[Ip-health] Impact Of The Probable Incorporation Of An Additional Step (Of Public Interest) In Indian Injunction Jurisprudence

[Judit Rius Sanjuan]

http://www.ip-watch.org/weblog/index.php?p=3D1309
Intellectual Property Watch

10 November 2008
Impact Of The Probable Incorporation Of An Additional Step (Of Public
Interest) In Indian Injunction Jurisprudence
By Swarup Kumar

 From the content of the recently decided Roche v Cipla 2008 (37) PTC
71(Del) interim order issued by Justice S. Ravinder Bhatt of Delhi
High Court, it appears that an additional step, i.e., a fourth step of
public interest - over and above the three-step test laid down in
historic judgment in American Cyanamid Co v Ethicon Ltd, 1975 (1) All.
ER 504 - has at least for the time being been incorporated into the
Indian jurisprudence for deciding the grant or non-grant of interim or
ad-interim injunctions vis-=E0-vis essentially pharmaceutical patent
infringement issues.

In the Roche v Cipla case, Justice Bhatt ruled that =93Courts while
deciding applications seeking interim injunction, involving claims for
infringement of patents, especially when life-saving drugs are
involved, have to strike a balance between the imponderables such as
the likelihood of injury to unknown parties and the potentialities of
risk of denial of remedies.=94

The Indian courts have in general applied the well-established three-
step test of American Cyanamid in order to decide whether to grant an
ad-interim injunction against an infringer or not. In determining
whether to grant an interim injunction in accordance with the Cyanamid
principles, a court ought to consider the following three points: (1)
That the claimant can show that there is a serious issue to be tried;
(2) that the court considers where the balance of convenience lies;
and (3) if there is no imbalance, then the status quo is preserved.

On the other hand, the Roche v Cipla order clearly implied that a
fourth step, i.e., taking into consideration whether the interest of
the general public will be hampered, ought from now onwards also be
taken into consideration by the Indian courts with respect to the
cases involving grant or non-grant of interim injunctions against a so-
called infringer (generic) when pharmaceutical patent infringement
issues are involved in India.

In some respects, it makes sense that in a country like India (where
purchasing capacity of the general public is extremely low), the
interest of the public be taken into account before a decision is
taken to award an interim injunction against a generic drug
manufacturer (a so-called infringer) who manufactures and sells a
generic version of a life-saving patented drug (having the same or at
least substantially the same composition as that of the composition
patented by the patentee) to a substantial population of the country.

In this respect, Justice Bhatt went ahead to observe in the Roche v
Cipla judgment that =93Between the two competing public interests, that
is, the public interest in granting an injunction to affirm a patent
during the pendency of an infringement action, as opposed to the
public interest in access for the people to a life-saving drug, the
balance has to be tilted in favour of the latter.=94 This logic makes
more sense when prima facie it appears that such generic manufacturer
manufactures and sells their version of the patented drug at a much
lower price, say for example, at almost one-third the reported price
of the patentee=92s drug.

However, one wonders whether the repercussion of the Roche v Cipla
order will be that with respect to every case relating to infringement
of an essential life-saving patented drug, a legitimate patentee
invariably will be not awarded the benefit of interim injunction
merely because an infringer manufactures and sells a version of the
patentee=92s patented drug at a price lower (not necessarily much lower)
than the actual price of a drug being sold by the patentee. The
question is when a lower price of a generic drug is sufficiently low
to be considered to have qualified to hamper the interest of the
public? If one-third the price of the patented drug has been
considered too low, how about one-half or even two-thirds the price of
the patented drug?

On the other hand, it is not too much to ask if one argues that a well-
reasoned, good decision such as the order of Justice Bhatt in Roche v
Cipla should be based on more concrete, tangible evidence and
preferably, well-documented information or data or statistics (which
are understandably difficult to procure) regarding the percentage of
population which would de facto be severely affected if the generic
version of a particular life-saving drug suddenly became - because of
the interim-order - not available to the public at large than on
presumptions that public interest would in general be harmed. A
delicate balance between the right of an individual and/or a company
to enforce his patent right and rights of people in general to have
access to medicine has to be established but that has to be done only
on the basis of tangible evidence and not presuppositions or emotional
rhetoric.

Moreover, the four-step test - the fourth step being public interest -
ought to be invoked only in situations where a life-saving drug or
medicine is involved and NOT with respect to any and every
pharmaceutical product or chemical composition. For instance, with
respect to a patent involving dietary supplement(s) or ancillary
medicine(s), it is not very difficult to conjecture that the interest
of the public would NOT be hampered as substantially if such
product(s) becomes unavailable in the same price range (presuming
prices of the generic variant of a product is almost invariably much
lower than the price of a patented product) in which a generic company
sells it. In situations where life-saving drugs are not involved,
applying the age-old and time-tested three-step test (laid down in the
American Cyanamid case) should be perfectly alright.

On a different note, wouldn=92t it be really interesting to see how the
things shape up on the issue of rendering compensation or issuing
damages incurred by the aggrieved party (say, a legitimate patentee)
in the due course of time. Furthermore, would the trend to make the
generic company - manufacturing and selling their version of a
patented drug - pay the patentee a royalty (as a particular percentage
of the sale or profit made by them) as compensation be also adopted
invariably by the courts across India? No need to mention that this
trend, if followed invariably, will be more or less in the nature of
compulsory licence wherein a licensee pays royalties to a patentee
after the grant of a compulsory licence. Is it not that this trend, if
continued, in turn would create a court-made compulsory licence regime
even though provisions for compulsory licensing already exist in
Sections 84, 92, 92 A etcetera of the 1970 Patents Act.

It would also be interesting to see if the amount of royalty the court
eventually directs a generic company to pay (if the patentee
eventually wins the infringement proceeding) would be a fixed
percentage of sale or profit made irrespective of the specifics and
circumstances of a case in question (uncanny it would be then) or such
royalty would be decided on a case-to-case basis after due
consultation with the generics company and more importantly, with the
patentee.

There is a further issue, which will keep intriguing many among us. If
subsequent to the awarding of an interim or an ad-interim injunction,
the actual case of infringement - decided on the basis of the merit of
a case - goes on for, say, a couple of years and the decision is
eventually awarded in favour of the patentee, would the consequence of
such a win actually be sweet enough for the patentee.

Let us attempt to dig on this issue a little. As many Indian attorneys
are aware, the grant of a patent on an Indian patent application takes
almost five to six years from the date of filing of such application.
Recently, though, there has been some remarkable progress by the
Indian Patent Office on this front. Post 2007, with respect to some of
the relatively recently filed cases, letters for patent documents
(patent registration certificates) were issued in some instances
within a fortnight from the date of allowance of an application.

Barring the recent outstanding developments, the effective term of a
patent in India is in general limited to fourteen to fifteen years (if
you are lucky enough not to have been bombarded with pre-grant
oppositions before the grant of a patent and then subsequently with
post-grant oppositions). Deduct another five to six years for
litigation (threat to institute suit, suit for infringement, counter-
claim of invalidation, interim orders, decision reserved and
eventually, the final judgment/decision) from the effective term and
you are actually left with only nine to ten years of effective term.

One does not need to be a rocket scientist to infer that by the time
the rights are eventually decided in the favour of say, for instance,
a patentee, the patented drug would have perhaps become obscure or
would have gained the status of being a drug which is no more in
demand. It is not unlikely that the third, fourth or even nth
generation(s) of such drug (including the generic variants) would have
already flooded the market. The patentee would thus be left with a
situation wherein even though it has been restored the exclusive right
to manufacture, offer for sale, sell and export its patented drug, it
has no more been left with a potential market. A remote consolation
for the patentee could be, however, that it would end up earning
royalties, which will ostensibly be only a small percentage of what
the patentee would have earned if they had retained their privilege,
inter alia, to sell and/or market their patented product exclusively
for a term of five to six years (i.e., post the grant of the patent).

To sum up, it appears prima facie that the introduction of the fourth
step (of public interest) in infringement jurisprudence is a some win
(for the generics), some (read much more) lose (for the patentee)
situation for the patent infringement litigating parties but is
perhaps the beginning of an all win-win situation for at least the
consumers.

Swarup Kumar is a senior IPR Associate/Attorney with the IP law firm
Groser & Groser in India, where he has worked since February 2004.
During Swarup=92s stint as a patent attorney, he has handled, inter
alia, drafting of complete specification, rendering opinions on the
patentability of inventions related to different fields of
technologies, filing and prosecution of patent applications, attending
to hearings =96 both application as well as opposition, handling patent
litigation matters etc. Swarup is qualified as an advocate and is a
registered patent agent. He completed his LLB in 2003 after graduating
in chemical and biological sciences from the University of Delhi.
Swarup then pursued a diploma course in intellectual property law from
the Indian Law Institute, Delhi along with a certificate course in IP
with the World Intellectual Property Organization (WIPO) Academy.
Subsequently, Swarup also added an MSc (Chemistry) degree from the MP
Bhoj University to his educational qualifications. Though Swarup=92s
thrust area of practice is patent, he also handles trademark, design
and copyright related matters in his present position.

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Judit Rius Sanjuan
Attorney
Knowledge Ecology International / Essential Information
www.keionline.org / www.cptech.org
Phone: +1.212.763.5720 (Only for October/November 2008)