Monday, February 16, 2015

Division Bench of the Delhi High Court Vacates Interim Injunction against Glenmark in Linezolid Patent Dispute

On February 5, 2015, a Division Bench of the Delhi High Court vacated the interim injunction granted on January 19, 2015 by a Single Judge of the Court against Glenmark Pharma in respect of Symed Labs’ process patents on Linezolid IN213062 and IN213063.

The reason for the ad interim vacation of the interim injunction of the Single Judge, according to the Division Bench, was the failure on the part of the Single Judge to take into account Glenmark’s contention that Symed Labs had failed to establish that the products of the parties were identical, which is a mandatory requirement under Section 104A of the Patents Act, 1970. Extracted below are the relevant portions of the DB’s order:

“According to Mr Chidambaram, a specific plea is taken in the written statement and he has drawn our attention to certain paragraphs thereof to show that the Linezolid API manufactured by the appellants/defendants is different from that of the plaintiff/respondent. Therefore, before the learned Single Judge could grant an injunction in favour of the respondent/plaintiff, it was incumbent upon the learned Single Judge to, prima facie, come to a conclusion that the Linezolid API manufactured by the plaintiff using its patented processes was identical to the Linezolid API manufactured by the defendants/appellants. This does not appear to have been done. It is in these circumstances that we are vacating the interim order for the time being and direct that the defendants/appellants shall maintain accounts and shall file the same in this Court as also supply a copy to the respondent/plaintiff”

Section 104A envisages reversal of burden of proof on the defendant in limited circumstances where the patentee is unable to establish that the defendant’s process is identical to that of the former’s patented process, but has established the limited fact that products of both parties are identical. In the facts of Linezolid case, unless the patentee sought to place reliance on Section 104A to seek reversal of burden of proof, I am not sure it is incumbent on it to establish the identicality of the products. Since I haven’t had the chance to read the Single Judge’s order of injunction, I shall reserve my comments on the issue.  


That being said, the vacation of the interim injunction by the DB is only ad interim since it is yet to dispose the appeal. The next date in the appeal April 6, 2015. 

Sunday, January 11, 2015

Delhi Patent Office Revokes Abbott’s Patent on the blockbuster drug Adalimumab (Humira)

On December 31, 2014, in a 30-page decision the Delhi branch of the Indian Patent Office set aside its order of grant of patent IN234555 to Abbott on its blockbuster arthritis drug Adalimumab (trade name “Humira”). The patent was revoked on grounds of lack of inventive step and insufficient disclosure.

The facts of the case make for interesting reading. The Patent Office granted the patent to Abbott on June 8, 2009, oblivious to the pendency of a pre-grant opposition filed by Glenmark in September 2008. When Glenmark brought this to the Controller’s attention, the letter intimating Abbott of the grant of the patent was cancelled, this time without hearing Abbott. Naturally, this peremptory decision was challenged by Abbott in a writ petition before the High Court of Delhi, wherein the Court directed the Controller to review the decision of grant by treating Glenmark’s challenge as a review petition under Section 77(f) of the Act. It is in this review petition that the decision of grant of the patent was set aside on December 31, 2014. That’s quite a way to start the New Year for both the parties concerned.

The Controller’s observations and findings start in Para 9 on Page 15 of the Order. Before dealing with the grounds of review, the Controller undertook a discussion on the subject-matter of the claims of the patent taking into account the amendment of claims undertaken by Abbott during the prosecution of the patent. Subsequently, the Controller rejected the contentions of Glenmark with respect to lack of novelty including the ground of prior claiming and ineligibility of subject-matter under Section 3(e) of the Act. However, the contentions relating to lack of inventive step and insufficient disclosure were accepted.

I will discuss the specifics of these findings in detail in a later post, but what is to be noted is that this decision again proves the need for and efficacy of the pre-grant opposition mechanism which is effectively the reason for the outcome in this case. Importantly, this also highlights the need to improve the procedure of examination of patent applications since examination, and not pre-grant opposition, is the first line of scrutiny. Therefore, it would help if details of examination of a patent including the search and analysis carried out by the Patent Office are captured clearly during its prosecution and are also available to the public, instead of the confidential treatment it receives now. After all, what is so confidential about the steps taken the examiner of a patent application to evaluate the patentability of the subject-matter?

Let’s hope these issues receive the attention that are due to them. Until then, we will have to repose faith in the opposition and revocation mechanisms.

I thank a good friend of mine for sharing a copy of the decision with me! The link to the Controller's decisions on the official website of the Indian Patent Office is as usual playing truant (even at the time of publication of this post).

Delhi High Court Enforces Novartis’s INDACATEROL against CIPLA

In a 143-page judgment pronounced on January 9, 2015, Justice Manmohan Singh of the Delhi High Court granted an injunction in favour of Novartis enforcing its patent 222346 on the bronchodilator drug Indacaterol against Cipla. Extracted below are the observations of the Court on the options available to it and operative portions from the decision (In the next post, I will present my analysis of the decision):

“121. Let me therefore ascertain as to what tools are available on record in order to enable to perform this duty of striking the balance between the parties. The said tools can be discerned from the pleas raised by the parties and position which they have taken the same can be summarized in the following manner:

a) Before starting of hearing in the injunction application in the present case, the statement was made on behalf of the plaintiffs that they are agreeable to license its patented product to the defendant subject to the defendant’s agreeing that the plaintiff would allow the defendant’s to import its product and work on profit sharing basis. In response thereto, the defendant refuses to consider the said offer as it is interested in conducting the manufacturing activities in India as according to the defendant that the merely importation would still lead to monopoly situation which is the ground of the tribunal to interdict for a compulsory license under Section 83 and 84 of Patent Act and upon which I cannot prematurely decide the same and perform the role of compulsory licensing tribunal at this stage without fact finding and evaluation of evidence and correctness of the stand of the parties.

b) The defendant on the other hand suggested that the court can mould the relief in its written submissions and also pleads that the court may fix up the royalty which can be ordered to be deposited before the court subject to the trial of the present suit. I find this approach again to be inequitable. This is due to the reason that in the present case, the court is not proceeding to hold that there exists a credible defence raising the grounds of the invalidity of the patent (though the defendant has raised the said grounds but the same are neither explained properly nor the same are relevant in view of the contra material on record and are distinguished by the plaintiffs for which the defendant has not provided any further answer) but is proceeding to observe on prima facie basis that there exists a valid patent and the defendant could be provided a permission to manufacture subject to payment of the royalty as an alternative to injunction so that the inventor is rewarded. Thus, the alternative to injunction approach for carrying out the activities which would otherwise be an infringement but for the public interest cannot be misunderstood on presumptive basis that the amounts are secured in the court subject to trial which means that the defendant would continue to use the invention with the plaintiff getting nothing until the trial of the suit gets concluded (without approaching the appropriate forum which is compulsory licensing court) when prima facie case has been made out for infringement and all other circumstances warrants the injunction. That is the reason why, I cannot agree with the proposal of the defendant that this court should permit the defendant to manufacture the patented product by observing that the public interests warrants so without recompensing the plaintiff realistically at this stage and merely seeking a deposit in the court which would lead to all other generic companies would be taking the same route without actually rewarding the inventor in practice. This approach was never contemplated by the US courts nor was such jurisprudence ever intended to be laid down by this court even.

c) The third tool which exists at this stage in my hand is to fix up the royalty as an interim measure as to what sort of the royalty would be reasonable and practicable so as to suitably recompense the plaintiff as an inventor. In order to perform this task, I have gone through the records of the case. There exists sale figures of the plaintiffs and the defendant also states that it has sold 12148 unit of drug in the month of October, 2014. I find that the said material again is not adequate in order to understand the profit margin of the either side and further perform calculation on the basis of the proximate loss or detriment to be caused to the plaintiff in terms of financial loss or otherwise in order arrive at the figure of reasonable royalty. Furthermore, the said fixation of the royalty by this court on the monthly basis would be against the scheme of the Act when there exists a mechanism under the Act to seek compulsory license and the domain of the tribunal is prescribed under the Act. Thus, it would be neither wise nor it is justifiable for me to comment on the sum of the royalty on per monthly basis or per annum basis without analyzing the relevant material on record to be presented before the court. I would say that in case the defendant was really interested in paying the royalty on practicable rates without hiding anything from the court, then the defendant ought to have proposed the concrete proposals to the court and discussions could have been made by it in detail in the written submissions as to what reasonable sum can be arrived at between the parties as an interim royalty in lieu of the injunction."

Operative Portion 

"130. The question to be asked at this stage is whether there exists any such circumstance showing the extreme demand of the patented product in question as per the material available on record showing imminent need or dire straits reflecting the plaintiffs inability to provide the medicine in question to the consumers except the concerns emerging from articles which are noteworthy yet general in nature. I find that there is no material on record suggesting the demand of the said patented product outstripping the supplies on the basis of the public interest. Rather, there exists a contra material on record wherein the plaintiff is stated to have a surplus medicines available and agrees to further accelerate the supplies if need be.

131. The main question in the present case before Court is whether the Court will allow a party to infringe the registered patent which is prima facie held to be valid, the infringement is established and there is no credible defence raised by the other side. The answer of this question is "NO". Under these circumstances, the Court would never encourage the infringement in view of the exclusive and statutory rights granted under section 48 of the Act. The effect of registered patent is defined in the statute and the same is not capable of being misunderstood. The statutory and monopoly rights cannot be reduced to a nullity as by virtue of section 48 of the Act till the term of validity of the suit patents, the plaintiff is entitled to prevent any third party who does not have its permission from the act of making, using, offering for sale, selling or importing for those purposes an infringing product in India. In the present case, the compulsory licence has not been granted by the authority to the defendant. Even its application for the same is not pending. Merely the grounds and conditions stipulated under section 83 and 84 of the Act do not absolve the defendant to infringe the registered patent.

132. Accordingly, in the facts and circumstances of the present case, the following directions are passed in order to balance the interest of the parties in the interim:

a) The defendant is restrained by itself or through its directors, group company, associates, divisions, assigns in business, licensees, franchisees, agents, distributors and dealers from using, manufacturing, importing, selling, offering for sale, exporting, directly or indirectly dealing in Active Pharmaceutical Ingredient (API), pharmaceutical products, compound or formulation containing INDACATEROL, specifically its Maleate salt, namely INDACATEROL Maleate alone or in combination with any other compound or API or in any other form as may amount to infringement of Indian Patent No.222346 of the Plaintiff No.1 until the determination of the pleas raised by the defendant for seeking the compulsory licensing if so filed shall be determined on merit and after hearing of parties in favour of defendant, otherwise, it would continue during the pendency of the suit.

b) If such an application is filed by the defendant, under those circumstances, the directions are issued to the controller or to the relevant authority to decide the application for seeking compulsory licensing within the period of six months from the date of filing the application within two weeks from the pronouncement of the order.

c) The defendant is at the liberty to move an application seeking modification/ vacation of the interim injunction in case the application seeking compulsory licensing is decided by the competent authority in its favour or the parties otherwise arrive at some consensus on the licensing terms.

With these observations, the application, being I.A. No.24863/2014, is disposed of. It is clarified that all the findings arrived by this Court are tentative which shall have no bearing at the final stage of the suit as well as at the time of deciding the application for compulsory licence, if filed by the defendant.”

Thursday, January 8, 2015

Powers of the Competition Commission to deal with Exploitative Abuse

Most students and practitioners of Competition law are aware that Section 4 of the Competition Act, 2002 deals with abuse of dominant position. Among the various proscriptions in the provision, direct or indirect imposition of unfair or discriminatory prices (including predatory prices) in purchase or sale of goods or services by a dominant entity is deemed as abuse by the entity of its market position under Section 4(2)(a) of the Act.

Of the three kinds of pricing referred to in the provision, predatory price is defined in the explanation to the provision, whereas there is no express guidance on what constitutes “discriminatory price” and “unfair price”. Since the Act uses two distinct terms which are capable of being ascribed independent meanings, they must be recognized as two different forms of abuse by a dominant entity, which are also distinct in the consequences for the victim of the abusive conduct.

Discriminatory pricing results in what the literature broadly calls exclusionary abuse, whereas unfair pricing is understood to lead to exploitative abuse. Between the two, what constitutes discriminatory pricing is relatively easier to understand compared to unfair pricing, notwithstanding the absence of definitions for both in the Act. It is the interpretation of unfair price that poses the challenge of subjectivity, which in turn calls for safeguards to prevent imputation of a meaning which was never intended by the Legislature.  

As stated earlier, the Act does not define “unfair price”. Section 2(z) of the Act states that words and expressions used but not defined in this Act and defined in the Companies Act, 1956 shall have the same meanings respectively assigned to them in the latter statute. Neither the Companies Act, 1956 nor the Depositories Act, 1996 appears to define “unfair” or “unfair price”. The definitions of “unfair trade practice” in the Consumer Protection Act, 1986 or the erstwhile MRTP Act, 1969 too do not seem to be of help in understanding the meaning of “unfair” from the perspective of pricing.
This requires us to look for interpretation of provisions in foreign legislations which are in pari materia with the Indian provision. Article 102 of the Treaty on Functioning of the European Union (TFEU) is similar in language to Section 4(2)(a) of the Competition Act. However, in the EU too, the body of case law on exploitative abuse is significantly small compared to judicial guidance on exclusionary abuse. The trend in the EU too perhaps may be attributed to the reluctance of the European Commission to deal with an inherently subjective enquiry such as exploitative abuse.
Whatever little case law exists appears to interpret “unfair” as “excessive”.  The frequently cited case on unfair/excessive pricing in the EU is the decision of the European Court of Justice in United Brands Company v. Commission of the European Communities (C-27/76 [1978]), wherein the following test was laid down:
“The questions therefore to be determined are whether the differences between the costs actually incurred and the price actually charged is excessive, and, if the answer to this question is in the affirmative, whether a price has been imposed which is either unfair in itself or when compared to competing products.”

Of the two questions which need to be answered under the test, the first calls for the establishment of absence of a correlation between the costs actually incurred and the price charged by the seller for a good or service. This would require the antitrust regulator to also assess the fairness of the profit margin earned by the seller. The larger policy implication is that dominant players could be expected to charge fairly, which obligation does not apply to entities which are not dominant. Simply put, since a dominant player, by definition, is one who can act independent of market forces, he is expected to adhere to higher standards of conduct given the potential for abuse and the consequences for consumers and market as a whole.

Having said this, the question that arises with respect to application of the United Brands test is this- is the regulator expected to merely establish the absence of a reasonable correlation between costs and selling price to arrive at a finding of unfair pricing? Or is it expected of the regulator to first arrive at what is fair before commenting on the unfairness of the price? It is one’s opinion that in either approach, the seller cannot be left in the dark as to what is truly fair in order for him to avoid being hauled up a second time for unfair pricing. In other words, although an enquiry on exploitative abuse requires the regulator to perform the role of a price regulator, it could be said that the regulator may also be called upon to set prices. That said, this is not merely an issue of policy, since a regulator who is the creature of a statute cannot exercise powers which have not been vested in him by the statute.

In the Indian context, this boils down to a simple question- whether the Competition Commission has the power to set/fix prices, and not just comment on its unfairness? To answer this, one must interpret Sections 27 and 28 of the Competition Act which spell out the powers of the Commission to deal with abuse of dominant position. Specifically, Section 27(d) empowers the Commission to direct that agreements which are in contravention of Section 4 “shall stand modified to the extent and in the manner as may be specified in the order by the Commission”. Section 27(g) is even broader since it permits the Commission to pass such orders or issue such directions it may deem fit.  Similarly, Section 28(2)(a) empowers the Commission to vest property rights, which implicitly includes creation of interest in favour of third parties by way of a license. The combined interpretation of these provisions makes it abundantly clear that the Commission has the necessary power to fix prices in a given case if the case so warrants.

For instance, in a situation where the agreement relates to a patent license between a patentee who is a dominant entity and another entity which is the licensee, the royalty tariff demanded by the dominant patentee could be accused of abuse under Section 4 for unfair/excessive pricing. In exercise of its power under Sections 27(d),(g) and 28(2)(a) based on the language of the provisions, it appears possible for the Commission to modify and spell out the prospective royalty tariff. Simply stated, apart from finding the extant royalty tariff unfair, the Commission has the express power to dictate the future tariff.

This conclusion typically raises objections relating to the ability/expertise of the Commission to set future commercial terms in highly specialized agreements where domain/sectoral expertise is called for to understand the commercial practicalities of the sector. But that objection is not one of statutory power, it is one of the Commission having the wherewithal/expertise to do justice to the nature of enquiry. Therefore, such an objection cannot be used to argue that the Commission lacks statutory authority to fix prices since it is the language of the Act that is decisive of the issue.  In any event, this is not an insurmountable challenge since the Commission has the power to consult experts in the relevant domain before it fixes future tariff in specialized contexts.

The long and short of it is that the Competition Commission has the power to enquire into exploitative abuse by a dominant entity and also has broad express powers to fix prices, where warranted.

Friday, January 2, 2015

Announcement: Fourth Annual IP Teaching Workshop in NLU Delhi on February 14-15, 2015


The fourth annual IP Teaching Workshop 2015 is being organized under the auspices of National Academy of Law Teaching, National Law University Delhi, in association with School of Law, University of Washington, Seattle, USA on 14th and 15th February, 2015, at National Law University, Delhi.

In 2012, the first such workshop identified several broad challenges faced by teachers of intellectual property law in India. In 2013 the workshop focus was on IP teaching techniques, use of information and communications technology in IP teaching, research and publication. The third workshop in 2014 discussed various issues on IP clinics.  All workshops have had key speakers and resource persons from India and abroad. Now in its fourth year, by bringing together a select gathering of IP teachers from all over India, the 2015 workshop will aim to focus on following agenda items:

Agenda
1. Teaching methods for advanced or niche IP courses- This involves discussion on methods and techniques for teaching specialised courses such as evidence in IP litigation, remedies, IP and competition law & economics etc.
2. Empirical research in intellectual property – This theme will deliberate on how IP law and policy can be informed by empirical research and how law teachers and researchers can contribute to such research. 
3. IP clinics- It focuses on contribution by the academia to law and policy - focus on how law teachers can actively contribute to IP law and policy by working with the government, interventions in judicial matters and by engaging with the civil society.
4. Teaching IP beyond law schools:  Experiences from technical, humanities and management schools - to include IP teachers in non-law institutes and their experiences- discuss how law school teachers can contribute and mutually benefit. 
5.  Engaging IP student societies: Activating IP teaching and research centres in different law schools, student participation activities etc.  

Eligibility:
All Intellectual Property Law Teachers from any law school/ college/ university (public/private) from India can participate in this workshop.

Process for Selection:
All interested candidates have to send in a short essay (around 1500 words) on any one of the above agenda items of their interest to ipr.nlud@nludelhi.ac.in along with their CV.
Selection will be based on previous teaching or research experience / publication in IP

Last Date of Submission of the application: January 5th 2015. (Late entries will not be entertained). The confirmed candidates will announced by January 10th 2015.  

Registration Fee: Selected candidates should pay a nominal fee of Rs. 3000/-(Rupees Three Thousand only). Organisers will cover economy air/train travel (cheapest-direct route) and stay/boarding at NLUD guest house for outstation participants.

Contact Information: Any query in this regard may be addressed to: ipr.nlud@nludelhi.ac.in or call: +918826724506 (between 14:00 -18:00 hrs)


I thank Prof.Yogesh Pai of NLU Delhi for sharing this information with me.

Announcement: Latest Issue of Trade, Law and Development Journal Published

The latest issue (Vol. 6, No.1) of Trade, Law and Development, the bi-annual student-run journal of NLU Jodhpur, has been published. The Journal has been ranked as the best law journal in India in the past (2011-2013) and the tenth best law journal in the field of international trade worldwide (in 2012 and 2013) by the Washington and Lee University Law Library in its annual rankings of law journals.

I thank Aabhas Kshetarpal, the Managing Editor of the Journal, for sharing this development with me.

Thursday, January 1, 2015

Beginning the New Year with a Few Thoughts for “Specialist” Litigators

Four years ago, on New Year’s Eve, I wrote a post on “generalizing” Intellectual Property Law. In the intervening period, particularly in the last two years, I have been blessed with ample opportunities to apply that sentiment to my work which has improved (I think) my understanding of IP Law and its practice. I have had multiple occasions to understand IP through the prism of Constitutional law, Criminal law and Competition law, and also go through the entire process of trials. The latter has strengthened my firm belief that a lawyer who banks solely on his knowledge of substantive law to deliver the goods is not even half a litigator because procedure will prove to be his Achilles’ heel.

Also, increasingly, I am of the opinion that although it might help to have a dedicated forum to deal with technology litigation, technology litigators must themselves not limit the scope of their practice and learning to their specialized areas. Regardless of what one chooses as her or his area of core competence, a litigator shouldn’t lose touch with fundamentals such as jurisprudence, Constitutional Law and Contracts. In fact, I’d go a step further to say that it is counter-productive, at least in Indian Courts, to project oneself as a specialist technology/IP litigator. Of course, the approach depends on what one wants to be seen as. If the objective is to have a larger appeal and be sought after as a counsel for multiple areas of the law, it helps to be a generalist with core competence in select areas, which is vastly different from exclusively practising niche subjects.

As I have said before, this is important because an internalized understanding of general areas of the law helps a litigator connect with non-specialist Courts which are seized with specialized subjects like IP. I have personally benefited as a litigator by employing this approach each time I have had to present the peculiarities of an IP statute before a Court, hence the conviction. Which is why it surprises me when I hear students of the law, who are yet to set foot in the profession and who wish to litigate, declare with absolute certainty in the first or second semester of law school that all they wish to study and focus on is IP or some other specialized subject.

It is certainly important to closely follow the evolution of jurisprudence in one’s chosen area, but it is equally important to connect it to the big picture because ultimately a litigator must be in a position to present to the Court the larger implications of specific arguments. And staying constantly in touch with general principles of the law helps present such arguments with greater effectiveness. Therefore, I think students would benefit immensely from paying attention to the fundamentals of general subjects instead of rushing through them. It would also help in the long run to having a basic understanding of economics and accounting.

This applies all the more to students of law who come from an engineering or pure sciences background. Although I don’t think law is meant to be taken up only by students from commerce or humanities streams (since I am engineer-turned-litigator myself), I do believe engineers and science grads in particular must invest more efforts in understanding the spirit of the law by systematically and rigorously examining theories of law and principles of common law. Engineers and science grads can certainly bring to the law skillsets and attitudes which are unique to them, but it is also imperative to “acclimatize” themselves to the dialectics of the law and its parlance.

When they do so, they will not only find greater acceptance in the fraternity, but will also perhaps be rightfully heard first on areas such as patent litigation given their training in technology. This also has a critical and positive consequence for the quality of discourse on patents. In the last few years, although the level of IP awareness has increased in India, the discussion on patents seems limited to broad and generalized propositions which may be attributed to lack of training in science, and negligible or no experience in the practice of the subject on the part of certain commentators. There are notable exceptions to this trend, but by and large the reluctance to deal with specifics probably stems from a clear paucity of training and experience.

I personally believe that the bar on academics from practising the law must also be held significantly responsible for this trend, which may not be peculiar to the patent discourse. As long as this bar remains in force, academics will be deprived of the opportunity of sharpening their perspectives through practice. Until such time this bar is lifted and even after, patent litigators with training or experience with technology must play a greater role in shaping the discourse on patents and in volunteering with realistic policy initiatives. This will hopefully bring about a more nuanced discussion on the subject. I must clarify that none of these suggestions are meant to claim an exclusive space for litigators with scientific training because there are patent practitioners whose lack of formal scientific training has not come in the way of professional brilliance.

With this, I wish everyone a Happy and Prosperous New year! May we learn more and be blessed with opportunities to apply what we learn!