trade Related Aspects of Intellectual Property Rights (15 April 1994) LT/UR/A-1C/IP/1 <http://www.wto.org/english/docs_e/legal_e/27-trips.pdf>. 3 Novartis AG vs Natco Pharma and Others, Indian Patent Office, Application No.1602/NAS/1998 (25 January 2005) <http://lists.essential.org/pipermail/ip-health/2006-March/009200.html>. 4 Patents Act, 1970, 3(d), amended by Patents (Amendment) Act, 2005. 5 Novartis AG & Anr. v. Union of India & Othrs. (Mad HC) 2007 <http://www.lawyerscollective.org/%5Eamtc/current_issues/Judgement.pdf>.
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Apart from discussing the various aspects of the dispute, this paper argues that section 3(d) represents the third dimension in international intellectual property debates. The regular two-dimensional view hardwired into the WTO/TRIPS framework and represented in most of the literature speaks of a developed vs developing country schisma schism that blinded policy debates for a great number of years. Given the proliferation of technologically proficient developing countries6 such as India, China and Brazil that are not yet fully developed, but have clearly transcended the developing country status in some respects, this schism needs some rethinking. On the one hand, a rapidly growing economy and strength in technology sectors such as software and pharmaceuticals invest India with some developed country characteristics.7 On the other, the fact that its Human Development Index (HDI) ranks as one of the lowest in the world8 and that 26% of its people live below poverty line9 keep it from fully transcending its developing country status. This paper argues that when viewed through a three-dimensional (3-D) lens, section 3(d) emerges as a provision premised on Indias status as a technologically proficient developing country. With a view to incentivising incremental pharmaceutical innovation by domestic pharmaceutical companies, patent protection is provided to pharmaceutical inventions. However, owing to fears of ever-greening and extended monopolies, such patent protection is limited to new chemical entities and their derivatives that provide substantially enhanced efficacy. Of course, the true mettle of section 3(d) will emerge only after the government defines what efficacy really entails. Section 3(d) is significant for Indian patent policy in other ways too. For one, section 3(d) represents the congruence of three distinct interests that vie for predominance in Indian pharmaceutical patent policy. The interests of multinational companies (MNC), the interests of the domestic industry and the interests of consumers. Unfortunately, till recently, a regular two-dimensional view of patent
The term technologically proficient developing country appears to have been first used by Professor John Barton. See John Barton Catch-up Strategies for Technologically Proficient Developing Nations, Simposio Nacional de Pesquisa de Administracao em Ciencia e Tecnologia, Rio de Janeiro (1991). 7 See generally, Annual report of the Planning Commission of India (2006) <http://planningcommission.nic.in/reports/genrep/ar0607_eng.pd>. 8 India ranks 126 (out of 177) in the recent Human Development Index. The HDI provides a composite measure of three dimensions of human development: living a long and healthy life (measured by life expectancy), being educated (measured by adult literacy and enrolment at the primary, secondary and tertiary level) and having a decent standard of living (measured by purchasing power parity, PPP, income) See Human Development Report (2006) <http://hdr.undp.org/hdr2006/statistics/countries/country_fact_sheets/cty_fs_IND.html>. 9 Press Note 2006, Ministry of Statistics and Programme Implementation, <http://www.mospi.nic.in/mospi_social_pr.htm> (13 Feb 2006).
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policy in India saw the balancing of pharmaceutical patent policy as one between MNCs on the one hand, and of consumers/domestic producers on the other. In other words, there was conflation of consumer interest with those of domestic producers, who provide affordable generic versions of drugs. Here again, this paper stresses that it is essential for the reader to wear a 3-D lens and see these interests as distinct. A regular 2-D view and a conflation of interests would suggest that the efficacy threshold be defined as high as possible. This would significantly limit the grant of patents, and provide cheaper drugs for consumers. However, a high threshold would harm the interests of domestic majors such as Ranbaxy and Dr Reddys, who are now extensively involved with incremental innovation. The ex post effects of a patent in the form of high prices etc can be addressed via measures such as price control, compulsory licensing etc. However, it is not wise to peg patentability criteria at arbitrary levels to achieve these purposes, particularly when such an action will adversely impact the innovation incentives of Indian pharmaceutical companies. In short, the term efficacy is a very useful policy lever10 and one ought to ply with it very carefully. Lastly, this paper argues that section 3(d), a section that does not find a parallel in any other patent regime in the world, represents a new phase in Indias TRIPS implementation efforts. The earlier phases were marked with hostility towards TRIPS.11 The current phase, which includes enactments of provisions like 3(d), represent an innovative exploitation of TRIPS flexibilities by India to further national interest. THE GLIVEC PATENT SAGA Like all corporate sagas, the story of Novartis begins with two individuals, who surprisingly never figure in the patent narratives that we hear about. In 1960, Peter Nowell and David Hunger-Ford, two medical doctors from the United States discovered a genetic mutation in patients with chronic myeloid leukemia (CML), a form of cancer. Their discovery launched the search for a compound that could block the single enzyme that causes the disease. In 1990, scientists at Novartis closed in on the target and, in 1993, the company filed a patent for a free base called Imatinib.12 Imatinib was then further researched upon and improved--a beta crystalline version of one of the salts of Imatinib (imatinib mesylate) was found to work well and within no time, the world had
10

Two prominent intellectual property scholars propose that courts ought to apply patent policy levers to tailor patent protection to suit specific industries. See Dan L. Burk & Mark A. Lemley, Policy Levers in Patent Law, 89 VA. L. Rev 1575, 1630 (2003). 11 See generally, Daniel Gervais, Intellectual Property, Trade & Development: The State of Play , 74 Fordham L. Rev. 505 (2005). 12 US Patent Number 5521184 (issued May 28, 1996).

Glivec,13 an effective treatment for CML. 14 The patent dispute that sets the tone for this paper centers around the beta crystalline form of imatinib mesylate referred to abovein more technical terms, this substance is a particular polymorphic form of the methanesulfonic acid addition salt of imatinib mesylate. Till date, 35 patents covering this salt have been granted to Novartis in various countries.15 However, owing to the unavailability of drug patents in India until 1 January 2005,16 Novartis claimed this polymorph in a mailbox application, that was to be opened on January 1, 2005 and examined17. This mailbox application, filed on July 17, 1998 covered the beta crystalline form of imatinib maesylate.18 Pursuant to the 2005 amendments to Indias patent regime19 which introduced product patents for pharmaceuticals, this application was opened and examined. It was immediately opposed by generic drug companies that had already been manufacturing this drug and the Indian Cancer Patients Aid Association on several grounds including: i) ii) iii) iv) lack of novelty/anticipation the claimed salt did not have any added efficacy under Section 3(d), obviousness and wrongful priority

Agreeing with the above arguments, the Assistant Controller of Patents rejected the patent application.20 Aggrieved by this rejection, Novartis AG, along with its Indian subsidiary, Novartis India, filed two writ petitions in the Madras High Court.
13 14

Glivec is sold as Gleevec in the US. Glivec is also useful in treating Gastro-Intestinal Stromal Tumours (GIST), a very rare cancer affecting the digestive tract or nearby structures within the abdomen. <http://www.gistsupport.org/treatments/current-treatments/gleevec.php>. 15 Novartis AG and Anr vs Union of India and Ors, WP No. 24759 of 2006, High Court of Judicature at Madras (May 17, 2006) (on file with author). 16 Under Art 65 of TRIPS, India had 10 years from the date of coming into force of TRIPS to implement product patent protection in pharmaceuticals. 17 Indias patent regime was amended 1999 to provide that applications claiming pharmaceutical inventions would be accepted and put away in a mailbox, to be examined in 2005these applications are commonly referred to as mailbox applications. This amendment was in pursuance of Article 70.9 of TRIPS and a WTO dispute filed by the United States against India for a failure to comply with this TRIPS provision. See WTO Appellate Body, India: Patent Protection For Pharmaceutical And Agricultural Chemical Products, WT/DS50/AB/R (Dec. 19, 1997), <http://docsonline.wto.org/imrd/directdoc.asp?DDFDocuments/t/WT/DS/50ABR.WPF>. 18 Crystal Modification of A N-Phenyl-2-Pyrimidineamine derivative, processes for its manufacture and use, Application No.1602/MAS/98 (July 17, 1998). 19 The Patents (Amendment) Act, 2005 was published as law in the Gazette of India on April 5, 2005. 20 Novartis AG vs Natco Pharma and Others, Indian Patent Office (supra n 3).

These petitions not only sought a reversal of the Asst Controllers order, but also a declaration that Section 3(d) was unconstitutional and in violation of Indias obligations under TRIPS.21 Pursuant to a government notification,22 the High Court transferred the first petition to the Intellectual Property Appellate Board (IPAB) a specialist tribunal set up to deal with appeals from the various intellectual property offices across the country.23 Before we assess the TRIPS challenge, let us dwell briefly on the merits of the dispute that is before the IPABi.e. whether the beta crystalline form is patentable or not. For the purpose of this paper, I limit my discussion to section 3(d). SECTION 3(D): THE STRUCTURE AND CONTEXT Section 3(d) reads as below:

d) the mere discovery of a new form of a known substance which does not result in increased 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 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.
In essence, section 3(d) aims to prevent a phenomenon commonly referred to as ever-greening: under one definition, this occurs when a manufacturer supposedly stockpiles patent protection by obtaining separate 20-year patents on

21 22

Novartis AG vs Union of India, WP (supra n 15). The notification under the Patents (Amendment) Act (section 117G), provided that all pending appeals in the High Court shall be transferred to the newly constituted Appellate Board. Notifications No.12/15/2006-IPR-III) dated 2/4/2007 issued by the Ministry of Commerce & Industry <http://ipindia.nic.in/ipr/patent/gazetteofindia_apr2007.pdf>. 23 See < http://www.ipab.tn.nic.in/> for more details on the IPAB. The IPAB is currently embroiled in a controversy around the appointment of one of its members, Chandrasekharan, who had been Controller of Patents when the patent office rejected Novartis application.

multiple attributes to a single product.24 According to a report of the US National Institute of Healthcare and Medicines (NIHCM):25

Drug manufacturers patent a wide range of inventions connected with incremental modifications of their products, including minor features such as inert ingredients and the form, colour and scoring of tablets.
In an attempt to stave off the possibility of ever-greening, section 3(d) stipulates that only those pharmaceutical derivatives that demonstrate significantly enhanced efficacy are patentable.26 The underlying assumption is that derivatives, such as salt forms, polymorphs, isomers etc that are structurally similar to known pharmaceutical substances are likely to be functionally equivalent as well--and if this is not the case and the new form of an existing substance works better than the old form, it is up-to the patent applicant to demonstrate this and claim a patent. To this extent, section 3(d) draws a distinction between evergreening and incremental innovation.27 By making derivates with added efficacy patentable, section 3(d) encourages sequential developments of existing products or technologies that help bring in improved products to the market, capable of addressing unmet public health needs. In order to appreciate whether Novartis invention is more efficacious than an earlier known form, lets look at what the invention entails. The invention represents a transition from the discovery of a free base to a useful drug. The various steps in this transition can be encapsulated as under: i) Synthesizing the Imatinib free base, a compound that was patented in the US, EU and several other countries. 28 However, this could not be

24

See Patentee Attorneys Challenge Assertions re FTA Patent Practices (Press Release dated 4 August 2004) <http://www.ipta.com.au/forms&notices/FTA_Release.doc> (5 July 2005) (last visited Aug. 30 2007). 25 Nat. Institute For Health Care Management Changing Patterns of Pharmaceutical Innovation, May 2002 < http://www.nihcm.org/~nihcmor/pdf/innovations.pdf>. 26 During the Parliamentary debates, Sri Kamal Nath, Minister of Commerce and Industry, in response to concerns by other Parliamentarians stressed that section 3(d) was introduced to prevent evergreening. Interestingly, Suresh Kurup, a Parliamentarian, specifically cited the ongoing case of Glivec to demonstrate the ill effects of ever-greening. See Lok Sabha Debates (22 March 2005) <http://164.100.24.230/Webdata/datalshom001/dailydeb/22032005.htm> 27 Classifying all incremental innovations as tantamount to evergreening is misguided. See Shamnad Basheer Limiting the Scope of Pharmaceutical Patents and Micro-organisms: A TRIPS compatibility Review, (Intellectual Property Institute, London, 2005.) 28 U.S. Patent No. 5,521,184 (issued May 28, 1996). See also corresponding European Patent No. 0564409.

ii) iii)

iv)

patented in India, owing to the fact that in 1993, India did not provide product patents for pharmaceutical substances.29 The conversion of the free base to a salt form -- imatinib mesylate by adding methanesulfonic acid. The obtaining of the beta crystalline form of imatinib mesylate, a polymorphic form that is allegedly the most stable form of the salt. A patent application was filed for this and it is this application that is the subject matter of dispute.30 The making of Glivec, a drug that is based upon the above beta crystalline form of imatinib mesylate.

Novarits claims that Glivec (beta crystalline form of imatinib mesylate) is more effective than the Imatinib free base, since it displays better bio-availability properties i.e. it is absorbed more easily into the blood.31 To this effect, it submitted evidence before the Assistant Controller demonstrating an increase in bio-availability of upto 30%. He disagreed that this was sufficient to constitute increased efficacy:32

As per the affidavit the technical expert has conducted studies to compare the relative bioavailability of the free base with that of beta crystalline 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. The present patent specification does not bring out any improvement in the efficacy of the beta crystal form over the known substances-- rather it states the base can be used equally in the treatment of diseases of in the preparation of pharmacological agents wherever the beta crystal is used. Even the affidavit submitted on behalf of the Applicant does not prove any significant enhancement of known efficacy.
As can be seen from the above, the decision of the patent office is not very illuminating and the patent controller did not give any detailed reasons as to why he thought the beta crystalline form lacked efficacy. What does the term efficacy mean? Does it connote only therapeutic efficacy? Or will it also include bioavailability? And importantly, what will constitute a significant enhancement in efficacy under the Explanation to section 3(d)? Will a 30% increase in bioavailability suffice?

29
30

Supra n 16. Supra note 18. 31 Gauri Kamath, Interview with Paul Herring, Head of Corporate Research, Novartis AG, BUS. WORLD, Feb. 19, 2007 < www.businessworldindia.com/feb1907/indepth04.asp>. 32 Novartis AG vs Natco Pharma, Indian Patent Office (supra note 3).

It is hoped that a final resolution of this dispute at the IPAB as well as the governments recent move to draft guidelines for determining efficacy in the patent manual will yield some clues in this regard.33 SECTION 3(D): TRIPS COMPATIBILITY As mentioned in the introduction, Novartis challenged both the TRIPS compatibility and constitutionality of section 3(d). The Madras High Court ruled that section 3(d) was constitutional.34 More importantly, it also stated that it does not have jurisdiction to rule on the TRIPS issue. Rather, the proper forum to bring this before would be the WTO. 35 As one can appreciate, this does not settle the TRIPS issue but only shifts the jurisdictional venue. Assuming the matter were to come before the WTO, it is very unlikely that a panel will rule against India.36 Article 27 of TRIPS stipulates that patents shall be available for any inventions provided that they are new, involve an inventive step and are capable of industrial application. However, none of the terms used in this Article have been defined. This leaves some flexibility in the hands of member states to define patentability criteria in a manner that suits their specific national interests.37 Historically, member states have refined patentability criteria in the context of specific fields of technology, taking into account the unique concerns posed by such technologies. Illustratively, in 2001, the United States Patent and Trademark Office (USPTO) revised its utility guidelines to cater specifically to biotechnology inventions.38 It is also pertinent to note a German provision brought in to ensure
33

Gireesh Chandra Prasad, Novartis warns India of losing R&D biz to China , ECON. TIMES, AUG. 7, 2007 <http://economictimes.indiatimes.com/articleshow/msid-2261510,prtpage-1.cms> 34 Novartis AG v. Union of India & Othrs , Mad HC (supra note 5 at para 19). The court based its decision on the fact that since section 3(d) did not confer uncanalised discretionary power on the patent controller, it was not vague or arbitrary. Therefore, it could not be struck down under the equality clause enshrined in Article 14 of the Constitution. 35 Id at para 8. 36 It is interesting to note that the Swiss government recently indicated that it was not willing to take up cudgels on behalf of Novartis. Business Standard Reporter, Swiss Govt. not to take Novartis case to the WTO, Business Standard Aug 8, 2007 <http://www.businessstandard.com/common/storypage_c.php?leftnm=10&autono=293771>. 37 See Commission on Intellectual Property Rights Integrating Intellectual Property Rights and Development Policy 114 (2002) <http://www.iprcommission.org>. 38 USPTO Guidelines for Examination of Applications for Compliance with Utility Requirements, 66 (4) Fed Reg 1092 (5 January 2001) <http://www.uspto.gov/web/offices/com/sol/notices/utilexmguide.pdf>. Such a requirement is, to some extent, also being applied by the EPO (EPO Opposition Decision revoking EP0630405 (ICOS Corporation) 20 June 2001 (Unreported)).

that the patent monopoly on a gene sequence is limited to the specific function disclosed and not to all functions.39 In much the same way as the above provisions, Section 3(d) may be construed as a refinement of patentability criteria to cater to evergreening--a specific problem inherent in pharmaceutical innovations.40 More specifically, the enhanced efficacy criterion can be seen as refinement of non obviousness principlesi.e. most forms of existing pharmaceutical substances are deemed obvious, unless they demonstrate increased efficacy.41 In short, patentability criteria have not been defined under TRIPS, a deeming provision such as section 3(d) can be made and sustained, provided it is not entirely arbitrary. This section aims to weed out frivolous patents by creating a credible efficacy barrier. It is very difficult to see how a WTO panel might strike this down as being in contravention of TRIPS. Of course, if the term efficacy is construed in so narrow a manner that the Indian patent regime effectively protects only New Chemical Entities, this may tantamount to a TRIPS violation. This is something that the government wished to avoid, as can be seen from the debates surrounding the Mashelkar Committee Report, which found that a blanket denial of patents to all pharmaceutical incremental innovations was likely to contravene TRIPS. 42 SECTION 3 (D): A 3-D PERSPECTIVE The above sections help contextualise section 3(d). At a broader level, I wish to highlight the importance of appreciating Indias patent policy in the context of its current status as a technologically proficient developing country. To this extent,
39

An amendment approved by the German Parliament in 2004 limits patent protection on human gene sequences to disclosed functions at the time of the patent application i.e. a patent on a human DNA sequence used for a specific function would not cover a second function discovered later by another researcher using the same DNA sequence. See N Stafford German Biopatent Law Passed <http://www.bintegrating omedcentral.com/news/20041209/01> (24 December 2004). 40 supra note 24-26 41 See Shamnad Basheer, IPI, supra note 27. 42 The government constituted a technical committee, with Dr Mashelkar, a reputed scientist, as Chairman to determine whether restricting the grant of patents for pharmaceutical substance to only new chemical entities (NCEs) would be in compliance with TRIPS. See DR. R. A. Mashelkar et al., Report of The Technical Expert Group on Patent Issues (2007) <http://ipindia.nic.in/ipr/patent/mashelkar_committee_report.doc>. The Mashelkar Committee Report was however withdrawn due to certain technical inaccuracies in the report namely the fact that certain sections of the report had been reproduced from a paper prepared by Basheer (supra note 27), without proper acknowledgement of the same. See generally Pallava Bagla, Plagiarism in his panels report, Mashelkar tells Govt. to withdraw it , Indian Express, FEB 22, 2007 available at <http://www.indianexpress.com/story/23941.html>.

the readers are cautioned against an antiquated 2-D view of international IP debatesa view premised on the developed vs developing country schism.43 At the risk of oversimplification, the broad notion is this: Developed countries need maximalist IP regimes, as they are highly innovative and strong IP regimes provide the requisite incentives in this regard. Developing countries require minimalist IP regimes, as they are hardly innovative and are often net importers of technology. This is borne out in part by the Ayyangar Committee Report, a report which, in large part, formed the basis for the 1970 Indian Patents Act.44 The report stressed the virtues of a relatively weaker patent system and stated:45

It does not need much argument to establish that if the scope of patentable inventions were widened, the persons to benefit would be mostly inventors in the highly advanced industrial countries and for the use of these inventions which are not subject to patents in any country of the world other than in the United Kingdom, the industries in India would have to pay a tax in the shape of royalty.
The consequences of the developed vs developing country schism reverberate in several channels of domestic and international IP making and is in fact hardwired into the very fabric of the WTO and TRIPS. 46 Unfortunately, this black and white categorisation that has come to inform most intellectual property debates does not hold tight in the context of emerging economies such as India, China and Brazil.47 In fact, the developing vs developed country classification is coming to be criticized in
43

A number of recent papers play into this regular 2 dimensional schism. Illustratively, see Luigi Palombi, TRIPS, Bilateralism and Patents: How They are Failing Both the Developed and the Developing World and What to do About It, 1 Elect. J. Inf. Innov. Health 71 (2007) <http://cgkd.anu.edu.au/menus/PDFs/Palombi%20(RECIIS)%20eng.pdf>. 44 N. R. Ayyangar, Report on the Revision of the Patents Law (1959). 45 Id p. 22. 46 There are no WTO definitions of "developed" and "developing" countries. Members announce for themselves whether they are "developed" or "developing" countries. However, other members can challenge the decision of a member to make use of provisions available to developing countries. See WTO Web Page on Development <http://www.wto.org/english/tratop_ e/devel_e/d1who_e.htm>. We therefore use these terms in the same way in which most of the existing literature on intellectual property and development uses them. Illustratively, see Luigi Palombi (supra note 43). See also Chenxi Jiao, The Negative Effect of Pharmaceutical Patents on South African Industry, Cardozo Public Law, Policy and Ethics Journal, Spring 2007, 655 at 657 who states: Although it might seem as though patent protection would lead to industrial growth, this Note will argue that patent protection has favored developed economies and stifled the growth of local industry in developing countries. 47 Supra note 6.

other areas of the WTO as well. Professor Picker demonstrates the anachronicity of such a classification, citing Russia as an example:48

Certainly there are other scenarios where countries may fall between the developed and the developing world, thus making development policy less pointed or efficient or effective..This demonstrates that the WTO definitions of development are arbitrary and that classification of countries in this way does not take into account their individuality.
India is neither developed nor developing. It is what I would prefer to label as a technologically proficient developing country.49 On the one hand, it is keen on incentivising innovation in sectors, where it is technologically proficient. Yet 26 per cent of its people live below poverty line and it has significant public health concernsto this extent, it continues to remain a developing country.50 The ageold intellectual property rules that were premised on a neat distinction between developed versus developing countries do not fit India anymore.51 This calls for new norms, driving India to innovate in its intellectual property policy. Section 3(d) is one such innovative norm that attempts to strike a balance between two conflicting priorities: On the one hand, drastic levels of poverty and resulting problems associated with drug pricing and affordability warrant a reduction in the scope of patent grants. On the other hand, Indias industrial and innovation imperatives warrant the grant of incentives in the form of patents to domestic majors such as Ranbaxy, Dr. Reddys and CIPLA.52
48

See Colin Picker, Neither here nor there Countries that fall between the Developed and the Developing World in the WTO, 36 Geo. Wash. Intl L. Rev. 147 (2002) AT 149. 49 Some scholars use the term innovative developing country (IDC). See CM Morel et al Health Innovation Networks to Help Developing Countries Address Neglected Diseases , Science 15 July 2005: Vol. 309. no. 5733, pp. 401 404, who state: Some developing countries, however, are more scientifically advanced than others and are starting to reap benefits from decades of investments in education, health research infrastructure, and manufacturing capacity. We refer to these as innovative developing countries (IDCs). Unfortunately, this does not appear to be an entirely accurate classification given that India, though technologically proficient in certain technology sectors such as software and pharmaceuticals has not yet witnessed any significant levels of innovation in these sectors. See Innovation in India, National Knowledge Commission, Delhi 2007 <http://knowledgecommission.gov.in/downloads/documents/NKC_Innovation.pdf>. 50 Supra note 9. 51 One might argue that at different times in history, other countries went through similar phases. Japan is an excellent example of a country that might have been categorized as a technologically proficient developing country in the 1970s/80s. However, what makes India, China, Brazil and other emerging economies of today different is that these are the first distinct set of technologically adept developing country cases to emerge in a post TRIPS environment. To this extent, this group challenges accepted norms of a developed vs developing schism, on which the international IP regime as elucidated in arenas such as TRIPS is premised. 52 Illustratively, Ranbaxy and Dr Reddys, the two largest pharmaceutical companies in India are amongst the top 3 Indian patentees in the US. Most of their current applications are for

Section 3(d) therefore provides that patents shall be granted only to new chemical entities and to pharmaceutical derivatives that represent genuine incremental inventions by being more efficacious than existing substances. In this way, section 3(d) makes a break from the regular two dimensional view of intellectual property policy premised on the developed vs developing country schism. A continuation of policies based on the regular 2-D perspective might have seen the introduction of a blanket provision excluding incremental inventions altogether. Fortunately, the government avoided such a measure. In the wake of pressure from the Left Parties to introduce such a blanket exclusion, the government referred this issue to an expert committee.53 Some may therefore argue that the non-introduction of such a provision stemmed more from a fear of TRIPS, rather than being driven by well thought out innovation policy goals. A study of the political context surrounding the introduction of the 2005 Patents Amendment Act would suggest that the government was driven more by national policy imperatives. The constitution of a committee to review the proposed measure for TRIPS compliance was nothing more than an effort to stave off any delays in effectuating the 2005 Amendments.54 In other words, TRIPS was only an excuse by the government to further domestic industry interests and assuage the concerns of those that sought to limit incremental patents altogether.55 As discussed in an earlier section, Section 3(d) has no statutory parallel anywhere else in the world. Its innovativeness lies in the fact that it deploys a drug regulatory term efficacy to lay down an almost bright line rule for determining the patentability of pharmaceutical inventions. Of course, the brightness of the line would depend on how the term efficacy is defined.

incremental inventions and processes. See Mashelkar Committee Report (supra note 42). However, when looked at from an international perspective, the numbers are still relatively small. Ranbaxy has only about 79 US patents till date (from 1975-2006), whereas Dr Reddys has 53. See USPTO DATABASE, <http://www.uspto.gov/patft/>. But with more R&D spending in the coming years, these numbers are bound to grow See Gautam Kumara, Palash Mitra, Chandrika Parschira, Indian Pharma 2015: Unlocking the potential of the Indian Pharmaceuticals Market , Mckinsey & Co. (2007). 53 Supra note 42. 54 It is pertinent to note in this regard that, during the course of Parliamentary debates, Shri Kharabela Swain, a member of Parliament, opined that patents ought to be given for incremental innovations as Indian scientists did not have the know-how or capital to come up with new chemical entities, but do have the know how to make improvements. See Lok Sabha Debates, (supra note 26). 55 See Shamnad Basheer, The Mashelkar Committee Report on Patents: Placing it in Context SpicyIP <http://spicyipindia.blogspot.com/2007/01/mashelkar-committee-report-onpatents_28.html> (Jan 28, 2007) for an overview of the political context surrounding the constitution of the Mashelkar Committee.

It is interesting to note in this regard that the term efficacy and the explanation to section 3(d) is derived, in large part, from a drug regulatory directive. Article 10(2)(b) of Directive 2004/27/EC56 defines a generic medicinal 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, mixtures of isomers, complexes or derivatives of an active substance shall be considered to be the same active substance, unless they differ significantly in properties with regard to safety and/or efficacy. In such cases, additional information providing proof of the safety and/or efficacy of the various salts, esters or derivatives of an authorised active substance must be supplied by the applicant. (emphasis by author).
Transposing a provision that operates within the context of a drug regulatory regime to a patent regime may not work optimally. For one, it makes it likely that the term efficacy would be construed in a drug regulatory sense consequently, the requirement would be a difficult one for most patent applicants to satisfy. Pharmaceutical companies generally file patent applications at the initial stage of discovery of a drug; it is only much later in the development process that clinical studies are conducted to gather information pertaining to the therapeutic efficacy of the drug. Requiring information on efficacy at the stage of filing a patent application is therefore an onerous requirement.57 On the other end of the spectrum, defining efficacy too loosely may result in even trivial increments gaining patent protection, further exacerbating the problem of ever-greeningthe very problem sought to be eviscerated by section 3(d). EXPLICATING EFFICACY: CREATING MORE EFFICACIOUS NORMS The Madras High Court judgment relied on a medical dictionary definition to hold that the term "efficacy" in section 3(d) meant "therapeutic" efficacy. Under such a definition, the kind of derivatives that qualify for protection are likely to be severely limited. For instance, increased "bio-availability" (which is what Novartis
56

Directive 2004/27/EC of the European Parliament and of the Council of 31 March 2004 amending Directive 2001/83/EC on the Community Code Relating to Medicinal Products for Human Use, (2004) 0.J. (L 136) 34. 57 The task of proving efficacy is much more difficult, expensive, and time-consuming than the task of proving safety.The Independent Institute, History of FDA Regulation: 1902-Present <http://www.fdareview.org/history.shtml>.

claims for its beta crystalline form) may not count as "therapeutic" efficacy. Further, salt forms that provide more stability and enable the drug to remain on the shelf for longer or be transported to various parts of rural India without refrigeration will not be patentable.58 But should this be the case? If the intention behind section 3(d) is to provide incentives to new forms of pharmaceutical substances that come with genuine advantages, then ought not drugs with significant increased bio-availability and stability to qualify? In this context, it is important to distinguish the interests of consumers from those of domestic pharmaceutical producers. Of course, were one to see intellectual property policy through a long-term dynamic innovation lens, one will appreciate that even consumers will benefit from more innovationif there is no drug, there is no question of access to the drug. Unfortunately, most public health groups and civil society activists resort to a myopic pricing lens i.e. beat the price down to the lowest possible level, without regard for anything else. Illustratively, the Drug Action Forum, Karnataka is now calling on Novartis to withdraw its case, when the issue of whether it has a patentable polymorph or not is yet to be decided by the IPAB.59 Till recently, a regular two-dimensional view of patent policy in India saw the balancing of pharmaceutical patent policy as one between MNCs on the one hand, and of consumers/domestic producers on the other.60 In other words, there was a conflation of consumer interest with those of domestic producers, who provide cheap affordable versions of drugs. As noted in the introduction, a 3-D lens comes in handy here as well, in that it enables one to see these interests as distinct.61 Consumer groups wish to peg the efficacy standard as high as possible in order to ensure that there are very few pharmaceutical patent grants. Illustratively, in their pre-grant opposition filed
In particular, see the recent pre-grant opposition filed by I-MAK against Abbots application claiming Aluvia, a heat stable form of an anti-retroviral drug, consisting of Lopinavir and Ritonavir. The advantages of this new combination include increased solubility in water and better bioavailability and stability translating to a lower pill burden and the ability to store without refrigeration. See < http://www.i-mak.org/lopinavirritonavir/>. 59 See Amrita Nair-Ghaswalla NGO takes Novartis battle online (29 August 2007) <http://timesofindia.indiatimes.com/Business/India_Business/NGO_takes_Novartis_battle_online/ articleshow/2318139.cms>. 60 The Ayyangar Report, which formed the basis for the 1970 Patent Regime, was premised, in large part, on the notion that Indian pharmaceutical patent policy ought to be a balance between MNCs on the one hand, and of consumers/domestic producers on the other. See Ayyangar Committee Report (supra note 44). 61 The clearest indication that these interests are divergent can be gleaned from the fact that domestic producers oppose price controls, as vehemently as the multinational pharmaceutical industry. See Pharma Industry Opposes Price Control Mechanism, The Hindu Business Line, Jan 11, 2007 <http://www.thehindubusinessline.com/2007/01/11/stories/2007011106660100.htm>. In contrast, consumers and associations are likely to favour extensive price controls.
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against the application at the patent office, the CPAA recommended that efficacy be interpreted in a drug regulatory manner.62 More interestingly, in a submission made to the Mashelkar Committee, the Affordable Medicines Treatment Campaign (AMTC) supported the introduction of a clause that would have restricted patentability to only new chemical entities (NCEs) other words, it advocated a total ban on any kind of incremental in pharmaceutical patenting.63 Therefore, groups such as AMTC are likely to support the elevation of efficacy standards to extremely high levelsand perhaps even to a level close enough to approximate a law that effectively grant patent protection to only new chemical entities.64 On the other hand, multinational pharmaceuticals wish to peg the efficacy standard as low as possible. In fact, Novartis would prefer that section 3(d) not exist at all. Which is essentially why it challenged section 3(d) as violating TRIPS, and the constitution of India. A regular 2 dimensional view and a conflation of interests would suggest that the views of consumer groups be preferred, since they tally with the views of indigenous pharmaceutical producers: therefore the efficacy threshold should be defined as high as possible. This would significantly limit the scope of grant of pharmaceutical patents, and provide cheaper drugs for consumers. However, a third dimensional perspective is likely to reveal that a high threshold will harm the interests of domestic producers such as Ranbaxy and Dr Reddys, who are now extensively involved with incremental innovation, such as new heat stable forms, drug delivery systems, extended release capsules etc.65 Illustratively, under a restrictive efficacy standard, Ranbaxys incremental innovation which enabled Bayers famed anti anthrax drug, Cipro to be taken just once a day, will not gain patent protection66. Given Indias status a technologically proficient country, India ought not to adopt an excessively restrictive efficacy standard. i.e. if the intention is to incentivise incremental invention, then one ought to encourage all kinds of incremental
Copy of pre-grant opposition filed by CPAA (on file with author). Mashelkar Committee Report (supra note 42). 64 Such a result is likely to contravene TRIPS. See Mashelkar Committee Report (supra note 42). See also Shamnad Basheer, IPI (supra note 27) 65 See Mashelkar Committee Report (supra note 42) 66 The invention, sold as Cipro-OD, enabled a patient to take the medicine just once a day (OD) as was successfully licensed to Bayer AG. Padmashree Gehl Sampath, Economic Aspects of Access to Medicines After 2005: Product Patent Protection and Emerging Firm Strategies in the Indian Pharmaceutical Industry 43 <http://www.who.int/intellectualproperty/studies/PadmashreeGehlSampthFinal.pdf>.
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inventions and not just inventions limited to therapeutic efficacy. The ex post effects of a patent in the form of high prices etc can be addressed via measures such as price control, compulsory licensing etc.67 However, it is not wise to peg patentability criteria at arbitrary levels to achieve these purposes,68 particularly when such an action will adversely impact the innovation incentives of Indian pharmaceutical companies. Given the recent opportunities for R&D collaboration with multinational pharmaceutical companies, the levels of patent protection ought to be at a fairly reasonable level to induce such investment.69 Perhaps India could draw from other jurisdictions such as the United States, where the patentability of a pharmaceutical derivative such as a new salt form or polymorph hinges to some extent on whether or not such derivative demonstrates "unexpected or surprising results".70 Under this standard, unexpected results would include not just "therapeutic" efficacy, but any other significant advantage as well, such as enhanced bioavailability, heat stability, humidity resistance etc. An excellent example in this regard is Wockhardt Ltd, which developed humidity resistant salt forms and isomers of known antimicrobial substances. The original compounds had been patented by Otsuka Pharmaceutical Company as potential antimicrobial agents against bacteria that were resistant to conventional antibiotics. When compared with these original compounds, the salts developed by Wockhardt and later patented in the US had better solubility characteristics and greater stability in the presence of high humidity climates.71 Such incremental innovations are of tremendous value in a country like India and the Indian patent regime ought to incentivise such innovations. It is important to note an important distinction between the US standard and section 3(d). Unexpected properties as drawn out by US case law is only a secondary consideration in assessing non-obviousness. In other words, one gets to this stage only when the primary enquiry on inventive step cannot be answered conclusively i.e. was it obvious to a skilled person to combine the prior art to get to the specific polymorphic form?

Shamnad Basheer, Indias New Patent Regime: Aiding Access or Abetting Genericide 8 International Journal of Biotechnology 5 (2006). 68 Protecting only therapeutic efficacy, and not other advantages would be seen as arbitrary. And it is also likely that such a measure could be seen as contravening the mandate under Article 27 to grant patents to all inventions and to not discriminate between fields of technology. See Shamnad Basheer, IPI (supra note 27). 69 McKinsey Report (supra note 52). 70 Illustratively, see Pfizer v. Apotex, 480 F.3d 1348 (2007). This unexpected property standard is to mirrored to some extent in the decisions of the European Patent Office (EPO) as well. 71 See Follow-on Innovation and Intellectual Property, Submission to the WHOs CIPIH by WIPO (20 May 2005) <http://www.who.int/intellectualproperty/submissions/en/> 13-14.
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In most cases, a structurally similar form would lead to a prima facie finding of obviousness. A showing of unexpected or surprising results (secondary considerations) helps in dislodging such an assumption.72 Illustratively, in Pfizer vs Apotex, the Federal Circuit stated that Pfizer failed to prove that the properties of amlodipine besylate over the prior art would have been unexpected to the skilled artisan, and that even if Pfizer made such a showing, this secondary consideration does not overcome the strong showing of obviousness in this case. 73 Section 3(d) is clearly distinctin that it elevates the unexpected property norm to a primary enquiryto be asked at the stage of determining patent eligibility. To this extent, it is a creative deployment of patentability principles and represents a new phase in TRIPS implementation efforts by India, characterised by a strategic use of TRIPS flexibilities. For a great number of years, TRIPS implementation efforts in India has been characterised by some level of hostility. The best example is the failure by India to implement the mailbox and exclusive marketing rights provisions, despite a good seven years passing by.74 Although section 3 (d) appears to have been introduced without much deliberation in Parliament, it still encapsulates a conscious attempt to balance innovation imperatives of domestic pharmaceutical companies with public health concerns. This explains why the government did not agree as readily to another proposed clause from the Left Parties that would have denied patentability to all incremental innovations. Rather, in a move meant to prevent the Left Parties from further stalling the progress of the Patent Amendments, the government deployed the excuse of TRIPS compliance and referred this to an expert committee.75 Section 3(d) creates something close to a bright line rule for determining the patentability of pharmaceutical derivatives. In a country with a relatively unsophisticated patent office that is examining pharmaceutical product claims for the first time, the advantage of such a bright line rule cannot be stressed enough. However, section 3(d) is still shrouded in considerable uncertainty and the government must now work towards guidelines to help brighten the line.

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See In re Soni, 54 F.3d 746, 750 (Fed. Cir. 1995), where the court noted that [t]he principle applies most often to the less predictable fields, such as chemistry, where minor changes in a product or process may yield substantially different results. 73 Pfizer vs Apotex (supra n 70 at 1371). 74 Supra note 17. See also Anita Ramanna Interest Groups and Patent Reform in India, Indira Gandhi Institute of Development Research, Mumbai Working Papers (2003) <http://econpapers.repec.org/paper/indigiwpp/2003-006.htm>. 75 Mashelkar Committee Report (supra note 42).

Even assuming that we determine the precise contours of efficacy, how do we go about deciding as to what level of efficacy would suffice to make something patentable? The Explanation to section 3(d) mandates stipulates that there should be a significant difference in properties with regard to efficacy? Will a 10% increase in efficacy amount to a significant difference in property? Or will it have to be higher? This is a complex issue for which there is no ready answer. A quantitative increase of 5% in stability may cause one substance to improve so much that it can finally be converted to a drug form, whereas with another drug, it would hardly amount to much. 76 Unlike defining efficacy (which could either be restrictively defined as therapeutic efficacy or broadened to include any kind of advantageous property), it is not possible to lay down a definitive guideline or a bright line rule for determining when something amounts to a significant difference in efficacy. Therefore it is best to leave this to be decided on a case-by-case basis. The term efficacy is a very useful policy lever and India ought to ply with it very carefully. This becomes ever more pertinent, now that now that there are more cases at the patent office that hinge on section 3(d)77 and several countries that are seeking to emulate section 3(d). 78 CONCLUSION To reiterate the thesis of this paper, section 3(d) represent Indias attempts at innovatively striking a balance between innovation and public health, given its status as a technologically proficient developing economy and its need to work within the broad framework of TRIPS. To this extent, section 3(d) is best appreciated through a 3-D lens---a lens that helps us move beyond the antiquated developed vs developing country classification.

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See In re Carabateas, 357 F.2d 998, 1001 (C.C.P.A. 1966), where the prior art suggested at most a four to eight-fold increase in activity level, whereas the applicants compound exhibited a nineteen-fold increase. Therefore it was held unexpected. Compare with Ortho-McNeil Pharm., Inc. v. Mylan Labs., Inc., 348 F. Supp. 2d 713, 749 (N.D. W. Va. 2004) , where the court found that a mere two-fold increase was unexpected, even in light of a prior art showing that some increase might be expected. For a discussion of these cases, see Jonathan J Darrow The Patentability of Enantiomers: Implications for the Pharmaceutical Industry 2007 Stan. Tech. L. Rev. <http://stlr.stanford.edu/pdf/darrow-patentability.pdf> 77 Supra note 58. 78 Gireesh Chandra Prasad, Copycats Popping Patent Law Pill, ECON. TIMES, AUG. 13, 2007 <http://economictimes.indiatimes.com/News/News_By_Industry/Healthcare__Biotech/Pharmace uticals/Copycats_popping_patent_law_pill/articleshow/2276358.cms>.

However, it is not clear what the term efficacy in section 3(d) entails. Section 3(d) needs to be refined further to make it work more efficaciously and to help India spearhead the emergence of truly innovative patent norms, characteristic of a new breed of technologically proficient countries. This would lend more certainty to the law and attract more investment in R&D. It will also create more bright line rules that are tremendously helpful in countries like India with less sophisticated patent offices. However, in so far as a quantitative determination of a significant difference in efficacy is concerned, bright line rules may not help, since different percentages have different implications, depending on the kind of derivatives that are used and the context in which they are so used. This should therefore be decided on a case- by- case basis. To this end, one ought to appreciate that the term efficacy is a useful policy lever and has to be plied with carefully. If pegged too high, it could hurt the innovation imperatives. If pegged too low, it could exacerbate ever-greening. In this regard, it is important that we not conflate the interests of domestic majors and consumers and peg the level as high as possibleto possibly approximate a position where effectively only new chemical entities will be granted patent protection. A clear pair of 3-D lens will help us see these interests as distinct and thereby enable us to peg the level at a more reasonable level, than would have been the case, had we continued to be blinded by this conflation.

When I could find voice, I shrieked aloud in agony, "Either this is madness or it is Hell." "It is neither," calmly replied the voice of the Sphere, "it is Knowledge; it is Three Dimensions: open your eye once again and try to look steadily."79

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Edwin A Abbott, Flatland: A Romance of Many Dimensions (Dover Publications, 2007).