Kerfuffle around section 3(d) of Patents Act refuses to die down

Section 3(d) of the Patents Act, 1970, by far, has been one of the most controversial provisions of India’s intellectual property (IP) regime. While India’s domestic pharmaceutical industry vouches for its role in establishing India as the “pharmacy of the world”, foreign multinational companies (MNCs) often denounce it as a restrictive and protectionist measure meant to boost the domestic industry in complete disregard of the international Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). With the Indian Patent Office (IPO) rejecting patent to Gilead’s hepatitis C drug on grounds of being on the wrong side of section 3(d), the provision is once again in sharp focus.

Background of section 3(d)

After India expanded the scope of patent protection, particularly for the pharmaceutical sector, in 2005, and introduced product patents for the same so as to make its patent regime TRIPS-compliant, there were widespread concerns that this would not only increase the prices of important life-saving drugs but would also rupture the business of the home-grown generic drug industry of the country. The Indian parliament had the onerous responsibility of coming up with legislation that was not only TRIPS-compliant, but also flexible enough to take into account public health considerations and the interests of the indigenous pharmaceutical industry.

Section 3(d) was thus an attempt of the Indian legislature to restrict the scope of subject matter eligible for patentability and consequently it specifically disallowed patents for the mere discovery of a new form of a known substance, unless such form demonstrated significant efficacy over the original substance.

Pronouncements on section 3(d)

Under the Patents Act, a patent can be granted only for an invention. An invention is defined as a new product or process involving an inventive step, and capable of industrial application. Inasmuch as section 3(d) creates a new threshold that every product/process claiming a patent in India needs to satisfy, its interplay with the definition of invention has been a central issue before the courts while evaluating the patentability of claimed inventions in the light of 3(d) challenge.

In a case where a claimed invention satisfies the statutory threshold of invention, can it be still denied patent protection on grounds of falling foul of a section 3(d) challenge? “Yes” seems to be the answer from India’s judiciary.

Prior to the determinative ruling of the Indian Supreme Court in Novartis v Union of India on the issue, it was also dissected in detail by Delhi High Court in a permanent infringement suit brought by Roche against famous Indian generic drug maker Cipla, which tried to take refuge under section 3(d) but could not succeed. Delhi High Court, while evaluating a section 3(d) challenge to the validity of the patent, pointed out that there is a difference between lack of inventive step challenge to the patentability and section 3(d) challenge. The court held that proving the former does not mean that the latter has also been proved.

Inasmuch as the act creates two distinct provisions for dealing with the two challenges, establishing a section 3(d) challenge requires a higher threshold of proof by any opponent to the patent grant and would not be satisfied by merely proving the prior existence of a similar compound to the patent in question, and some additional facts including what was actually the old known substance, how can it be said to be the same as that of the subject invention, etc., also need to be proved.

Threshold of proof

While this case discussed the threshold of proof required to be established by a party that seeks to establish a section 3(d) challenge to the patent, the Supreme Court in Novartis v Union of India looked at how a 3(d) challenge may be successfully negated.

Though looking at the issue from a different angle, the court agreed with Delhi High Court in the conclusion that section 3(d) sets up a second tier of qualifying standards for patenting chemical substances/pharmaceutical products, and is not merely an ex majore cautela.

The court then explained how a section 3(d) challenge may be thwarted, and held that in case of chemicals, especially pharmaceuticals, if the product for which patent protection is claimed is a new form of a known substance with known efficacy, then the product in question must pass the test of enhanced efficacy as provided under section 3(d) read with the explanation. The test of efficacy, the court further clarified, would depend upon the function, utility or the purpose of the product under consideration, and in the case of a medicine that claims to cure a disease, efficacy can only be “therapeutic efficacy”.

The question that now remained was: what would constitute “enhanced therapeutic efficacy”? While a couple of divergent views were presented before the court on the issue, the question was mostly left open by the court, with only one stipulation that the issue of enhanced therapeutic efficacy should receive strict and narrow interpretation so as to be in consonance with the health considerations of the country.

Draft policy maintains status quo

While the decision in the Novartis case established the threshold of “enhanced therapeutic efficacy” as a successful answer to a section 3(d) challenge, it left many questions unanswered, such as what essentially would lead to an inference of enhanced therapeutic efficacy, what kind of proof is required to establish the same, and how to draw the line between incremental inventions and inventions hit by section 3(d). Further, the factors that need to be established to succeed in a section 3(d) challenge also remain uncertain.

While some factors were listed by Delhi High Court in Roche v Cipla, the list is far from exhaustive, or even comprehensive. This has created a certain amount of ambiguity regarding patentability standards for pharmaceutical products in India, but there has been no clarification on the same, which has added to the criticism of section 3(d).

Even the first draft of India’s national IP rights policy has steered clear of any reference to the provision, signalling that India’s policymakers regard it as just another provision of the Patents Act and don’t see the necessity to explain its existence. However, more clarity on the perimeters of the provision is the need of the hour, and may even enhance acceptability of the provision among its critics.

Manisha Singh Nair is a partner and Priya Anuragini is an associate.at LexOrbis.