In reaction to the Novartis ruling

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Dear Sir,

I must commend you on the June issue, which I thoroughly enjoyed. I particularly liked Alfred Romann’s article on the Novartis patent issue. It was one of the most balanced pieces that I’ve seen—as it highlighted the various nuances of this complex dispute in an objective manner.

Since then, the Chennai High Court ruled that section 3(d) of the Indian Patents Act was constitutional. It also ruled that it did not have jurisdiction to adjudicate on the TRIPS challenge by Novartis. Having just signed a bilateral IP treaty with India, the Swiss government is not interested in taking up cudgels on behalf of Novartis before the WTO. To this extent, Novartis lost the battle. But will it win the war?

One ought not forget that the IPAB is still to decide on whether Glivec is patentable.

Novartis is clearly upset with the judgment and now threatens to move its investments to China – a country that paradoxically figures in every press release as having one of the worst IP records.

Novartis ought to know that the Indian government is too sophisticated to fall prey to this bullying tactic. Gone are the days when the bureaucrat in charge of “fisheries” one day would be negotiating WTO agreements the next. We now have a fine cadre of government folks that specialize in IP issues whose voices have become a force to reckon with.

Taking on a government that is slated to become an economic superpower in the years to come and challenging it’s pro-public health legislation is poor strategy. Particularly so, when one is pitted against powerful public health activists, that have strategically positioned the debate as one that hinges more on morality and less on patent law technicality.

The short-sightedness of Novartis’ strategy is compounded by a recent McKinsey report that predicts that the Indian pharmaceutical market will treble to US$20 billion in the next 10 years.

Compare and contrast Novartis’ aggressive and weakly thought out patent strategy with that of Roche, which has gone on to acquire four patents already. Its patent covering pegylated interferon (Pegasus) has now been challenged in a post grant opposition, but one hardly hears of this in the press. Roche has been strategic enough to play it quiet, increasing the chances of its patent applications being decided more objectively.

Novartis, in contrast, excacerbated the politicization of its dispute and given that most adjudicators are not hermetically sealed off from society, it is likely that the stream of anti-Novartis headlines did have an impact.

In short, the Novartis patent saga teaches us that pharmaceutical companies may not get very far in India by deploying aggressive bullying tactics.

Novartis is right to be concerned about the vagueness in section 3(d). Though noble in intent and innovative in several respects, 3(d) is very poorly drafted and leaves much to be desired. Probably in the run up to the legislation, speed was essential and the precise contours weren’t thought out.

Amending section 3(d) by an act of parliament to iron out drafting errors may not be politically feasible, but some of the vagueness can be cured by working out appropriate guidelines. And this is what Novartis ought to have focused on—rather than alienating itself from the government and the public by challenging a legislation that seeks to prevent ever-greening.

In particular, these guidelines ought to address the following issues:

  1. What amounts to “efficacy”? Is it limited to therapeutic efficacy or does it include clinical efficacy?
  2. What amounts to a “significant difference in property with regard to efficacy”? Will a 30% increase in bioavailability do or does it have to be much more significant?

The Glivec patent dispute has taken up considerable time, energy and resources. In the Chennai High Court alone it near monopolized the attention of 2 judges, 9 parties, 15 counsels and several law firms. It will be a pity if all this attention comes to nothing—at the very least, one hopes that it generates more clarity on what “efficacy” means.

On a broader note, this saga offers very valuable lessons for patent strategy in India.

It teaches us that pharmaceutical companies and patent lawyers representing them cannot remain obsessed with the technical nuances of patent law.

Rather, a successful patent strategy will be one that works within the framework of an increasingly-politicized patent regime to yield results that help generate more goodwill for the pharmaceutical company in question. In short, patent attorneys ought to think about some serious training in PR.

Shamnad Basheer
Visiting Associate Professor
George Washington University
Law School

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